IHG Hotels and Resorts is looking to attract a larger number of independent hotels onto its platform with the launch of a new luxury lifestyle collection brand.
The company, like many in its comp set, has seen the growing trend for conversions in the wake of the COVID-19 pandemic and wants to grow its share of the market.
The new brand will join the Six Senses, Regent and InterContinental brands in the luxury segment, along with Kimpton and Hotel Indigo at the upper-upscale end of its portfolio, above existing upscale conversion brand Voco.
“Owners that join IHG's new collection brand will gain access to our world class revenue delivery systems, technology platforms, loyalty offering, operational expertise and procurement savings, without high upfront costs or any compromise on their hotel's distinctive identity or name,” the company said in its half-year report.
The new collection brand aims to help fast-track IHG's growth in market segments that were worth more than $100 billion in rooms revenue in 2019, and where over 40 percent or around 1.5 million rooms are currently independent. “Over the next 10 years, we anticipate the collection to attract more than 100 properties globally, helping contribute to our ambition of delivering industry-leading net rooms growth,” the statement continued.
Half-Year Results
IHG managed to grow its revenue by 16 percent to $565 million in the six months to the end of June and swung to a pre-tax profit of $67 million, compared to a loss of $275 million in 2020.
A significant improvement in demand over the period resulted in in revenue per available room growth of 20 percent from 2020, although it was down 43 percent compared to 2019. Unsurprisingly, recovery was most pronounced in the Greater China region.
IHG opened 17,400 rooms (132 hotels) in the first half of the year (up 46 percent from 2020) and removed 18,900 rooms in 102 hotels for net system size growth of 0.1 percent year over year. (Excluding the 16,700 rooms in the SVC portfolio termination in Q4 2020, that net growth is 2 percent.) The company now has 884,000 rooms in 5,994 hotels worldwide, weighted 69 percent across midscale segments and 31 percent across the upscale and luxury segments.
The company also signed deals to open 32,600 rooms in 203 hotels during the two quarters, up 24 percent compared to 2020. IHG’s global pipeline now stands at 274,000 rooms in 1,805 hotels.
"Trading improved significantly during the first half of 2021, with travel demand returning strongly as vaccines roll out, restrictions ease, and economic activity rebuilds. It has been great to see our teams welcome more and more guests back into our hotels, with domestic leisure bookings leading the way, particularly in the U.S. and China,” Keith Barr, CEO IHG Hotels & Resorts, said.
“Essential business travel was a key element of our resilience throughout the pandemic, and we are now seeing more group activity and corporate bookings start to come back. These trends and the momentum in the business have continued in recent weeks, including in EMEAA where a lifting of travel restrictions in some markets is also now driving improvements in demand.
“With occupancy and rate continuing to improve, nearly 50 percent of our hotels achieved RevPAR above 2019 levels in July.”
Positive Momentum
While the spread of the Delta variant has the ability to derail any bounce back in travel and tourism spending, IHG like others in the sector appears cautiously optimistic that things are on the right path.
“The actions we have taken during the last 18 months position us well to exceed our pre-pandemic level of growth and profitability. While there is a risk of trading volatility in the balance of the year, and discretionary business trips, group bookings and international travel will take time to fully recover, we are confident in the strength of IHG's future prospects,” Barr said.
A version of this story appeared on Hotel Management's sister site, Hospitality Insights.