In February, IHG Hotels and Resorts announced it had added nine new hotels to its portfolio in the UK and Ireland. The new hotels span five of the hospitality company’s 18 hotel brands and is spread across four collections, with the latest addition being the 252-room Hotel Indigo K West Shepherds Bush, scheduled to open in 2025.
Hospitality Investor caught up with Matt Walton, senior development director UK&I, IHG Hotels & Resorts to discuss the recent signings and plans for the future.
Hospitality Investor: What is the rationale behind all of IHG’s recent deals?
Matt Walton: Brand growth is really important to us. The UK and Ireland is an established market for us and our focus is driving that even more. A big part of our strategy is the relationship with and account management for our owners, listening to them and in challenging times, supporting them in terms of their existing assets or new assets they're acquiring. It’s thinking about how we can be supportive and what our brands look like overlaid onto their assets. Seeing the number of these new hotels signed and opened is testament to how important the UK and Ireland market is to us. We’re approaching 350 open hotels in the UK and Ireland and we have many more in the pipeline. We want to go down to particular micro-locations and we feel we’re in a strong position for further growth.
Hospitality Investor: Is conversion going to be a big part of IHG’s strategy going forward?
Matt Walton: For us, all of our brands can be conversion brands and that’s one of the most important things. Looking at the investment/transaction market and in terms of all the other market constraints, conversions are here to stay and it’s all about using our brands and listening to owners in terms of how we can best complement their assets. That conversion landscape is not going anywhere. Having said that, there are still new build opportunities or adaptive re-use opportunities.
Hospitality Investor: Mid-market assets are feeling the squeeze right now as consumers currently tend to lean down towards budget hotels or – for customers with more discretionary spend – towards luxury stays. How is IHG dealing with that?
Matt Walton: IHG’s stable of brands is strong. Our Holiday Inn brand – which could be categorised as midscale – is being adapted and constantly changed because we listen to consumers on how to give them the best experience and to owners on how to get the best return for the asset. We’ve seen a crossover or a greying of the lines of business stays blurring into leisure stay and I think that mid-market component is ideal to capture the suites/long stay element. I see opportunities within that, it’s just making sure it’s done in the right way. I think with the brand stable IHG has, we’re extremely well-positioned to drive that.
Hospitality Investor: How is IHG keeping pace with the increasing expectations of consumers and investors alike?
Matt Walton: Our standards are high and we are looking to go above and beyond in terms of what we offer. We recently relaunched the IHG One Rewards programme which allows us to offer guests experiences by redeeming points from us. We’ve partnered with a range of sports and music events such as being one of the main headline sponsors for the Leeds and Reading festival and giving our guests access. Focusing on some of those areas puts us in a strong position versus our competitors and the rest of the market. These result in benefits from an investor’s point of view. It’s all interlinked. For example, having a refreshed loyalty programme means guests will have incentive to spend more and it increases the attractiveness of IHG. From an owner’s point of view, this is exactly what they want as it drives business into their hotel.
Hospitality Investor: How is IHG navigating the debt landscape?
Matt Walton: It’s extremely challenging for the whole sector. And it’s not just debt. It’s inflation as well as labour shortage. But what we’re doing – and it’s evident from our signings and openings – is that we’re tackling this head on. We have confidence in our portfolio of brands in terms of what we deliver for our owners as well as from a guest experience point of view and so we’re navigating the current landscape by just properly listening to all parties.
Hospitality Investor: What trends are you seeing in the hotel sector right now?
Matt Walton: Although it’s currently very challenging sector-wide, it’s clear to see that there’s still growth and development. We’re seeing ESG is at the forefront of everyone’s mind in terms of people trying to tackle each component and trying to understand what it truly means for the investor, from an asset point of view and from a guest experience point of view. It’s something that will constantly keep changing but IHG has a strategy in place which involves working with specialists internally and externally to really try to understand what to do in that arena.
Hospitality Investor: What else does IHG have in the pipeline?
Matt Walton: I’m extremely proud about the position we have in the UK and Ireland market, not just in terms of how the estate is trading but also in terms of the pipeline and future deals we’re looking at. We’re seeing a lot within voco and our Vignette Collection in terms of conversions. The transaction market is still up-and-down in relation to what assets are on the market. However, there are existing owners and unbranded hotels that are really looking for a brand and we’re having conversations with them. Albeit challenging, there are opportunities out there and this is backed up by all our recent signings and openings.