After a quarter of a century at InterContinental Hotels Group, the last six as CEO, Richard Solomons will leave the U.K. hotel firm at the end of June. Meanwhile, the firm continues with strong Q1 2017 RevPAR growth.
DENHAM, England—InterContinental Hotels Group’s CEO Richard Solomons has announced his retirement; his last day will be 30 June. All his duties at the United Kingdom-based hotel firm will end on 30 August.
On the day of the company’s first-quarter results, which featured strong revenue per available room growth across all markets, Paul Edgecliffe-Johnson, IHG’s CFO, joined analysts in wishing Solomons well and praising him for his contributions.
Keith Barr, currently IHG’s chief commercial officer, will succeed Solomons beginning 1 July.
Solomons has been at IHG for 25 years—as CEO since 2011 and on IHG’s Board of Directors since 2003, when the firm demerged from Six Continents PLC.
At a conference call to announce IHG’s first-quarter 2017 results, Solomons said “(IHG has) achieved a great deal since becoming a standalone company in 2003. … We launched new brands, enhanced others and began a substantial presence in China, building scale there and recently opening our 300th hotel.”
Edgecliffe-Johnson said the quarter’s numbers benefitted from improvement in oil markets, which account for about 14% of IHG’s portfolio, compared with the industry average of 11%.
Houston’s hosting of the 2017 Super Bowl also helped, he said, although he added “we remain cautious of these markets in light of increased supply.”
Another factor boosting Q1 global numbers was the late Easter holiday, Edgecliffe-Johnson said.
“Overall, it is an encouraging first quarter, and we grew RevPAR in all markets,” he said.
Solomons and Edgecliffe-Johnson said global RevPAR was up 2.7%.
IHG opened 7,000 rooms in the quarter—a 3.4% year-over-year increase in room stock to 767,000 rooms. The company’s pipeline sits at 232,000 rooms, of which 14,000 are in construction at 112 properties.
When asked by an analyst how IHG sees itself, especially in the limited-service segment, in comparison with the other large multinational hotel firms, Solomons said he would not begin to make value judgements as to where other firms are.
“We have taken an organic approach, investing in the long term in digital and technology. We do think we are taking the right route, but there are some differences out there,” he said.
“Limited service is a good model if you have the right brands, as it is relatively easy to get financing for it, and the owners are happy with returns,” Edgecliffe-Johnson said.
“(Limited service) is driving good (return on investment) for owners, but then again, sitting here in the InterContinental Park Lane (in London), clearly the cash-on-cash returns will not be as high, but the increased value of the real estate adds to the overall picture. There are different models,” Solomons added.
Solomons said that franchising in Europe continues to grow.
“Franchising works very well in the more sophisticated markets where financing plays more of a part, and it will continue to be a more accepted form of growth. We think we have an advantage in this respect, and it brings high margins and returns for us,” Solomons said.
“Franchising benefits from having a broad portfolio of brands,” Edgecliffe-Johnson added.
Solomons also said that having just returned from opening the company’s 300th hotel in China, he was seeing great interest from Chinese investors to grow IHG’s Hualuxe brand out of China. But, he added, the focus remains on getting a strong Chinese base for the brand.
As of press time, IHG’s stock was up 12.8% year to date on the New York Stock Exchange. The Hotel Stock Index is up 23.37% over the same period.