IHG SVP of development on Voco’s US momentum
 
IHG SVP of development on Voco’s US momentum
29 SEPTEMBER 2020 7:49 AM

Julienne Smith, IHG’s SVP of development, Americas, said the Voco brand, which was conceptualized in the U.K. and launched in 2018, is getting its first locations in the U.S. by Q1 of 2021 and lends itself to more opportunities in several markets, including college towns and airport locations. 

ATLANTA—InterContinental Hotels Group’s Julienne Smith, SVP of development, Americas, said the company’s upscale conversion brand Voco is seeing momentum, with its first three U.S. locations on the way.

Voco was first launched in 2018 outside of the U.S., with the 388-room Watermark Hotel & Spa Gold Coast in Surfers Paradise, Australia. The initial rollout of the brand was concentrated in the Europe, Middle East, Asia and Africa regions, then planned to focus on the Americas and Greater China.

In a recent media briefing, Smith said Voco’s first planned locations in the U.S. include the 50-room Franklin Hotel in New York City, the 50-room Historic St. Augustine in Florida and 64-room The Tiger Hotel in Columbia, Missouri. Smith said all three locations are set to open by the first quarter of 2021.

Smith said the decision to bring Voco to the Americas now is because IHG saw an open space in its overall portfolio where this “soft brand with hard elements could fit.”

“We’re thrilled to have this momentum and commitment from our franchise partners,” she said.

Each of the three U.S. locations will be through different franchise partners, Smith said. The owners of Franklin Hotel are Andrew Weiss and Stephen Weiss Jr., of Flintlock Construction, and will be managed by Aimbridge Hospitality; The Tiger Hotel is owned by Glyn Laverick of Columbia Hotel Investments; and Axis Income Fund owns the Historic St. Augustine.

She said the location for each new property is strategic in terms of relationships and being in tune with where its franchise partners, or prospective ones, already have assets.

“Each one came about differently; the Tiger Hotel was an opportunity that was uncovered by one of our development representatives,” Smith said.

The Voco development team has relationships in the markets, they know who is building and who owns, they understand market dynamics, and they are able to bring certain deal terms to the table that might be attractive to the franchisee, she said.

Smith said Voco has significant opportunity to convert heritage, urban, destination and suburban properties, and was developed to appeal to owners of existing high-quality hotels that compete or can be modified to compete in the upscale, soft-brand segment. Though most of its opportunities will be conversion, Smith said new-build and adaptive-reuse are also options.

Converting a hotel that is new, or like new, may not require a significant property-improvement plan, which reduces the conversion cost, she said.

The brand offers owners a more flexible approach to brand standards, she added, as well as lower capital outlay compared to other brands.

Pipeline
Voco currently has 12 hotels open in the U.K., Smith said. There are also 28 new hotels in the development pipeline, which will take the brand into 19 countries over the span of five years, according to a news release.

Of the current hotels, 80% are conversions, she said. About two-thirds of the hotels in the development pipeline are conversions.

Smith said her partners in Europe, The Middle East, Africa and Greater China are finding opportunities to build new.

In the current lending environment, she said there is some capital available for existing assets, but not a lot available for new development, “particularly if that capital wasn’t already in place pre-COVID. But we do see opportunity.”

Smith said there’s several lenders who are looking to invest in existing properties to either rebrand or renovate.

Voco’s target was to hit 200 properties by 2028, which Smith said is still the global messaging, but she feels it’s more about finding as many opportunities that make sense in viable markets.

“Not to be coy, certainly that is what our global headquarters is saying on our earnings calls, that’s the number they’d like to hit,” Smith said. “Here in the Americas, we’ve got an open road. We’ve got college markets that make sense. We’ve got urban markets where we could have several. … The opportunity to grow is pretty exponential.”

Ultimately, if there’s an upscale rate to be paid in a market and there’s an asset that’s convertible, “then we should have a Voco there,” she added.

Challenges in signing new deals
Smith said many of the conversations for deals were already in place before the pandemic, and the challenge now is many “of our hoteliers are focused on keeping their portfolio above water.”

Not everyone is focused on pipeline, she said. Post-COVID-19 for some hoteliers will be about keeping their existing hotels economically healthy.

“Across the industry, we have less resources to plug into; it’s no secret that probably six weeks ago we did reduce our staff by 10%,” Smith said. “We just a couple weeks ago welcomed back a number of employees that were on furlough, so to get hotels (through PIPs), through our committee process, through our negotiations with less people is a challenge. I know our competitors are facing the same (issue).”

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