IHG Happy to Keep Doing Things Differently to Competitors

InterContinental Hotels Group Chief Executive Richard Solomons has chosen a good time to bow out.

The United Kingdom-based company’s share price has hit record levels recently and its first-quarter results revealed a 2.7 percent rise in global revenue per available room – a key hotel industry metric.

Solomons is stepping down and will be replaced by chief commercial officer Keith Barr in what looks to be an orderly transition. Barr is part of the IHG’s executive committee and has been a key player in the decision-making process so it seems likely that he will continue with the same strategy as his predecessor. And what is interesting, is that this is markedly different to others in the sector.

On an earnings call with analysts after the release of the results, Solomons spoke about the approaches of some of his competitors, and how IHG differs.

“A few years ago if you took the big five — Hilton, Marriott, Starwood, Accor, and us — there was quite a similarity in the sense of growing the business, driving brands focusing on organic [growth],” he said.

Solomons believes that IHG is essentially the same business as it was then. Although in that time it has bought Kimpton Hotels & Restaurants and moved to an asset-light strategy.

There were rumors that IHG was interested in buying Starwood and had it beaten Marriott to the deal, you sense that Solomons might be talking quite differently (and quite possibly not retiring.)

“Hilton is now controlled by the Chinese effectively with a 25 percent stake… and who knows where that will take it. Marriott and Starwood obviously is a mega-merger with 31 brands, clearly they’ve gone for scale above all else, they have done a lot of other acquisitions as well and as I understand it have bid on many others they haven’t been successful with. And Accor is taking a… very diverse route in terms of many investments right across the hospitality and digital spectrum,” he said.

“So I’m not making a value judgement about where the others are. I do think for us we’ve very much focussed on organic growth, where we think there’s the most value.”

Q1 takeaways

Europe was a particular strong performer for IHG with revenue per available room (RevPAR) in this region up 6.9 percent. Inbound travelers taking advantage of the the fall in value of the pound, helped RevPAR rise 12 percent in London.

On the other side, Asia, Middle East & Africa was a weak spot for the company with RevPar only up 0.1 percent

IHG currently has 232,000 rooms in its pipeline, up 5 percent year-on-year.