HB ON THE SCENE: Five Questions With IHG on New Brand—Avid Hotels

PHOENIX—As the story goes, InterContinental Hotels Group (IHG) identified the need for a new midscale brand in the industry, one that would be able to compete for the $20 billion in industry revenue it believed was being left on the table in the segment; the hospitality group then developed the brand’s concept after examining the needs of guests and owners in the lower midscale category; and then, in June, IHG unveiled the new brand, without a name associated with it, to owners at the IHG Americas Conference. Now, just a couple of months away from 2018, the brand, in addition to releasing new property renderings, has more than 150 letters of interest from owners and more than 50 applications for franchises.

On guests in the midscale segment, Jennifer Gribble, VP of the Avid Hotels brand, said the following as she pointed out the brand’s guiding principles: “fresh, frank and fair.”

She continued, “I’ve actually had the chance to spend time with these guests and literally have been in their homes and in focus groups, and what we kept hearing, or played, over and over again was that this part of the segment is just wildly inconsistent, and the quality is not there, and there is no brand they can trust. It was really important for us to champion that guest and deliver a brand where, if they do need to shop hotel by hotel, they can actually trust this brand.”

Hotel Business sat down with Gribble at The Lodging Conference, held here this week at The Arizona Biltmore Hotel, to find out why owners are expressing interest in the brand, how IHG will ensure its new midscale brand will be owner-friendly, and why it took the hospitality group four months to reveal the brand’s name.

IHG expects the first Avid Hotels locations to begin construction in early 2018 and the brand’s first opening to be in early 2019. What draws owners to this brand?
I think owners are really excited about what we have to offer with Avid because they’re recognizing that we’re taking a different approach to it. We’re focusing on the basics done really well, and I think they’re acknowledging that that’s a gap today within the category.

Why focus only on new-builds? Tell me about the thought process.
We believe that we needed to deliver new developments and new construction to make sure that we deliver that consistency and quality that guests are expecting, and that’s one of the best ways to manage it.

There has been a lot of talk at the conference around brand standards negatively impacting ROI for properties. How did IHG go about ensuring its standards for Avid will be owner-friendly? 
A big part of developing Avid Hotels has been about making sure that it works just as well for owners as it does guests, and so we’ve created this owner advisory board of seven different owners who’ve been with us every step of the development process of this brand. With their guidance, we’ve been able to make thoughtful choices to ensure we deliver for the guest, but also ensure that we deliver a strong ROI. From the get-go, we’ve had a really strong view of what the cost per key needs to be and have continued to measure the brand development process against that cost per key.

What’s the number one question owners have been asking you about Avid?
Well, certainly, “What’s the cost per key?” is an important one. It’s obviously a big factor in deciding what brand that they do develop.  I guess the other question I hear quite frequently is “is it just a new-development brand?” I think owners are interested in conversion opportunities when they see a strong brand, so that’s something that typically comes up as well.

Why did IHG make the decision to withhold Avid’s name for three months after announcing the new brand in June?
In June, we had our IHG Owners and Investors conference, and we saw it as a great opportunity to tell all of our current franchisees about what was going on at IHG and about our new brand. We didn’t yet have all the legal protection that we needed around our name, and so we couldn’t share it at that point, but again, we felt like it would’ve been a big miss not to tell owners about this because, essentially, we wanted to give them the first look at what the opportunity was. In September, we finally had all the legal protection we needed and could file our franchise disclosure documents to officially put this brand on sale, so that’s when the name finally came together.