InterContinental Hotels Group CEO Keith Barr said hotels can benefit from pandemic-era changes in the interaction between hoteliers, guests and stakeholders and even the change in work practices, office rentals and cities at large.
MANCHESTER, England—In five years’ time, the hotel industry will be bigger than it is today and the use of technology will accelerate even more, Keith Barr, CEO of InterContinental Hotels Group, predicts.
Speaking to BBC chief correspondent, Gavin Hewitt at the online Annual Hotel Conference from a stage in Manchester, Barr said his most pressing concern is helping advocacy for the industry and pressing government to see the continued importance of the industry to economies.
“Governments have to support the industry in the short and middle term,” Barr said.
He said he is confident and the message to guests is that “we’re ready when you are ready.”
Some of that business already has returned, and not just from domestic travelers.
“We’re on the path to recovery, but still with a long way to go. There has been a bouncing off the lows after travel stopped to a significant degree, and that will continue as we start to understand the virus,” he said.
“We saw momentum in the summer, with a recovery of occupancy varying from market to market, and now we have plateaued and are seeing a more muted response in terms of growth.”
Barr said it is important for not just IHG but also the entire industry to be on top of its game to avoid losing customers.
“We are looking at where we can grow organically,” he said, specifically noting opportunities for IHG brands Atwell Suites, Voco and Six Senses. There will be access to significant private-equity capital, particularly for challenged assets, he said.
“We added five brands in the last few years, so I do not see much white space today. There are opportunities to add something in the collection space, but I need now to look after the children and make sure they get into their middle-school years,” Barr said.
He added business travel is making inroads, citing non-discretionary travel and extended stays for project workers as examples.
Out of office
Barr said the industry could expect a rise in hotel stays as businesses scale back on renting office space.
“People will be meeting in hotels more as they go to offices less. Shrinking office space, but also leisure will come into play as (staff has) learned to work remotely,” he said, adding safety will be paramount to this trend.
“Without question, safety is at the very top of guests’ needs. Safety was never on that list until the pandemic, and we had such questionnaires every week. Last week we conducted a webinar with 1,500 business-travel and procurement individuals, and they went point by point through our hygiene measures. That never happened before,” Barr said.
Confidence on this and other industry matters is coming from China, he said.
“I was speaking to (IHG associates in) China every day at the beginning (of the pandemic), and there was so much concern, but now it has flipped, with everyone talking to me (from there) around a conference table, with flights full, and it shows the demand is there when the safety is in place, and that is what the future is for all of us when we get to that same place,” he said.
“We did have a risk register (before the pandemic), with the issue of pandemics on there, but it was thought to be a regional concern, so we did learn from China. We lifted and shifted (their experience and best practices) globally,” he said.
He said such thinking might allow some sense of a return of normalcy by next summer, in a phased approach.
“Businesses must have comfort allowing staff to travel. It is difficult to predict how a crisis will end when you are in the middle of it, as you will always have recency bias,” Barr said, referring to the idea that people will predict outcomes based on the data and information from the last few months or year, rather than from a much longer perspective.
Europe is the biggest concern in terms of performance metrics, he said, due to it having more government restrictions.
“The highest occupancy, 69% on Labor Day weekend in the U.S., which has recovered more as there are less restrictions on movement. The U.S. is ahead of the U.K. now, but China is leading,” he said.
As markets falter, so will some hotel firms, Barr said, which will lead to consolidation.
“Typically, the smaller companies struggle, so consolidation will happen. It is the power of scale, not being able to invest in technology and loyalty, the things that drive value for owners. The bigger companies have the fire power to grab customers,” he added.
He said in terms of guests, the pandemic has allowed a lot of people who might have been gadget-challenged to figure the technology out.
Barr said it has been an eventful year for him, his third year at the helm of the firm.
“I told my wife this is the year we could have gone on holiday a little more, but that did not happen,” he said.
Instead, he needed to step back and think about IHG and the industry’s stakeholders.
“When this is over will they look at us and say we have done the right thing? And keeping that in mind has made us make a lot of good decisions,” Barr said, echoing the sentiments of Kenneth Macpherson, IHG’s CEO for Europe, Middle East, Asia and Africa, at the Arabian Hotel Investment Conference’s “AHIC on the Road” virtual get-together last week.
He said the hotel industry being part of the solution is critical to reestablishing when the free movement of people really is going to come back.