During the 43rd annual NYU International Hospitality Industry Investment Conference, LODGING sat down with Elie Maalouf, CEO, Americas, InterContinental Hotels Group (IHG), to discuss how the industry’s recovery is progressing, the company’s development strategy, and his view on today’s pressing industry challenges—from labor availability to sustainability commitments.
What is your impression at the conference of how the hospitality industry is doing today?
Everyone I talk to recognizes that the recovery has been faster and stronger than anybody had assumed or predicted six months ago. The fundamental drivers of our industry were interrupted but not impaired; unlike the 2008 crisis where there was severe and prolonged GDP growth interruption, we’ve bounced back very quickly economically as a nation, and the industry is following. Leisure travelers want to come back. Business travelers want to come back. On the development side, people are seeing financing starting to come back. I’d say, overall, the atmosphere is energized.
What is the strategy for growing IHG’s brand portfolio?
We work strategically in our brand portfolio and have a sequence of things that we plan to do over time. For instance, we looked at our brand portfolio several years ago and determined that there were certain segments that we weren’t playing in that we wanted to play in. We wanted to have a new transient midscale product, so we launched avid, which is going to have 50 hotels open by the end of this year—it has 45 already. It’s the right brand at the right time with small rooms, which address construction costs, 100-percent new build so you get the full confidence of cleanliness, and a contemporary grab-and-go breakfast, which is nutritious but efficient for owners to offer. If you had to create a brand today, you’d create just that.
We realized we wanted to have an all-suites transient product so we launched Atwell Suites. We did not have a conversion upscale product so we launched voco, which has hotels open or under development around the world and several right here in New York City. We realized we had some gaps in luxury that we solved through acquisition—like with Regent and Six Senses. And we also wanted to have an upper-upscale collection brand; Vignette Collection was on our roadmap for some time. Vignette Collection allows really high-quality hotels with their own personality and distinctive character to join IHG without having to abandon their identity fundamentally. We’ve had a lot of interest in it globally already, and are eager to bring it to the United States in a franchise format.
How are IHG’s growth and development plans progressing in the United States?
Our growth is going to continue in the United States along the vectors of our existing brands and new brands. This year, we are celebrating the 30th anniversary of Holiday Inn Express and its 3,000th hotel opening—almost 2,500 are in the Americas region and 2,245 are in the United States. That’s 100 a year for 30 years, on average, and we’ll continue to grow Holiday Inn Express.
On the other end of our spectrum, we’re celebrating the 75th year anniversary of InterContinental this year. It’s just an incredible achievement for a brand—it’s the largest luxury hotel brand in the world with 205 hotels open, another 73 under development, and with great assets coming into the United States, too.
Our extended-stay brands in the Americas region have proven themselves during this pandemic, and we saw occupancy performances including 70 percent across the Holiday Inn Express. And now, at near 80 percent occupancy in our extended-stay brands, they are machines. Efficient to build, to operate, and beloved by our corporate customers and even leisure customers, they’re going to continue to grow.
We’ve seen great growth in our new brands: avid has a couple hundred hotels in the pipeline; Atwell Suites will open in Miami at the end of this year; voco already has several signings and openings in the United States. I think Vignette will bring the same success.
Are you seeing similar labor challenges across markets?
Labor was tight in our industry, and frankly in all industries, before COVID, which exacerbated it. Our industry alone lost 5 million people last year. Some of them found other convenient work and they’re not coming back. Others will, but not enough of them yet. The economy rebounded quickly. We’ll find ways to redesign our workflows and our services to meet the lower levels of labor availability. Our customers, I think, will understand that maybe they didn’t need all those things to begin with. And I think our industry, as it recovers, will attract more people.
How are you retaining employees amid these labor challenges?
In the United States, we’re 90-percent franchised, so all of those hotels are operated by other operators. But we have a substantial managed portfolio. The most important thing is we’re paying more. That really matters to be competitive. We’re offering more flexibility and more benefits. We’re also finding ways to lighten the workload, which is why we’re looking at different housekeeping formats, making sure that our guests have a trusted, clean, confident stay but not necessarily doing things every day that they don’t need us to do.
While exploring different operational designs, are you seeing an opportunity to advance sustainability efforts?
Through our operational designs—whether it’s housekeeping, F&B, water usage—we’re finding solutions that reduce the environmental impact that are more sustainable but don’t reduce the quality of the experience and the services that guests get.
We know that many in the industry have made important [sustainability] commitments. We’ve made, I think, some of the most serious ones: a commitment to meeting science-based targets by 2030, to report on them every year, to having a zero or near-zero carbon new-build hotel format by 2030, to reducing water and other waste by certain percentages and reporting on those. These are serious, tangible, and measurable activities that give our customers—corporate and individual—the confidence that we are taking environmental challenges seriously.
What’s your outlook for 2022?
I would think that there’s a chance that between Spring Break and Labor Day next year, you’re going to have gangbusters demand. Leisure’s going to be similar to what we saw [in 2021] and more because we’ll be well past COVID concerns, I think, by then. You still have a lot of deferred travel and events that people want to have with families and friends. And then you have the return of business travel, too… Spring Break to Labor Day, if you were planning to go somewhere, I’d book it quickly.