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IHG to Crowne Plaza owners: ‘Move up or move out’
August 31 2011

Next up for IHG is a repositioning of its Crowne Plaza brand, with hopes of moving to the upper-upscale segment. Along the way, IHG plans to remove about 40 hotels from the brand, or 10% of its portfolio.

Highlights
  • One owner chose instead to renovate and rebrand his Crowne Plaza to a Holiday Inn.
  • IHG will take a page from the Holiday Inn relaunch playbook to help execute the Crowne Plaza repositioning.
  • Already in the works is the launch of a new brand identity, including a new color scheme and website, that lets consumers know positive change is on the way.
By Jason Q. Freed
Contributing Editor, Tech Impact Report

 

INTERNATIONAL REPORT—Already entrenched in rolling out a renewed focus that includes an emphasis on staff training and an improved bedding program for the Crowne Plaza Hotels & Resorts brand, InterContinental Hotels Group has announced a goal to reposition the brand to the upper-upscale segment.

In doing so, the franchisor will take a hard look at each of the nearly 400 hotels in the portfolio and expects about 40, or 10% of the brand, won’t fit the mold for an upper-upscale product and will be removed from the system.

“We’re following what we call our ‘Rest to Best’ strategy where we want to get all of the hotels to move up to where the top-performing hotels are,” said Janis Cannon, VP of global brand management for Crowne Plaza and Hotel Indigo. “There are plans to remove hotels from the system. It’s either move up or move out.”

IHG does not have a brand that operates in the upper-upscale space, an issue that has turned off franchisees who are looking to develop in that segment. Mark Carrier, SVP of the B. F. Saul Company, which owns three Crowne Plazas, said although he has invested capital for his hotels to compete in the upper-upscale space, performance is lacking from a brand perspective.

“Crowne Plaza needs to step up from the lower position to fully upper upscale so it can compete effectively with Marriott, Hyatt and Sheraton full service,” he said. “In certain locations the product is not up to that. Now IHG is executing a multi-year project to make sure that’s right. They’re going to be bringing the brand into that competitive position.”

Case study
Case in point: When executives from ownership group Lane Hospitality were finalizing the necessary product-upgrade plan for the Crowne Plaza in Clark, New Jersey, president and CEO Bill DeForrest took a close look at the local market and the property’s competitive set. Hotels in the competitive set included a Hilton Hotel, a Renaissance by Marriott, a Hotel Indigo and other upscale assets.

DeForrest knew IHG had plans to move the Crowne Plaza brand into the upper-upscale segment. If he committed to repositioning his Crowne Plaza, his hotel would be another player in an already crowded space.

“We saw the chance to re-evaluate our strategy to achieve optimal market positioning,” DeForrest said.

Lane Hospitality chose to renovate and rebrand the hotel as a Holiday Inn. “Owning the upper-midscale segment will give us a very strong, open niche,” DeForrest said.

“The market we compete in has had significant new supply added in the upper-upscale category both within the immediate and surrounding areas,” he said. “The upper-midscale market however has had numerous assets formally in the market leave the category, mostly choosing to compete in lower-tier categories. We see a significant opportunity for a newly renovated, redesigned asset competing with an industry leading upper-midscale brand.” 

Hotel Assets Ad Will Appear Here

Changing the landscape
IHG will take a page from the Holiday Inn relaunch playbook to help execute the Crowne Plaza repositioning. It will be a “multi-year journey,” Cannon said, and most of the face-lifting will occur in the U.S., where Crowne Plaza hotels aren’t as uniform in their standards.

Currently, there are 394 Crowne Plazas open, 163 of them in the U.S. Cannon said most of the growth outside of the U.S. has taken place in Asia and India, and that will continue to be the case. There are 115 Crowne Plazas in the pipeline, with about 90 executed contracts in Europe and Asia, with the balance in the U.S.

Growth in the U.S. will come primarily by way of conversion, and IHG hopes to get Crowne Plazas in key gateway markets such as San Francisco, Los Angeles and Boston.

In China, Cannon said, the efforts will be more about awareness and uniformity rather than repositioning, since the brand was introduced as upper-upscale there.
 
“It’s all about getting a more consistent global portfolio of hotels,” she said.

New standards
Already in the works is the launch of a new brand identity, including a new color scheme and website
, that lets consumers know positive change is on the way, Cannon said. A lighter purple, rather than the old maroon, reflects the upscale position and is more energizing, modern and upbeat, she said.

A new generation of Crowne Plaza’s Sleep Advantage will include aromatherapy, and there will be a renewed focus on guests being able to conduct business, such as free Wi-Fi and the ability to print boarding passes.

“What we’ve also learned about our guests is there’s something around restoration,” Cannon said. “In order to perform at your best, you’ve got to get a good night sleep.”

Owners will be asked to contribute capital expenses, but each hotel will be examined on a case-by-case basis, depending on what it will take to reach that upper-upscale category. Cannon and IHG are working with JD Power & Associates on a feasibility study, performing gap analysis to determine how many hotels are there already.

“How many are brand defining?” she said. “And how many of those would be below the baseline and what would it take to get them where they need to be?”

Cannon said IHG must build a compelling argument for change, and that it’s got to be tied back to profit for the owners.

“It does take work from the brand, in terms of sales and marketing, food and beverage, training, design—all of that has to be upgraded in a way that is serious about being truly upper-upscale,” Carrier said. “Our properties don’t perform at the level we’d like them to, and we see this as a vital program to help us fulfill the potential of a real-estate business.

“If they can get this right and really make this move successful by working with their franchise partners, it will unlock great potential earnings,” he said. “It will unlock (revenue per available room) gains that will more than compensate for the expense to get there.”

Carrier said he expects capital expenditure to be grossly different depending on the asset and amount of transformation required.

“If you own a very good hotel today that is already positioned there but the brand is below you, you don’t actually have a whole hell of a lot of expense,” he said. “If you don’t have the bones to make it, you’ve got kind of a challenge. You might want to be rebranded to a Holiday Inn or another positioning.”

DeForrest said Lane owns and operates two other Crowne Plazas and plans to make the necessary investments to meet the new brand positioning.

“I do believe in the need to have a truly strong competitor in all segments, and Crowne needs to represent this option for our guests,” he said.  

COMMENTS   Show All
lisa woods
3/26/2013 9:10:00 PM
none
lisa woods
3/26/2013 9:10:00 PM
none
lisa woods
3/26/2013 8:31:00 PM
none
zenith
9/13/2011 10:24:00 PM
Hate to admit but they have missed the boat. Now guess who will pay for this greedy blunder. Ofcoarse the investors and absolutely no loss to IHG.They will make their money thru LD. They should help pay the franchisee's They ought'a see the CP in tampa,atlanta, orlando, to name a few, just awful. You loose money you can make it back BUT you loose your credit you might aswell wash your hands and look for Mcdonald's for job.Ihg should be ethical enough to help these 40 lost hotels simple they fed IHG all this time and they were great. Please don't frame yourself as two-faced.
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