InterContinental Hotels Group CEO Keith Barr has a three-pronged approach for creating a brand portfolio that fills every segment.
NEW YORK—Since Keith Barr became CEO of InterContinental Hotels Group, the company has launched three brands—Avid Hotels, Voco and Atwell Suites—and acquired two—Regent Hotels & Resorts and Six Senses Hotels Resorts Spas. Two of those deals happened within the last six months, capping off a breakneck growth push for the United Kingdom-based company.
It’s all part of Barr’s strategy to enhance, acquire and create brands in order to assertively carve out IHG’s place in an industry where size matters more and more.
Barr described a conversation he had with IHG’s board of directors after he became CEO in July 2017.
“I saw the industry bifurcating,” he said. “The big companies will get bigger; it’s all about having a full brand portfolio. There will be some mono brands that stay, because of their ownership structures, but the industry will bifurcate, and we need to know where we stand.”
He described where IHG stood at the time as “better than most,” but he said he knew the industry was increasingly competitive and IHG needed to grow faster to maintain its position.
Now nearly two years into his tenure in the top role, Barr can reflect on IHG’s growth strategy and think ahead about how technology and innovation will play even larger roles to drive the company moving forward.
Speaking with Hotel News Now during a break at the NYU International Hospitality Industry Investment Conference, Barr broke down his three-pronged approach to growth into enhancing existing brands, then filling in the gaps through brand acquisitions and creating new ones from scratch.
The company’s most recent launch, Atwell Suites, falls firmly into the “create” category for Barr. Announced in May, the all-suites brand combines extended-stay and select-service characteristics in the upper-midscale segment.
“We have pure-play, extended-stay brands,” Barr said, referring to Staybridge Suites and Candlewood Suites. “This gives us that part in between—in that four- to six-night range.”
The company’s approach to its other recent brand creations—Avid Hotels and Voco—have been similar niche-builders. The new-build Avid Hotels, launched in 2017 in the midscale segment, now has two hotels open and more than 180 in the pipeline. Voco, launched in 2018, casts a wider net, targeting upscale conversion opportunities outside the U.S. At the end of March, Voco had four hotels open and another eight in the pipeline.
“We had to create new brands,” he said. “It doesn’t make any sense to me to not have a product on a shelf when customers want to stay there and owners want to build them.”
Getting the fundamentals right has been key to building momentum for these from-scratch brands, Barr said.
“For Avid, we were ruthless about getting the cost per key right; if you can get that right, owners love it and guests love it,” he said.
On the brand acquisition side, Barr said he knew that for IHG to have a seat at the luxury table, the company would have to acquire brands rather than build them, given its asset-light position.
Enter Regent Hotels & Resorts, a luxury brand Barr said he had been pursuing for a decade before the company completed an acquisition of a 51% stake in the company in July 2018, with the right to acquire the remaining stakes in the future.
Following that deal, which added six open hotels to the portfolio plus another five in the pipeline, Barr was primed to fill another gap he recognized in IHG—the resort segment. He called the company’s February acquisition of Six Senses Hotels Resorts Spas “a great fit for the portfolio.”
Barr said he worked on the deal for more than two years, and part of what sold Six Senses leadership on the deal was how IHG worked through its 2014 acquisition of Kimpton Hotels & Restaurants.
“I spoke to the principal and CEO about how we run these sorts of brands,” he said, invoking the company’s path of integrating Kimpton. “We bring a level of trust. We’re going to lead it pretty independently. We will plug it into the enterprise, where we add value, but we’re going to keep it special and unique.”
As of the end of the first quarter, there were 18 Six Senses properties open worldwide with another 17 in the pipeline. Barr’s target is to have 60 hotels open in 10 years.
As for the company’s pre-acquisition and pre-creation stable of brands, the keyword is “enhance,” Barr said.
“We’re taking great brands and enhancing the value proposition” he said of the company’s stalwarts, which include Holiday Inn, Holiday Inn Express and Crowne Plaza.
“The goal is to strengthen them and drive better performance,” he said. “When you get that right, it sets brands up for sustained success.”
Technology and the future
Technology and innovation go hand in hand with growth when it comes to the top items on Barr’s priority list.
The company is introducing automation and artificial intelligence to its transactional activities, essentially “robotizing” tasks like travel agent commissions, Barr said, and down-the-line tasks like reservations, content queries and complaints.
“It’s a matter of using automation and technology to enable colleagues to have more time to engage with customers,” he said.
Cloud-based technologies, like the company’s guest-reservation system launched in 2018, are another priority.
“Everything has to move to the cloud,” he said. “It’s about agility and security. By having everything in hotels, there’s too many potential points of failure. Every vision we have is answering, ‘How do we get this out of the hotels and into the cloud?’”
Barr said his tenure as chief commercial officer of IHG prepared him for the technology aspects of running a major hotel company.
“I’m never debating the technical,” he said. “I’m debating the strategic thinking behind it. Should we be building something, or partnering, or buying a capability?”
When asked about the parts of the business he thinks the most about, Barr said that in addition to technology and performance, it’s about people—employees and customers.
“I spend a lot of time digging into our culture,” he said. “We used to do big (employee) surveys (and) then build out an action plan, but we’re changing it and adding virtual learning summits and real-time engagement with colleagues. There’s a talent shortage, and whoever has the best will win. As a leader, I’m spending more and more time on the people side, because if I can’t get the right people, I can never realize the vision I have for the company.”