LAS VEGAS— InterContinental Hotels Group Plcs new Chief Executive Andrew Cosslett left little doubt yesterday among the estimated 3,500 attendees here at the 2005 Americas Investors and Leadership Conference that the global chain, while doing well, could stand to do even better to reach a goal of becoming the number-one lodging choice of hotel guests— and owners— on a consistent basis. “The future for IHG is about strengthening our system around the world and strengthening our brands,” Cosslett said during the opening general session at the Mandalay Bay Conference Center. “Our brands lie at the heart of what we offer to owners,” he added. Toward that, Cosslett, who joined IHG in February from Cadbury-Schweppes, identified four tracks that would move the company to its goal. These include sharpening brand definitions and pushing up quality levels; investing in delivery systems to drive hotel returns; leveraging market knowledge and scale; and aligning the organization. Cosslett also set an ambitious growth target for the group that would raise its net rooms count by 50,000 to 60,000— an increase of about 10%— on a global basis by year’s end 2008. China was cited as a key growth market. The chief executive echoed the sentiments of Stevan Porter, president-The Americas, who exhorted attendees to join with IHG in not just sitting on the laurels of having a legacy brand like the 53-year-old Holiday Inn, but to recall the risk-taking entrepreneurship of its founder, the late Kemmons Wilson, and work to push all the brands to higher awareness levels. “If we are unwilling to take risks, to constantly reinvent ourselves with fresh, new products that reflect relevant consumer and developer values, we miss a huge opportunity, and will likely perish,” said Porter. “We are the leadership of this system. We carry the mantle. Taking risk is part of that mantle.” Having shifted its focus toward branding and management while maintaining its core competency of franchising, IHG has been striving to leverage its stable of brands against its competitive sets. Mark Wells, svp/Americas brand performance, told the crowd to reach the level of effectiveness necessary, four tracks needed to be followed consistently: “First, we must refine and tighten each of our brand concepts and their deliverables, their promises. Second, we must have hotels in the right locations. Third, we must effectively communicate about our brand concept, its locations and promises. And, finally, we must deliver the brand concept and its promises and we must deliver with discipline and consistency.” Wells noted in the coming months, IHG would invest more resources in strategic research to ensure brand concepts are further redefined, as well as invest marketing funds to drive awareness via major media, online advertising and promotions. While first-half results for IHG show overall increases in brand fundamentals— Americas RevPAR increased 9% and operating profit was up 21% to $181 million— Porter acknowledged some franchisees are not pleased with their RevPAR performance, believing the franchisor isn’t focused “on the right things.” “So I can’t stand up here in good conscience and tell you everything’s great, when I know in fact it’s not. What I do know is we are having a good year— a very good year. But our gains haven’t been as stellar as I would like them to be.” Porter added he was still not satisfied with the results. “We are showing incremental improvement, but not step change gains,” he said. Nonetheless, each of the brands— Holiday Inn, Holiday Inn Express, Crowne Plaza, InterContinental Hotels and Resorts, Staybridge Suites, Candlewood Suites, Hotel Indigo— has experienced strong distribution growth, via both conversions and new construction. A total of 128 hotels representing 15,411 rooms were added in 2005, with 600 hotels in the pipeline; 78 were removed from the system.
IHG Group Plc's new chief executive Andrew Cosslett