Understanding Hotel Giant IHG

InterContinental Hotels Group, based in Denham, England, is one of the largest hotel groups in the world by number of rooms, along with competitors like Marriott and Accor. It has about 5,656 hotels globally — 842,759 rooms — mostly in the U.S. The vast majority of its hotels are franchises.

Keith Barr took over as CEO nearly two years ago, replacing former CEO Richard Solomons. He leads the company along with chief financial officer Paul Edgecliffe-Johnson and chief marketing officer Claire Bennett, plus regional CEOs for the Americas; Europe, the Middle East, and Africa; and Greater China.

There are 17 IHG brands overall, spanning from midscale to luxury. The midscale Holiday Inn Express is by far its biggest, making up nearly half of its hotels worldwide. Meanwhile InterContinental Hotels & Resorts is its largest luxury brand with a total of 204 hotels, and Crowne Plaza its largest upscale brand, with a total of 427 hotels.

For years the IHG Rewards Club was the largest in the world in terms of members — but Marriott’s surpassed it in 2018, after it merged with Starwood Preferred Guest (SPG). The program currently has over 100 million members and offers four levels, where guests can redeem points for free nights in certain hotels. It was first launched in 1946, making it the very first hotel rewards plan.

Mini History

The hospitality group has a confusing history, tracing itself back to an 18th-century British brewing company, Bass brewery, which slowly evolved into a hotel company.

In 1969 the brewery launched the Crest Hotel chain, its first step into the hotel industry, and continued to invest in hotels over the next few decades. Eventually Bass acquired Holiday Inn International from shareholders, and in 1998, it bought InterContinental hotels from a Japanese conglomerate. A couple years later, it sold its brewing business and changed its name to Six Continents.

In 2003 Six Continents split into two businesses: InterContinental Hotels Group, focused on hotels; and Mitchells & Butlers, focused on restaurants and soft drinks.

British businessman Andy Cosslett took over as one of the first CEOs of the new company, in 2005. He launched boutique hotel brand Hotel Indigo, and in 2007, he oversaw a four-year, billion dollar relaunch of the Holiday Inn and Holiday Inn Express brands.

Under Richard Solomons the company began to shift to a majority-franchise model. However by the time Solomons stepped down, the hotel group had been overtaken as the largest by number of rooms by Marriott, and Solomons was criticized for not responding quickly enough to digital trends, such as Airbnb.

The company began to give cash to investors rather than make further deals to expand the business. In June 2017 former chief commercial officer of IHG Keith Barr became CEO.

Current Biz and Challenges

Since his appointment, Barr has focused on cutting costs and investing in technology, including a new reservations system, IHG Concerto, and a new property management system. The $125 million in cost-cutting measures mainly came from layoffs.

Earlier this year, the company bought Six Senses, a wellness luxury brand, and last year bought stake in luxury hotel brand Regent Hotels, growing its footprint in the luxury market. Also under Barr, the company has launched a few new brands, including midscale brand Avid and upscale brand Voco Hotels.

But the company acknowledges that acquiring too many brands too fast could lead to brand bloat, diluting the unique character of each new acquisition or creation. IHG has a history of scaling fast, as it did with Holiday Inn Express and InterContinental.

The company is trying to keep up with competitors, such as Marriott and Accor, as well as with newer ones, such as Airbnb.

Previously Barr was CEO of the greater China region, where the company is currently trying to grow its footprint. By 2009 the company had 100 hotels in the region, growing to 200 by 2013. Now there are nearly 400 IHG hotels in China, and the company aims to keep growing in the region.

In 2016 the company suffered another data breach, leaving guest credit card information vulnerable to hackers. The hotel group said the breach only affected 12 properties, but it was soon revealed that it had expanded to at least 1,000. This caused concerns over cybersecurity at the hotel company, something it will have to continue to keep an eye on.

What’s Next?

Barr’s plan is to grow the company quickly, especially in China, and to continue to invest heavily in digital data technology.

In February, at an investor summit in Los Angeles, Barr said he wanted to grow IHG “by either launching new brands, acquiring brands, taking new brands to new markets, and also repositioning our existing brands and innovating.”

Recently IHG has focused on buying luxury brands, but it is not stopping there. In 2021, it plans to open an all-suite, upper-midscale brand, Atwell Suites.

As for technology, the company plans to expand IHG Connect from simply Wi-Fi into a complete platform that can offer a full digital guest experience. Meanwhile it’s continuing to develop IHG Concerta, its new reservation management system from Amadeus, in order to shift rates based on consumer demand, with the goal of maximizing revenue.

Along with continuing to grow in China, the group wants to expand further in other markets as well, particularly the Middle East and Vietnam.

Competitors

Marriott International
Its acquisition of Starwood Hotels in 2016 helped it become the largest hotel group worldwide by number of rooms. Plus, after merging the two loyalty plans, it has the largest rewards program as well.

Wyndham Hotels & Resorts
The second largest hotel chain in the world, even after its spin-off from Wyndham Worldwide. It has 9,000 hotels globally, spanning 20 different brands.

Hilton International
Hilton has been doing well recently, investing in new areas, like its Lyft partnership, flexible meeting spaces, and hostel-inspired brand Motto. It is similar to IHG in terms of size.

Accor
Based in France, Accor is the largest hotel group in Europe. Plus it’s been making a bunch of acquisitions recently, including Tribe in March, and plans to invest further in the co-working space.