Video: IHG CEO Richard Solomons on hotel cycles, slowdowns and partnerships

BERLIN, Germany — During IHIF 2017 in Berlin, Questex Hospitality Editor-in-Chief David Eisen sat down with Richard Solomons, CEO of InterContinental Hotels Group, to talk about the hotel company's growth, trends in the cycle and what gives the head of a major hotel corporation grey hairs. Video is below, sprinkled in with some highlights from their conversation.

1. Long-Term Thinking Wins the Race

“Around the world, we’re at equal or ahead of the previous peak in terms of signings,” Solomons said. But that, of course, can change, and no company should rest on its laurels. “We’re in a long-term industry,” he said. “We’re trying to work with owners who think long-term. We think long-term. We finance the business conservatively. We invest in cycles, and we want to work with owners who do the same thing.” People investing today may face some challenges in the coming years thanks to political concerns around the world, Solomons acknowledged. “But in a long-term business, you have a fund behind it,” he said. “That’s what’s driving the number of signings.”

2. Slowdowns Are All Part of the Cycle

IHG’s RevPAR has been growing over the last few years, but the growth rate has declined year-over-year. “I have a few grey hairs,” Solomons quipped, but emphasized that the industry is cyclical, and slow-downs are not uncommon. “We’ve had a lot of growth the last few years,” he said. Last year, IHG grew its RevPAR by 1.6 percent and improved overall revenues by 5 percent, which Solomons credits to adding rooms and growing the overall system size. “We’re growing our revenue because the industry is growing,” he said. 

3. Things Can Change

But these are tumultuous times, and Solomons is aware that major changes like the Brexit or elections in France and Italy can affect IHG’s profits. “To the extent these changes over time drive GDP upward or down, that will impact our business,” he said. “Uncertainty, in the short term, is never good for investment. We rely on people borrowing money and investing in hotels. Uncertainty isn’t helpful.” 

4. Expertise Is Invaluable

In the face of uncertainty, Solomons said that IHG’s job is just to look after the hotel guests and look after the hotel owners and deal with the ups and downs. “That does require having a depth of expertise in the business and it requires having a well-financed business that can look through cycles and issues and be locally responsive—whatever that may mean.”  

5. Education Can Help You Prepare for What’s Ahead

Solomons recalled that at a previous IHIF, Marc Finney, head of hotels & resorts at Colliers International UK, predicted that, in the future, the industry would have fewer hotel companies and brands. “And he got that right.” 

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