InterContinental Hotel Group plans expansion across the Indian market
Kenneth Macpherson, CEO, EMEAA and Vivek Bhalla, Regional Vice President, SWA tells Hotelier India that they are bullish about the immense potential it offers, particularly in the midscale segment
How big is the Indian market for InterContinental Hotel Group (IHG), especially when compared to the rest of the world? How has the market grown in the last few years?
Kenneth Macpherson (KM): India is a very exciting market for IHG. Not only is it one of the world’s fastest growing economies in 2018, with a growth rate of 7.4 per cent, but the country’s medium-term prospects for the hospitality sector also remain positive. IHG is currently on a growth curve in the country with strong results across the total revenue, MICE and Food & Beverage. There has been steady growth in the travel and tourism sector in India, and in recent years, we have seen a shift in the Indian hospitality landscape to focus on quality midscale hotels. This is largely in response to the rising middle class and a significant increase in domestic travel, pan-India. In line with market needs, we have ambitious growth plans for our midscale brands, Holiday Inn and Holiday Inn Express
We currently have 12 Holiday Inn hotels and six Holiday Inn Express hotels open across major metros and secondary cities, and close to 85% of our development pipeline (going by the number of hotels) in the country are Holiday Inn and Holiday Inn Express hotels, which are expected to open in the next three to five years. There has been a significant increase in domestic travel in India, which has created a demand for quality, branded accommodation across markets, including tier-one and tier-2 cities.
In line with market needs, we signed a partnership with SAMHI last year to rebrand approximately 2,000 rooms, across 14 hotels (operating and under-construction) within their India hotel portfolio, as Holiday Inn Express hotels. These hotels will be located in 10 cities across India and the list includes Delhi NCR, Bangalore, Hyderabad, Pune, Chennai, Nasik, Kolkata, Ahmadabad and Mumbai. Additionally, we signed a portfolio deal with Lotus Trans Private Limited for four Holiday Inn hotels spread across the Buddhist Tourist Circuit. This year, we are also introducing a Holiday Inn Resort in Kolkata, and marking our debut in Agra with Holiday Inn Agra MG Road.
We also believe that there is an opportunity to develop our luxury and lifestyle brands portfolio in India. Therefore, we will continue to look for opportunities to bring signature InterContinental Hotels and Resorts to gateway cities and resort locations in India, and also explore opportunities for other brands.
Vivek Bhalla (VB): We are fully committed to the Indian market as we see great potential here, given the positive long-term economic growth, strong domestic travel growth and the government’s efforts to support the tourism sector. Our India portfolio has increased over 110% in the last five years — from 15 hotels (2,843 rooms) in 2012 to 31 (5,991 rooms) now. We will be opening 10 to 11 more hotels by the end of this year. In addition, as of June 30, we have a robust pipeline of 54 hotels in SWA, across four brands — InterContinental Hotels and Resorts, Crowne Plaza, Holiday Inn, and Holiday Inn Express. We are in India for a long haul and targeting high value growth. We are also looking at bringing new brands into the market – Hotel Indigo, Kimpton Hotels & Restaurants, voco ,and the newest addition to our global portfolio — Regent Hotels & Resorts.
The IHG and SAMHI management inaugarating India’s first Holiday Inn Express in Gurugram.
What were the factors that encouraged you to launch Holiday Inn Express in India and what sort of space do you see it occupying in the Indian hospitality industry?
KM: Our partnership with SAMHI to rebrand approximately 2,000 rooms, 14 hotels (operating and under-construction) within their India hotel portfolio, to Holiday Inn Express hotels, is in line with the growing demand from the domestic travel market and an increasing need for quality midscale accommodation. Holiday Inn Express is our fastest growing brand globally, and has been accepted very well by the smart and savvy travellers of today. The brand is a perfect fit for this market. All Holiday Inn Express hotels under the portfolio are being renovated and upgraded to global brand standards. The hotels will be offering design-led spaces that are purposeful and contemporary to make the environment inviting, efficient and resourceful for our guests, along with quality service delivered by highly trained and energised staff.
What is your outlook for India’s mid-market segment?
KM: We have seen a shift in the Indian hospitality landscape to focus on quality midscale hotels. This is largely in response to the rising middle class and a significant increase in domestic travel. There is great emphasis on development of travel infrastructure to support tourism in secondary markets, which is expected to further fuel the growth of this segment.
VB: Our focus is on the growing category of domestic travellers. Our Holiday Inn brand family comprises more than 85% of our pipeline (by number of hotels).
We recently opened the first hotel from our partnership with SAMHI – Holiday Inn Express Gurgaon Sector 50, and will be opening additional eight to ten Holiday Inn Express hotels in 2018, which will significantly expand our presence pan India. Additionally, this year we are introducing a Holiday Inn Resort in Kolkata with the signing of Holiday Inn Resort Kolkata NH6, and we have also marked our debut in Agra. These recent partnerships and signings have helped us build a great momentum in the midscale market, and as of June 30, we have 18 operating hotels across the Holiday Inn brand family and a robust pipeline of 40 hotels due to open in the next two to three years. While our focus is on the mid-scale segment, we are committed to growing our up-scale brand, Crowne Plaza and the luxury brand, InterContinental across key markets in the region.
How big is spiritual and wellness tourism segment for Indian hospitality?
VB: Spiritual tourism has been an important part of the Indian culture, and we see great potential in the segment for quality branded accommodation. To tap into this sector, we recently announced a partnership with Lotus Trans Travel Private Limited for a portfolio of four Holiday Inn hotels located across the Buddhist Tourism Circuit in India: Bodhgaya, Kushinagar, Gorakhpur and Shravasti. With this signing, IHG is uniquely positioned as the first international operator to have presence in India’s Buddhist Circuit. Wellness tourism, though a niche, is a fast-growing segment and we believe there is great scope for the hospitality industry to leverage this emerging trend.
Holiday Inn Express offers the best to its guests.
What are the trends that will transform the Indian hospitality sector in the next decade?
VB: We foresee a further increase in domestic travel in India, particularly by the younger population – for both work and leisure. This presents a huge opportunity for the hospitality sector, especially in the midscale segment. Our midscale brands, Holiday Inn and Holiday Inn Express are a great fit for this growing market.
We are also increasingly seeing that travel is driven by a demand for experiential living. More specifically, luxury travel is shifting away from acquiring expensive tokens, towards a desire for indulging in unique, enriching and impactful experiences. Based on this trend and to cater to the changing needs of our luxury guests, we recently announced the launch of ‘Curated Experiences by InterContinental’ campaign to offer memorable, sophisticated, and authentic luxury travel experiences for our guests staying across select InterContinental Hotels and Resorts in India, Middle East and Africa region. The offering has been designed to cater to the increasing demand of tourists looking for authentic and immersive travel experiences and a closer look at culture, heritage and local surroundings of the city they are visiting.
How much of a differentiator is technology in the hospitality space? How big a role will Artificial Intelligence play in the hospitality sector?
KM: In the world of travel today, technology is imperative and is increasingly making a difference in how we do our business and engage with our guests. We expect that guest services will be completely redefined by new technologies such as Artificial Intelligence, robotics, virtual reality, and automation. At IHG, we do our best to deliver great guest experiences. As one of the largest international hotel companies in the world, we have the benefit of scale, which gives us the ability to develop world-class delivery systems.
We have been working to deploy our new Guest Reservation System (GRS), a new Cloud-based platform that is an industry first. It will drive a fundamental shift in how hotel solutions are delivered to users with its incorporation of several capabilities into a seamless hotel management tool.
We are looking at bringing Hotel Indigo, Kimpton Hotels & Restaurants, voco, and Regent Hotels & Resorts to India.”
Initial functionality is designed to enhance usability, guest satisfaction, loyalty and revenue for hotels. The
system provides General Managers with a powerful dashboard, online training and assistance. In the future, it will comprise an entire suite of hotel solutions including property management, sales and catering, and Point of Sale systems.
VB: The role technology plays in the lives of consumers has evolved significantly and that has impacted the hospitality sector.
Travellers today are extremely tech-savvy and the hospitality sector needs to evolve to match consumer expectations. At IHG, we do our best to deliver great guest experiences. As one of the largest international hotel companies in the world, we have the benefit of scale, which offers us the ability to develop world-class delivery systems. Among our recent innovations is the industry’s first cloud-based Guest Reservation System (GRS) that will enable guests to build the kind of stay they want, and for us to offer stay options and amenities according to past booking preferences of the guests.
Can you elaborate on global hospitality trends for 2018?
KM: We believe that digital and technological developments will continue to transform the way in which the hospitality industry delivers guest experiences. We have also noticed that guests today are looking for more experiential travel which allows them to experience the culture and customs of the destination as a local would. This is especially important in the luxury space as travellers look to hotels to provide them with a personalised concierge services for creating authentic local experiences that are curated to suit their discerning tastes and needs. In India, Middle East and Africa, we have launched ‘Curated Experiences by InterContinental’ that caters to this new trend.