At the International Hotel Investment Forum (IHIF), now only days away, Richard Solomons, the CEO of InterContinental Hotels Group, will be prominently featured on day 1, sharing the stage with fellow Brit Alison Brittain, the CEO of Whitbread. The two will be part of "20/20 Vision: Looking Back 20 Years, Looking Forward 20 Years."
Solomons, whom we profiled back in 2015, has been at the helm of IHG since 2011, and in this exclusive interview, he shares his thoughts for 2017, why technology is always top of mind for IHG, the company's development and brand strategy for the year and why he keeps coming back to IHIF.
1. 2016 had so many storylines within the hotel industry. In your estimations, what was the biggest of them and how or will it carry over into 2017?
Loyalty and direct-booking initiatives were significant themes in 2016 and that included our global launch of Your Rate by IHG Rewards Club. This was an important step for IHG and allows us to provide our most loyal guests with access to exclusive, preferential rates when they book direct. This will continue to be a big focus for us in the coming year.
Technology was another important theme. It helps hotel companies connect with guests on a more personal level. The ‘always-on’ environment has also made consumers uncompromising. This is a theme we looked closely at in our 2017 Trends Report. It challenges brands to address conflicting customer needs in the ‘Age of I’, where consumers increasingly demand inclusivity and individuality at the same time.
2. Cross-border investment, particularly Asian capital, was a theme of 2016 and one that doesn’t seem to be curbing anytime soon. The majority owner of your recently opened InterContinental Barclay in New York, for instance, is a Middle East-based group. What will foreign direct investment look like in 2017? What regions and segments will it target?
We build long-term and trusted relationships with owners, who are looking to invest in compelling brands that are constantly innovating. The number of owners we work with across multiple territories and multiple brands is testament to our compelling owner proposition. We see this cross-border investment in hotels across all regions, including here in Europe. Take, for example, Crowne Plaza London and The City and Crowne Plaza Edinburgh-Royal Terrace, which are both owned by a Dubai-based investor. Another example outside Europe is Greenland USA (a subsidiary of Shanghai-based Greenland Group), which currently owns eight IHG-branded hotels in Greater China and who are set to open our first Hotel Indigo property in Los Angeles, this year.
3. Europe had a volatile year: the Brexit, referendum in Italy and terror attacks, the latest in Berlin. With your operations based in the UK, you have a primary vantage point of things. How would you describe the hotel operating environment in Europe and how have these political and social issues impacted it?
As a global business with nearly 5,200 hotels in almost 100 countries, we are very used to managing through change and uncertainty. Despite the economic and political uncertainty that we saw in Europe last year, we continue to be optimistic about the growth opportunities for branded hotels across the region. Last year, for example, we reached an important milestone in Germany because of our well-defined and well-executed strategy. We now have over 100 hotels open or in the pipeline in the country, and many of these deals are part of Multiple Development Agreements (MDA) with our owners. Germany is an example of how we stay focused on business for the long-term and our experience shows that the hospitality industry is very resilient.
4. The hospitality industry operates in this mutable globally connected world—constantly disrupted with the likes of OTAs, home-sharing and whimsical customers. Taking all that in, how has it all fundamentally changed the business of hotels and, further, what does the hotel or brand of the future look like?
Guests travel for all sorts of reasons and have a variety of different needs and occasions that they travel for. This has always been the case; it’s a not a new phenomenon. It is our guests that drive change in our industry, rather than new business models. It’s why the accommodation landscape is so diverse and why the industry continues to grow. We’re focused on constantly evolving our brands to make sure they stay relevant and reflect the changing needs of our guests. At IHIF this year, we’re showcasing how we’ve done that with Holiday Inn Express. From the guestrooms to the public spaces, we’re changing how people interact with the hotel.
Boutique is another exciting part of the industry; it’s the fastest-growing segment and we can see that here in Europe and around the world. Hotel Indigo has had significant growth in this region, both in mature markets such as the UK and emerging markets like Eastern Europe. Kimpton Hotels & Restaurants, the boutique brand we acquired in 2015, will also have its international debut here in Europe. The first hotel to open outside of the Americas will be in Amsterdam, followed by Paris.
5. What are IHG’s fundamental goals for 2017 and what are the steps you’ll be taking to achieve them?
We will continue to execute our strategy of delivering high-quality, sustainable growth and driving scale in our priority markets. In Europe, the Holiday Inn brand family remains our engine for growth and the combined development pipeline for our Holiday Inn and Holiday Inn Express brands in the region stands at nearly 100 hotels. We will also open our first Kimpton hotel in Europe and will continue to expand the footprint of our other boutique brand, Hotel Indigo. We’ll maintain our focus on driving revenue through digital and loyalty, as well as offering guests the best price when they book direct with IHG. This is all underpinned by investment in relevant technology, which includes our new cloud-based Global Reservation System (GRS). GRS is a transformational project and we are on track to begin its rollout later this year. It will sit at the heart of our business and offer guests a more personalised experience, allowing far greater flexibility in how we manage and sell rooms.
6. Why do you come to a large hospitality investment-focused conference like IHIF, what do you look to walk away with?
Events such as IHIF play an important role in bringing people together to discuss the key developments across our industry and opportunities for future growth. Everyone has a different perspective and it’s always great to spend time with people who are equally passionate about our industry. I particularly enjoy conversation around innovation and brand development, hearing about how different companies are adapting to guests’ needs, and the integral role technology can play in this.