HOTELS

Jeff Weinstein

Responding To The News
November 1, 2007

IHG (InterContinental Hotels Group) put on a very splashy and seemingly expensive show in Dallas last week to hype the re-launch of its Holiday Inn brands (Holiday Inn and Holiday Inn Express). I even got to watch Andy Cosslett play guitar in the opening act. He looked like he knew what he was doing, too.

It was an impressive display that included the Holiday Inn “experience,” a Disney-like guided tour showcasing the history of the brand and some of the amenities that will make up its just-announced future. I walked through very large rooms in the Dallas Convention Center, including one that featured full-size versions of the new signage. The show ended with a song-and-dance production number about what makes the new Holiday Inn so inviting. It was truly an “experience”—one that the 5,500 conference goers had to get tickets and wait in long lines to enjoy. In fact, the entire conference was incredibly well choreographed with very strong production value.

This conference was all about change for IHG, and the executives weren’t shy about emphasizing that. I wish I had kept count of the number of times they used the word “change.” They made it clear that the status quo is not good enough to compete in today’s marketplace, and that they are going to make a huge investment to revive the iconic Holiday Inn brand.

After spending a few days around the new signage and logo, I came to the conclusion that I like the look. Of course, the proof will be in the buy-in from the franchise community and the execution of the business model. IHG is not making this too expensive a proposition, as the company is expected to offer some sort of financing options. The leadership says the complete package, including signage, bedding and lobby upgrades should cost between US$50,000 and US$150,000 per hotel. Will this be enough to make the brand stand out in an increasingly crowded marketplace? Does the brand still resonate with consumers?

Personally, I like the leadership’s focus on service and the mandate that franchisees meet stringent standards before they are eligible to upgrade. Again, in a world where bad service is more the norm, IHG has its work cut out.

The Holiday Inn brand definitely does need this to thrive. And add all the new Holiday Inn products coming onto the market around the world with the new look already in place, and IHG could make a nice impact.

This Just In

The other interesting story that just crossed my desk comes from Lodging Econometrics (LE), a company that tracks new hotel construction. Its October 31 press release announces that the new construction pipeline in the United States set a record at 5,011 projects/654,503 rooms, making Q3 the fifth consecutive record-setting quarter.

LE President Pat Ford says guestroom counts in the pipeline are 31% higher than the last peak in 1999. However, the project count is an astonishing 47% greater. Factoring in cancellations and postponements, the overall pipeline accelerated by 375 projects/43,162 rooms quarter-over-quarter, he notes.

All I can say is I hope this is more pipedream than reality, as based on where we are in the economic cycle, there is no need to seed the industry with this many new rooms. At the same time, how many of these planned projects actually break ground has to be questioned. True, many of these numbers reflect the new brand developments at the select-service and mid-market levels. But anecdotally, industry executives tell me many of these deals, especially in the upscale and full-service categories with residential attached, are not going to get built. And that is not such a bad thing for the U.S. hotel business going forward.

Posted by Jeff Weinstein on November 1, 2007 | Comments (0)