Maalouf outlines IHG strategy with new brand on horizon
 
Maalouf outlines IHG strategy with new brand on horizon
05 APRIL 2019 8:33 AM

From its recent acquisitions of Six Senses and Regent to its stable of established brands to the upcoming launch of a new all-suites brand, IHG continues to build a portfolio that attracts a wide range of owners and consumers, according to Elie Maalouf, CEO of the Americas for the London-based company.

ATLANTA—InterContinental Hotels Group’s February acquisition of Six Senses Hotels Resorts Spas takes the company to another level as it continues its quest to fill in white spaces in its portfolio and meet the needs of consumers, according to Elie Maalouf, CEO, Americas.

“When we found the opportunity to acquire Six Senses … the world leader in luxury for resorts, spa, hotels, and super-exclusive destinations with a deep focus on sustainability, on wellness, on rejuvenation, on dignity … it’s just a great fit,” Maalouf said during an interview at the recent Hunter Hotel Conference. “Look at the locations they’re in, the destinations they’re in, the resorts they’re in … we’re very pleased to have it in the family.”

With the 16 open resorts and the 18 under development—including the first urban one in the United States that is expected to open in New York in 2020—the brand “is truly a prize and continues to round out our luxury resort portfolio,” Maalouf said.

The effects of having such a brand in the portfolio to complement its other luxury brands—Regent Hotels & Resorts, InterContinental Hotels & Resorts and Kimpton Hotels & Restaurants—can’t be underestimated, Maalouf said.

“It’s trickle down and trickle up—it’s an overall value creation synergy,” he said. “Let’s start with a trickle up. Our owners have been with us for 60, 70 years, we have customers who stay with us from inception of their careers … and they want more luxurious experiences as they and their careers grow. So there is that ladder of prosperity, and we want people to stay with us throughout that.

“The trickle down is the benefit all of our brands receive by being associated with luxury brands that have meaning and can attract customers to the system,” he said.

The Six Senses acquisition was a highlight of a first quarter that featured the company executing on its previously stated strategy, according to Maalouf.

“Our plan, our strategy—it doesn’t change on 1 January from 31 December for any particular reason,” Maalouf said, adding that the focus remains on building and strengthening the company’s brand portfolio. “It really starts with existing brands. It’s not necessarily all about the new brands, which we talk about a lot and everybody wants to hear about.”

Maalouf called Holiday Inn and Holiday Inn Express the company’s “powerhouse brands” in the mainstream segment that continue to grow at a rapid pace.

“They’re getting stronger, not just bigger,” he said. “Last year—all in one year—not only did we reach 1,500 new Formula Blue designs for Holiday Inn Express in the Americas, plus high adoption of the (next-generation) design in Europe for Holiday Inn Express—but in the Americas we launched a new breakfast for all of our hotels, for all of our customers, full adoption of eligible hotels.”

Maalouf said that at a recent reception at the Hunter Hotel Conference, the message from Holiday Inn Express owners was clear: “They were just talking about how things were going, saying, ‘The one thing you guys got right is that breakfast.’”

The change in breakfast resulted in some owners being able to take market share from competitors, he said.

“Sometimes it’s the big things that get high visibility, but a lot of times it’s (really) about how we’re making each brand stronger through focusing on the guest experiences that make a difference in the hotel,” Maalouf said.

New all-suites brand on the way
The launch of a new all-suites brand at the company’s upcoming conference in May has been a high-profile discussion at conferences. Maalouf declined to provide details.

“Again, (it will address) another unmet customer need and an owner need,” Maalouf said. “We thought Avid was targeting about a $20-billion unmet customer need. We think (the new all-suites brand) is about an $18-billion sale—so it’s a meaningful opportunity.”

There are plenty of other elements on tap to make a big difference for existing brands in IHG’s portfolio, he added.

“We’re unveiling in May new designs for Staybridge Suites and Candlewood Suites—two brands that have performed very well year in and year out,” Maalouf said.

The CEO also lauded what he called the revitalized Crowne Plaza brand, which has had a number of high-profile renovations at flagship properties, including the property adjacent to the company’s Americas headquarters in suburban Atlanta, a hotel on 36th Street in New York City, and properties including: North Augusta, Georgia; Charlotte; and Columbus, Ohio.

Avid, a midscale brand that the company launched in September 2017,* has more than 170 deals signed, according to Maalouf. The first Avid opened in Oklahoma City in August 2018, and there are more than 30 properties under development and construction.

“It’s unlike what people have suggested that are there too many brands,” he said. “Evidently owners don’t seem to think so. It may come at the expense of others, but the process of innovation and finding unmet customer needs and unmet owner needs is what we think about.”

Growth on the upper end
IHG’s steady growth in higher-end segments has been instrumental in adding cache among consumers—and the quest isn’t over, Maalouf said.

“We’ve been saying for some time we’d like to have more in premium to luxury, we’d like to have more in resort,” he said.

The upper-end expansion began with the acquisition of Kimpton Hotels & Restaurants four years ago and continued with the 2018 acquisition of Regent Hotels & Resorts and this year’s Six Senses buy.

Kimpton was North America-centric when IHG acquired it; the brand now has 25 properties open or under development outside of North America, Maalouf said.

“These are gateway or high-attraction, resort destinations, and in great locations within those destinations,” Maalouf said. “All are either beautiful new-build hotels or fabulous renovations at the higher end of design and a boutique experience with great restaurant and bar. So all of a sudden you have a brand that has achieved and is achieving that objective of becoming truly a global boutique brand, empowering it back in the U.S. and globally. “

Maalouf said the rejuvenation of the Regent brand and the continued expansion of the InterContinental brand are high priorities for IHG.

The InterContinental brand recently opened its 200th property—a hotel in a reclaimed quarry in Shanghai in which four stories of the building are underwater, Maalouf said.

“It’s a fabulous engineering and environmental feat, to reclaim a quarry and turn it into a sustainability experience,” Maalouf said.

IHG’s expansion days are not over, according to Maalouf.

“Are there more white spaces in the future? I don’t think it is a static picture because consumer preferences and global opportunities can lead, in the future, to the identification of white spaces that aren’t either today obvious or present at a level of scale of opportunity, or that today we are prepared to address,” he said. “We might have already identified white spaces that we’re not discussing publicly, but we have a strategy in a sequence of things.

“The nice thing about this industry is that it’s not static—it’s dynamic,” he added. “What guests want, what owners are willing to do, what the global geography allows you does shift around.”

Maalouf said “mainstream” is a category that for IHG that includes midscale and upper-midscale brands. Above that sits the premium brands and above that is its luxury brands.

“I believe, and I hope that our approach has been enduring and perpetual in terms of yes, a focus on guest experience, quality of experience, satisfaction, loyalty, and not going back and forth, or owner satisfaction, owner loyalty, owner returns,” Maalouf said. “We really have two constituents that are core to our business model. The single common theme between guests or owners is the trust that we build and maintain. They’re looking for different things, but they both want trust.”

Reservations in the cloud
The ongoing rollout of IHG’s cloud-based Concerto guest-reservation system—the first phase was launched in 2018—plays an important role in building that trust, according to Maalouf.

“It was designed with a lot of owner input on how do we design, deploy a new generation of guest reservation systems to remove on-property effort to put a lot of the effort into the cloud to … increase functionality, increase usability, increase features … without increasing costs,” he said. “Now we’re working on the second phase, which is going to start to introduce guest selection features, room selection features, service selection features. That also helps hotels and owners and operators and revenue management and guest satisfaction in optimization of their inventory.”

*Correction, 5 April 2019: This story has been updated to correct the launch of IHG's Avid brand, which was in September 2017.

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