ATLANTA—Fresh off the introduction of two new brands—one wellness brand targeted toward the U.S. traveler and another international brand designed specifically for Chinese consumers—InterContinental Hotels Group will now shift gears and turn its attention inward.
The focus in the near term, executives said Tuesday on the company’s second-quarter earnings call, will be on evaluating, positioning, showcasing and growing the current nine brands under the IHG umbrella.
“Our approach has always been to maximize the strengths and scale potential of every brand that we own; this has worked well for us. Although we have fewer brands than most of our major competitors … our brands rank either first or second globally in their respective segment in terms of open and pipeline rooms,” said Richard Solomons, CEO of IHG. “These leading positions have been delivered through innovation and the creation of brand families. So, we concentrate on doing as much as we can with our portfolio of existing brands, but there is a limit to how far we can go.”
Solomons said IHG's commitment to invest in the growth of its brands has been crucial to the company’s success in the past and will continue to be so in the future.
“We will only invest where we see the opportunity to create value for shareholders, and all investment is about driving growth in our brands and having the ability to recycle our capital in the future,” he said.
Solomons said IHG has an approximate 5% share of the global hotel industry. The company expects to double that over the next 20 years, with most of the growth coming in the U.S., China and India.
Brand by brand
In China specifically, IHG has seen early success with its Hualuxe brand. The company has signed 27 letters of intent, mostly with owners new to IHG. Eight of those comprising 2,800 rooms already have been converted into management contracts, Solomons said, including hotels in Beijing and Shanghai.
In Shanghai specifically, IHG is pushing its InterContinental Hotels & Resorts and Crowne Plaza brands heavily. The company plans to have 15 hotels operating under those two brands once the pipeline comes to fruition.
Crowne Plaza is IHG’s “highest priority,” particularly in the Americas, where the brand somewhat underperforms due to inconsistency, Solomons said. In 2013, IHG plans to use its own capital “to make sure we add and retain Crowne Plaza hotels in the right locations, with the right assets to build awareness and showcase the brand properly,” Solomons said.
When reimaging Crowne Plaza in the U.S., IHG can point to the success it had with the recent relaunch of the Holiday Inn and Holiday Inn Express brands. From 2007 to 2010, the company removed 1,400 hotels and added 1,800 new ones, bringing the average age of a Holiday Inn and Holiday Inn Express hotel to around 10 years old.
“Our efforts don't stop there,” Solomons said. “We are continuing to drive awareness for the great work that we've achieved, and this is really paying off.”
Growth for the wellness-centered Even brand is expected to come at a slower pace. Solomons said IHG is being “very careful” to make sure the company gets the first locations right. He said there is a lot of interest in the brand from owners and guests, but he doesn’t expect the first property to open until late 2013 or early 2014.
“At IHG, we have a successful track record of buying and launching new brands. This is due to our thorough approach, which takes into account the needs of our target guests and our owners,” Solomons said. “This is the approach that informed our decision to launch two new brands this year.”