HOTELS interview: Jim Abrahamson on leaving IHG, plans for Interstate

On Monday, Jim Abrahamson resigned from his post as Americas president for IHG to take over as CEO of Interstate Hotels & Resorts. Abrahamson will formally take the reins of Interstate later this year, following a transition period with current CEO Tom Hewitt, who will remain with the company as chairman. Abrahamson talks with HOTELS about his decision to leave the world’s largest hotel company and his plans for Interstate.


HOTELS: Why did you leave IHG?

Abrahamson: First of all, IHG is a fantastic company with great brands and a great future. It’s a terrific organization. Running the Americas was a great job.

It’s all about the opportunity that I saw at Interstate as a company that I’ve done business with for the past two decades. I’ve always had tremendous respect for the company. It was an opportunity to work with great people, have a relationship with all the brands and have an opportunity to really grow this company. Also, to become CEO and follow in the footsteps of Tom Hewitt, who has been a good friend and a great leader in the industry. So it had all the elements of being a wonderful opportunity.

HOTELS: Was Richard Solomon’s appointment as IHG’s incoming CEO a factor?

Abrahamson: None whatsoever—almost the other way around. I have such tremendous respect for Richard. I’ve known Richard for a long time, and having the chance to work with him was terrific. That underscores just how great an opportunity I think Interstate really is. Richard will do a tremendous job. I’ve got complete respect for him. The timing was nothing but coincidental.

HOTELS: How did the opportunity with Interstate come about?

Abrahamson: They had begun this recruiting process some time ago but had only recently contacted me—within the last six weeks or so. They recruited me into the organization. It’s a large industry, but it’s a small business, right? I’ve known and had great respect for Lee Pillsbury (CEO of Thayer Lodging Group, Interstate’s parent company) and Tom Hewitt. We had a great business relationship together before. Interstate is the largest single franchisee of IHG. Clearly we had a great relationship. When we discussed the opportunity and what the plans are for the company, I viewed it as a very logical next step in my career. I think I’m well positioned to lead the company and take it to the next level.

HOTELS: How will Interstate be different under your leadership?

Abrahamson: It’s building on this great platform that exists. You have this company that has this 50-year history and legacy. It’s a company that has an excellent reputation for its management skills. You have this great base. But most important, there are tremendous people and great leadership at Interstate. And there’s real scale—with 335 hotels, 25,000 people—this is a company that has scale and distribution. We don’t have to go out and create the platform; we have the platform. We have the opportunity, we think, to look to grow through consolidation. We have capital, and we’ll look to consolidating other smaller management company players, as well as continue to grow for our own portfolio, and we’ll look at selective acquisition of assets.

We’ve got great partners in Jin Jiang and Thayer Lodging as great capital sources, but we have other capital sources and internally-generated capital to be able to grow this portfolio. Our debt is in great shape—there’s a lot of headroom on our debt capacity. So we have all the elements. And the wind’s at our back from the economy standpoint. So the growth opportunity is really what we’ll head towards in the next phase.

Tom did a great job guiding it through some choppy waters of the recent downturn, but he also at the same time didn’t sit still, and he’s given us this wonderful positioning to grow from, both domestic rollup as well as international expansion, where we have a great platform in Russia, Europe and China.

HOTELS: What are your short-term goals growth-wise?

Abrahamson: Our growth goals are as described. We’ve got a great pipeline right now, both domestically and internationally. So we’ll continue to execute against that, and we’re looking at both management company acquisitions as well as asset acquisitions.

HOTELS: Which markets and areas are at the top of the list short-term?

Abrahamson: Obviously we’re growing in China. We’re looking to grow our platform in Europe. The United States is critically important; that’s our largest market and will continue to be so. Having a global reach gives us strength to play in each of those markets.

HOTELS: What is your longer-term vision?

Abrahamson: We have a great plan in place and wonderful people, so we’ll be executing against the plan. Now, as the world continues to see economic recovery, we’ll take advantage of that and we’ll take advantage of our scale and we’ll take advantage of our capital partners to continue to grow this business.

HOTELS: Are you optimistic about the strength of recovery?

Abrahamson: I think we’re in the midst of a good broad-based recovery. We think it will continue. The next leg up is going to be dependent upon seeing some better and broader recovery numbers in the U.S. and global economies where we continue to be beleaguered by high unemployment and large federal deficits. But the lodging market is in full recovery right now. This has been a demand-led recovery. We need to look for rate growth in certain markets.

HOTELS: Anything to add?

Abrahamson: Just to underscore, this is a positive move. I don’t want you to read anything between the lines. This is a great time for IHG. We’re going to grow with IHG brands. I’ve got great confidence in IHG. This is a real positive. And I can’t say enough about Tom Hewitt. I couldn’t be more pleased to work with some people that I have profound respect for. I think I’ll be able to make my own contribution to take it to the next level.