InterContinental Hotels Group revealed plans to launch a new, high-quality midscale brand at its 2017 Americas Conference this week in Las Vegas. It will target more than 14 million guests in a vastly underserved segment of the U.S. midscale market, estimated to be worth $20 billion in annual industry revenues. This brand will champion the traveler who wants a hotel stay that finally meets their expectations for the type of hospitality they value most – the basics done exceptionally well – at a price point about $10-15 less than IHG’s industry-leading Holiday Inn Express® brand.
Richard Solomons, Chief Executive Officer, IHG, said: “This new brand builds on IHG’s leading position in the midscale segment alongside Holiday Inn and Holiday Inn Express. It addresses the needs of a rapidly growing and underserved segment and we believe it will shape the future of this unique midscale category. This launch will extend our track record of innovation and brand development, with a new offering that is right for our guests, our owners and our shareholders.”
This brand was created around a set of fundamental values: taking a new approach to designing everyday travel; appreciating the value of guests’ every hard-earned dollar and being direct, honest and clear. The name, logo and other brand elements will be announced later this year. Initial features of this brand include:
- Rooms designed for sound sleep: Delivering a best-in-class sleep experience, rooms were intentionally designed for reliable rest. These guests value an investment in high quality mattress and linens, specific design to help reduce noise and intuitive in-room climate control. Guest rooms will be a mix of 220 square foot king (65 percent) and 275 square foot queen/queen (35 percent), featuring a built-in work space, open closet storage with luggage shelf, a great shower and a smart TV.
- Hotel amenities: Hotels will feature intimate and inviting public spaces, including a mix of seating designed perfectly for travelers looking to spend 30-45 minutes in the lobby working, socializing or enjoying a complimentary breakfast. Optional amenities include a pool and porte cochere based upon market dynamics.
- Leading technology: Hotels will leverage the latest in technology. This includes a state-of-the-art, cloud ¬based next generation reservation system, mobile check-in and check-out and IHG Connect® enhanced Wi-Fi with the fastest speed in the industry and auto log-in recognition at all IHG hotels. Rooms will also feature enhanced in-room entertainment options which allows guests to cast content from their smart devices to in-room TVs.
- Fresh, no-nonsense, complimentary breakfast: A select number of high-quality, brand-name options will be offered to guests to grab and go or enjoy in the lobby, alongside a premium coffee experience to start the day off right. The offering provides owners with a simple, low-cost operating model. Hotels will also offer a well-curated market for food, beverage and personal items.
- Hotel build: Hotels will be designed for new build construction to provide exactly what guests need, consistently, on an average lot size of approximately 1.5 acres. The prototype design features 95-100 keys with a minimum of three stories.
Elie Maalouf, Chief Executive Officer, IHG, Americas, continued: “These travelers will often spend hours researching hotels to find a great and affordable lodging experience in this segment. When they can’t find it, they compromise, accepting lower standards and an inconsistent experience to get the price they want. We will change that with this new brand by delivering a superior guest experience that doesn’t currently exist at this price point. It’s a game changer and a huge opportunity to build scale, strong brand awareness and great financial performance for our owners.”
IHG expects the brand to be franchise-ready in the fall of 2017 with the first hotels beginning construction in early 2018 and opening in 2019. Initial development will be focused in the U.S. market. Working hand-in-hand with its owner advisory board, the brand’s development has been guided by feedback from owners and operators to help ensure these new hotels are efficient to build, operate and maintain.
Once the brand is launched, key elements of the initial owner offer will include:
- Target build cost between $85K – $90K/key (excluding land costs)
- Five percent Royalty Fee
- First 100 signed license agreements will be eligible for a two percent fee discount in year one and one percent fee discount in year two (2/1 royalty fee reduction)