IHG Hotels & Resorts says it plans to launch a new brand targeted at midscale conversion opportunities.
This announcement comes as the hospitality company notes that in the first of 2023, conversions represented 36 per cent of signings and 42 per cent of openings globally. As at 30 June, IHG had a global system of 6,227 hotels, around 925,000 rooms, weighted 68 per cent across midscale segments and 32 per cent across upscale and luxury
IHG says over 100 hotels have already expressed interest in the brand, adding that expects this new brand to reach an estate of over 500 hotels over the next 10 years and 1,000 hotels over the next 20 years.
For the first six months of 2023, IHG posted pretax profit of $567 million, up 90 per cent year-on-year on revenue of $2.23 billion, up 25 per cent from the year prior.
Why it matters
Post-pandemic, experts have widely discussed the challenges the midscale segment faces as the cost-of-living crisis pushes more consumers towards budget options and those with more cash to spare gravitate towards luxury, leaving the midscale squeezed. However, in their half-year results released in the past week, both IHG and Hilton have expressed interest in growing their midscale offering, signalling either that the tide is turning in favour of midscale products and/or companies are focusing on growing as well as improving their midscale offering in order to retain consumer interest.
Earlier this year, senior industry stakeholders at Hospitality Investor’s Investor Council stated that in order to compete and survive, midscale hotel assets would need to evolve to meet changing consumer needs. Perhaps, this evolution is what we’re seeing now.
What they said
Elie Maalouf, CEO of IHG Hotels & Resorts said: “We’re proud of our industry-leading position in upper midscale with Holiday Inn and Holiday Inn Express. Our aim is that this new conversion brand will become the first choice for guests and owners in the midscale segment, accelerating our growth in a space that is already worth $14bn in the US market alone.”