Editor’s Note: This interview is part of Skift’s CEO interview series. This particular series is with hospitality CEOs talking about the Future of the Guest Experience and the evolving expectations and demands of hotel guests. Check out all the interviews as they come out here. Also, enjoy the previous series on the Future of Travel Booking, with online travel CEOs.
InterContinental Hotels Group is one of the world’s largest hotel chains with more than 697,000 rooms in close to 100 countries.
Its most iconic brand, Holiday Inn, is designed for a mix of families and business travelers, but the group has also become a force in the boutique and lifestyle sector with the Hotel Indigo and Even Hotels brands. IHG enhanced its stature in the market when it agreed to acquire Kimpton Hotels & Restaurants for $430 million in cash in December.
InterContinental Group now has more than 4,700 hotels and 1,100 more under development.
Richard Solomons, CEO of the group since July 2011, recently spoke with Skift about the evolving guest experience, adopting the experience to the brand or customer, and the thinking behind the group’s recent acquisition of Kimpton.
Skift: What are the biggest challenges you face in improving the guest experience?
Richard Solomons: It’s not unique to the hotel industry but customers are much more clear about they want today, therefore, as a supplier you have to be very clear what your brand stands for. One of the advantages that we have is that our brands are very clearly defined. We can target our brands much more clearly.
If you’re clear about the brand then the challenge is making sure that it is delivered on the ground, partly through the physical product but primarily through the overall experience. That’s a lot about the people. You hear hotel people talk about it all the time but the challenge, especially in a management franchise world, is really training people, helping them understand the brand, and making sure that you give them the tools to deliver a consistent experience.
It’s easier if you own the hotels and all the people work for you. In a franchise, it’s about explaining, training and taking people with you.
There’s also technology as an enabler, not just in the hotel but across the guest journey. Whether it’s a guest planning or booking their stay or giving feedback, there is some coherence to the whole brand experience
Skift: You touch on technology so let’s dive into that. What role does technology play in improving the guest experience? Is consumer-facing or back-end technology more important or effective?
Solomons: In one sense, what’s behind the scenes doesn’t matter at all because nobody cares what you have to do to deliver the front-end experience. However, you can’t deliver the front-end experience unless you sort out the back end.
That’s one of the reasons why things sometimes take longer than you might think in the hotel sector. It’s easy to announce or pilot something, but getting it right consistently across properties requires the right back-end. We spend several hundred million dollars a year in technology. The front-end stuff isn’t that difficult if you understand your brands and your consumers, which I believe we do.
The big players, and we’re one of the biggest, are getting on with it. The medium or small players are really struggling because they can’t fund it. I hope that there’s always going to be room for small chain and boutique players, but the big players have what it takes to deliver what consumers expect today.
Skift: What’s one unexpected shift that you’ve seen in guest expectations or demands?
Solomons: You always hear about the question of whether the customer knows what they want or you have to tell them what they want. We didn’t know if we needed the iPod or the Walkman until we were told that we needed it. There is clearly something about being able to drive innovation for the customer. Using your phone as a room key might be one of those things. You wouldn’t have necessarily defined that as a customer. What it means is that you really have to understand the consumer.
One area where I believe that IHG is ahead of the game is the way that we think about the customer. In our industry, we talk about economy, midscale, upscale and luxury, but that’s all a price point and now how consumers think. Several years ago we did a massive study into the segmentation of the consumer. We really looked at the needs, the occasion and who these customers are. If you understand them better, you can actually deliver against their needs, which are going to vary a lot by brand.
Mobile check-in is perfect for the Holiday Inn Express customer. The average InterContinental customer wants to talk to people. Mobile check-in is probably irrelevant for them. They’re much more concerned about the quality of the resort experience.
You’re really targeting innovation to what the customer wants, which is what has changed. When I grew up, you could get a sedan, a sports car or a wagon. That was it. Think about all the options out there today and that’s true in many segment. There’s such a range of hotels that customers are much more targeted, which means you have to understand them better.
Skift: What are your views on the increase in hotel fees levied against guests?
Solomons: It’s as true for hotel guests as it is in any business. People want to pay for what they value and not pay for what they don’t value. What you tend to find is that customers pay for a basic service and then extras on top of that. It’s not something that I see as a big trend in hotels yet, but it could become more so. We’re a long way from where airlines are today, but what it means is that you don’t necessarily have to pay for a service that you don’t need.
Most travelers are pretty smart and they know what the total cost of their trip is going to be. It just comes back to being transparent about what you’re charging, which is very important in order to gain the trust of your guest.
Skift: How has content and social media changed InterContinental’s conversations with its customers?
Solomons: It is changing quite a lot but I think we’re all still experimenting. Clearly what social media has done is given everybody a voice.
The obvious one is reviews and we talked about transparency before but transparency of quality is probably the single biggest change. We’re not unique in this but we’ve pushed reviews in a very big way. We found that we have significantly more reviews posted on our own website than all the other big ones.
What’s changing now is that guests want to know that someone writing a review of a Crowne Plaza or Holiday Inn knows what they’re talking about. You never quite know on third-party sites. What social media does is reinforce the relationship between the brand and the customer, whether it’s dealing with a problem or just sharing news.
Skift: Speaking of brands, let’s talk about IHG’s recent acquisition of Kimpton Hotels. What aspects of the Kimpton guest experience does IHG want to offer to guests? What do you think is driving this demand for a boutique stay?
Solomons: As a brand family, we’ve bought and launched brands in the past. It’s a matter of whether there’s something out there that’s good enough to acquire. Forget the price. If there is something that’s good enough, are they of the quality to fit within the brand family that we’ve created? Or do you have to launch it yourself and is that feasible?
I don’t believe that it’s feasible today to recreate what Kimpton has created. They have a great understanding of customers, which really goes back to Bill Kimpton. They are better at running, designing and maintaining restaurants than any other hotelier.
They have quite a lot to offer us as we look to grow our business and, conversely, we have a lot to offer them. They can’t afford to invest in technology in the way that we can, we have relationships that enable us to bring new owners into the field, and, very importantly, it’s a brand that has potential overseas. Kimpton recognized that they couldn’t leverage that.
One of the big similarities between Kimpton and IHG, which I think goes to the heart of a lot of what we’ve talked about is that Kimpton was founded by ono person. It was his vision to create this unique restaurant and hotel business. They still talk a lot at Kimpton about how the history of the company is embodied in this one man. With Holiday Inn, we still talk about Kemmons Wilson who founded the Holiday Inn business.
One of the big things in today’s world is who you trust in business and what businesses stand for. Kimpton, Holiday Inn, InterContinental are business that are truly driving hospitality in the image of their founder. You can trust a company that stands for something. We’re not just a new venture that can then IPO and make ourselves a billion dollars – as much as we’d love to.
One of things that really struck the Kimpton team when they were choosing a partner and when they first met us is that there’s such a similarity there. I might sound soft to be a CEO talking about this, but I really do think it’s important as a business today to stand for something.
Skift: Is there anything about the guest experience that you are focused on improving or thinking about that we haven’t touched on today?
Solomons: I can get carried away sometimes looking at the complexities of our industry. Fundamentally people want to come in, have a nice meal, a great meeting and go home happy. If you don’t deliver a great experience then the rest really doesn’t matter. That’s why we’ve always been focused on what our brands and we stand for.
We talked about trust a lot, but it is what drives consumer behavior. In a world where, without sounding too portentous, there are so many uncertainties, customers are more and more looking for who they trust. Whether it’s Holiday Inn or BMW or HBO, there are brands that truly stand for something and consistently deliver a great experience. That’s what I think is at the heart of a successful hotel business.