IHG: New midscale Avid Hotels will be ‘mass-scale play’
 
IHG: New midscale Avid Hotels will be ‘mass-scale play’
18 SEPTEMBER 2017 8:11 AM

InterContinental Hotels Group has fully unveiled its new midscale brand, Avid Hotels, with the first property expected to open in early 2019.

REPORT FROM THE U.S.—After months of teasing out details, InterContinental Hotels Group announced the name of its new midscale brand: Avid Hotels.

Avid Hotels’ development will be a “mass-scale play,” said Elie Maalouf, CEO of the Americas at IHG, citing his company’s experience in building more than 1,300 Holiday Inn properties around the world. Every Avid Hotel will be a new build, he said; there are no plans for conversions.

“We’re coming in with something that’s not there today, what guests have been looking for and not able to define,” he said.

He said IHG has received more than 150 written letters of interest from owners, although company officials noted no license agreements have been signed because owners weren’t given full details on the brand until today.

Construction on the first Avid is expected to begin in early 2018, he said, with the first opening expected in early 2019. There’s no pace projection, he said, but the company is confident interest today will translate into development momentum. It is franchise-ready, he said.

Maalouf noted construction for an Avid property should take about a year, and the cost to build should be about 10% to 15% less than for a Holiday Inn Express. The hotels will sit on an average lot size of 1.5 acres, will be a minimum of three stories and will have 95 to 100 guestrooms. The initial owner offer includes a 5% royalty fee, and the first 100 signed license agreements will be eligible for a 2% fee discount in the first year and a 1% discount in the second year.

“We have many lined up that want to be the first,” he said. “Avid is a mass-market play, a broad mainstream play. Wherever there is midscale today, there will be Avid.”

The midscale segment
The midscale segment is a deep marketplace, with 14 million travelers and $20 billion in roomnights revenue, Maalouf said. The space is dominated, he said, by conversion products that don’t get renovated, don’t have strong loyalty programs and aren’t modern, efficient or contemporary.

Avid Hotels is targeted to the “principled everyday traveler,” who is self-reliant, practical and knows the value of a hard-earned dollar, Maalouf said. These guests take pride in being frugal, he said, and while they can afford more, they want to be deliberate with how they spend their money. The price point will be about $10 to $15 less than for a room at a Holiday Inn Express, depending on the market, he said.

When asked about whether Hilton’s new midscale brand, Tru by Hilton, played a role in IHG’s development of Avid, IHG shared a statement that it always evaluates growth opportunities that fit within its strategy and to complement its current portfolio.

“No one is serving the needs of the Avid Hotels guest today—and these needs are broader than those of any one demographic,” the statement reads.

Guests in the midscale segment are staying in a “sea of sameness,” Maalouf said, and guests are unsure of the quality of the hotels they choose. They’re paying what they can afford for an unsatisfactory experience or paying more than they can afford for features they don’t need, he said.

When guests arrive at an Avid property, he said, they’ll see the modern exterior with welcoming canopy and open and airy retail-like entry, he said. There are open and vibrant public spaces and work areas. Avid Hotels will offer “focused, high-quality complimentary breakfasts and marketplace options,” he said.

Maalouf said the goal of room design, described as clean and modern, will be to provide guests what they want and cut out anything they don’t. The rooms have sound-reducing features, a designated workspace, ample and easy-to-use storage, and a shower-only bathroom with bright and airy design.

A king room is only 222 square feet, and the double-queen room is 275 square feet—both 100 square feet less than same-sized rooms at a Holiday Inn Express, he said.

Because guests value technology-enabled hotels, every Avid Hotel comes with IHG Connect, the company’s branded Wi-Fi network that is free to all guests, allowing streaming and casting through smart TVs and other devices. The hotels will use the new cloud-based guest reservation system that is rolling out now to all IHG hotels, he said.

The design of the hotels is based on input from guests and IHG’s owner advisory board, Maalouf said.

“We worked with them closely on many of the important aspects of the guest experience, many of the important aspects of the design and construction,” he said. “I think we have come to a design for Avid that gives guests what they want at the price point they’re looking for and gives owners what they’re looking to develop, what they’re hungry to build and what they think they can get a good return on investment on.”

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