IHG shares first details about new midscale brand

The new brand will have four key aspects to help differentiate itself from IHG’s existing products.

InterContinental Hotels Group revealed the first details about its secretive new midscale hotel brand. Elie Maalouf, CEO, The Americas at IHG, hinted at the brand during the NYU Hospitality Conference earlier this month, suggesting that it would have a focus on technology, rates would be roughly $10 to $15 cheaper than those at a Holiday Inn Express and it would target a segment of travelers “where demands aren’t currently being met.”

Heather Balsley

The reveal was headed by Heather Balsley, SVP, Americas brands and marketing at IHG, who offered little with regards to a name or logo for this new brand but elaborated that it will target a customer segment worth $20 billion in annual industry revenue, a segment that Balsley said is currently not being served.

With so many brands active today, what segment of guests could possibly be underserved? Balsley called it IHG’s “next power brand” because it will serve travelers who often spend hours researching their stay before making a booking, and are looking for the basics in hospitality but “done exceptionally well.”

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“These are practical, self-reliant guests who take pride in being frugal,” Balsley said during the announcement. “They have to accept lower standards or an inconsistent experience, or pay more. Because of this, they compromise to get what they need. [With this brand], we will change all of that.”

Balsley said the new brand will have four key aspects to help differentiate itself from IHG’s existing products:

  • Rooms designed for sound sleep: Balsley said guest research showed travelers are looking for reliable rest above all else. IHG’s new brand will have high-quality mattresses and construction that will reduce noise. Guestrooms will be a mix of 220-square-foot king and 275-square-foot queen rooms, and will include a built-in work space, open closet storage, a shower and a smart TV.
  • Inviting public spaces: The new brand will target travelers who want to spend 30-45 minutes working  or socializing in the lobby, and the brand will also include a pool and porte cohere based on the market.
  • Modern technology: For the back of house, the brand will employ a modern, cloud-based reservation system that allows for mobile check-in and check-out as well as fast Wi-Fi. In the guestrooms, travelers will be able to cast their own content to the TV through the use of smart devices.
  • “No-nonsense” breakfast: A grab-and-go breakfast setup will be in place, with space for guests to sit and eat if they choose. This will be offered in addition to a marketplace selling food, beverages and personal items.

“This new brand builds on IHG’s leading position in the midscale segment alongside Holiday Inn and Holiday Inn Express,” Richard Solomons, CEO of IHG, said in a release. “It addresses the needs of a rapidly growing and underserved segment and we believe it will shape the future of this unique midscale category. This launch will extend our track record of innovation and brand development, with a new offering that is right for our guests, our owners and our shareholders.”

Hotels in this new brand will be built on an average lot size of roughly 1.5 acres. The existing prototype design of the properties consists of 95 to 100 keys with a minimum of three stories. These hotels can be built for roughly $85,000 to $90,000 per key, which is 15 percent less than Holiday Inn Express properties. The royalty fee will be 5 percent.

The lack of a name or logo is telling as to how early IHG is in the process of rolling this brand out, but activity is expected to rapidly progress from here.

“We will be introducing a name in the coming months, and additional information on key elements is to come,” Balsley said. “We have more details to reveal around key elements of the brand, its square footage and total cost-per-key on our development sites, for example.”

Balsley said IHG expects the brand to be franchise ready by fall 2017, with the first hotels in its portfolio beginning construction by early 2018 and the first one opening in 2019. Development will begin in the U.S. before expanding internationally.

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The company expects to open more than 30 new Comfort properties in the market by 2033 via its existing franchising agreement with Choice Hotels Japan.

While consolidated revenue for the quarter was up 10.9 percent as reported, it was up 4.1 percent on a like-for-like basis compared to Q3 2018.

Sam Schwartz has spent more than four years with First Hospitality, including most recently as a general manager.