Following an 'Exceptional Year,' IHG Reveals Plans to Add More Hotel Brands in 2018

Keith Barr, CEO of InterContinental Hotels Group

During the Q4 2017 earnings call for the InterContinental Hotel Group this week, Keith Barr, CEO, who took the helm of the company last July, said 2017 was an exceptional year. He reported IHG took in $1.78 billion in revenue, a 4 percent increase over the $1.71 in revenue earned in 2016.

Thanks to the new U.S. tax bill, the company reaped a one-off credit to its P&L of $108 million in 2017. But rather than pay that out in special dividends to its shareholders, IHG said it is reinvesting that money back into the company, with an eye to focusing on future growth. The company currently has 13 brands, representing nearly 800,000 rooms worldwide, and close to another 250,000 guest rooms in its development pipeline. 

In September 2017, IHG launched Avid, a midscale brand, which already has snapped up 75 development deals. The first property, the 87-room Avid Hotel Oklahoma City-Quail Spring, will open this fall. IHG said the brand is now available for franchise in Mexico. The company also plans to focus on the upscale and luxury markets for future growth.

Barr next announced that IHG has another brand ready to go for later this year, but declined to reveal its name or other details. "Our guest research shows that many consumers are looking for something more than traditional, big-box hotels," said Barr. "We think there is a real opportunity for an upscale brand that offers the guest something more formal and differentiated, combined with the reassurance and quality standards of a branded chain. Later this year, we will be launching an upscale conversion brand that ticks all of those boxes. The rollout will be led from our [Europe, Middle East, Africa and Asia] region, where we know there are a number of independent hotels -- and those belonging to small brands -- that would benefit from coming into the IHG system."

In addition, IHG has big plans to fuel more growth in the luxury segment in 2018. The company will form a dedicated luxury division to help its existing high-end brands evolve and to revitalize any luxury brands it might acquire. "We see a real opportunity to round out our portfolio and add other luxury brands at a price point above InterContinental and potentially also in the resort space," Barr said. The company will look to acquire "one or two small, luxury, asset-light brands" that it could "incubate and grow," he added. 

According to Barr, the $60 billion global luxury segment is expected to grow by more than 50 percent within the next 10 years, and IHG's plans to grow its footprint in this segment, he said, will add "halo benefits" that include strengthening the IHG Rewards Club program and attracting more B2B customers.