Richard Solomons, the CEO of InterContinental Hotels Group, is acting fidgety. Across the table, he’s tearing up scrap paper, then methodically breaking them down into smaller and smaller squares. At first, the worry is that the seasoned—cagey, perhaps?—executive is performing this antsy act to in some way obfuscate the audio recorder that is documenting his every word. But hijacking an interview is the furthest ploy from Solomons’ mind. He’s done countless interviews in the past months; just arrived in Los Angeles fresh from a visit to Davos, Switzerland, for the World Economic Forum; acquired a new brand business; and accomplished this while plagued by speculative media reports about shareholders calling for the sale of the Denham, UK-based hotel company, spanning 10 brands and more than 700,000 rooms globally.
Solomons, who has been CEO of IHG since 2011, certainly has a lot on his plate. So if he finds some solace by keeping his hands occupied, can you blame him?
The paper-folding binge does end, and the London-born Solomons’ story begins to unfold. The hospitality industry is a service industry, something Solomons is keenly aware of. And though his days preceding IHG found him working in investment banking, his understanding about how to deliver great customer service was forged at an early age, and from a likely source: his father.
FORMATIVE YEARS
Solomons grew up in England, where his father owned a motor trade business. “I didn’t get an allowance,” Solomons said, reminiscing about a time when businesses collected cash and deposited it daily to the bank. “Saturdays and holidays were spent pumping gas.”
A 900-room InterContinental hotel will be part of the more than $1-billion Wilshire Grand project in Los Angeles.
His father always focused on the customer. On one occasion, a honeymooning couple rented a car from his father’s stable and unwittingly parked it on the beach just before the tide came in. When it did, the car became waterlogged. “We went out, got another car and drove it to them,” Solomons remembers. “At the time, you don’t think about it. It wasn’t a company policy; just him.”
That customer-is-everything ethos has stuck with Solomons—and it’s something he believes all successful CEOs should have. Sure, the hospitality industry is a capital-intensive business and a good CEO must have the financial grasp, but, as Solomons said, “We are a people business.”
When you have a global supply of more than 4,600 hotels that create millions of interactions per day between guests and employees, the “people business” is magnified. For Solomons, then, it’s all about taking care of customers and investing and defining IHG’s brands, which are spread across varying segments, from Intercontinental in the luxury space, to Holiday Inn and Holiday Inn Express in upper midscale and Staybridge Suites in upscale extended stay.
Hotel Indigo Nashville is one of IHG’s lifestyle hotels. IHG’s acquisition of Kimpton gives them instantly many more.
And though customers absolutely think in terms of brands, according to Solomons, what segments these brands reside in have no real resonance with consumers. “What we’ve done more of is understanding the consumer,” he said, pointing to an exhaustive segmentation study IHG recently commissioned that, in Solomons words, showed that “segments are meaningless to a consumer.” He went on, “You don’t go home to your wife or partner and say, ‘I’m going to take you away this weekend and we are going to stay at a midscale hotel, even better a midscale, limited-service hotel.’ They don’t talk like that. They talk about need and occasion.”
BRAND RELEVANCE
For Solomons, each of IHG’s brands is a hub and everything else plays off that, from technology to sales and marketing. Solomons is certainly a CEO of the macro-manager ilk, building up IHG with strong leaders to carry out functions that make the organization strong. “To run a business, you don’t need to know how to do everything,” he said. “You have to have a fundamental understanding of what the business is about. You have to know what you stand for and lead it, but get great people around you.”
He points to two, in particular, Keith Barr, IHG’s chief commercial officer, and Eric Pearson, CIO, a position that, for hotel companies, continues to rise in importance. “Everything we do in technology is about how to support the brand,” Solomons said.
“Our business is about evolving existing brands,” Solomons said. “It’s a long-tail business. You don’t make a decision and package it overnight. We continue to roll out brands in new markets.”
Holiday Inn Express is being introduced into Russia, Singapore, Indonesia, among others, and is evolving further in China as that country’s middle class continues to take shape and travel more. IHG is so bullish on the Chinese traveler that it created a brand specifically for them called Hualuxe. It recently unveiled the first two hotels to open under this flag: Hualuxe Nanchang High Tech Zone and Hualuxe Yangjiang City Centre. In all, Solomons said 27 deals are currently in place for the brand.
Stateside, IHG’s recent acquisition of Kimpton Hotels & Restaurants Group for $430 million gives them the foothold they need to grow even further in the coveted lifestyle space. Kimpton currently has 62 hotels in 28 U.S. cities, and plans are to expand the brand into global markets. The Kimpton acquisition complements IHG’s other lifestyle brand, Indigo, around 60 hotels strong. “We bought this business for what it stands for and we are not going to change it,” Solomons said. “We will adapt it and make it better. That’s very important for guests to know.”
Solomons also doesn’t count out launching a soft brand in the same vein as Marriott’s Autograph Collection or Hilton’s recent debut of Curio. But he admits some concern. “We’ve looked at it,” he said. “It’s interesting, though: What are you saying to the customer? If a brand is too soft and unclear, it will upset customers. You must be careful about how to define it. If it is just a device for growth, in the long term it will be damaging.”
Still, Solomons is perfectly fine with where IHG’s business is at the moment, citing its breadth and depth relative to the competition. “We are in 100 markets and we are where the revenue is: not in super luxury, not in economy, and the other big guys don’t have that,” he said. “Our rewards scheme is the biggest in the world. We are unique and it gives us resilience.”
Like a father beaming over a child’s accomplishment, Solomons noted that post-Lehman, IHG was the only large hotel company to not cut its dividend. “We kept ours,” he proudly said.
Solomons does recognize global uncertainty and its influence on a company as global as IHG—the implications from the Greek elections, a deflated euro, volatility in Russia, etc. These are matters out of his control, so he doesn’t tend to worry. “I don’t spend time over macro things,” he said. I say, ‘How do we grow this business, what do we do?’
“It’s always been this way for a global business—things go on that are positive and negative. On the other hand, people are traveling more. They bounce back.”
AT A GLANCE
INTERCONTINENTAL HOTELS GROUP
Headquarters: Denham, UK
Structure: Owner, Operator, Franchisor
Portfolio: More than 4,600 hotels and 10 brands
Website: www.ihg.com