IHG Takes Aim at Upscale and Luxury Markets

by Jessica Montevago
IHG Takes Aim at Upscale and Luxury Markets

Photo: IHG

InterContinental Hotels Group (IHG) is ramping up momentum after a strong 2017, particularly in the upscale and luxury segments.

After reporting a four percent increase in group revenue last year, up to $1.78 billion from $1.71 billion in 2016, CEO Keith Barr discussed plans on the company's fourth quarter earnings call to further develop IHG’s portfolio in those categories.

In the luxury space, Barr intends to further accelerate the growth of Kimpton Hotels – which IHG acquired in 2014, in the U.S. market and globally, for $430 million.

“One of our key objectives has been to take the brand global,” Barr said, noting it opened its first international Kimpton last May with the Kimpton De Witt in Amsterdam. With signings in China, Indonesia, and Taiwan, Kimpton will soon makes its debut in Asia as well.

Barr sees even more opportunity within the $60 billion global luxury sector that is projected to grow by 50 percent over the next decade.

To add other luxury brands to its portfolio, the company is looking to acquire one or two small, asset-light brands, he said. They would operate at a price point above InterContinental Hotels, and potentially also in the resort space.

The upscale segment, valued at $40 billion, is also expected to grow by 50 percent over the next 10 years.

“Our guest research has highlighted that many consumers are looking for something other than the traditional big-box upscale hotel,” Barr stated. “They want a more unique experience. We think that there is a real opportunity for an upscale brand that offers the guest something more informal and differentiated, combined with the reassurance and quality standards of a branded chain.”

A franchised upscale brand will launch later this year, and initially focus on Europe, the Middle East, Africa, and Asia.

This comes on top of IHG’s previously announced plans to target the midscale market. Last September, it revealed plans to launch its 12th brand, Avid Hotels. 

Rates are expected to be about $10-15 less than IHG's upper-midscale Holiday Inn Express brand. Guest rooms will include “sound-reducing features,” workspace, open storage units, and in-room entertainment options that allow guests to cast content from their smart devices to in-room televisions.

IHG has already signed 75 franchise agreements for the brand in the U.S. and Canada, and recently announced it will launch in Mexico. The first Avid Hotels property, located in Oklahoma, began construction and is anticipated to open in the third quarter of this year.

TMR Recommendations
Top Stories
Advisors Get First Look as Scenic Eclipse Arrives in North America

Travel advisors experienced the world’s first 'discovery yacht' during its inaugural journey to Quebec City from Europe.

Former Silversea CEO Amerigo Perasso to Lead Abercrombie & Kent

He replaces founder Geoffrey Kent, who will now serve as co-chairman.

Two Standout Hotels to Consider for South Africa Travel

Here is an inside look at two standout hotels, from a focus on history in Johannesburg to an art experience in Cape Town.

Abercrombie & Kent Expands Luxury Small Group Tours

Company executive talks about the growing demand for trip personalization and how travel advisors can increase their luxury business.

Raffles Singapore Officially Reopens

The property is fully open, offering new suite categories, restaurants and bars, while maintaining its distinctive architecture and legendary service.

This Hotel Feels Like the Ideal London Home

With every amenity planned to perfection, and a bit of town and country rolled into one, the Mandarin Oriental London is back in business and catering to discerning travelers.

News Briefs
Tip of the Day

"Bringing companies, consumers and communities together is our best chance to protect destinations and ecosystems for future generations.” - Prince Harry, Creator of Travalyst

Daily Top List

The Best Times to Post on Instagram

1. Monday: 6am, 10am, 10pm

2. Tuesday: 2am, 4am, 9am

3. Wednesday: 7am, 8am, 11pm

4. Thursday: 9am, 12pm, 7pm

5. Friday: 5am, 1pm, 3pm

Source: Later.com

TMR Outlooks