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CEO of IHG Banking On Newer Hotel Brands To Drive Profit Momentum

IHG Hopes New Brands Will Drive Its Profits Upwards

IHG CEO Is Banking On Newer Brands To Drive Profit Momentum

Last year, IHG returned to profitability even after closing 151 underperforming Holiday Inn and Crowne Plaza properties. Investors however want to see higher growth in the coming months. They want to see the firm return to growth mode after nearly three quarters of basically no growth and a modest 0.6% system-wide drop in its guest room count last year.

“The Holiday Inn brand families are a core driver. Avid is the second one, and then it’s a balanced approach across luxury and lifestyle and upscale,” IHG CEO Keith Barr said in an interview.

On an investor call, corporate officials suggested a goal to return to the 5% growth observed in 2018, an IHG benchmark year because it was the fastest rate of increase seen at the firm in a decade at the time.

The Holiday Inn network, which includes Holiday Inn Express, will continue to fuel a large portion of IHG’s growth. However, fresh brands are also playing a role in returning to 2018 growth levels.

Avid, IHG’s low-cost mid-tier brand that debuted in 2017, has slightly under 50 locations in its portfolio. According to a business investor presentation, another 164 are in the Avid development pipeline. During the conference call, IHG’s chief financial officer, Paul Edgecliffe-Johnson, described it as “A brand of significant size over time,” while also acknowledging that it may take some time for Avid to match Holiday Inn Express’s more than 3,000-hotel network.

Avid still has a significant gap to close to compete with Holiday Inn Express, which has 645 hotels in the pipeline.

Other emerging brands include the upmarket Voco, which debuted in 2018 and has the potential to more than treble its 31-hotel portfolio with an additional 38 in the process. IHG’s premium Vignette Collection, which debuted in August and has signed six properties since then, is another high-end development resource.