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Cosslett: A Very Different Industry

In an exclusive column for HM, Andrew Cosslett, CEO of IHG – the world’s largest hotel chain by number of rooms – looks at what the industry can expect in 2009.

This year we’re reflecting on a very different hotel industry to the one we’ve seen over the past few years. There is no doubt we’re in a much tougher trading environment now.

IHG CEO, Andrew Cosslett

The momentous external events of 2008 risk overshadowing some major achievements notched up by IHG. We beat our 360 target of adding 50,000 to 60,000 rooms on a net basis to our system, six months ahead of schedule. We grew faster than any of our major rivals and until at least the third quarter of 2008, when we last reported our figures, outperformed them in every one of our major markets.

We continue to make good progress on the largest project ever undertaken in the hotel industry – the USD$1 billion relaunch of Holiday Inn – and launched Holiday Inn Club Vacations in Florida, our first move into the Timeshare industry. We opened our 100th hotel in China and have taken the first steps to making Hotel Indigo and Staybridge Suites truly global brands. We hit record system delivery numbers and saw our employee engagement scores rise to new heights. This has been a great team effort and everyone at IHG should be very proud of what we’ve achieved.

This year, 2009, will be challenging for travel and tourism. The key to winning in the battle we face is a strong system – a system that consistently delivers guests to our hotels through our call centres, websites and sales teams. And rightly so, our owners demand that. They expect us to get more guests walking through their doors than the competition and we’re focused on doing just that. Our marketing fund currently stands at nearly USD$1 billion and we will use that firepower to keep focused on delivering ‘Great Hotels Guests Love’.

The USD$1 billion Holiday Inn re-launch is our biggest project right now. The programme, which involves every one of our 3,200 Holiday Inn hotels around the world, is going well and we’re now seeing the results. Guest feedback is very positive and relaunched hotels are seeing increased customer satisfaction and RevPAR.

InterContinental is still growing at a record pace. We now have 157 open and 69 in the pipeline. This is the largest InterContinental estate has been in its 60 year history. Crowne Plaza has also had a strong 2008 and we have made great progress with the ANA joint venture in Japan.

Over the next couple of years we’ll see branded hotels continue to grow at a faster pace than non-branded ones. Hotel conversions will play a big part in this as independent hotels look for the support of a large system to stay competitive.

During 2009 we’ll continue to strengthen our brands and support our owners. This means we’ve got to be cleverer with our use of technology, deliver more environmentally friendly hotels and really focus our marketing efforts.
Although there are some hard times ahead for the industry, the one thing we can be sure of is that the long term trends are very positive.

People are living longer, new markets are travelling, the internet makes travel easier and more accessible and low cost airlines continue to grow. Things are going to be tough but we know that this industry is cyclical and we will see business get better. We can’t tell when that will be but whenever it is we will be ready to take full advantage of it.