As the number of international brands grows steadily, hotel groups are also pursuing growth into emerging markets, reports David Churchill
This month’s soft opening of a new Intercontinental hotel in London’s Westminster is something of a rarity: not only will it be the first new Intercontinental in the capital for 36 years but also only the second property currently open in London for its flagship global brand.
But what Intercontinental Hotels Group (IHG) – the world’s biggest hotelier in terms of room numbers – may be lacking in its home country, it is more than making up for overseas. It has a pipeline of 1,060 hotels due to come on stream over the next few years, comprising some 167,485 rooms – about a quarter of its present global roomstock.
Yet IHG is not alone in seeking to expand around the globe despite the current economic outlook. All the major international chains are putting their faith in a strong growth in business travel over the next decade by pumping up their flow of new hotels. Hilton Worldwide, for example, says it has 161,000 rooms coming on stream in the next few years – the biggest expansion in Hilton’s history.
While most of the hotel industry’s previous growth has been focused on the North American market – which is still by far the most important for international chains – much of the new investment is aimed at emerging markets, particularly China and the rest of Asia-Pacific.
Latest figures from STR, the US-based hotel research company, show that the total global pipeline as of last August was 5,570 hotels, adding 870,797 rooms – to put that level of growth in context, IHG’s current inventory is around 4,500 properties. Of this new roomstock coming on stream, some 43 per cent was due to open in the Asia-Pacific region followed by 35 per cent in the US and 16.5 per cent in Europe. Although more US hotels (2,745) are due to open than in Asia-Pacific (1,638), the greater room numbers in the Far East indicates that the hotels planned are generally bigger than their US counterparts.
STRUCTURAL SHIFT
Such growth has been made possible by the structural shift in the hotel industry over the past decade, away from actual ‘bricks and mortar’ ownership of hotels to mainly being franchisors of global hotel brands. Hotels financed and built by external investors are then either managed by hotel chains or operated by others to standards laid down by the brand owner.
This asset-light, brand-rich strategy has enabled groups such as IHG to grow at a pace impossible when they were also property owners. But this brings its own problems for hotel chains: what happens when the property owner and brand manager fall out?
This is an issue Hilton faced in September when it gave up management of its flagship Paris hotel at the Arc de Triomphe after becoming involved in a contract dispute with the owner, a French property company called SIHPM.
But whether or not such ownership and branding disputes matter to business travellers and buyers is a moot point. After all, there is clearly an increasing number of business hotels being built in towns and cities in parts of the world where previously good quality accommodation was in short supply.
Yet it is not just the number of hotels that is expanding: the choice of brands on offer is also growing steadily. All the global operators now have a range of up to a dozen and sometimes more brands, covering the whole spectrum – from economy brands through the crowded mid-market right up to luxury upscale portfolios aimed at business travellers and the well-heeled leisure jet-setter.
Every niche is catered for: opening next year in the US before being rolled out elsewhere in the world is IHG’s new Even Hotels brand to capture mid-market travellers who are increasingly health conscious. The rationale, according to hoteliers, is that there cannot be too many brands on offer.
This has obviously helped corporate buyers, who can now often find a preferred branded property in most major cities in the world. Additionally, this has the benefit of enabling multi-destination bookings within the same group, helping with the tracking of costs, as well as scope for corporate deals based on the total number of room nights booked in a given period across all brands in the group.
This can also be translated into added-value benefits, such as free wifi or minibars, which help control the extra costs from the growing trend for hotels to charge ancillary fees. Staying within a global branded group also brings benefits from maximising points earned from loyalty schemes.
Although the top global hotel groups seem firmly entrenched, there is always scope for newcomers to break in to the club. One of the biggest chains in the world that most people have never heard of is Home Inns. With over 1,400 hotels and more than 176,000 rooms it comes in at ninth place in the 2012 list of global top ten hotel groups, calculated by French-based hotel consultancy MKG Group, pushing out Hyatt.
But its appeal to international business travellers is limited by the fact that all its hotels are located within China, targeting the fast-growing demand for business and leisure travel within the massive Chinese market. Yet it is clearly one to watch once it starts expanding overseas.
TOP GLOBAL HOTEL GROUPS
INTERCONTINENTAL HOTELS GROUP (IHG)
Hotels/rooms: 4,452/666,873
Global overview: The bulk of IHG hotels are located in the Americas, followed by Europe, while China is its fastest-growing region.
Brands: Intercontinental Hotels, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites
What’s new: Hualuxe, a new upmarket brand aimed at Chinese travellers.
Business tip: IHG’s loyalty scheme, Priority Club Rewards, is one of the biggest with over 67 million global members, and a key feature is a scheme to use reward points to pay for stays in other hotels across the world.
HILTON WORLDWIDE
Hotels/rooms: 3,908/644,471
Global overview: Owned by US private equity firm Blackstone Group, it claims to be the fastest-growing global hotel company in terms of room growth and is set to maintain this over the next few years with 161,000 rooms and 931 hotels in the pipeline.
Brands: Waldorf Astoria, Conrad, Hilton Hotels, Doubletree, Embassy Suites, Garden Inn, Hampton, Homewood Suites, Home 2 Suites
What’s new: Fitness centres in more than 1,000 of its hotels worldwide are in the process of getting a technology upgrade.
Business tip: Hilton HHonors claims to be the only loyalty scheme to offer members both hotel points and airline miles for the same hotel stay.
MARRIOTT INTERNATIONAL
Hotels/rooms: 3,537/617,837
Global overview: The iconic US hotel group has been sprucing up its image in recent years, linking up with boutique hotel veteran Ian Schrager to develop new lifestyle brands such as Edition, and is pushing its global expansion.
Brands: Ritz-Carlton, Bulgari Hotels, JW Marriott, Marriott Hotels, Edition, Autograph Collection, AC Hotels, Renaissance, Courtyard, Fairfield Inn & Suites, Springhill Suites, Residence Inn, Towne Place Suites, Marriott Executive Apartments
What’s new: In October, Marriott added the five-hotel, 8,000 rooms Gaylord Hotels brand in the US.
Business tip: By the end of 2013, some 70 per cent of the signature Marriott Hotels worldwide will offer the ‘great room lobby experience’, providing a more casual environment for meetings, networking, and food and drink.
WYNDHAM HOTEL GROUP
Hotels/rooms: 7,205/613,126
Global overview: Wyndham is a franchisor of some 17 hotel brands operating in more than 50 countries.
Brands: Wyndham Grand, Wyndham Hotels, Wyndham Garden, Wingate, Tryp, Ramada, Days Inn, Baymont, Super 8, Howard Johnson, Travelodge (US), Nights Inn, Microtel, Hawthorn, Dream Hotels, Night Hotels, Planet Hollywood
What’s new: A Wyndham survey released in October of more than 4,000 business travellers found that almost half had extended a trip at some stage to include a holiday.
Business tip: The Wyndham Rewards loyalty scheme offers members the opportunity to redeem points for concerts and other events rather than just free hotel stays.
CHOICE HOTELS INTERNATIONAL
Hotels/rooms: 6,199/535,217
Global overview: A global hotel franchisor based in the US of mainly midscale and economy brands, although it also offers “historic, boutique and unique” hotels through the Ascend Hotel Collection.
Brands: Clarion, Quality, Comfort Inn, Comfort Suites, Sleep Inn, Econo Lodge, Rodeway Inn, Cambria Suites, Mainstay Suites, Suburban
What’s new: Choice opened 88 new franchised properties during Q2 of 2012.
Business tip: Free wifi is available at the Clarion, Quality and Comfort hotels in Europe.
ACCOR
Hotels/rooms: 3,436/439,593
Global overview: In October, Europe’s biggest hotel group made clear its focus on emerging markets with the US$1.9 billion sale to Hilton-owner Blackstone Group of its budget Motel 6 and Studio 6 chains in the US, leaving it with just 17 Sofitel and Novotel hotels in North America. Nearly 30 per cent of Accor’s current roomstock is now based outside North America and Europe.
Brands: Sofitel, Pullman, MGallery, Grand Mercure, Novotel, Suite Novotel, Mercure, Adagio, Ibis, Ibis Styles, Ibis Budget, HotelF1
What’s new: Existing economy brands Etap, All Seasons and Formule 1 are being converted to the new trio of Ibis brands.
Business tip: Eurostar travellers from St Pancras should take a look at the recently-opened Pullman St Pancras hotel, the first of the new Pullman business-focused brand to open in the UK, which replaces the former Novotel on the site.
STARWOOD HOTELS
Hotels/rooms: 1,076/315,300
Global overview: Arguably better known for its brands than the Starwood name (initially an investment vehicle created to house the Sheraton and Westin brands) it now has established a reputation for developing a new generation of lifestyle brands, such as W (now at London’s Leicester Square) and Aloft (at Excel). Its biggest pipeline of new hotels over the next couple of years will be in China, with 100 openings.
Brands: St Regis, Westin, Le Meridien, The Luxury Collection, Sheraton, Four Points by Sheraton, W Hotels, Aloft, Element
What’s new: Starwood sees scope for expanding in the global upscale and luxury markets, capturing top-end business and leisure travellers as the world economy recovers, and has earmarked some 80 per cent of its global pipeline of 95,000 rooms in these sectors.
Business tip: Starwood’s environmentally-friendly brand Element has its first European property opening at a new business development close to Frankfurt airport, scheduled to come on line in 2014.
BEST WESTERN INTERNATIONAL
Hotels/rooms: 4,078/311,158
Global overview: Best Western operates as a membership and marketing association for independently operated and owned hotels in 100-plus countries, although mainly in the US, where it started. There are 375 hotels in the US pipeline, with 75 (6,700 rooms) being developed in 15 other countries or territories.
Brands: Although all properties are branded Best Western, two new categories have been introduced to reflect higher-end facilities and services in some member hotels – these are Best Western Plus and Best Western Premier.
What’s new: A move into the extended-stay market is currently being considered.
Business tip: Business travellers who are elite members of another hotel’s loyalty programme can enjoy the same status in the Best Western Rewards scheme.
CARLSON REZIDOR
Hotels/rooms: 1,320/209,000
Global overview: Carlson Rezidor Hotel Group is the strategic partnership formed earlier this year to bring together Carlson Hotels of the US with pan-EMEA hotels group Rezidor, in which Carlson owns a majority stake. Rezidor’s CEO Kurt Ritter is retiring at the end of the year and new chief Wolfgang Neumann is expected to continue the expansion strategy in Europe and emerging markets.
Brands: Radisson Blu, Radisson, Park Plaza, Park Inn by Radisson, Country Inns & Suites, Hotel Missoni
What’s new: A 25 per cent cut in energy use within five years across the group’s hotels is the target of Think Planet, a recently-unveiled eco-friendly initiative.
Business tip: Club Carlson loyalty scheme members can earn bonus points until the end of the year, based on length of stay, under the Stay More Nights, Earn More Points offer.
HYATT HOTELS
Hotels/rooms: 469/133,134
Global overview: Hyatt has recently stepped up a gear in its global expansion. About 75 per cent of the 175 hotels and 39,000 rooms in the pipeline will be located outside North America, with 50 in India and 30 in China.
Brands: Park Hyatt, Grand Hyatt, Hyatt Regency, Hyatt Place, Hyatt House, Andaz
What’s new: The 30th Park Hyatt hotel opened in October in the Indian city of Chennai.
Business tip: Imagine the Possibilities is a loyalty scheme promotion until the end of November for Hyatt Gold Passport members, offering bonuses for those staying for five consecutive nights or more.
OTHER KEY PLAYERS
SHANGRI-LA: The Hong Kong-based luxury group has 72 hotels and more than 30,000 rooms in Asia-Pacific, North America, the Middle East and Europe, operating under the Shangri-La, Traders and Kerry Hotels brands.
FOUR SEASONS: The Toronto-based group with a high reputation for luxury and service embraces 90 hotels in 36 countries.
MANDARIN ORIENTAL: The Hong Kong-based luxury hotel group now operates, or has under development, some 45 hotels and 11,000 rooms in 28 countries.
MARITIM HOTELS: Operates some 37 hotels across Germany with a focus on the meetings and conference markets; it also has another 14 around the world.