After a series of reincarnations, InterConti has emerged as a shrewd and smooth operator with seven profitable brands. Jonathan Hart takes up the story A popular slogan for Pan Am when it dominated world skies was: Suddenly You're Somewhere Else. The same might apply to the airline's former hotels division, set up in 1946 to add quality accommodation to remote regions of the world being flown by the now defunct carrier. Let go by Pan Am in a vain attempt to stave off bankruptcy, InterContinental Hotels as a corporate entity has since travelled in a variety of directions following its purchase in 1998 by UK brewing company Bass. As a name once prized in developing destinations as a must-have status symbol, InterConti, as it is commonly known, suddenly found itself enfolded into the same family and, according to some insiders, playing second fiddle to the far less prestigious and humdrum Holiday Inn, purchased by Bass a decade earlier. A family that soon expanded across the category range as Bass hit the acquisition trail in the late 1990s, also buying Southern Pacific Hotels Corporation and Bristol Hotels & Resorts. For fans of the former InterContinental Hotels Company (IHC), the InterConti product may have remained solidly upscale but its individuality and kudos had arguably been blurred. With Bass selling off its brewing interests in 2000, InterConti then became part of the renamed Six Continents, which added the former Posthouse chain to its stable, converting most into Holiday Inns. Change again when Six Continents de-merged its pubs and restaurants business from its hotels and soft drinks business five years ago, reverting to the more familiar InterContinental Hotels Group (IHG) for the latter. And there has been change yet again as IHG, in conjunction with a major cost-cutting programme, follows the industry trend in selling off its bricks and mortar to focus on management and franchising in a world of accountancy rules, where unburdened or less volatile profitability carries the primary clout. Emerging from this rocky journey is a group that today owns little but operates big, with more than 3,800 hotels and well over half a million rooms – claimed to be the most of any group globally – in almost 100 countries.
Marrying economies of scale to low capital expenditure and high returns on capital employed across seven brands, IHG earned handsome gross revenues in the region of US$13 billion during the year to last September through its primarily management or franchising operations. Only 20, or 1%, of the group's properties are now owned or leased, collectively producing 11% of profits. In contrast, franchised and managed units, with 76% and 23% of total room count respectively, produce 67% and 22% of profits. With, conservatively, 1,500 more hotels, or over 200,000 rooms, in the pipeline, IHG's strategy is "to use other people's money and build the (hospitality) industry's strongest operating system, focused on the biggest markets and segments where scale really counts." One of those markets is China, where IHG currently operates 71 properties across four brands and has another 92 under development, including the InterContinental Nanjing, opening this year. At 432 metres high, it will have the distinction of being the world's tallest hotel. Suddenly, InterConti is somewhere else.
InterContinental Hotels Group brands
InterContinental Hotels & Resorts: newly 'refreshed' upscale brand experiencing record growth; 147 hotels and 53 in the pipeline. Latest signings include Shanghai, LA and Chicago Crowne Plaza Hotels & Resorts: fastest growing upscale brand in Asia, including 16 hotels plus 33 under development in China. Also strong presence in North America (169 properties). Total of 73 hotels in Europe, Middle East and Africa; 93 under development Hotel Indigo: style-savvy boutique brand launched in 2004. Currently only in the US (eight hotels) and Canada (one). Total of 47 properties under development in the US and Mexico Holiday Inn Hotels-Resorts: iconic mid-market brand, with 1,370 properties globally, including 811 in the US, 117 in the UK and 41 in Germany. Another 341 units under development Holiday Inn Express: scaled down value brand with 1,770 properties, chiefly in North America. There are 178 units across Europe, the Middle East and Africa and nine in Asia/Pacific. Fast growing budget brand with 663 more hotels under development Staybridge Suites: US extended-stay hotel brand (incorporating former Summerfield Suites), now being spread to the UK (London, Liverpool, Birmingham, Glasgow) and the UAE (Dubai). Total 118 units with 143 in the pipeline Candelwood Suites: value extended-stay brand in North America; 151 hotels plus 143 in development
Loyalty scheme: Priority Club, claiming 37million members worldwide. Points earned and redeemable across all brands together with industry partners. No blackout dates and scheme recently expanded to include points redeemable against free nights at 'Any hotel, anywhere’ Website: www.ichotelsgroup.com
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