Chain of the month: IHG

InterContinental Hotels Group was the first international hotel chain to enter the Middle East and North Africa market and 50 years on we certainly haven’t heard the last from it, with 41 hotels in the regional development pipeline and a knack for reinventing itself

The year 2011 marks the 50th anniversary of InterContinental Hotels Group’s (IHG) presence in the Middle East and North Africa.

The anniversary is a landmark occasion for IHG, which was the first international hotel chain to enter the region with the opening of the InterContinental Phoenicia in Beirut in December 1961.

Over the years, the hotel group and its brands have laid claim to a number of hotel industry firsts.

First for expansion
One of the most significant was in 1954 when Holiday Inn, the brand pioneered in 1952 by Kemmons Wilson as an affordable ‘destination’ lodging for families travelling across the US, became the first hotel franchise, leading to massive growth.

As a result of the success of the franchise agreements, it became the first chain to reach a 300,000-room inventory in 1956, and in 1972, Time magazine reported that a new Holiday Inn hotel was opening every three days.

Today, Holiday Inn and sub-brand Holiday Inn Express (HIEX), born in 1991 as the US’ first limited-service brand, continue to expand globally, with 10 Holiday Inns and four Holiday Inn Expresses in IHG’s Middle East and North Africa upcoming properties pipeline.

IHG has also recognised the importance of reinventing the brand to keep up with the times. In 2007, the group announced a major re-launch of Holiday Inn, the industry’s largest brand.

“The initiative involved a billion dollars’ worth of upgrades across the world to make sure the Holiday Inn would remain fit for the next 50 years,” IHG senior vice president for sales and marketing — Asia, Middle East & Africa Karin Sheppard tells Hotelier Middle East.

“I see positive growth of the Holiday Inn brand across the Middle East and Africa. As we see low-cost airlines expand across the region we see a emerging type of traveller likely to seek out great value from a trusted brand, and that is exactly what Holiday Inn offers,” says Sheppard.

But looking at the MENA pipeline, it is clear the hotel group is not relying only on the Holiday Inn brand in its regional expansion. Among the hotels under development in the region are 11 Crowne Plaza properties — the brand which made its first appearance in Maryland, US in 1983 and now has more than 350 hotels worldwide; nine InterContinentals; and seven Staybridge Suites.

The Staybridge Suites brand, launched in 1997 targeting long-stay travellers, entered MENA in Cairo in 2008 followed by a second property which opened on Abu Dhabi’s Yas Island a year later, and has been received well in the regional market. In the next five years, more Staybridge Suites will open in the UAE, Bahrain, Kuwait and Lebanon.

“Here, more so than in other parts of the world, there is a leisure market of people travelling with large families for extended periods and the Staybridge Suite concept is perfect for this market. It gives them more space, access to shared facilities where they can socialise and meet with other travellers and they have their own kitchen,” says Sheppard.

The firm has identified a “good opportunity” in the region for developing this brand, which offers a combination of traditional hotel facilities and the space and independence of a serviced apartment.

“We are probably one of the first global chains to introduce the extended-stay concept in the region and this is something we can definitely build on,” she adds.

In fact, the only brands which IHG has not officially earmarked for the region yet are Candlewood Suites and Hotel Indigo. While Sheppard confirms there are currently no plans to bring Candlewood Suites to MENA, it is a different story with Hotel Indigo, dubbed the first boutique hotel brand operated by an international hotel group.

Expansion of the brand into the Middle East is “firmly on the agenda”, with a new property expected to be announced in the UAE or Saudi Arabia within the next 12 months.

“We would like to introduce Hotel Indigo to the Middle East in key capital cities, something we’re working actively on,” Sheppard reveals.

“In the very near future, we’d certainly be able to announce what our intentions are. This is a brand that is typically a new build so in terms of when it will open, that could take a little longer.”

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First for technology
While aggressive expansion and being the first to enter new and emerging markets have been priorities for IHG, it has also strived to become a trailblazer in other areas of the hotel business, perhaps most poignantly in technology.

In 1965, Holiday Inn pioneered the world’s first computerised hotel reservation system Holidex, which two years later became the first such system to link directly with airline and travel agents’ reservation systems. Thirty years on in 1995, Holiday Inn became the first hotel brand to take a booking over the internet.

Today, it continues to embrace new and emerging technological platforms, including social media and tablet apps.

“Social media works on multiple levels; we’ve used it to drive awareness of our brand and to get people booking through our websites,” says Sheppard. “We’ve also had a lot of focus on mobile technology, particularly in the Middle East where there’s a burgeoning new population and the average mobile ownership is close to two handsets per person.

“We’ve developed mobile apps for each of our brands, which put us in the hands of people making it easy for them to make a reservation.”

However, there is a tendency in this region for people to browse online and book offline, according to Sheppard. But while the actual bookings through mobile devices in this region are at a lower level than elsewhere, the figure is growing rapidly and the group expects that trend to continue.

IHG is also one of the first global hotel chains to introduce iPad technology into its day-to-day staff operations, says Sheppard.

“We’ve evolved over the past six years from the traditional approach of a guest talking to a concierge to find out more about the location they’re staying in.

“Now, five days before the guest gets to the hotel they’ll get an email from the concierge with suggestions of activities to do while staying with us. Several of our advice tools are now applications guests can download for their iPad so it’s interesting to see how technology is helping us deliver the guest experience in a new way.

“Technology becomes an extended way of bringing to life what is on offer. There has been a tremendous focus on educating concierges and we encourage them and colleagues to go out and explore, and continue to find new points of interest.”

First for customer loyalty
While technology has opened up booking and communication channels to guests, IHG’s comprehensive loyalty schemes have kept them returning again and again.

Guest loyalty goes back a long way for the hotel group, having launched the industry’s first frequent guest programme ‘Priority Club Rewards’ in 1983, which today is the hotel industry’s largest loyalty programme with nearly 60 million members globally.

Pascal Gauvin, vice president of operations for the Near East and Africa at IHG, predicts as many as half of all guests in MENA come through guest-loyalty programmes.

“The guests love to be part of our loyalty systems. They don’t just want to stay in a hotel because of a commodity, they appreciate the brand and they give a lot of constructive feedback. Customers are savvy, they understand a country classification system is not a worldwide system, but they know companies like IHG are global. It’s the brand that makes a difference, people are buying a brand.”

Gauvin recalls a conversation with a guest last month: “I was in Egypt and met an IHG customer, a British expatriate who had been working around the world. When he discovered I was an IHG employee he showed me his Ambassadors card and told me about all the hotels he stays in with amazing savvy; which IHG brand he prefers in Dubai, in Cairo, in Europe and so on.”

It is critical to keep loyal customers, Gauvin says, particularly in challenging times: “These loyal guests travel more than anyone else and are the ones who will continue travelling, even during times of unrest.”

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Success amid setbacks
IHG, like most chains, knows all too well the importance of attracting guests in the aftermath of social and political unrest, and natural disasters.

To name but a few in the last decade: IHG hotels, colleagues and guests were among those affected by the tragic Asian tsunami in 2004. The company went into fundraising mode with in-kind donations and corporate matching raising up to US $1 million.

The following July, London’s Holiday Inn Bloomsburg became an impromptu centre for victims of the London Tube bombings, a further $2.2 million was raised by guests and customers for the cause.

That same year, Holiday Inn and Crowne Plaza properties in the US provided refuge for some of the many people left homeless following Hurricane Katrina.

Then in 2008, the hotel group saw revenues slump worldwide at the wake of the global financial crisis.

Just as the region started to see some economic relief, political and social uprising across the Middle East and North Africa, particularly in Bahrain and Egypt, from March of this year significantly lowered performance in the regional market.

The unrest, later coined as the ‘Arab Spring’, was said to have led to a $1 million decline - to $31 million - in managed operating profit during half one of 2011.

From an operational standpoint, however, Gauvin says IHG was prepared for the Arab Spring, as it is for any future crisis thrown its way. A sophisticated crisis management system kicked in at the start of the unrest, prioritising the safety and security of guests, colleagues and the assets.

Gauvin took the lead from his UAE base, making daily conference calls with the properties in the heart of the turbulence, evaluating options, making decisions and moving forward.

“The general managers and their colleagues are fully trained on all procedures and drills. When there is a crisis many guests wish to leave, so we take them to the airport, help them with their tickets. If it is unsafe for staff to come to work, we let them stay at home, if it’s unsafe for them to go home, we keep them at the hotel.”

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Risky business
Armed with comprehensive crisis systems and experience, today, IHG isn’t shy about expanding in countries considered high risk, but it already proved that when it first set foot in the region half a century ago with the opening of Beirut’s InterContinental Phoenicia.

The hotel became a battlefield during the Lebanese Civil war from 1975-6 and was left a burnt-out ruin. It was abandoned for nearly 25 years until the late 1990s when an extensive renovation programme was put in place. The hotel reopened in March 2000, adding a third tower.

Five years later, in 2005, tragedy struck again when the then Lebanese Prime Minister Rafik Hariri was assassinated in a bomb explosion on the street outside the hotel. The property was closed once again for repairs and reopened three months later.

Today, the InterContinental Phoenicia stands tall as a proud symbol of InterContinental Hotels Group’s 50 years in the region, and its ability to keep reinventing itself.

For images of the InterContinental Phoenicia Beirut from worn torn to standing proud today, click here. 

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IHG history at a glance
- 1988: Bass, one of the UK’s largest brewers and pub owners established in 1777, moves into the hotel industry, buying Holiday Inns International.
- 1990: Bass buys the North American Holiday Inn business.
- 1991: Bass launches Holiday Inn Express.
- 1994: Bass launches Crowne Plaza, a move into the upscale market.
- 1997: Bass sells its North American midscale hotel buildings, but keeps control of branding through franchise agreements.
- 1997: Bass creates and launches Staybridge Suites by Holiday Inn.
- 1998: Bass acquires InterContinental Hotel Company.
- 2000: Bass acquires Southern Pacific Hotels Corporation in Australia.
- 2000: Bass also acquires Bristol Hotels & Resorts Inc., a US-based hotel management company.
- 2000: Bass sells its Bass Brewers operation to a major Belgian brewer and changes its company name to Six Continents PLC.
- 2001: In April, Six Continents acquires the European Posthouse hotel chain.
- 2001: Six Continents buys the InterContinental Hong Kong.
- 2002: Six Continents PLC separates the group’s hotels and soft drinks business now called InterContinental Hotels Group PLC from its retail business.
- 2003: On April 15, InterContinental Hotels Group PLC (IHG) becomes a distinct company that is listed in the UK and US stock markets.
- 2003: In July. IHG sells 16 Staybridge Suite hotels to Hospotality Properties Trust and enters into a 20-year management agreement .
- 2003: In December, IHG adds midscale extended-stay brand Candlewood Suites to its portfolio.
- 2004: IHG introduces Hotel Indigo.
- 2006: IHG signs an operating joint venture with All Nippon Airways (ANA) to form IHG ANA Hotels Group Japan.
- 2007: IHG announces worldwide re-launch of Holiday Inn brand family.
- 2011: IHG celebrates 50 years in the Middle East.