IHG expects Avid to fill gap for developers, guests
 
IHG expects Avid to fill gap for developers, guests
15 NOVEMBER 2017 9:32 AM

Executives of Avid Hotels, the value-engineered new brand from InterContinental Hotels Group, expect experienced owner-operators to understand the need to provide quality stays for everyday travelers.

PHOENIX—Leaders of InterContinental Hotels Group’s newest brand are looking for a specific kind of owner as they prepare to get it off the ground.

The brand, Avid Hotels, was officially launched in September. With construction expected to start in early 2018, and the first property expected to open in early 2019, executives Jennifer Gribble and Chris Drazba said during the recent Lodging Conference they are looking for owner-operators who understand what everyday travelers are looking for in a value-oriented hotel.

Drazba, IHG’s VP of core brands and Mexico development for the Americas, said the ideal Avid owner is invested in the vision of select-service assets.

“An owner that has truly bought into the transient limited-service space,” he said. “One that understands the need to include free breakfast but doesn’t necessarily want a full F&B operations. It’s not a brand where we seek third-party management arrangements.”

Gribble, VP of Holiday Inn Express and Avid Hotels, said Avid is strictly a new-build brand and the company is searching for owners that have experience building and developing properties because they’ll understand the value engineering that went into its development.

IHG officials met with seven hotel owners in its system at the beginning of 2017 to nail down details of Avid, she said.

“We wanted to get brand right for consumers and owners,” she said. “It’s been helpful—particularly when you get to prototype design. We got offered suggestions on how to improve it, but overall they were really enthusiastic about the overall design.”

Filling a gap
The brand was created to fill the gap between economy and midscale segments. Avid’s targeted average daily rate is $10 to $15 less than Holiday Inn Express, the executives said. Development costs are between $85,000 and $90,000 per room, excluding land fees.

Key elements of the initial owner offer include a 5% royalty fee and the first 100 signed license agreements will be eligible for a 2% fee discount in the first year and a 1% fee discount in the second.

“We’ve had a lot of owners raring to go,” Drazba said.

The prototype has 95 rooms—52% of which are standard kings that measure 221 square feet. The other 48% are double queens that measure 275 square feet. The prototype sits on 1.6 acres, according to Drazba.

Avid has an urban footprint ready for developers who want to pursue that model, and brand executives have talked with some developers that have suggested dual-branding Avid with IHG’s Staybridge Suites brand might make sense, Drazba said.

“We don’t have a number for a goal, but we do believe it can be a large-scale player,” Gribble said. “It’s going to be enduring for everyday travel … people want better design, they want a better bed. They’re willing to give up square footage for ‘better.’”

The company started the brand’s development process by building model rooms out of foam core board and had owners and consumers walk through them at separate times to provide feedback. Then, they graduated to plywood and later constructed full-model rooms in the company’s Atlanta design studio.

“We had such great clarity on what we were going to deliver for the brand,” Gribble said. “We didn’t have anything surface that really surprised us. Value engineering has been a big part of it.”

Creating an environment conducive to sleep was an essential ingredient in the brand’s DNA, she said. In addition, built-in storage options and a functional desk in the guestrooms were important.

“Developers like that we’re delivering on the basics,” Gribble said.

Value engineering was a focus
Drazba said the first meeting with the owners produced an important agreement: Do not violate the economic model, including the cost per key to build.

“In the context of building a brand, you can have scope creep,” Drazba said. “We’ve had many rounds of value engineering for this brand to keep the model where it’s at in terms of cost.”

One of the primary value-engineering stages concerned the heating, venting and air-conditioning units, he said.

“We had gone through many types of A/C options for these hotels,” he said. “We focused on the consumer and owner sides and considered we were aiming for a sleep-oriented, quiet room.”

They decided to go with PTAC units.

Another example of value engineering is that the brand reduced the size of the windows in the fitness center, Gribble said. The smaller window saves money while still allowing guests a view outside while they work out.

“We knew this brand had to make money for owners, but we wanted to make sure we didn’t overdesign it and miss the mark,” Drazba said.

The exterior of the building has a retail corner storefront the ground floor.

“We think it’s fresh,” Drazba said, adding that developers agree. “They thought it was a very attractive-looking product. They like the curb appeal of this hotel.”

Pools and porte cochêres are optional for the prototype based on the developer’s needs, he said.

Another unique aspect of the building is that the interior stairs are in front and are an accented feature in the elevation, the executives said.

“What I heard so many times from consumers is that today in this category, design and quality aren’t there, and in other aspects of their lives they come to expect good, affordable design,” Gribble said.

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