IHG Sees Room to Take Kimpton Worldwide as Lifestyle Hotel Brand

Kimpton Hotels & Restaurants is a boutique hotel brand created by Bill Kimpton in 1981 in San Francisco. InterContinental Hotels Group (IHG) bought it for $430 million in 2014 and has been scaling it up as a mid-priced lifestyle brand.

“International is a huge part of our expansion strategy,” said Kathleen Reidenbach, Kimpton’s chief commercial officer. Reidenbach has been with the brand for two decades.

• Kimpton has 76 hotels in operation — up from 62 when IHG bought it.
• Sixteen of those are outside of the U.S., with 11 in Europe and the Middle East, two in Greater China, one in Canada, one in the Caribbean, and one in Mexico.
• It has 41 properties in the pipeline.
• Nine of those are set to be in Europe and the Middle East. Eight will be in greater China.

What’s the pitch to developers?

• “You see the premium [rate] that we get in transient as well as group, you see it show up on the Star report,” Reidenbach said.
• The “star report” is from hotel benchmarking, research firm STR, which measures any given property’s performance in occupancy, average daily rate, and revenue per available room ranked versus relevant competitor properties.
• Kimpton claims to thrive in a context where pure business hotels are often underperforming relative to other lodgings in an era of the Great Merging, or the rise of blended leisure and business travel.
• “Guests choose us for their leisure and they choose us for their business travel,” Reidenbach said.
• “They want to have their wedding with us and they want to host their corporate offsite with us, which is an especially popular path right now. That’s the beauty of Kimpton is that we bring to the table all of that, and that’s what’s resonating with the market both domestically and internationally with owners.”

Yet some developers might balk at the Kimpton product.

• In theory, a real estate investor wanting the fun and personality of a boutique hotel could go all-in by developing a unique, independent brand instead.
• Otherwise, an investor looking for a reliable formula for cash flow might want to go with a provenly lucrative, if blander, offering, such as Holiday Inn.
• Kimpton seems to straddle the two categories as a “boutique” brand aiming for global scale and financial predictability.
• “That is the fine line that Kimpton walks,” Reidenbach said.

The brand claims it has drivers in place to produce premium rates and profitability as consistently as possible.

• “Owners tell us they love that Kimpton is both consistent and unique,” Reidenbach said. “It offers consistency where you want consistency in terms of great talent providing service that creates locally loved restaurants and bars, and a creative design sense that encourages inventive meetings and events. We hardwire all of that into the pillars of the brand.”
• “Then we pair that with a localized approach to any given property,” Reidenbach said. “We are constantly doing activations at our properties, in big ways such as running concerts, and small ways, like changing our cocktail recommendations to what’s seasonal and locally relevant.”

To add to the menu, Kimpton has been spinning a couple of variations on the brand.

• It recently debuted its first adults-only boutique hotel, the 23-room Kimpton Key West’s Ridley House.
• It has dabbled in branded residential by providing access to Kimpton Seafire Resort + Spa’s luxury amenities to The Residences at Seafire in Grand Cayman.

Is it difficult to expand internationally while staying true to brand principles?

• “We focus on how you want guests to feel welcomed and inspired as a higher level design principle that can be translated locally rather than a set of rules that come out of San Francisco,” Reidenbach said. “We have guardrails so that the coffee cup or the bathrobe isn’t too out of bounds, but we want employees in each destination to be empowered to foster human connection.”
• Hiring is a key objective.
• “Creating a welcoming and inspiring stay starts with the team,” Reidenbach noted. “We say, ‘We hire for heart — we can train the rest.’ We’re looking for creative individuals that share the brand’s values.”

Reading some online reviews and social channels suggests that some Kimpton hotels have fallen out of favor with loyalists.

• Reidenbach acknowledged some pandemic-related strains at some properties.
• “Staffing during the pandemic has been a strain,” Reidenbach said. “If part of your brand promise is offering a free wine hour and you can’t do that because of Covid, or it’s about fostering human connection but there’s a plexiglass plane between a staff member and the guest, that causes challenges in executing a vision.”
• Reidenbach said IHG has a broader goal of “tightening the brands.” During the pandemic, IHG let some owners slip on upkeep or maintaining some brand standards — but that period is ending.
• “In 2023, a number of properties will be renovating, and that’s exciting,” Reidenbach said. “We’re bringing back our concert series to several locations, and so on.”

Kimpton has strived to stay close to guests through “social listening,” which could have a side benefit of making its digital marketing more cost-effective.

• The brand identifies emerging emotional buttons with guests and creates campaigns or programs to generate word-of-mouth referrals.
• In December, Kimpton identified a perception among people that many travel influencers on social media tend to represent limited slices of society.
• So it launched a “stay human” collective of social media influencers, trying to promote the voices of more diverse content creators and offering these influencers stays at their properties.
• Starting in February, a handful of properties will attempt to offer packages that better reflect diversity.
• Another example of “social listening”: Many mothers talked online about the social debate over breastfeeding. In September, Kimpton introduced on-demand fridges specifically for storing breast milk at its U.S. properties.

Talk of creativity and talent may sound expensive and headache-inducing to some potential capital partners.

• Yet a handful might like the mix if it can produce consistently higher margins.
• IHG Reidenbach also touted how Kimpton will benefit from the marketing blitz that parent group IHG has been making to drive awareness in its loyalty program, along with the revenue management and other software enhancements IHG has been adding to all its brands to boost operational efficiency and rate-setting while shifting share to direct bookings, which are lower cost than ones that come through online travel agencies.

Whimsical creativity was a key to the original Kimpton brand. Industrializing quirky is a tricky task.

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