Robert Shepherd, IHG’s chief development officer for Europe, Middle East, Africa and Asia West, has good reason to be optimistic about 2018. The company smashed its year-end expectations for 2017 and has a pipeline that is 244,000 guestrooms strong.
Ahead of the upcoming International Hotel Investment Forum, March 5-7 at the InterContinental Berlin, Shepherd discussed the top markets for development and the new hotel designs that are attracting the next generation of travelers.
1. What hospitality trends and storylines will dominate discussion at IHIF and why?
Technology remains firmly on everyone’s agenda, especially in terms of how hotel companies can find ways to enhance the guest experience and connect with consumers on an ever-more-personal level. For IHG, 2018 will be a big year in this regard as we continue to progress with the roll-out of our new guest reservation system. We’re really excited about this and I think it will truly transform the guest booking experience.
I think there will also be a lot of discussion around the evolution of brands. As part of this, we’ll be showcasing the transformation of our own Crowne Plaza brand during IHIF. Great brands move with the times and we recognize that business travel is changing, so we’ve developed innovative new guestrooms and flexible co-working lobby spaces to deliver an experience that’s design-led, tech-enabled and more relevant to the modern business traveller.
2. What are the European markets/countries that you are looking at for future development and what makes them an attractive investment?
There is huge potential in many of our markets across Europe. Germany, the UK and Ireland, France, Poland, Benelux, Spain and Italy are key areas of focus for us and we see huge growth potential in these markets.
The branded hotel market in the UK and Ireland ranks No. 1 in Europe. Over time, we have built a strong presence for each of our brands in the major cities and remain focused on building scale—putting the right brands in the right locations where we know our guests want them and we can deliver sustainable returns for owners.
In Germany, there is a long-term growth opportunity to capitalize on both domestic growth and international travel flows. We’ve already driven significant scale there, working with long-standing partners to open and sign new hotels based on guest demand. We expect to open more than 40 hotels in Germany over the next three to five years, which would increase our presence there by around 60 percent.
3. With so many brands in the marketplace, what makes them a success and are they differentiated enough in the market? Do both customers and developers understand the differences?
[We] ensure that we have clearly differentiated brand propositions that really stand for something. Each one offers service, designs and innovative solutions shaped by consumer insight and we continue to evolve our brands to ensure they remain relevant to changing guest demands. For example, the Holiday Inn brand family… is undergoing the biggest transformation in 20 years. Part of this has included introducing our Next Generation concept across our Holiday Inn Express estate in Europe. The concept is based on consumer insight, with room features such as smart TVs for guests to stream media from their own device and beds with in-built USB power sockets. This design has been value-engineered to deliver an attractive build cost for our owners and hotels with Next Generation guestrooms are also seeing improved guest satisfaction and an average [revenue-per-available-room] increase of 9 percent.
We’re also focused on broadening our portfolio, where we can identify the right opportunities. We acquired Kimpton Hotels & Restaurants in 2015. It’s a unique brand [that] for us fills the gap for those seeking a highly personal approach to boutique luxury. We’re continuing to take the Kimpton brand into new markets, having opened the first Kimpton outside of the Americas, in Amsterdam, in May 2017, and can see huge potential for Kimpton, having recently signed hotels in Southeast Asia and Greater China.
4. What are the strategies hotels are employing now to boost revenue and curb costs?
We remain very focused on driving a greater proportion of bookings through our direct channels. Key to this has been the global rollout of ‘Your Rate by IHG Rewards Club,’ which offers loyalty members access to the best prices when they book directly with IHG. The initiative has helped boost member enrollments, which is crucial given that IHG Rewards Club delivers a significant proportion of rooms revenues.
Additionally, we’re continuing to renew our focus on restaurants and bars, which has become an integral part of the business, underlined by a strategy designed to improve our dining reputation, drive guest satisfaction, grow revenue and deliver guest preference. More people eat with us than sleep with us (each year IHG hosts 37 million guests in our restaurants and bars globally) and concepts like our Open Lobby design across the Holiday Inn estate in Europe have successfully increased [food-and-beverage] revenue by an average of 20 percent.
5. What has been keeping you busy in the past year and what will you be focusing on in the year to come?
We have recently announced the integration of our Europe and AMEA regions to form EMEAA. This is an exciting change which will allow us to accelerate our growth by increasing resources dedicated to the highest-opportunity markets and segments. As part of this, we made changes to our structure that will allow us to invest more where it matters, enhance our capacity and help us to become more agile.
Personally, I’m really excited about the year ahead. I think the changes we’re making will free us up to really take advantage of the most attractive future growth opportunities, particularly in key markets like the UK and Ireland, Germany, France, Poland, Benelux, Spain and Italy as well as all the other fantastic countries right across Europe.