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There’s a certain karma that InterContinental Hotels Group CEO Richard Solomons vows to retain for Kimpton Hotels in light of IHG’s pending $430 million acquisition of the boutique brand — and he’s not necessarily referring to the future of the Kimpton Karma Rewards loyalty program, which Solomons said today he’s not ready to address.
In acquiring Kimpton Hotels, IHG’s first brand acquisition since purchasing Candlewood Suites in 2003, Solomons spoke during a London conference call with financial analysts about the importance of maintaining Kimpton’s “soft branding.”
“Personally I’ve stayed in several Kimpton Hotels and it’s an offering that I’ve admired greatly for many years with the ability to deliver a consistent and distinctive service through soft branding in a very wide variety of hotels,” Solomons said.
“Soft branding,” in this context refers to a subtle brand ethos, characterized by building a unique emotional connection with customers through “soft” elements such as consistent standards of service and a product enhanced with personal touches. This contrasts with “hard branding,” using prominent logos, brand colors, or other uniform elements of corporate design, product or service elements. It’s bespoke versus mass-produced.
Will IHG’s Gain Be Kimpton’s Loss?
The prospect of losing what the Kimpton brand stands for, including its personalization and the relationships forged between staff and guests, is precisely what triggered a wave of trepidation on social media in the hours after the acquisition announcement.
“It really is an excellent fit in our portfolio and perfectly compliments our existing boutique brand, Hotel Indigo, and our wellness-focused brand, EVEN Hotels,” Solomons said.
IHG CFO Paul Edgecliffe-Johnson picked up on the hard branding versus soft branding theme. Edgecliffe-Johnson said IHG, with its existing nine brands from Holiday Inn to InterContinental Hotels & Resorts, is a leader in hard branding.
But boutique hotels and Kimpton, in particular, have a soft brand that an increasing segment of customers, looking for unique properties and experiences, identify with and respond to, he said.
Kimpton’s core guests are 35- to 55-year-old business travelers, and Kimpton Karma, with its 1.6 million members, accounts for about “25 percent of room bookings and slightly more in-room revenues,” Solomons said.
Joining With Hotel Indigo and EVEN Hotels
Officials said the combination of Hotel Indigo, EVEN Hotels, and Kimpton Hotels will create a leading lifestyle and hotel business with 200 properties — including those already operational and others in the pipeline.
IHG officials vowed to double Kimpton’s earnings of $39 million over the next three years, although synergies with other brands of systems won’t be particularly material.
Solomons said the boutique segment represents less than 2 percent “of the overall U.S. market so there’s a great opportunity for future growth based on the high level of demand. This picture is similar across the rest of the world.”
IHG officials confirmed that Kimpton’s operations will remain San Francisco-based and that Kimpton CEO Michael Depatie will stay on board as will COO Mike Defrino, who will continue to run Kimpton’s operations, reporting to Solomons.
“Mike Depatie, the current CEO, who has been running the firm and heavily engaged in development, is going to continue doing that,” said IHG’s Edgecliffe-Johnson. “I think we have the best of both worlds, actually, with the COO continuing to run and the CEO continues to focus on driving distribution. And, obviously, we’re delighted that he’s shown that commitment and support to the brand, as part of the IHG family.”
If Solomons is true to his word than the Kimpton brand’s yoga mats and pet-friendly nature will remain.
“One of the key hallmarks of the Kimpton brand is its deeply personal, genuine, authentic service, and they have the ability to service multiple guests’ needs and occasions across the segments as we define them, including mixing business with pleasure, short break experience, romantic getaway and well-being at a premium price point,” Solomons said.
Rhetoric aside about soft branding and maintaining Kimpton’s brand qualities, Kimpton’s customers will be taking a hard look at the evolution of the brand, including its Karma Rewards loyalty program.