The owner of some of the world's most recognised hotel brands remains focused on winning in Europe
Hospitality is a vital industry for the UK – and one that could stand to benefit from a weaker pound, as long as the business travellers keep coming. But for InterContinental Hotels Group (IHG), the UK is also a crucial market for testing and learning new concepts as it grows its brands across Europe and beyond.
Speaking to Business Voice just before the EU referendum, Angela Brav, IHG chief executive for Europe, emphasises the importance of the UK’s “scale and maturity” in helping the brand owner work out how to respond to changing consumer habits and new technology in a fiercely competitive sector.
With more than 300 hotels here, it is the only market in Europe to have all six IHG brands – InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express, Hotel Indigo and Staybridge Suites. It is also near the top of the list for getting a Kimpton – the US boutique brand bought in January 2015, which is launching its first hotel outside the US in Amsterdam next year.
And although the UK remains a relatively small market for IHG globally in terms of revenue – despite the company being headquartered in Buckinghamshire – it is also one of three named “key markets” for Europe. As such, it appears alongside Germany and Russia in a new strategy that has meant focusing the business priorities around the best opportunities for growth.
Focus on winning
When the American-born executive arrived in Europe at the end of 2011, she was clear that there was no “Europe”.
“Europe is a really diverse, very complicated region. You can’t tackle 'Europe' or say you’re going to grow 'in Europe'. You have to be clear about where your brands are going to work the best. Which economies are ready for you and how do you need to operate in those markets?” she explains.
With that in mind, IHG decided to be “very deliberate about where we wanted to win”, she continues.
Europe is a really diverse, very complicated region
Making choices about where IHG had real strength was initially a huge risk, she continues. It meant pulling back from development plans in Turkey and Poland, for example. It also meant alienating people in the process. But four and half years later, she says it was a no-brainer that has allowed global brands to take on a more successful local flavour and “have a personality”.
And Brav’s take on picking Russia as a key market carries a certain reassurance for continued success in the UK post-Brexit. “Everybody thinks Russia is off the rails,” she says. “You would think that with all the things going on in Russia and all the challenges they’ve had politically that the market would have fallen apart, but it hasn’t.
“In fact, we’ve had more signings in Russia than ever before and it’s because Russians are spending their money in Russia, which is who we were trying to attract with the Holiday Inn brand; Russians travelling in Russia as much as international travellers.”
The need for more rooms and more quality creates a significant opportunity for mid-scale brands, she says.
A lifestyle edge
As for the UK, Brav says it’s at forefront of the roll-out of IHG’s lifestyle and boutique brands, Hotel Indigo, as well as Kimpton. Hotel Indigo York, which opened in July 2015, was the ninth to launch under the brand in the UK – out of 19 in Europe. Nine more openings are planned across the country, including one in Aldgate, London next year.
The UK has also led the transformation of the Holiday Inn brand – one of the biggest IHG has ever undertaken.
As well as service and guest room improvements, this has included the roll out of the “Open Lobby” concept, which combines front desk, lobby, restaurant, bar, lounge area and business centre in a more contemporary space. It gives both guests and local visitors more flexibility, similar to how they would use space at home – and it has prompted a 7 per cent improvement in guest experience scores and a 10 per cent rise in spend on food and drink across Europe.
There have been big efforts on improving IHG’s food offering in the UK too, as food and drink is both a huge revenue driver and the biggest employer within the company. In fact, more people eat than sleep at IHG’s hotels.
“I think we’re just now getting our mojo in that space,” Brav says – and this has become all the more important in light of increasing competition from the restaurant and bar market.
To keep pace with the trends, IHG opened upmarket burger restaurant Stock Burger at the Holiday Inn in Brighton earlier this year, which has already been recognised at the National Burger Awards – no doubt precipitating its planned roll out into other hotels. And following the longstanding success of chef Theo Randall’s restaurant at the Intercontinental Park Lane, in March he opened Theo’s Simple Italian – a “casual dining” experience, as part of Hotel Indigo Kensington – Earl’s Court.
Technology as a given
Although Brav doesn’t see the rise of challenger brands, such as AirBnB, as too imminent a threat, she believes they have forced the industry to “sit up and do things even better”. And the technology that has made such disruption possible is also behind many of the changes at IHG.
“Without technology you can’t deliver exceptional service experiences to your guests; full stop,” says Brav.
Since last year, the company has been trialling various app-based services, offering mobile check-in and check-out, personalised information and offers, translation services and even mobile room key technology. It has also further developed its long-standing loyalty scheme to ensure guests get the best offers by booking direct. But the biggest transformation has been at the back-end, with a new global reservations system designed to help staff better manager guest interactions and further personalise their experience.
Without technology you can't deliver exceptional service experiences to your guests; full stop
Crucially, says Brav, a lot of time and money has been spent trying to anticipate where technology is heading to ensure the company is building something that can adapt with future developments.
She also emphasises the importance of using technology to gather data and insight from guests – not only on their indicated preferences, but also through trends and purchase patterns “to develop the brands in ways that guests didn’t know to ask for”.
But she adds: “You can have the best technology but if you don’t make it relevant to your employees, and they don’t use it, it doesn’t matter.
“Technology is not delivering the pillows into rooms. Technology doesn’t clean our rooms. While it checks you in, you still want an employee there so that in case the technology doesn’t work, you’re not struggling with it. The technology has to be leveraged by employees.”
And this is an important challenge that IHG, as a largely franchised business with relatively few direct employees, has to nail. But Brav believes that ensuring employees are the desired face of the brand boils down to one thing: having amazing brands that are relevant to three stakeholders – the guests, the hotel owners and the employees.
“If I have great brands and great owners, then I will have a higher propensity to attract the most amazing employees,” she explains, arguing that the hospitality industry has changed for the better over the past decade to offer rich career opportunities for those entering it.
“For the past five years we have really focused on our owners,” she continues. “What are their values? Are their values similar to our values? Are they people that we enjoy doing business with? Because think about it from this side: our relationships with our owners are 20-plus years and how many marriages last that long?”
As many businesses are finding, success is hard to come by if it relies on complying with demands from HQ. Instead it’s now about building strong brands that business partners want a piece of and guests want to experience.
And regardless of current political or economic uncertainties, Brav remains passionate about her patch and its continued growth prospects.
“A global company that doesn’t do an amazing job in Europe, doesn’t have a globally strong brand,” she says. “If people love your brands here, they’ll seek them elsewhere.”
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