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IHG carves out luxury/lifestyle niche amid expanding space

Holiday Inn is a name that stands alone in its familiarity. Singers of all genres have referenced it in song—even getting a playful edit when Chingy, Ludacris and Snoop Dog collaborated on “Holidae In,” which jumped all the way to No. 3 on the Billboard Hot 100 in 2003.

Perhaps no hotel brand is as demonstrative as Holiday Inn, itself an appellation taken from the 1946 film “Holiday Inn.” Kemmons Wilson took it forward from there.

The name is so well known globally that consumers might not know that it’s owned by InterContinental Hotels Group, whose roots stretch back to Bass Brewery. Today, it only sells beer in its hotels, which amount to more than 6,000 globally. Holiday Inn, and later Holiday Inn Express, a limited-service complement added in 1990, are the workhorse brands for IHG, accounting for almost half of the company’s global pipeline and 70% of open hotels.

IHG will continue to focus on what Elie Maalouf, CEO of the Americas region for IHG Hotels & Resorts, calls its “bread and butter” and “mainstream business,” but over recent years, IHG has been branching out further into the so-called “luxury and lifestyle” space, not unlike other lodging companies that are building up in the segment, especially via acquisition.

Elie Maalouf assumed the role of CEO of the Americas region for IHG Hotels & Resorts in 2015.

“We have a bigger range now and we aim to be the leading luxury/lifestyle player in the world,” Maalouf told HOTELS during the Americas Lodging Investment Summit in Los Angeles in January. “It doesn’t,” he qualified, “always mean being the biggest.”

Indeed, the luxury and lifestyle hotel space has become pervasive. Beyond what IHG is trying to accomplish, other lodging companies have bulked up within it, too. Accor, through its deal for Ennismore, has a lifestyle division composed of 11 brands, inclusive of SLS, Delano, Mondrian, 21c and Hoxton, among others. This collection complements its luxury hotel brands, including Fairmont, Raffles and Sofitel.

Marriott has its luxury and premium brands that include Edition, St. Regis, Ritz-Carlton, W, Le Meridien and Renaissance; Hilton boasts Waldorf Astoria, Canopy, Curio Collection and Conrad, while Hyatt has long stayed in the luxury/lifestyle stratosphere with brands such as Park Hyatt, Andaz, Alila, Thompson and its recent acquisition of Dream Hotel Group. In fact, Hyatt CEO Mark Hoplamazian doubled down on its luxury and lifestyle strategy during his company’s fourth-quarter earnings call: “Our strategy has been to focus on the high-end customer and serve and operate at the high end of every segment. We continue to focus on filling out our portfolio to be able to add a number of experiences and the critical mass that we have to that high-end traveler.”

IHG is decidedly more brand diverse than Hyatt, but it endeavors to keep churning its luxury and lifestyle legs. On luxury, for instance, Maalouf took a not so veiled swipe at his traditional luxury competitors when explaining his notion of the modern luxury expectation. “Today’s luxury traveler requires different things: contemporary, thoughtful design; immersive and clinically honest wellness; authentic and curated food and beverage; discerning and subtle service,” he said, calling it not necessarily traditional. “It’s knowing what you need without being in your face with it. Not the ladies and gentlemen of the past, but high-touch subtlety and modernity in our brands.”

For years, IHG hung its singular luxury reputation on the eponymous InterContinental brand, which stretches back to 1946 and Pan Am founder Juan Trippe and has been part of IHG since 1998. It currently numbers 208 properties globally, a pipeline of 84 and, as Maalouf said exuberantly, “We are going to 300.” In January, IHG commemorated its next InterContinental opening with a topping-off ceremony of the 208-room InterContinental Hotel – Bellevue at the Avenue, in the fast-growing Seattle suburb. The hotel, the first of the brand in the Pacific Northwest, is projected to open in the fourth quarter 2023.

Recent bolt-on additions to the IHG luxury quiver include Regent Hotels & Resorts and Six Senses. IHG acquired the former in 2018 for a rather minuscule $39 million and quickly added Six Senses a year later for $300 million. Both are brands with a heritage outside the U.S.; Six Senses, known for its sustainable, wellness ethos, currently has 20 operating hotels with a pipeline of 34 that includes a resort in Napa Valley opening in 2026, while Regent is just at eight hotels globally with an eight-count pipeline that includes the reintroduction of the Carlton Cannes, a Regent hotel in the spring of 2023.

“We resuscitated, we renovated, we rebirthed that brand,” Maalouf said of Regent. “People, developers still have a very warm and reminiscent feeling for that brand—they remember it from when it was in Miami or Beverly Hills.”

In InterContinental, Six Senses and Regent, IHG has three brands now covering the luxury segment, which Maalouf remains bullish on, even in the eye of a potential recession. “The rich, as F. Scott Fitzgerald said, are different,” he paraphrased. “The market can go up or down, but they still spend and will spend. The new generation of luxury travelers never felt need. This newer generation doesn’t have prudence in they’re spending—the Chanel bag or those things. They don’t know what it is not to have it and they are not limited by what they will spend for the right experience if delivered properly.”

The Carlton Cannes, a Regent hotel is set to reopen later this year.

LUXE TO LIFESTYLE

IHG kicked off its exploration into the lifestyle space in 2004 when it launched Hotel Indigo. Maalouf’s predecessor, Steven Porter, said Indigo “filled a critical void by addressing middle market consumers who are trading up to higher levels of quality and taste,” adding the brand was an answer to travelers who desire an experience as much as a destination. The brand currently numbers 135 hotels globally with a pipeline of 124.

It wasn’t until 10 years later that IHG made a further concerted effort to bulk up in the lifestyle space—this time via acquisition of Kimpton Hotels & Restaurants. New brands, like Indigo, take time to scale up, but in Kimpton, IHG had a well-known and established brand, created by the “godfather” of lifestyle hotels, Bill Kimpton. When IHG acquired Kimpton, there were 62 hotels operating—none outside the U.S. “It reflected a sort of irreverent luxury when we acquired it,” Maalouf said. In the span of eight-plus years, IHG has opened 14 more Kimpton hotels and taken the brand global, with hotels in cities such as Paris, Amsterdam, Edinburgh, London, Tokyo and Sydney. In fact, growth concentration has been outside the U.S., where there has been an attrition in the number of hotels, including the imminent loss of the Kimpton Hotel Born in Denver, which is converting to another brand.

“We’ve got this luxury and lifestyle portfolio and they’re all sort of in the modern contemporary, wellness, sustainability space. IHG’s entire orbit of luxury and lifestyle products, which also includes the soft brand Vignette Collection, total 440 properties, but Maalouf is quick to point out that some 300 are under development.

Its most recent splash was an agreement with Iberostar, the Spanish operator of all-inclusive resorts, which was signed last November and added some 70 hotels to IHG’s system as the company’s 18th brand. For IHG, it was all about being where its customers are and wanted them to be. “Culturally, we’re very similar, like-minded organizations; so, we decided this was a perfect way to have our 18th brand and be in a segment we’ve been looking at for some time,” Maalouf said.

CONVERTING REAL ESTATE

Maloouf is a brand leader now but his background in commercial real estate allows him a perspicacity over the market. Consider office buildings, which went dark during COVID and have yet to fill up thereafter, especially in urban core markets. It may never attain its pre-pandemic normalcy and the trend has already left some landlords defaulting on their loans. However, conversion from office to hotel is easier said than done. “It’s hard,” he said, alluding to the design obstacles, such as large floor plates and bathrooms and elevators in the center.

“What you need for hotels are independent units, with their own bathrooms, with their own HVAC. That’s why going from residential to hotel is much easier.”

Office-to-hotel conversions are going to happen, Maloouf said, “because the demand for office is clearly shrinking around the world.”

Beyond development, Maalouf carries optimism for the future of hospitality, banking on a continuance of traveler demand despite a contrail of inflation and higher interest rates. And, relative to air travel, hotels are still a great value. “Look at where the airlines have driven their fares?” he said. “Hotels are the bargain, right?”

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