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IHG’s Strong First Quarter Bolstered by the Americas

IHG’s Strong First Quarter Bolstered by the Americas

KinsellKirk Kinsell, InterContinental Hotels Group’s president of the Americas, is sitting in a car in the middle of West London, heading Heathrow airport to catch a flight to Scotland. Thanks to public transportation strikes, his journey is taking a lot longer than normal. Despite a travel headache, Kinsell is in an upbeat mood. IHG reported its first quarter results this morning, and growth in the Americas led all other regions. RevPAR was up 6.6 percent and room nights sold have broken monthly records for each of the past 37 months. Globally, the company had its strongest RevPAR performance in seven years, and its best first quarter for pipeline signings in six years. Here’s what Kinsell had to say about the positive results and the strategy for the United States in 2014 and beyond.

You have a good reason to be happy today with these strong results, not just in the Americas, but in other regions as well.
It was a strong quarter, no doubt about it. The team has worked hard to deliver it, as have our owners and employees across all of our hotels. We’re pleased with the results and particularly pleased with the performance of Crowne Plaza and the extended-stay brands in the quarter. Crowne Plaza led nearly 8 percent and Staybridge Suites and Candlewood Suites were up over 8 percent RevPAR. On the Crowne Plaza side, that’s a good testament to the work we’ve been doing in terms of refocusing the brand and investments owners are making in renovations that they’re carrying across the hotels, as well as the relaunch we’ve done refining the positioning of that brand.

When you put that on top of transacting on the two sales of InterContinental Hotels [InterContinental Mark Hopkins San Francisco and 80 percent interest in InterContinental New York Barclay] and continuing to deliver on our commitments to our shareholders—they’re pretty delighted on getting a return of some of the proceeds through a special dividend—it makes for a nice quarter.

To what do you attribute the record number of nights being sold in the Americas?
I think its twofold. We can’t take away the economic environment that we’re trading in. It’s been robust, it’s been healthy, but we’ve seen the return on the back of the recession of the business traveler and corporate demand. Of course, we’ve always seen the leisure traveler; they’ve never let us down. But it’s having hotels in the right locations with the right branding for those different stay occasions where people are traveling, whether for leisure, business, quick rest-and-go stays, or romantic weekends. I think it’s the diversity of our brand lineup, and I think it’s also the fact that people recognize our brand, and we deliver great experience and they want to return.

We’ve noticed a lot of Hotel Indigo announcements lately—there are 52 in the pipeline globally—so what’s the growth strategy for the brand moving forward?
Over the last few years, there weren’t as many announcements both for singings or openings because we were effectively repositioning with our focus on development in the key markets, large gateway cities, and the “culturespheres.” Certainly Hotel Indigo plays an integral part of our brand lineup, and we think it’s a great lifestyle choice for people who want to experience the local neighborhood, and to have style and design as part of the décor.

And you must be excited about the first two EVEN hotels opening this summer?
It’s been a while coming. We certainly have been busy in readying the two hotels in Rockville and Norwalk, both of which we expect to get in gear in the second quarter. We still have the other three in the pipeline—the two in New York City and the other in Brooklyn. We’ve got some other prospects too. Quite a few people have a lot of interest in EVEN Hotels, and so we’re excited about what that could be. But more importantly, we’re excited about these first two hotels so we can bring people like owners and developers through so they can be more ecstatic about it and support the positioning and our concepts.

What are the company’s plans in terms of further assets disposals?
There are seven hotels we have an economic interest in, other than the three EVEN hotels, which as we have said to our shareholders, that we will use capital to do brand development and brand expansion, we’re not going to necessarily own real estate. So we would expect to recycle in time those investments. Here in the Americas, out of the seven hotels globally, we have three hotels and they’re all leased properties and there are no current plans for the sale of those assets.

In 2013, IHG opened 237 hotels and signed 444 properties into the pipeline. Do you foresee this amount of growth continuing in 2014?
We announced our signings for the first quarter being very strong as well. We’re well into the recovery on the back of the recession. We can see the high demand factors, which are benefiting the individual owners and driving a lot of occupancy in the hotels. We should expect that there will be continued new development opportunities as well as people who want to be associated with our high quality brand and do business with IHG. I’m optimistic that we have a good future ahead of ourselves.

What’s your overall strategy for the United States for the rest of the year and beyond?
Our strategy remains focused around delivering preferred brands and offering world-class hospitality in everything we do. Our focus is around our guests and the foundation of both our past and future success. The way we get there is through being people powered, where we put our colleagues and our owners at the center of everything we do, helping our owners be the best employers and best operators, and ourselves as the managers doing the same and delivering the best guest experience. And continue to do that on the back of high quality growth. What got us here over the last 10 years in a large way will get us there, which is a real focus around being committed to using our balance sheet as effectively as possible, leaning into our relationships with our owners, and ultimately focusing on the guest through people and making sure we have the best brands and most preferred brands.

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