Consider it the year of Italy for IHG Hotels & Resorts.
The hotel powerhouse behind brands like Holiday Inn Express, Kimpton, InterContinental and Six Senses opened two marquee hotels — the Six Senses Rome and the InterContinental Rome Ambasciatori Palace — in the Italian capital over the last few months. But it’s more than luxe properties that tie IHG to the Eternal City.
Elie Maalouf, who grew up in Rome, took over as the company’s new CEO at the start of July.
So, does that mean IHG’s new top brass will start changing everything to his liking? Not quite. Consider the Maalouf era as one of building on existing strengths.
This isn’t entirely early days at IHG for the company’s new chief executive. It’s Maalouf’s ninth year with the company, and he previously served as the CEO of IHG’s Americas division, where he oversaw everything from development and operations to the launch of new brands.
“I own the strategy that we have, and there’s no need for renaming everything or re-labeling everything,” Maalouf said with a laugh. “But we’re going to build on this.”
The building isn’t taking place in just one direction.
In recent year, IHG embarked on a brand-building spree that former CEO Keith Barr often likened to filling in the rungs of a ladder. Through a mix of acquisitions, organic growth and partnership, IHG’s brand lineup today ranges from all-inclusive resorts via a partnership with Iberostar to ultra-luxe hotels charging thousands of dollars per night.
While InterContinental Hotels & Resorts is IHG’s namesake high-end brand, the company brought in Regent and Six Senses to beef up its offerings in the ultra-luxury sector. Along with Six Senses Rome, IHG this year opened the Carlton Cannes, a Regent Hotel, in the south of France and the Regent Hong Kong.
Daily Newsletter
Reward your inbox with the TPG Daily newsletter
Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts
The Six Senses development pipeline is now double what it was when IHG bought the brand in 2019. Upcoming openings include Six Senses London, Six Senses Kyoto and Six Senses Svart in Norway. Regent is slated to return to the U.S. with a location in Santa Monica, California, in the next few months. This is in addition to international locations in Jakarta, Indonesia; Kyoto, Japan; and Bali, Indonesia. InterContinental doesn’t appear to be losing steam either, with more than 200 hotels open and close to 100 in development.
“It’s part of where we’ve been going with the company: not focusing less on our mainstream, everyday brands, but doing both,” Maalouf said. “Our luxury and lifestyle portfolio is really hitting a rhythm.”
IHG still knows what keeps the lights on: mainstream brands
Don’t think IHG is losing sight of its cash cow enterprise of affordable brands like Holiday Inn Express. The company also launched a new midscale brand, Garner, last month. Garner is clustered in IHG’s Essentials Collection with brands like Holiday Inn, Holiday Inn Express and Avid. There are hundreds of Holiday Inn, Holiday Inn Express, Avid and Garner hotels in various stages of development.
The driver behind Garner is a mix of guest needs and ownership opportunity: Affordable, midscale hotel brands are rapidly growing around the world because of a growing, global middle class. Further, a brand like Garner appeals to hotel owners looking to operate a lower-cost hotel at a time when the cost to build and operate any kind of property is extraordinarily high.
“Garner makes sense in any environment, given the width and breadth of the space and the needs of guests and owners,” Maalouf said.
The brand buildup isn’t stopping now that IHG is at 19, either. The company is always exploring opportunities — whatever those might be. Regent and Six Senses were acquisitive growth, while the Vignette Collection — the company’s luxury soft brand — was a brand developed in-house.
“You see that the current brands are growing, but then opportunities will come up,” Maalouf said. “Will we find other opportunities? I think we will. I can’t tell you when.”
On gaining Iberostar and losing Mr & Mrs Smith
The hotel orbit can often feel like musical chairs.
Hyatt’s partnership with MGM Resorts is ending in favor of the casino resort operator joining up with Marriott International on a new loyalty and brand partnership. But Hyatt also picked up a partnership at the expense of IHG when it bought Mr & Mrs Smith, a platform of smaller luxury and lifestyle hotels that previously showed up on IHG’s reservations system.
Maalouf downplayed the Mr & Mrs Smith deal ending. He instead pointed to the brand’s lineup of luxury and lifestyle brands — which also includes names like Kimpton and Hotel Indigo — as driving significantly more business than its former partner.
There’s plenty of upside from IHG expanding significantly into the all-inclusive resort sector with Iberostar. All-inclusive resorts are popular with leisure travelers, and they are seeing more demand each year. Given the expansion into this space by competitors like Hyatt and Marriott, it almost becomes a must-have for any hotel company and its loyalty program.
“We enjoyed our relationship and time with Mr & Mrs Smith. It was very productive, but it wasn’t a very large part of our business, frankly,” he said. “We’re always exploring other opportunities. But I would say that, net-net, when you add Iberostar Beachfront Resorts, we’re still growing our partnership portfolio significantly from last year.”
Another summer of Europe (and elsewhere) for travelers
Travel demand continued to explode this past summer. Europe felt it, particularly from U.S. travelers, who flocked to the continent following several years of travel restrictions that kept many sticking closer to home.
Airfare and hotel rates soared, and IHG clearly benefited from this like many of its competitors. Rates for hotels in the company’s Europe, Middle East and Africa regions were up 17% in June from the same time in 2019.
But Maalouf sees this not necessarily as a summer of Europe but more of a redistribution of travel demand worldwide now that restrictions have largely dropped everywhere. Hotel rates in the Americas region were still up 13% in June from 2019 levels.
“There’s been a lot of pent-up demand for that. It wasn’t just the summer of Europe. What you saw in the U.S. and all of North America and all of our markets was they were all strong,” he added. “What happened in the U.S. is some pockets saw demand shift to other parts of the country.”
Don’t expect that redistribution to dissipate next year, either. Maalouf even finds that to be a welcome relief to parts of the world that saw a surge in travel demand coming out of lockdown.
“That redistribution is healthy for the world versus the concentration that you got in the post-pandemic surge,” he said. “What happens next year? I’m hoping that people will continue to travel to all these destinations. There doesn’t seem to be any reason why they won’t.”
Related reading:
