LAS VEGAS—Fresh off a system-wide relaunch of the Holiday Inn and Holiday Inn Express brands and in the middle of a Crowne Plaza repositioning, InterContinental Hotels Group took time Monday to reinforce several brand initiatives already in the works.
With so many brands in flux—Crowne Plaza is pruning its portfolio while solidifying its target consumer while Hualuxe Hotels and Resorts and Even Hotels are in the beginning stages of establishing their identities—IHG executives focused much of their attention on franchisee retention.
The lifeblood of IHG is its partners, executives said during the 2013 IHG Americas Investors and Leadership Conference, which drew a record 7,042 attendees.
“I believe that when we sign a license agreement we don’t just do a deal, we make a promise,” said IHG CEO Richard Solomons. “When I say, ‘I want you to win,’ that’s not just a statement, it’s a promise.”
“Maybe you think we’ve been talking a lot about guests’ needs and not your needs? Brands are important. We’ve been working on updating our standards and testing hallmarks,” added Kirk Kinsell, president of the Americas region for IHG. “But the only way we serve our guests is through you. We have to give equal focus to you, our owners. It really should be about what we’re doing together. Relationships work better when we work together.”
Owners association
The IHG Owners Association on Monday elected its new chairman, Bakulesh “Buggsi” Patel of BHG Hotels. Patel is the first Asian-American hotelier to chair the association, a 25-member global board that represents the interests of 3,200 IHG owners and operators.
“The Owners Association has probably never been in alignment with franchisors as much as we are today,” Patel said.
Patel outlined five priorities for the association:
- Continuing to strengthen IHG brands so they are preferred by guests and owners. “In today’s market a room is a room. To have preferred brands, you have to take care of the guest. It is our job to deliver a quality guest experience,” he said.
- Continue to strengthen the capability of GMs. “GMs need to point to their owners and say, ‘Empower me,’” Patel said.
- Work with IHG to build standards around things that really matter to the guest. “What difference does it make what kind of flowers we plant outside our hotel?” he said.
- Identify IHG’s revenue tools that make the biggest difference to the bottom line. Patel said IHG needs to lead in the digital space. Brand websites need to be cutting edge, and the Holidex central reservations system needs updated. “I’ll never understand why people don’t use (the tools), especially when we paid for most of them,” he said.
- Operate responsible businesses. “At the federal or state level, it's very important to be advocates for our business,” Patel said. “Because if you don't get engaged and communicate with your legislators, laws get passed that can hurt us.”
Brand priorities
Continuing to strengthen its relationship with franchisees, IHG will embark in 2014 on a number of initiatives that aim to drive more to the bottom lines and reduce frivolous spending.
Kinsell said there are still economic headwinds and uncertainty around the world. Hotel margins are being squeezed “by everyone and their brother—some of you think even by IHG,” he said.
“The top line isn’t growing as fast as it should,” Kinsell said. “Raising rates has been totally elusive. In the highest demand period we’ve ever seen we can’t seem to drive rate and (revenue per available room) enough. We’re going to work hard on this.”
The franchisor is working closely with the owners association to develop a new impact policy.
It has hired a chief capital markets officer to “improve the (capitalization) rates on your hotels and open up new sources of money for you,” Kinsell said.
IHG is working to simplify brand standards. Payment card industry compliance tools will launch next year. Replacing Holidex Plus is an ongoing project, “a standard that’s right around the corner,” Kinsell said.
Keith Barr, newly appointed chief commercial officer, shed some light on how the company will tweak their brand standard strategies.
“Using customer insight to set up the framework for our brands, we’ll position each brand with the right customers,” he said. “We’ll have clearer and simpler standards.”