InterContinental Hotels Group CEO Keith Barr, during the
company's full-year earnings call on Tuesday, outlined strategic initiatives
the company intends to undertake during 2018 and beyond.
Barr said they'll redeploy resources to leverage IHG's scale,
strengthen its loyalty program, bolster its digital and technological
innovation, enhance its franchise position and strengthen its existing brands
while adding new brands where growth is possible.
Toward that plan, IHG commenced a comprehensive, companywide
efficiency program in August that will realize $125 million in annual savings
for reinvestment by the end of 2020, Barr said.
Redeploying Resources
A number of announcements and executive appointments went
into effect Jan. 1:
IHG has created an integrated commercial and technology
organization, which includes B2B sales, booking channels and revenue management
systems. Barr expects improved efficiency and greater speed in deploying new
products. Eric Pearson, who previously served as IHG's chief information
officer, oversees the new organization as chief commercial and technology
officer.
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IHG's brands, loyalty and marketing teams now sit within
IHG's global marketing organization. IHG named Claire Bennett as chief
marketing officer. She joined the organization from American Express, where she
served as general manager and EVP for travel and lifestyle services. "Our
brands are strong and performing very well, but we believe that we have a
significant opportunity to drive even better performance here," Barr said.
"We can improve the efficiency of our spend, increase the impact of our
marketing initiatives and better leverage technology and data to drive even
stronger performance."
The company also created a regional operating structure that
left IHG's two largest markets—the Americas and Greater China—unaltered but
combined Europe, the Middle East, Asia and Africa into one region encompassing
72 countries. Kenneth Macpherson will head the
region.
Strengthening Loyalty
IHG Rewards Club saw
an 11 percent increase in membership last year and a 34 percent increase over
the last three years. Last year, IHG launched a number of loyalty club partnerships,
including Amazon Kindle, OpenTable and Grubhub. Looking ahead, Barr said the
company will focus on additional partnerships that differentiate the program.
Supporting Digital & Tech Innovation
Pilots of IHG's global reservations system, IHG Concerto,
are underway at more than 225 hotels around the world. A GRS is the
metaphorical brain of a hotel's technology ecosystem. Cloud-based Concerto,
developed with Amadeus, will integrate with IHG's revenue management system initially.
Later, Barr said, Concerto also will integrate the property management, sales
and catering, and point-of-sale systems. The company is on track to roll Concerto
out by the beginning of 2019.
"It's just going to let us do so many things that have been
so hard to do in the past," Barr previously
told BTN. "Often, we come up with a great idea that a corporate client
wants us to do or something that we want to do and you go, 'Oh, that's just
really hard,' because of the technology, because we have legacy systems. We're
getting rid of all of that."
The company is also scaling up existing tech initiatives,
such as mobile check-out, which is live in more than 3,000 U.S. hotels; Alipay,
which integrates with IHG's loyalty app and is accepted at 70 percent of IHG
hotels in Greater China; and IHG Connect seamless Wi-Fi log-in, which is
installed at more than 3,000 hotels in the Americas and soon will roll out
globally.
Franchise & Brand
Positioning
In order to enhance its attractiveness to owners and to accelerate
growth, IHG plans to alter boutique-centric Kimpton Hotels & Restaurants'
operating model, though Barr said IHG is still weighing its options on how to
do so. In Greater China, it has extended its franchise model to the Holiday Inn
and Crowne Plaza brands, growing on the success of the Holiday Inn Express
brand in that region. It also will increase investments into property development.
IHG has restructured its brands into three categories:
- Mainstream:
Holiday Inn, Holiday Inn Express, Candlewood Suites and Staybridge Suites
- Upscale:Crowne
Plaza, Even Hotels, Hotel Indigo and Hualuxe
- Luxury:
InterContinental Hotels & Resorts and Kimpton
The company intends to launch a new upscale brand this year
and will look to acquire one or two asset-light, luxury brands to round out its
portfolio.
RELATED: IHG Will Launch New Upscale Brand & Acquire in Luxury Space
Q4 & Full-Year 2017 Results
Systemwide occupancy
rose 1.4 percentage points year over year during the fourth quarter to 67.9
percent, and average daily rate increased 2 percent to $112.64. For the full
year, occupancy increased 1.1 percentage points to 70.3 percent and ADR grew
1.1 percent to $113.54.
As of Dec. 31, IHG's system counted 5,348 hotels, or 798,075
rooms. Its pipeline totaled 1,655 hotels, or 244,146 rooms. IHG's full-year
operating profit rose 12.5 percent year over year to $763 million.
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