IHG launches new Avid brand to attract midscale travelers, developers

Amid a rush of new-brand announcements at the NYU Hospitality Investment Conference in June, IHG announced that it would be launching a new midscale brand, but declined to share many details or even a name for the new concept.

Today, IHG is pulling back the curtain on Avid, which Elie Maalouf, CEO of the Americas for IHG, is calling a “natural progression” from the company’s Holiday Inn and Holiday Inn Express brands.

Midscale Demand

With the extended-stay Candlewood Suites as the only midscale brand in the company’s portfolio, IHG was not addressing the needs of an estimated 14 million travelers who could spend about $20 billion in roomnight revenue. “We were not addressing the vast majority of the midscale travel,” he said.

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

IHG consulted with its guests in focus groups and interviews and meetings to understand what their needs were. “We call these travelers the ‘principled everyday travelers,’” he said. “They're self-reliant and practical, they know the value of the hard-earned dollar and even when they have a little extra money they take pride in being frugal and not spending it on things they don't need or want.”

Designing Something New

The Avid prototype’s lobby has an open and airy retail-like entry, according to Maalouf, with large windows for maximum light. Open multipurpose areas can be used for breakfast or work, while a marketplace provides necessary supplies. “That's what our guests told us that they wanted in the building,” Maalouf said. Following guest research, the guestrooms have sound-reducing elements and open storage spaces, and the bathrooms have bright lighting and walk-in showers. “And then there are things that they're not willing to pay for or don't need, like all the extra space,” he said. “So our king-sized guestroom is 222 square feet and our double queen is 275—both about 100 feet less than Holiday Inn Express currently.”

IHG consulted with its advisory board to develop the new design and solicited feedback to make sure the prototype appealed to guests and owners alike. “This is very important for us because we want their input to create a hotel that's not just appealing to guests but also appealing to owners [and] drives the right returns for them, the right [return on investment],” Maalouf said. “A lot of the design is derived from what they said. We didn't just do multiple focus groups. We really sat and took them through our initial designs, walked them through our prototype, walked them through our build in our Design Center and got their feedback on specific features.”

The company also asked the focus groups about where they stay when they travel for different purposes, and what leaves them unsatisfied in their hotels. Most importantly, Maalouf said, they asked the group what they are willing to pay for and what they don’t care about in both guestrooms and public spaces. As a result, the hotels have no swimming pools or meeting rooms, but emphasize the communal spaces in the lobbies. 

“And so we end up with a new-build construction product that can fit on an acre-and-a-half—which is about an acre or less than what most hotels in the segment require,” Maalouf said. “We’re opening up new markets and reducing the cost for owners [with] sustainable construction design and a prototype somewhere between 95 and 100 keys and a minimum of three stories.”  

The design evokes other brands in the sector, like Hilton's new Tru brand, which also has open spaces for storage, and La Quinta's Del Sol prototype, which has a similar exterior, albeit with different colors. These hotels, like Avid, also improve room revenue with smaller room sizes, made possible by mounting TVs on the wall and eliminating the traditional chest of drawers.  

The appeal of smaller guestroom sizes is understandable, especially in urban markets. In cities, land cost in relation to room rate is quite high, Michael Suomi, principal and interior director of design at Stonehill & Taylor, told HOTEL MANAGEMENT earlier this year. But by shrinking a room’s square footage by 30 percent to 50 percent, a hotel can add 30 percent to 50 percent more rooms to the overall count, and make 30 percent to 50 percent more each night. “The math works out well for big cities,” he said. 

Planning Avid’s Growth

IHG expects that the cost to build an Avid hotel will be 10 percent to 15 percent less expensive than building a Holiday Inn Express hotel, and will be $10 to $15 less per night in terms of guest rate.

“We expect the first construction to start in early 2018 and the first hotel opened in 2019,” Maalouf said. “More than 150 owners have already expressed interest in the brand.” For now, the company will be launching the brand domestically, but could expand into other markets down the line.

Avid Hotels are franchise-ready beginning today, Maalouf said, officially marking the start of licensing in the U.S. Key elements of the initial owner offer include a 5-percent royalty fee, and the first 100 signed license agreements will be eligible for a 2-percent fee discount in the first year and a 1-percent fee discount in the second.