Earlier this week Business Traveller attended the International Hospitality Investment Forum (IHIF) at InterContinental Berlin, to hear from the industry’s top executives on the hotel world under the theme ‘Fortune Favours the Bold’.
Outgoing CEO of IHG Hotels and Resorts, Keith Barr was interviewed by Alexi Khajavi, president of hospitality and travel for Questex, on May 16, with topics spanning his forthcoming departure from the company to the impact of the Covid-19 pandemic and the reopening of China.
The discussion kicked off with Barr’s reflection on 30 years at IHG, six of which he held as CEO of the company. Elie Maalouf, a member of IHG’s Board and Executive Committee, who has led IHG’s Americas business as regional CEO, will take over the CEO role from July 1.
“Most importantly it was the right time to hand over the reins of IHG to a great leader because of what we have accomplished over the last six years.
“Really transforming the company across our brand portfolio, technology and loyalty, and seeing the company through [the pandemic]. We’re projected to have a record year of profit, growth and performance…”, he said.
Speaking on the impact of the Covid-19 pandemic, Barr noted that the company had come out of it stronger due to the choices made during the crisis.
“We had to really prioritise and recognise what were the big things that were going to move the needle. Conversions are going to be a play, so let’s launch a new brand with the Vignette Collection.”
IHG launched the new luxury and lifestyle brand Vignette Collection in August 2021, with aims to attract more than 100 properties globally over the next ten years. It has since signed properties in Europe, Australia, Asia and the US.
“We saw that because we had created a more agile business, we had created significant financial capacity to reinvest it into the business… We made a decision to transform IHG One Rewards with the biggest incremental investment we’ve ever made since we launched the programme.”
He added that the company had also made large investments in technology, with new websites and a brand new mobile app launched to “really take advantage of the recovery”.
That recovery is certainly taking place, with Barr asserting that “there’s really no signs of any cracks [in demand for travel] whatsoever”.
“You have the airlines predicting record levels of airline travel through the summer, forward bookings for group meetings and events for the rest of the year look very solid, we’re seeing government travel up in the US, leisure and business travel…”
The extended lockdown in China was also discussed, given IHG’s strong footprint in the country.
While Barr was “absolutely stunned at the pace and the strength of recovery of domestic travel”, he said that outbound and inbound travel will continue to be a challenge as “global international airlift is not there yet”.
“But once China opens up, you are going to have that outflow of international travel which will be another tailwind for the industry.”
The IHG brand portfolio has grown exponentially during Barr’s tenure, with seven brands launched in the space of six years – Vignette Collection, Avid, Atwell, voco, along with the partnership with Iberostar and the acquisition of Six Senses.
Commenting on the growth, Barr said:
“When I was first talking to our team about our brand portfolio, I thought about it like a ladder. We had clear missing rungs on our ladder, which meant that effectively we were telling owners and guests [to] go and do business with or stay with a competitor”.
In particular, Barr praised the voco brand, stating that it had “exceeded our expectations” and is one of the “fastest [upscale brand launches] in terms of scale.”
The Voco brand currently has 45 hotels and IHG says it is on track to reach 200 hotels under the brand by 2028, ten years since its launch.
Barr also described the acquisition of Six Senses as “probably the real coup”, particularly at a time when luxury and lifestyle is booming, allowing IHG to “to see its acceleration into Europe and into the Americas at the top end.”
“The focus right now on luxury resorts and residential [is] probably at an all-time high,” said Barr, adding that about 50 per cent of the projects with Six Senses will have a residential component.
Last year IHG also signed a long-term commercial agreement with Iberostar for resorts and all-inclusive hotels, which involves up to 70 hotels (comprising 24,300 rooms) under the Iberostar Beachfront Resorts brand being added to IHG’s system over the next two years – an agreement which is set to boost IHG’s global estate by 2.8 per cent.
Barr commented on the partnership:
“Iberostar are a fantastic partner for us, and the Fluxa family [owners of Iberostar] are just amazing in terms of what they have built across their generations… That’s hard to do organically, it’s taken them 50 years to build up this great business in Latin America, the Caribbean, North Africa and Spain.
“For us to start that day one, it’s going to be a hard slog. So, we [looked] at what’s the value we can bring? 115 million rewards members globally who want to stay at resorts, global presence, lower cost of distribution, the ability to help them accelerate their development into new markets too.
“We think it’s going to be fantastic relationship for decades to come, and we’re very excited about it.”
Finally, looking to the future and offering some advice to his successor, Barr stated that “no company is ever complete. There’s opportunities for us to organically launch brands, to continue to do partnerships (like Iberostar)…
“Of the big players, we have the fewest brands which means we have the biggest opportunity to grow our business”.