What's in a name? Well, for IHG, that's the next big--and pretty crucial--step in rolling out its 13th hotel brand. Another big step needed? Making sure it'll stand out from all the other value-driven midscale brands out there.
The hotel company revealed the news to more than 3,000 hotel owners attending IHG’s 2017 Americas Owners Conference in Las Vegas. The brand is code-named Project Horizon, and you can view a promotional video below.
Here’s what little we know so far about this as-yet-unnamed brand:
- It is a midscale brand with rates that will be $10 to $15 lower than rack rates at a comparable Holiday Inn Express property.
- The brand is designed for new build projects with around 90 to 100 rooms, spread out over 1.5 acres.
- The brand will launch in the Americas.
- The brand is for what IHG termed “principled everyday travelers” who want “exceptional quality at a great price” and are “practical, self-reliant, and value a hard-earned dollar.”
- Rooms are “designed for sound sleep” and will measure 220 square feet for a king room (making up 65 percent of rooms) and 275 square feet for a double queen room (making up 35 percent of rooms).
- In-room technology will include the ability for guests to cast content from their own devices onto the TVs.
- Complimentary breakfast will be “no nonsense” but with “brand-name options.”
- It will cost a hotel owner from $85,000 to $90,000 per room key to build and the first 100 license agreements would get a discount. IHG will have a 5 percent royalty fee.
- The brand will be “franchise ready” by this fall, and the first hotels are expected to undergo construction by 2018 and open by 2019.
Speaking directly to reporters in a media call, Heather Balsey, IHG’s senior vice president of brands and marketing for the Americas, said this new brand has the potential to capitalize on a segment of the industry that is “worth $20 billion in annual industry revenues” and that it was designed to “cater to guests who are not being served today.”
Balsey also emphasized that this “next power brand in the industry” is “deeply rooted in guests’ needs” and used descriptors such as “fresh, fair, and frank” to describe how IHG is “completely rethinking what a hotel in this space should stand for.” She added that the name will be revealed in the “coming months.”
IHG isn’t the first hotel company to publicly announce a new brand without disclosing its name. Just last year, Trump Hotels did the same when initially publicizing its new boutique hotel brand, Scion.
“It seems that IHG is in the middle stages of the launch of this brand,” said Makarand Mody, assistant professor of hospitality marketing at the Boston University School of Hospitality Administration. “They seem to have a fairly fleshed-out concept in mind and its associated target market descriptors, and business model parameters, such as cost per key etc. I’m sure there is more they haven’t disclosed yet and are working on.
“The name and the logo, being critical components of the brand identity, are elements that require extensive testing and research. I suspect they are in the middle of testing out options with potential consumers by showing them the concept and asking them about their preference for a variety of name and logo options before deciding on which one to go with. In that sense, this market research is fairly typical and thus the lack of name and logo are not uncommon for a ‘very soft’ brand launch such as this.”
Competing Against Tru by Hilton
Judging from what information about this new 13th hotel brand that IHG has disclosed, however, it does sound somewhat familiar to descriptions of Tru by Hilton, which just recently opened its first property in Oklahoma City just a few weeks ago.
Mody agreed, saying, “In terms of a concept such as this, that they are targeting mainstream travelers below the Holiday Inn Express brand, and from some of the concept descriptors highlighted … the first brand that came to mind as a potential competitor was Hilton’s new Tru by Hilton brand. I feel like this is the brand that inspired the new brand development process for IHG.”
Like this new brand from IHG, Tru by Hilton was initially publicized as a brand that would be cost-effective for both owners and hotel guests. And since making that announcement in January 2016, Hilton has seen a lot of early success.
Earlier this month, Alexandra Jaritz, global head of Tru by Hilton, told Skift that the brand has a “total of 425 deals in various stages of development,” making it the fastest new development pipeline in the history of the hotel industry, according to STR.
Jaritz said she thinks what’s driving this incredible development pace is simple: consumer demand.
“Forty percent of guest demand is in the economy and midscale segments,” she said. “In that segment today there’s really nothing out there like Tru by Hilton that is meeting consumer needs. There’s inconsistency in that segment today, and not a lot of innovation.”
That being said, one might even argue that Tru by Hilton was inspired by Starwood’s Aloft, which was launched in 2005, as well as many of the micro-hotel or pod-like hotels, including Pod Hotels, that have debuted in recent years.
After all, as iconic hotelier Ian Schrager has said before, “Hospitality is a me-too industry.”
A Market Opportunity
The reason why so many hotel companies are all in pursuit of this type of a brand has to do with the potential returns.
“There is definitely potential for such mainstream brands, driven by one of the trends highlighted in the Skift Megatrends Report: global overtourism,” said Mody. “Those middle-class individuals and families who take low-cost carriers and are just beginning to vacation abroad require something similar in terms of their accommodation choice, which I don’t think any hotel brand owns right now. Airbnb has tapped into some of this market quite effectively. Though I don’t see this new IHG brand as being as exciting as an Airbnb from an experiential standpoint, it can definitely be a challenger to the sharing economy from a value standpoint, driven mainly by price, and tap into this trend for overtourism.”
Mody believes the new brand might have potential interest from Millennials if it can add something exciting to the mix.
“From a domestic standpoint, I feel that the brand may find some resonance with the Millennial traveler provided it can offer something exciting,” Mody said. “One of my concerns on reading the description of the concept is that nothing really stands out as something that would make a Millennial go, ‘This is something I really want’ or ‘This is something cool,’ or ‘This is something exciting.’ The value-hunting Millennial derives value not just from price — in contrast with the international overtourism segment — but also from the experiential element, which the new brand seems a little light on as currently described.”
That’s something we’ll no doubt hear more about from IHG as it works on refining the concepts for its newest brand. And if IHG’s recent design refreshes and investments in its other brands such as Holiday Inn, Holiday Inn Express, Candlewood Suites, and Staybridge Suites are any indication, it’s clear that design and technology will also play major roles in shaping the brand identity of this yet-unnamed hotel brand.
Watch a promotional video about the new brand here.
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Photo credit: Design inspirations for IHG's newest brand, as depicted in a brochure. InterContinental Hotels Group