With an active construction site for a Hotel Indigo property as the backdrop, IHG’s Elie Maalouf discusses the growth prospects of the company’s brands during this strong economic cycle.
LOS ANGELES—Surrounded by the frenetic pace of construction at the massive $1-billion Metropolis project in downtown Los Angeles, Elie Maalouf was in the mood to talk hotel development.
The current economic landscape put some extra bounce in the steps of Maalouf, CEO of the Americas for InterContinental Hotels Group, and nearly every other executive attending last week’s Americas Lodging Investment Summit. Like most hotel leaders, Maalouf said his portfolio growth is one of his primary goals.
“I just have a level of confidence about our industry, about our position in the industry, about our strategy for that position and how we’re going to continue to grow on it,” Maalouf said during an interview conducted in the nearly complete Hotel Indigo Los Angeles Downtown, which is part of the Metropolis project. “When you look at the fundamentals, improving business climate, continued global flows of travelers, contained supply growth across the country, the strength of our brands and the strategies that we have to expand them and grow them with their owners—we feel pretty good about that strategy.”
IHG’s global pipeline includes nearly 1,500 hotels comprising nearly 230,000 guestrooms, according to Maalouf. As of 30 September 2016 (the latest data available from the company), IHG’s existing global portfolio consists of 5,099 hotels (754,265 rooms).
“It’s pretty healthy across all the brands,” he said.
The 350-room Hotel Indigo L.A. Downtown is one of the jewels in the development crown because it will establish the brand in a billboard location in a gateway market, Maalouf said. It is being developed by Greenland, a Shanghai-based developer, as part of the Metropolis mixed-use project that will also include three residential towers, retail, restaurants and athletic studios.
There are 72 Hotel Indigo properties (8,554 rooms) open with 68 more hotels in the pipeline, Maalouf said. The downtown L.A. property has nearly three times the number of rooms at an average-size Hotel Indigo.
Other brands are also in growth mode, according to the executive.
Holiday Inn Express
Maalouf said the Holiday Inn Express brand continues to be the pipeline leader for the company and the industry as a whole. The brand has 2,469 hotels comprising 243,234 rooms in its portfolio, with 678 hotels in the pipeline.
“We work hard at that,” he said. “We’ve got some people who really keep doing that very well, and I’m very proud of that. But it’s really about the full portfolio.”
InterContinental Hotels & Resorts
The InterContinental brand has 186 hotels (63,742 rooms) open and 58 more in the pipeline, including a 900-room property just blocks away from the Hotel Indigo L.A. Downtown and hotels in Washington and San Diego.
Kimpton Hotels & Restaurants
IHG’s integration of Kimpton, which it acquired in December 2014 for $30 million, is moving along, according to Maalouf. The boutique hotel brand has 63 hotels comprising 11,379 rooms open and 17 hotels in its pipeline.
“Kimpton has continued to grow very well, and that’s bringing our joint resources together,” he said. “We’ve brought great integration to our teams, great integration to our resources. We’re bringing, really, the power of IHG and the strength of Kimpton to grow their brand around the world and the United States.”
Crowne Plaza Hotels & Resorts
IHG in 2016 announced a $200-million investment to accelerate the growth of its Crowne Plaza brand. Maalouf said it has been gaining momentum and has 90 hotels in the pipeline to complement the 401 hotels (112,112 rooms) already open.
“(It’s) a long-term plan with our owners and IHG … to bring innovative marketing, innovative guest experience, innovative hallmarks, designs from the guest room to the meeting spaces, to the restaurant and bar, even brand new uniforms,” he said. “This year is really a decisive year for Crowne Plaza and its growth.”
“Holiday Inn is really the heritage of this company, beginning with (founder) Kemmons Wilson and everything he did, and it continues to expand globally,” Maalouf said. “If you look at our pipeline figures, Holiday Inn is right up there in terms of signings and openings around the world and the United States, so it’s really continued to be a brand of demand by guests, by owners.”
The latest Holiday Inn prototype, called H4, will have an “open, collegial, contemporary lobby” concept when launched in the U.S. this year, Maalouf said.
“We’re very pleased with the progress of Holiday Inn,” he said. “It continues to be one of our core drivers for the company.”
Holiday Inn has 1,155 hotels (209,297 rooms) open and 253 more properties in its pipeline.
Relationship with owners
Companies that count on franchising for substantial growth, such as IHG, must ensure they have excellent communication with hotel owners to foster the mutually beneficial relationship, Maalouf said. Those owners, he said, are on board with IHG’s growth and changes to the individual brands.
“We have to keep working hard to earn their trust, to produce leading and winning designs and experiences for our guests but great returns for them,” Maalouf said. “That equation has been working for us, and they’ve been voting with their approval and with their signings and with their openings of our brands. I feel a great weight of responsibility to continue that and to continue to produce for them.”
Identifying consumer trends
A strong pipeline also hinges on consumer preferences—guests want more products from hotel chains that cater to them, Maalouf said. IHG in January released its first 2017 trends report that focused on the issue.
The report, called “The Uncompromising Customer: Addressing the Paradoxes of the ‘Age of I’,” reflects on what guests want, where they want to go and how they want their experiences to evolve, Maalouf said. The complicated part is that guests want things to be available, but they want experiences to be scarce and exclusive.
“There’s been a paradox there,” Maalouf said. “How do we work together to find that experience for them and maintain that abundant rarity, or the other one?”
There are four paradoxes outlined in the report:
- The paradox of separate but connected: Seeking a constant belonging with people, brands and places, while also seeking individuality and the desire to communicate uniqueness of self.
- The paradox of abundant rarity: A desire for luxury to be both scarce and available.
- The paradox of seeking a better me and a better we: Seeking personal self-improvement, while seeking public, civic or global improvement.
- Do it myself and do it for me in my way: A desire to be in control while not being the controller.
Maalouf said key motivators for guests include experiencing individuality while being around people they like.
“Those are just two examples (of) how we keep peeling back the layers of what our guests are telling us so we can more deeply personalize the experiences for them, and keep them closer to our properties and our hotels,” he said.