ATLANTA—IHG is set to launch a mainstream all-suites, upper-midscale brand later this year as part of the brand’s strategic plan to close gaps in its portfolio and create new brands. It will be targeted at an $18 billion industry segment where strong guest and owner demand has driven a 70% increase in room supply in the last four years, according to the company.
In the last year, IHG has made rapid progress augmenting its portfolio with the recent acquisition of Six Senses, which the brand expects to grow to more than 60 hotels in the next 10 years; the acquisition and repositioning of Regent Hotels & Resorts, gaining three signings; the launch of its new upscale brand Voco, which was brought to market brought to market with 16 hotels signed; and the launch of Avid Hotels, which had 170 hotels signed since its launch, including in Canada and Mexico, and its launch in Germany.
“We have made excellent progress in 2018 executing against the strategic initiatives I set out a year ago to accelerate our growth, whilst delivering a strong financial performance,” said Keith Barr, CEO, IHG, in a statement for the company’s preliminary results for 2018. “The investments we have made have had a significant impact, allowing us to further evolve our established brands, move quickly to strengthen our portfolio both organically and by acquisition, and create real momentum in our business. We have made further progress in 2019 with the acquisition of the top-tier luxury brand Six Senses and the planned launch of a new all-suites, upper-midscale brand.”
Among the highlights:
- $27.4 billion total gross revenue (up 6.6%)
- Global full year RevPAR up 2.5% (Americas Fully year RevPAR up 1.9%)
- Strongest net system size growth in a decade of 4.8% (+4.3% organic), including 56,000 room additions, up 17% year over year. 18,000 rooms removed leaving 837,000 rooms across the global estate.
- Highest signings in a decade (+18% YoY) with nearly half of total signings from the Holiday Inn Brand Family.
IHG continued to strengthen and grow existing brands with increased pace of openings and innovations to enhance guest experience and owner returns including:
- Holiday Inn Express new guestroom designs now open or committed to in more than 50% estate globally.
- Holiday Inn “Open Lobby” public space design now open or committed to in 80% of Europe estate.
- Crowne Plaza renovation completed or on-going across one-third of the U.S. estate.
- Kimpton: continued global expansion, presence secured in 14 countries, with 18 deals signed in the year.
“Our strategic focus on accelerating our net rooms growth helped drive a net system size increase of 4.8%, and our best performance for both openings and signings in a decade, leaving us well positioned for future growth,” said Barr. “Global RevPAR increased 2.5%, with underlying operating profit growing 6%. This, combined with a 19% rise in underlying EPS, underpins our decision to raise the total dividend for the year by 10% and follows the payment of a $500m special dividend in January 2019, taking total shareholder returns announced for the year to over $700 million. The investments we have made have been funded through our group efficiency program which is on track to deliver $125m of annual savings by 2020. We have successfully implemented a more efficient and agile organizational structure whilst building resources and capabilities focused on the most attractive growth opportunities.”
IHG further strengthened its owner proposition and revenue delivery enterprise, with the global roll-out of IHG Concerto, featuring a new Guest Reservation System. Further enhancements are set to be deployed in 2019.
“The fundamentals of our business remain strong, and while there are macro-economic and geopolitical uncertainties in some markets, we are confident in the year ahead and that our strategy will deliver industry-leading net rooms growth over the medium term,” he said.