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It’s been a little less than two years since Keith Barr became the CEO of InterContinental Hotels Group (IHG), succeeding former CEO Richard Solomons, but in that time, Barr has made it a point to make sure that IHG is a very different company.
“I’ve had a lot of people talk to me, saying, ‘Wow, you know, something’s different at IHG,” Barr told Skift at the Americas Lodging Investment Summit (ALIS) in Los Angeles. “Which is great to have people say, because when I took over as chief executive, my aspiration was to take a company that had been very successful, but to realize its potential in an increasingly competitive marketplace.”
Barr’s strategy involved $125 million in cost-cutting measures — primarily from layoffs — as well as major investments in technology, including a new reservations system, called IHG Concerto, and soon, a new property management system.
“it was a tough year, because that $125 million in cost savings impacted people, and that was across the world,” he said. “I rallied the team together a year ago in January, actually here in Los Angeles, over at the InterContinental, and brought everyone into the tent and said, ‘Hey we’ve been successful, we’re going to be successful, but things have to change. And we restructured the company. And touch wood, they did an extraordinary job.”
His ultimate goal for IHG? “How can we become a more agile company? How can we move faster?,” Barr said. “How can we take costs out of the business, which is tied up in lower-value activities, or where we can leverage new technologies to create financial capacity to invest for leverage for growth in the business?”
“My aspiration is to have a full robust brand portfolio from the upper end of luxury into mainstream, and we still have some gaps there,” Barr said. “I want us to continue to innovate and lead in digital data technology.”
Growth and acquiring more scale is as top of mind for Barr as it is for his competitors, and he said he intends to grow IHG “by either launching new brands, acquiring brands, taking new brands to new markets, and also repositioning our existing brands and innovating.”
Restructuring also means making investments in the luxury and upscale hotel space, as well as focusing in on loyalty, in addition to technology. And Barr isn’t content to stop there.
“I guess, when you do deals, more deals come to you,” he said. “When people see you launching new brands in new segments, seeing Kimpton going international, seeing an InterContinental hotel there and then seeing it in San Diego and Washington, they go, ‘You’re a different company than you were five years ago.’ But I’m not where we want to be. I mean, I think we can do so much better than we are today.”
IHG’s M&A Strategy
When it comes to buying brands, Barr said any brand that IHG would buy has to fill a “gap in our portfolio” and especially in the luxury space.
“Like everyone else in the industry, we’re going to look at all the companies that are out there and see if there’s any opportunity to do something, but like everyone else, we’ll look at 10, 20 things in a year and maybe nothing, too,” he said.
Barr said that IHG’s acquisition of Kimpton is a good example of how IHG wants to buy and build up brands — by letting them operate independently, as well, especially when they are as boutique and lifestyle oriented as Kimpton.
“That’s hard for us to do, because we love scale,” Barr admitted, referring to IHG’s history of building up some of the world’s most iconic hotel chains, Holiday Inn included. “Let’s be honest about it. With Avid, we’ve got an Avid team that plugs into the enterprise, and it works that way. Kimpton’s not that way. They’re still based in San Francisco, you’ve got Mike DeFrino, and Kathleen Reidenbach, and Allison Reid. That’s the CEO, chief commercial officer, and chief development officer.”
While the “back office, finance, and legal-related affairs” for Kimpton have been integrated into the IHG system, Barr said Kimpton still “controls the marketing and tone of voice. What we try to do is give them the power of the IHG enterprise, but not try to make Kimpton just another product on the shelf. We recognize the unique way of selling it, unique way of running it. I think you’ll see us do more of that.”
Likewise, with Regent, Barr said the leadership for that brand is still based out of Asia. He added, “If we acquire something else in the luxury space, probably run that independent as well. So, we can get the benefits of the scale enterprise, but prevent the brand from becoming homogenized; I think that’s the mistake that some other companies have made over time — they haven’t kept the DNA of what makes it really special. If I just treat Kimpton like it’s another one of the brands, we’ll sell it. But there’s an esprit de corps to that team, there’s a culture in that group. You have to maintain and protect that.”
Investing in Technology
Another major part of Barr’s strategy for IHG involves investing in technology “behind the curtain” and that isn’t necessarily customer facing.
“Nobody sees me spending a lot of money building middleware, but that lets me go do things very differently. Nobody understands IHG Connect; people think it’s just Wi-Fi. It’s so much more. It’s a complete platform for us to be able to have a digital guest experience in the hotels. Wi-Fi was the first piece of it, but it enables us to do everything for the future. What we’ve been doing is building for the future, now we have to leverage those platforms and then continue to integrate them too.”
Following the deployment of IHG’s new reservations system, Concerto, which features attribute-based booking, IHG will also look at updating its property management system, both to make it easier to update and also for enhanced cybersecurity.
“Property management systems have to evolve to keep pace with the rest of the technology platforms that we’re creating,” Barr said. “They have to be much more integrative from a data perspective. I think they have to move to the cloud.”
Becoming Even More Global
Growing in China is also a primary objective for Barr, who served as IHG’s CEO of its Greater China business for four years prior to serving as IHG’s chief commercial officer on his way to becoming CEO.
“Our growth in China is pretty amazing. Somebody asked me the other day about it. And I said, you think about it, I moved to China at the end of 2008, beginning of 2009, and we just had 100 hotels. I left in 2013, and we had 200 hotels. A year ago at this time we had 300 hotels. This year, we have almost 400 hotels. We have another 350, 400 in development. So, our scale vision for China is materializing and we just have a phenomenal brand portfolio. I’m very bullish on China for the long term, about our potential to just have an incredible business there.”
And as demand for travel continues to grow, Barr believes “the mounting pressure on existing destinations” will lead to “new [travel] destinations that will be created.”
At the moment, Barr sees growing tourism development and interest in the Middle East, as well as Vietnam.