LOS ANGELES, California—The youngest brand in IHG’s portfolio, Hotel Indigo, is leaving its North America nest, bound for the United Kingdom and Costa Rica.
The brand currently has 19 properties open with 2,445 rooms. There are about 60 projects in the pipeline, as of 12 August. Its first European property, to be located in London’s Paddington area in Westminster, is due to open this year with 64 rooms. The owner and operator is London Town Hotels Ltd.
London was a natural extension for Hotel Indigo, with IHG’s headquarters around the corner, said Jim Anhut, senior VP, franchise development, the Americas, who spoke with Hotel News Now at the IHG 2008 Americas Investors & Leadership Conference in late September.
Every move is carefully calculated at IHG, he added.
“We didn’t say we have a franchisee that’s interested and they are pulling us into a market,” Anhut said. “Hotel Indigo did a fair amount of research—its genesis was a research project that started in 2002, we launched in 2004, and the strategy to go global was hatched in ’05 and ’06. We did a fair amount of research in ’06 and ’07 on where we could go and we determined that plenty of the markets that aligned with (IHG’s) bigger distribution strategy were directly aligned with (Hotel Indigo).”
Therefore, the growth strategy outside of U.S. is to target key gateway cities, Anhut said.
“You connect all those dots and then that gives you the confidence outside of the region, and then you’ve got the backbone and the support of this company in those regions.”
Anhut said the brand will do well in the “big five” markets: U.S., China, Japan, U.K. and Germany.
The brand also has migrated from upper midscale to the upscale/upper-upscale segment, according to Anhut.
Moving up
“Had that not have happened we might not be as excited about doing things outside of the United States as we are today.”
That positioning is not uncommon for boutique hotel operators.
“That’s not unlike other boutique hotel operators who have distributed more widely (in the U.S.),” Anhut said. “The customer is willing to pay for that experience, they see value in that experience so they’re willing to pay extra for it. “
Outside of the U.S. developers have clients that are interested in doing business with IHG at an upscale or upper-upscale price point, he said.
And the competitors for Hotel Indigo are mostly independent boutique hotels. In the U.K. there are a few smaller chains, such as Malmaison and Firmdale Hotels, that have compelling products, according to Anhut.
But the service aspect helps to distinguish Hotel Indigo—IHG hired and retained Chip Conley and his Joie de Vivre Hospitality boutique hotel company for one year in 2004 to help establish the Invite Inspiration service culture.
“(Conley) is a really generous guy,” Anhut said. “He’s like Vince Lombardi, who said, ‘I’ll give you my playbook, but I’m going to out execute you.’ Chip has that same attitude.”
Anhut said Conley was pretty aggressive in approaching IHG, because he thought this company should do something in the boutique space.
Accepting imitations
Recent “lifestyle” brand launches have validated Hotel Indigo’s positioning, Anhut said.
“What they can’t copy is the connection with IHG and the infrastructure, and where we’ve gone with the design platform,” he said. “The bigger companies are starting to come out with so-called lifestyle brands—they’re interesting, but cookie-cutter.
Another project that was announced at the conference was The Hotel Indigo in San Jose, Costa Rica, which will open in spring 2009.
Anhut said there is also a project in the works for Berlin, Germany.
“You’re always tweaking at the edges for a brand launch, and so now those edges are totally rounded off. We’re confident and comfortable with where we are, the brand’s positioning and its potential.”