A fast-paced interview at HICAP in Hong Kong reveals InterContinental Hotels Group CEO Keith Barr’s thoughts on a variety of topics, including his desire to accelerate the company’s growth, industry consolidation and the importance of Asian travelers to the global hotel industry.
HONG KONG—Keith Barr, CEO of InterContinental Hotels Group, sees a lot of opportunity to bring IHG’s brands to the Asia/Pacific region and capitalize on one of the fastest-growing travel segments in the world.
Barr discussed consolidation, growing IHG’s boutique Kimpton brand and more in an eight-minute interview with Hotel News Now as part of the Hotel Investment Conference Asia Pacific Program. Designed to be a fast-paced, high-level interview, the eight-minute session was a prelude to a later town hall session featuring Barr being interviewed by Christopher Hur, chief investment officer for Lodgis Hospitality.
Following is the transcript of the session, which was held at The Kerry Hotel. The text was edited for brevity and clarity.
Q: What is it about the hotel industry that is attractive to you in your role as CEO?
Barr: “If I didn’t go into the hotel industry, I would have been a lawyer, and I think I’m a better chief executive than I would have been a lawyer. Being a CEO is a lot more fun.”
Q: What’s the most fun thing about being a CEO?
Barr: “The global nature of this business. It’s extraordinary. I flew into Hong Kong on Tuesday and caught up with so many friends across the Asia/Pacific (region) and just the dynamic nature of the growth. It’s an extraordinary industry compared to many others.”
Q: You spent a lot of time in China in your role at IHG, and (STR’s) Jesper Palmqvist just showed us the tremendous growth that’s going on here. Does that surprise you at all?
Barr: “I lived in Shanghai for four-and-a-half years. Today we have 350 hotels open (in China), 450 in the pipeline. It’s our fastest-growing market globally—we’re about 15% increase year-over year. It doesn’t surprise me. What does surprise me is the pace of change. You would think it’s going to slow down, but you think about Shanghai today versus five years ago, 10 years ago, 15 years ago … it’s just fundamentally different. It’s spreading across China, particularly out west.”
Q: You’ve been in the role of CEO at IHG for almost a year and half, you’ve made some pretty sweeping changes, particularly in this region. Can you talk about that, why the changes, what they’ve meant to IHG and how they changed the company?
Barr: “My focus when I became CEO was how to become more agile, how do we move faster, how do we accelerate our growth and how to put more resources close to our customers and close to our owners to drive performance. We’ve put a lot more resources into the market, so we’ve scaled up in Australia, Japan, southern Asia, the Middle East … put more boots on the ground to drive performance there, and it’s paying dividends. You look at the first half of this year, it was our best signings and best openings in over 10 years.”
Q: You’ve launched a number of brands, including some specific to this region. Can you talk about why it’s important for brand launches in this kind of environment?
Barr: “We want to make sure we’ve got the right products on the shelf for our guests and for our owners. When we have a gap, we want to fill that gap as best we can. We’ll do mainstream brands, upscale brands organically, which we’ve done with Avid hotels in the U.S. as we launched last year and have already signed 130 in the first half (of 2018). We’ve taken that now to Mexico, Canada, and we’ve just announced that we’re taking it to Germany. We just launched the Voco hotel brand—we’ve already signed three in Australia and a number in Europe to play in the upscale space. I’m here this week focusing on the Regent brand, which many of you know has a special place in many of our hearts in this part of the world.”
Q: Kimpton is growing fast. Talk a little about that brand and that boutique/lifestyle segment.
Barr: “What a great brand. Incredibly (successful) in the U.S. Now we have pipeline in Taipei, Bali, Tokyo … looking at places in Sydney right now, Frankfort, Barcelona. We did the Principal hotel deal in the U.K. with Starwood Capital which provides us with four Kimptons in the U.K. So just great momentum in that space because it offers a product that guests love with a restaurant offering and a bar offering, but it also brings that creativity and that flexibility to our owners that they really want.”
Q: So, here’s the tough question … you knew it was coming. Whenever consolidation is mentioned in the industry worldwide, IHG is always a part of that conversation. Sometimes it’s as the buyer, sometimes it being bought. What’s your take on consolidation—how is that affecting you at the moment?
Barr: “The big five hotel companies have 25% of existing room stock but 60% of the pipeline. So the big hotel companies are fundamentally going to get bigger by either organic or inorganic means in terms of acquiring brands. If you’re a small, niche brand, you can exist for a period of time, but people that are in the middle will always be challenged going forward because of the investment in technology, the investment of enterprise capability and so forth. You still will see consolidation take place in the industry. You have to make sure you’re getting better, not just bigger, because any company can get bigger today—deals can be done. But you can be disruptive to shareholder value, and you can be pretty disruptive to your brand portfolio, your composition. I think consolidation will happen, it’s natural in this industry. We’ve acquired Regent, we’ve acquired Kimpton, and we’ll continue to do things selectively.”
Q: It sounds like you’re a man in it for the long run.
Q: The importance of Asian consumers in the market. How important is that to you and the industry in general?
Barr: “Asia/Pacific in general is incredibly important. It has some of the fastest-growing markets in the world, some of the fastest-growing economies in the world. You’re seeing the rising affluence, the outbound travel from China and other markets as well. It’s incredibly important that we’ve got a great portfolio of brands here and showing enterprise contribution in the markets we focus on. Customers are going to continue to grow at a pace that’s almost unlike anywhere else in the world, and we want to be part of that. We focus so much on China … we want to make sure we have great distribution there, a great brand portfolio so we can maximize that outbound travel principally in Asia. About 80% of the outbound travel is in Asia/Pacific. That’s why I want to make sure we’ve got a great footprint here.”
Q: What’s the biggest opportunity for IHG?
Barr: “To continue to scale up in certain markets where we don’t have our full brand portfolio. We’ve had some markets where we haven’t brought a full array of brands and now that they’ve matured, we’re really penetrating the markets.”
Q: How about the biggest challenge that you face?
Barr: “It’s the pace of technology changes. How do you invest in technology, invest in your enterprise to stay competitive in an industry that historically has moved very slow? You have to find ways to it fun fundamentally different than we’ve done it in the past.”