IHG to Roll Out New Brand with an Independent Flair

During InterContinental Hotels Group Q2 2021 earnings conference call, CEO Keith Barr explained that the company’s global RevPAR was down 43% relative to 2019. However, by March the company was beginning to see sequential monthly improvements in both occupancy and rate as vaccines were rolled out and restrictions were lifted.

“By June, it was encouraging to see rates back at 90% of 2019 levels and occupancy down only 18 percentage points,” said Paul Edgecliffe-Johnson. “This reflects the sophistication of our revenue management tools and the mix impact from our leisure and resort hotels.”

And by July, occupancy and rates improved with nearly 50% of its hotels achieving RevPAR above 2019 levels.

Like most hospitality brands, driving the recovery in Q2 2021 was domestic leisure travel, specifically U.S. resort locations which represent approximately 5% of IHG’s Americas estate. These resorts led the recovery with RevPAR 3% ahead of 2019. Additionally, nonurban locations which represent more than two-thirds of its Americas estate also strongly outperformed urban markets.

However, demand from business travelers has been “relatively resilient” over the past year and in the last quarter has started to accelerate as corporate demand and group meetings start to return, Edgecliffe-Johnson noted.

Guest Satisfaction Remains High

The company said it consistently challenges itself to operate with insight and make informed decisions so it can create tailored services and solutions that increase demand, strengthen guest preference and deliver strong owner returns.

In particular, Barr said that IHG has broadened its appeal of its IHG Rewards loyalty program and has supported the return of business travel with tailored campaigns and enhancements to its meetings and events offer. According to Barr, it seems to be working.

“During the first half, […] our guest satisfaction index [was] net positive throughout the period, ahead of our competitors,” he said.

IHG Invests in Tech

For some time, IHG has highlighted its tech investments including IHG Concerto, its guest reservation system, its loyalty program and more. The company did this specifically so it could have a “digital advantage,” Barr noted and so it can drive direct bookings to its hotels, create rich, integrated digital experiences for guests, and deliver revenue-enhancing propositions to owners.

“Our investments in our cloud-based technology platform, IHG Concerto, has allowed us to rapidly deploy technological developments to support a safe and secure guest experience and reduce unnecessary contact,” he added. “[For example,] contactless check-in is receiving strong guest feedback and is already live in 3,000 hotels in the U.S. and Canada.”

With IHG Concerto, the company can develop and roll out performance-enhancing tools faster and easier than ever before. And the company is currently working on rolling out attribute based pricing to enable the “curated merchandising of rooms and selection of add-ons for fully tailored stays. There's a huge lift this year to catalog the inventory of nearly 6,000 hotels and almost 900,000 rooms, but we're working towards having a truly differentiated offer,” Barr said.

New Brand Coming Soon

Barr also discussed how IHG will be rolling out a new brand in the next few weeks. While Barr wouldn’t share much about the brand itself, what he did reveal was interesting. First, it will offer a different price point to its upscale conversion brand voco. The company plans for it to have more than 100 properties in the next decade. And it seems to be targeting independent and boutique hotels. Barr explained that the independent market is worth $100 billion and has 1.5 million rooms, but “with independent hotels having seen significant trading pressures, owners are increasingly looking to access the scale benefit of branded systems and their marketing, loyalty and technology platforms.”

According to Barr, owners of high-quality independent hotels that join this new brand will be able to do so with limited capital outlay and with the retention of their hotel's distinctive identity and character. However, they will gain access to IHG’s revenue delivery systems, distribution channels, loyalty program and will be fully supported by dedicated luxury operations, marketing, sales and reservation teams.

IHG is also hoping this new brand will fulfill changing guest expectations. Guests – especially Millennials and Gen Z -- desire distinct experiences and unique services but also want trust and assurance of a big brand, and a big loyalty program.

“We’ll be able to meet all of those demands,” Barr said.