Two years after announcing its Voco brand, IHG has 12 properties flying the flag worldwide with a further 28 in the pipeline—including the brand’s debut in the U.S.
While the company had planned to launch Voco in the Americas at both the Hunter Hotel Investment conference and the NYU International Hospitality Industry Investment Conference, the COVID-19 pandemic made a soft launch a logical alternative, said Julienne Smith, SVP of development at parent company IHG.
The company has three signed franchise agreements for U.S. Voco hotels, Smith said—all conversions, playing up to the brand’s focus on quick rebranding opportunities. “The first is a 50-room heritage—or historic—hotel called the Franklin Hotel located in the Upper East Side of Manhattan. The next is a 50-room hotel, and only 3 years old, located in St. Augustine, [Fla.]. And finally, the Tiger Hotel, which is another historic hotel based right outside of Mizzou, University of Missouri, and this one is 64 rooms.” All three of these hotels will be open by the first quarter of next year, Smith said, noting that one might open a little sooner.
The deals were signed with three separate franchise partners. Voco The Franklin Hotel in New York City will be developed with Flintlock, a company that has collaborated with IHG on other Manhattan properties. Aimbridge Hospitality will operate the Voco The Tiger Hotel in Missouri, while owner Glyn Laverick will keep his position as the hotel’s CEO. The owner of the St. Augustine property is Axis Income Fund.
New Brand, New Opportunities
While IHG has a strategy on where it wants Voco to grow, the company also is looking to established relationships to get the brand off the ground in new markets. “[We’re] in tune with our franchise partners—or prospective franchise partners—on where they have assets,” Smith said. “So each one came about differently. The Tiger Hotel was an opportunity that was uncovered by one of our development representatives. Flintlock in New York is a long-term relationship. So is the opportunity in Florida.”
Smith credited IHG’s development team for getting these projects signed: “They've got the relationships in the market. They know who's building and who owns; they understand market dynamics, where we want to build our hotels and where markets might be shifting; and then they are able to bring certain deal terms to the table that might be attractive to the franchisee.”
While the pandemic has created hurdles to developing new properties, Smith said lenders do have capital available for conversions. “We're not seeing a ton of capital available for new development, particularly if that capital wasn't already in place pre-COVID, but we do see opportunity,” she said. “There's a number of lenders—Stonehill through Peachtree [Hotel Group], Access Point Financial, PMZ—they're all looking to invest in existing properties [that are] either rebranding or renovating. So there is some capital in certain segments, and the right markets, of course.”
Many of the Voco conversations were already in place pre-COVID, Smith added. “The challenge, post-COVID, is many of our hoteliers are focused on keeping their portfolio above water,” she said. “So there's distraction. Not everyone is focused on the pipeline. They're focused on keeping their existing estate afloat, which is a challenge given the current travel environment.” The economic and travel downturns also mean that hotel companies worldwide have fewer resources to plug into. “It's no secret that probably six weeks ago or so, we did reduce our staff by 10 percent,” Smith acknowledged, adding that the company also brought back some furloughed team members a few weeks back. “So to get [property improvement plans] through our committee process, through the negotiations with less people is a challenge.”
IHG had previously aimed for 200 Voco properties to be open in the Americas by 2028, and Smith wouldn’t say if that number was still a realistic target. “We've got an open road,” she said. “We've got college markets that make sense like the Tiger. We've got urban markets where we can have several [properties]. Our first Voco in New York is a 50-room hotel. We could have 20 of those throughout Manhattan if they were that small. So the opportunity to grow is pretty exponential.” The company is looking at airport and suburban opportunities, Smith added. “If there's an upscale rate to be paid in a market, and there's an asset that's convertible or buildable, if there's a story when we get into a better development environment, then we should have a Voco there. So I like to use that as my North Star: Let's do as many deals that make sense with the right developers in the right markets.”