IHG is launching a new luxury lifestyle conversion brand

Insight Comment The ability for the big hotel companies to conjure up new brands is seemingly endless, but this move by IHG makes a lot of sense. The Covid-19 pandemic has drastically altered the hospitality industry with many independents or small chains looking to join forces with bigger players. Bringing in a new collection brand at the upper end of the market should make it easier for a lot of owners.

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 of its rivals, 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 likes of Six Senses, Regent and Kimpton brands, along with InterContinental and Hotel Indigo at the upper 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 company added: “The new collection brand will help fast-track IHG's growth in market segments worth over $100 billion in rooms revenue globally in 2019, and where over 40% 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.”

Half-Year Results

IHG managed to grow its revenue by 16% 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 course of the period, resulted in in revenue per available room (RevPAR) down 43% versus 2019 but plus 20% versus 2020. Unsurprisingly, recovery was most pronounced in the Greater China region.

IHG opened 17,400 rooms (132 hotels) in the first half, up 46% and now has a global estate now of 884,000 rooms (5,994 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 US 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% 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.