InterContinental Hotels Group CEO Richard Solomons will
retire on Aug. 30. Chief commercial officer Keith Barr will step in as CEO on
July 1. "There's never a perfect time to make this decision, but this
feels like the right time for me," Solomons said. He has served as CEO for
the past six years and has spent 25 years with the company, 14 of which on
IHG's board.
Barr joined IHG in 2000 and was appointed chief commercial
officer in 2013. He previously held various senior leadership positions,
including CEO of IHG's Greater China business.
Analysts on a Friday earnings call inquired what the change
in leadership could mean for the future of IHG. In recent years, the hotel industry
has seen consolidation and M&A among its larger players, and IHG became an
early participant when it bought
Kimpton Hotels in 2015. But the industry also has seen the world's largest
hotel companies change their strategies. Marriott International, for instance,
made a play for increased scale by acquiring Starwood Hotels & Resorts,
while AccorHotels is investing
in prospects outside the traditional hotel space.
Speaking to the prospect of consolidation, Solomons said,
"Greater scale adds value, but it doesn't need to be the thing to do. We
have scale when we need scale." He cited IHG's loyalty network, capacity
to invest in digital technology and "sufficient presence with our
portfolio to drive awareness and preference."
"Keith's been a senior executive here, sat on the
executive committee with [CFO Paul Edgecliffe-Johnson] and I for many years,
has been an integral part of the decisions, has driven a lot of what we've
done, particularly in the digital and technology sphere," Solomons said.
"He'll pick up the reins and he will run the business extremely well. He
will react to the changing environment, as I would have done if I was
here."
IHG systemwide average daily rate increased 0.8 percent year
over year to $109.79 during the first quarter. Occupancy rose 1.2 percentage
points to 64.9 percent.
Regional Results
In the Americas, revenue per available room increased 2.2
percent. U.S. RevPAR rose 1.9 percent year over year. While oil producing
markets still weigh on IHG's results, RevPAR for these markets rose 1 percent,
excluding the revenue gained from the Super Bowl in Houston. However, supply
growth is expected to continue in these areas, which could continue to impact
RevPAR. In Mexico, RevPAR grew 10 percent and in Canada 3 percent.
In Europe, RevPAR rose 6.9 percent year over year, driven
more by a bump in occupancy than by rate. RevPAR in the U.K. grew 8 percent,
and London's RevPAR rose 12 percent. Hilton and Hyatt Hotels Corp. reported
similar strength in London, bolstered by strong inbound international travel. Germany
benefited from trade fairs during the quarter, giving the country a 9 percent
RevPAR boost. Increased corporate and leisure demand fueled a 7 percent
increase in RevPAR for Russia. In France, RevPAR increased almost 6 percent,
and in Paris it rose 8 percent as leisure travelers returned to the market
after terror attacks in late 2015.
In Asia, the Middle East and Africa, RevPAR inched up 0.1
percent year over year. Easing of visa conditions in India drove 13 percent RevPAR
growth for the market. In the Middle East, low oil prices, high supply growth
and government austerity measures drove RevPAR down 7 percent.
In Greater China, RevPAR grew 3.8 percent during the
quarter. It increased more than 5 percent in Beijing and Shanghai as a result
of strong corporate and meetings demand. In Hong Kong, RevPAR grew 1.8 percent
from strong corporate and transient demand.
Hotel Development
As of March 31, IHG's pipeline stands at 232,215 rooms
across 1,494 hotels. The company opened almost 7,000 rooms, or 49 hotels,
during the first quarter, about a third of those new rooms in Greater China.
IHG plans renovations to Crowne Plaza hotels in
Mexico, Latin America and the Caribbean as part of its Accelerate
program. The multimillion dollar renovations will focus on guest rooms,
lobbies, restaurants, meeting rooms, business centers and fitness facilities.
Some renovations are already in progress and are expected to wrap in 2018.