IHG’s deals and development pace in the Americas continues at a “pleasing level” despite setbacks related to COVID-19, CEO of the Americas Elie Maalouf said.
WASHINGTON—The COVID-19 pandemic “took the floor out of the hotel industry,” but despite setbacks, InterContinental Hotels Group remains active in deals and development, said Elie Maalouf, the company’s CEO of the Americas.
At the end of the first quarter of 2020, Maalouf said IHG reported 10% of its hotels in the Americas were closed because of the pandemic and employees were furloughed.
Since then, it has been reopening hotels and the situation has improved. He said a full recovery of the hotel industry will be needed to help refuel the overall economy.
“We’re such an important part of the U.S. economy,” he said. “We may not be a big part of the stock market capitalization … but in terms of employment and GDP, we’re a big part.”
The U.S. added 2.5 million jobs in May, and about half of those came from the hospitality and leisure industry, some of which were related to hotels reopening, he said.
“It’s good to see jobs are coming back, but we’re still a long way from where we were and where we need to be,” he said.
The company’s first priority once the pandemic hit was to support owners, colleagues, guests and communities, Maalouf said. This included giving employees personal protective equipment and housing first responders, and sick as well as homeless people. IHG also extended cancellation policies, protected guests’ loyalty statuses and ensured a clean environment.
The key to keeping guests is giving them confidence, he said.
In 2015, IHG launched the “IHG Way of Clean” in partnership with Ecolab and Diversey. Recent circumstances made it necessary to take that initiative further, he said. IHG partnered with Cleveland Clinic for its “Clean Promise” program, which rolled out 1 June, to enhance safety and sanitation measures. These measures include social distancing signage and floor markers, protective barriers at the front desk, hand sanitizing stations, required masks and health screenings for colleagues.
The company offered a flexible work policy and healthcare coverage to all managed employees.
“We have extended coverage … for those who can’t pay during this period and kept them on the plan even when they haven’t been paying (for coverage) for several months,” he said. “We’ve been very mindful of how we can continue the medical coverage for our colleagues.”
To help owners struggling with low demand as well as fixed costs, including debt service, IHG has relaxed its standards in several areas, such as food and beverage, guest experience, pools and fitness centers, he said.
“We put in some fee relief and deferral, short-term limited but effective, and we worked hard on government support and relief,” he said.
Deals and development
Maalouf said development activity has continued, albeit slower due to the pandemic.
In Q1, IHG globally executed more than 100 deals, he said, noting that pace is in line with the overall industry but slower than previous years.
“Even in the first quarter, we had 20 deals in the Americas for our newest brands Avid and Atwell,” he said. “That shows you—people (are) still willing to commit to new brands. … We’re going to continue to grow those two brands even during these times.”
This week, IHG will open its first Avid Hotel in Mexico with the Avid Hotel Fresnillo. Two InterContinental hotels continue construction in Bellevue, Washington, and Dallas, he said. Overall, new construction starts have remained at a “surprisingly pleasing level” over the last few months, he said.
“Where there are deals occurring in the country, we are taking a very competitive share of those,” he said.
When will the industry return to ‘normal?’
Maalouf said he has no doubt the industry will return to normal, though the timing of that is to be determined.
“We’re climbing out of it. We will make a higher high. We’ll be back to 2019 levels and 2019 freedom of travel and comfort of travel,” he said. “The science and the medicine will get us a way out of this. Time will get us a way out of this.”
Industry analysts have predicted the industry will return to 2019 levels between 2021 and 2023, he said.
“We will see if they’re right. I hope it’s sooner, but we’re ready for that trajectory if that is the case,” he said.