The sector will see consolidation “over time,” IHG CEO Keith Barr told The AHC Reimagined, with “small brand companies acquired by the larger companies.”
This week's AHC Reimagined virtual conference was put on by Hospitality Insights, which is part of Questex Hospitality (the parent company of Hotel Management).
Barr said that the group had no immediate plans, commenting that, having added five brands in the past few years he had “to look after the children we have first before we add more.”
Commenting on the wider sector, he said: “We’re on the path to recovery but with a long road ahead. We’ve bounced off the lows. We have seen travel beginning to come back and we expect to see that continue—we were seeing a recovery of occupancy and we’ve plateaued right now as an industry. We’re in a muted response in terms of growth.”
Barr described the key pressure points as the “big box upper-upscale hotels” in city centers, which would find recovery “very challenging.”
He said: “We’ve launched a number of new brands over the past few years. At the moment it’s about making sure we deliver on health and safety, not just for IHG, but for the industry. Every time someone has a stay that’s not perfect, it may make them choose not to make a second stay. We as an industry have to work together.
“My concern is that governments don’t understand the importance of travel and hotels in terms of jobs. Governments have to support this industry, if they don’t get behind this you will see small businesses fall over and that’s not good for society.”
Looking at IHG, Barr added: “What’s interesting right now is where can you grow your business organically. It’s how do you scale brands up faster and who do you partner with. There’s a lot of capital out there looking to take advantage of real estate portfolios that are already challenged.
“We know that customers want to travel. That desire is there. It’s a question of when will the free movement of people come back. Business is going to have to have confidence about traveling and that’s when you’ll see the recovery. It’s difficult when you’re in the middle of a crisis to know what the future will hold.
“It’s not been the year I was expecting. There’s no playbook for this; we’re used to dealing with a financial issue or natural disaster. I said that when we’re through this pandemic we need to think about what our colleagues, owners, guests are going to say a year from now. It’s helped us make some very good decisions.”
Looking at the group’s performance, Barr said: “I thought it was going to be mostly leisure. We thought it would be drive versus fly. We saw leisure come back but business came back too and our business/leisure mix remained constant. Our messaging has focused on health and hygiene and the safety processes that we’ve put in place—we want guests to know that we’ve made safety our priority. We did a webinar with 1,500 corporate travel managers, with us explaining our cleaning procedures. I never thought we’d be doing that.
“In China people are going to the malls and shopping, our resorts are having record years in terms of occupancy. It shows you that the demand for travel is there when it is safe to do so, that’s what the future holds for all of us. The U.S. has come off the lows—the highest occupancy we had this year was the Labor Day weekend, where we had around 69 percent occupancy. It has recovered better than much of Asia and Europe, because there are fewer restrictions. China is leading, U.S. is second and then Europe is behind.”