IHG's quiet comeback strategy

Chitra Narayanan New Delhi | Updated on January 20, 2018

Pascal Gauvin, COO, India, Middle East and Africa, IHG

Intercontinental Hotel Group was an early mover in India yet its brands haven’t made as much headway as Marriott or Hyatt here. But the UK chain is trying to change that now.

The Intercontinental Hotel Group with brands like Holiday Inn and Crowne Plaza in its portfolio was the first foreign hotel operator to enter India when it arrived here through a tie up with the Oberoi group in Delhi in the 1960s. Yet, being an early mover has not really translated in leadership position for IHG here. In fact, during the recent Hotel Investment Conference South Asia (HICSA), when a perception survey of hotel owners was conducted by consulting firm HVS, American chains Marriot, Hyatt and Starwood emerged as the top three preferred hotel operators with British-headquartered IHG coming a distant fourth.

Ask Pascal Gauvin, COO, India, Middle East and Africa, IHG, why the chain has fallen behind, and he admits, “Although we entered India quite early, we made some mistakes. Right now we are working on bringing our brands back, focusing mainly on Holiday Inn Express and Crowne Plaza.” The other two IHG brands in India are Holiday Inn and the upscale Intercontinental.

Gauvin points to the good year that IHG had last year in India, when it managed to accomplish quite a few brand conversions, notably a few Hilton properties in Delhi. “We have people (hotel owners) asking to convert to our brand and that’s what we have been working on. We are quiet achievers and there is proof in the pudding in the conversions,” he says. Interestingly, the HVS study corroborates this as although IHG is fourth behind Starwood, the gap has been narrowed down substantially compared to the year before.

In all, IHG has 26 hotels in 14 cities in India. Its competitors Marriott and Starwood are far ahead – while Starwood has 47 operating hotels and 37 in the pipeline here, Marriott has 30 operating and 45 in the pipeline. “We don’t want scale just for the sake of scale. Our brands are precious,” retorts Gauvin.

Having said that Gauvin adds that in 10 years time, the target is to have 100-150 hotels in India including existing and pipeline across 25 cities. “We are adding 11 cities, so we will have our presence in 25 cities here.”

Betting on Midscale

While it may have entered India through the upscale Intercontinental brand, the focus now has shifted sharply to the midscale Holiday Inn Express brand. With the opening of two Holiday Inn Express hotels in Delhi (at the T3 airport) and Chennai (on Old Mahabalipuram Highway), there are currently three properties of this brand in all with another 18 in the pipeline. As for Crowne Plaza, Gauvin says, “We now have 10 and eight in Pipeline. We are accelerating quite well.”

While four of IHG’s brands are present in India, Gauvin says, “Our priority is midscale because of the large domestic market opportunity. Holiday Inn Express has been developed as a niche midscale brand that delivers everything a time pressed traveler needs and has nothing they don’t need,” he says.

Among all the upcoming hotel openings which according to Gauvin will be the star performer? “ Holiday Inn Express in Delhi International Airport T3,” he says without hesitation. The transit hotel at the airport was operating as Eaton Smart hotel but has now been rebranded as Holiday Inn Express.

The OTA disruption

For Hotel chains with big distribution muscle like the IHG, their loyalty programmes have been a valuable tool in getting guests to revisit properties. But with online travel agencies (OTAs) now usurping that too by coming up with their own loyalty cards, that USP may soon be lost. Gauvin admits that it is a competition. “But it is up to us to make our guests loyal to our brand and give a great experience. OTAs are only a booking platform. Their role ends when the guest walks into our door. We are the ones who understand what the guest needs,” he says.

Delivering greater Personalisation

Gauvin says greater personalisation and delivering localised experiences will get guests to be more loyal. “We get a pre-arrival report of the guests staying with us that includes time of arrival, flight details, and previous experience in our hotel . It allows us to prepare the room they want,” he says. “We look at whether you are travelling on business, on pleasure, we don’t treat you the same.”

IHG’s recent trend report, he points out, is in fact called “Meaningful Membership in The Age of I”. The thrust of this is to enhance a guest’s personal and social identity. “We have recently tied up with Amadeus to build a cloud reservation system. All that will open up an even bigger personalisation opportunity,” says Gauvin.

Published on April 20, 2016

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