Skift Take

The Americas still takes the (slightly) biggest piece of IHG's development pipeline pie, but Greater China is vaulting forward each year with new signings and higher room counts for the company behind brands like Holiday Inn and InterContinental.

Series: Early Check-In

Early Check-In

Editor’s Note: Skift Senior Hospitality Editor Sean O’Neill brings readers exclusive reporting and insights into hotel deals and development, and how those trends are making an impact across the travel industry.

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IHG’s quest to return to the record-setting pace of development and expansion last seen in 2018 relies significantly on international markets. 

The hotel parent company behind brands like Holiday Inn, InterContinental, and Kimpton operates a bulk of its portfolio in the U.S. and generally relies on the Holiday Inn brand family — led by Holiday Inn Express — to throttle up its overall guest room count. But the company’s most recent annual report and 20-F filing shows an increasing tilt to Greater China. 

Greater China — a debated term within the industry and geopolitics that usually encompasses Mainland China and the special administrative regions of Hong Kong and Macau but Chinese leaders also leverage on Taiwan, which companies like IHG have also used — had both the largest share of IHG room openings in 2021 as well as room signings, outperforming both the Americas as well as Europe, the Middle East, Africa, and Asian countries beyond China.

The region was also the only of IHG’s three regions to increase in number of properties — IHG added nearly 13,000 rooms across 69 hotels in Greater China compared to a loss of nearly 4,000 rooms across 12 hotels in the EMEAA region and a drop of almost 15,000 rooms across 30 hotels in the Americas. 

The attention to China might be a head-scratcher for some, as the region is the worst-performing of the three main hotel markets currently in light of its zero-tolerance approach to new spikes on coronavirus cases. Revenue per available room, the industry’s key performance metric, was down 4 percent from 2019 levels in the U.S. last week while it was down 13 percent in Europe and a 42 percent decline in China. 

“This year will be volatile, and it could spill over a bit into next year,” IHG CEO Keith Barr told Skift last month. “But we run this business for the long term, and I wouldn’t stop investing in China.”

Taking the Long View: IHG and other hotel executives continue to take the long view on China and see its large domestic population, growing middle class, and significantly lower number of branded hotels compared to the U.S. as fertile soil for expansion. This is particularly good news for IHG, which declined slightly in size last year in light of an initiative to remove underperforming Holiday Inn and Crowne Plaza hotels from its network. 

The pressure is on to achieve 2018 levels of growth, which at the time was the highest level of expansion the company had seen in a decade. IHG’s development pipeline will help fuel that return, company leaders noted on an investor call last month. 

While the company accounts for 4 percent of all hotel rooms globally, IHG has nearly 11 percent of the global development pipeline. IHG has a 453-hotel development pipeline in Greater China, including the Holiday Inn, Regent, InterContinental, and Hotel Indigo brand families. 

“We’ve been there since 1984, and we’ve had a long-term [bullish outlook] on China, and it’s paid dividends,” Barr said last month. “It’s our fastest-growing market still [and] pushing near double-digit growth.”

Currently, the Americas accounts for 57 percent of IHG’s more than 880,000 rooms while EMEAA comprises 25 percent, and Greater China has 18 percent. The Americas barely leads the company’s nearly 271,000-room development pipeline, accounting for 36 percent of the rooms in development. Greater China is a close second place at 34 percent, and EMEAA comprises 30 percent of the development pipeline. 

Brand Expansion: While the Holiday Inn brand family might drive a bulk of IHG’s growth, the company beefed up its brand portfolio to better compete across a variety of price points and have a better, well-rounded offering to take to potential franchisees. IHG added nine brands to its portfolio via organic launch or expansion in the last decade. 

This includes Six Senses, Regent, Kimpton Hotels & Restaurants, and the Vignette Collection in the luxury and lifestyle tier. Voco, Even Hotels, and Asia-focused Hualuxe Hotels and Resorts expanded IHG’s reach in what it labels its “premium” division, which originally was comprised of only Crowne Plaza. Avid, which operates in IHG’s “essentials” division alongside the Holiday Inn brand family, was launched in 2017 and is already a significant part of the company’s growth plans. 

“The Holiday Inn brand families are a core driver. Avid is the second one, and then it’s a balanced approach across luxury and lifestyle and upscale,” Barr said last month. 

Ian Schrager Poised to Buy Hollywood Standard Hotel Site

Nightlife-turned-hotel maven Ian Schrager is reportedly close to inking a deal in partnership with Ed Scheetz — former CEO of the Schrager-founded Morgans Hotel Group — to buy what was once The Standard, Hollywood, the Real Deal reports

Standard closed the 139-room hotel for good last January after its leaseholder, Spanish real estate firm the Ferrado Group, raised rents, the company said in a statement at the time on its website and social media. 

Schrager and Scheetz plan to rebrand the hotel under a different name, but no timeline on the deal was made public. The deal comes as Schrager continues his partnership with Marriott on the Edition brand, which has a hotel near the Standard Hollywood site. He is also at work on an expansion of his Public Hotels brand, which he aims to usher in an era of high-end, limited-service hotels.

A representative for Schrager did not respond to Skift’s request for comment on the Hollywood deal in time for publication.

Major Brands Hit Pause of Russian Hotel Development Plans

The hotel sector was one of the few Western holdouts when it came to doing business in Russia amid the country’s invasion of Ukraine. Boeing, Airbus, Starbucks, McDonald’s, and a variety of financial firms practically raced each other out of Russia, but hotel companies were quiet on their own plans until last week

Accor, Hyatt, Hilton, IHG, and Marriott respectively announced they would freeze plans to open future hotels in Russia as well as halt development and investments. Companies also shuttered their corporate offices in Moscow.  

Companies still plan to operate existing hotels in light of franchise agreements they have with third-party owners — the hotel companies themselves largely don’t own the hotel real estate utilizing their various branding. 

“We have been closely monitoring the deteriorating situation in Ukraine, Russia and neighboring countries, and remain in regular contact with our teams on the ground, as we work to comply with sanctions and applicable laws. Our hotels in Russia are owned by third parties and we continue to evaluate the ability for these hotels to remain open,” Marriott released in a statement late last week. “We deplore the loss of life, widespread impacts to millions of innocent civilians and the humanitarian disaster in Ukraine. We strongly support those working towards peace and an end to the needless suffering.”

Reporter’s note: This is my last week at Skift and this will be the last Early Check-In under my watch. While I might be going, Early Check-In will continue. Thanks so much for “checking in” each Monday morning for all the latest in hotel deals and development!

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Tags: Early Check-In, ian schrager, ihg, marriott, Skift Pro Columns, ukraine

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