Andy Cosslett has served as chief executive of InterContinental Hotels Group since 2005. This morning he resigned after he “closed a chapter” in the company’s history.
INTERNATIONAL REPORT—The chief executive of InterContinental Hotels Group resigned this morning effective 30 June, to be succeeded by the CFO.
Andy Cosslett, who joined IHG in February 2005 from Cadbury Schweppes, said it’s the right time to step down in terms of the position of the company, because it has “closed a chapter” after the Holiday Inn relaunch. His successor, Richard Solomons, 49, will leave his role as CFO and director of commercial development to become CEO on 1 July. He has been with the company since 1992.
David Webster, chairman of the board, said Solomons was the board’s first choice. “We had no hesitation in deciding that Richard is the right successor,” he said during a conference call today. “Richard and Andy have worked closely during the past six years … This is ensuring continuity in our management and our strategy.”
Cosslett, 55, said he has been considering his situation for quite a while: “I’m into my seventh year, but it does feel like the right time to hand over the reins. ... The business is in great shape, and that really helps my exit.”
While Cosslett said he will not receive any departure bonus, he recently received sizeable performance bonuses.
Cosslett received 34,894 shares based on IHG’s annual bonus plan for 2007 performance, according to an SEC filing on 11 March; he received 51,005 shares on 21 February from the company’s long-term compensation plan; and he received another 91,691 shares on 17 February.
Solomons received 11,346 shares in March and 90,602 in February.
Cosslett said Solomons has been at the heart of the business since IHG became an independent company in 2003 (formerly Six Continents PLC). Solomons said little on the conference call, but noted that he is “delighted to be given the opportunity.”
Solomons briefly held an operations role when he served as interim president of the Americas for IHG for nine months after the death of Stevan Porter in 2008.
Bill DeForrest, CEO of Lane Hospitality and chairman of IAHI, the IHG ownership group, is in London meeting with IHG on other matters and said he was fortunate to hear the announcement directly from Cosslett.
DeForrest said the decision came as a surprise but is one the IAHI will respect and understand.
“He’s been an incredible partner and leader, and it’s the best thing for him,” he said.
DeForrest said he is “100% confident” that Cosslett is indeed stepping down for the reasons he gave and that “you’re not going to read next week that he’s accepted another job.”
“Of all the qualities I admire about Andy, first is that I can trust him,” DeForrest said. “He has a lot of important goals for his life that he wants to accomplish. He feels he needs to have the ability to take some time to reflect on what he wants to do next.”
Analyst reaction was subdued.
In a research note, David Loeb, senior research analyst for R.W. Baird, said the company is maintaining its “outperform” rating and US$27 price target following Cosslett’s resignation.
“No shift in strategy is signaled by the CEO departure, in our view,” the note said. “Cosslett appears to be going out on top after accomplishing all of his goals, most notably, completing the Holiday Inn refresh. A full internal/external search was conducted; Solomons was the board's first choice.”
Loeb said Cosslett will not receive an exit package; he will only retain shares accrued during his tenure. IHG remains R.W. Baird’s “top hotel brand pick.”
Nigel Parson, analyst at Evolution Securities PLC, said in an investors’ note, “The market will be disappointed at Cosslett’s departure, but he has a good sense of timing and is probably sick of living in an airplane or hotel room.” IHG received a “neutral” rating from Evolution Securities.
At press time, IHG shares on the NYSE were down 2.97%, according to Reuters. IHG snapshot
Cosslett made his most recent public appearance last week at the International Hotel Investment Forum in Berlin, where he discussed top issues the hotels industry faces moving forward.
Cosslett pointed to outbound travel from large countries like China as a key driver in global hotel growth. He said IHG is in the process of getting ready to receive the emerging Chinese travel market.
“Being the No. 1 brand in China helps us,” he said. “The Chinese look to Holiday Inn as a Chinese brand, so when they travel overseas they feel at home.”
He said despite fears of US$200 per barrel oil prices, people simply won’t give up traveling.
“They may make different decisions on how they’ll spend their money,” he said, “but there are a few things we won’t give up—and travel is one of them.”
Also, IHG is looking to add up to two new brands to its portfolio within the next year, either through acquisition or in-house development, Americas president Jim Abrahamson told HotelNewsNow.com during the Hunter Hotel Investment Conference last week.
In the Americas, the United Kingdom-based company is eyeing a new brand in the midscale segment. IHG also is targeting an upper-upscale or luxury brand to meet the growing demand in China.
“We like brands. We want to grow our brand portfolio. We’ve got capital to invest,” Abrahamson said.