Kudos: IHG Drops Underperforming Hotels

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For years it has seemed like the marriottjor hotel groups have been pursuing growth at all costs, regardless of customer experience. It’s kind of refreshing to see a major hotel group counter that trend.

IHG ends contracts with subpar hotels

Skift has the story of how InterContinental Hotels Group (IHG) is dropping more hotels than it’s opening, as part of a plan to boost customer service and brand perception. In the first quarter of 2021, IHG removed 61 hotels with a total of 9,500 rooms. Half of the hotels being dropped belong to either Holiday Inn or Crowne Plaza.

This follows comments earlier this year from IHG’s CEO, where he indicated that the hotel group was planning on removing roughly 200 underperforming hotels from its network, in order to improve customer service and better position the company for growth. As IHG’s CFO described this more recently:

“This is the right time for us to have conversations with owners. Guest expectations have changed. We have been working with the owners to take out the hotels in the system that hadn’t met our vision for the brands as they move forward.”

Even with the hotels already having been dropped, it sounds like we should expect quite a few more hotels to be rebranded in the coming months.

For context, IHG is one of the world’s largest hotel groups, with over 5,900 hotels, ranging from InterContinental to Hotel Indigo to Holiday Inn Express. The brand has been expanding in the premium space in the past few years, between acquiring Kimpton, Regent, and Six Senses.

IHG recently acquired Six Senses

What’s IHG’s real motive for dropping hotels?

The major hotel groups make money through management and franchise agreements with the hotels that belong to their portfolios. The hotels are largely independently owned, and the hotel groups typically get a cut of the revenue for the properties that they manage or franchise.

For the hotel groups, bigger is typically better, and that’s also why we see so much brand inconsistency, and why we’ve also seen the “independent” hotel portfolios become so popular, since it gives hotel owners so much flexibility. Hotel groups have a hard time saying no to new hotels, even if they’re not great.

Could IHG really be so committed to brand perception and guest experience that it would be willing to give up revenue like this? Yes and no.

For IHG this is part of a bigger gamble:

  • IHG hopes that cutting hotels with low customer service ratings will improve brand profiles, making IHG more desirable
  • IHG sees huge potential for hotels that aren’t currently affiliated with major hotel groups; roughly 60% of hotels in the Middle East and Southeast Asia are independent
  • IHG hopes that by boosting brand profiles, the company will more easily be able to convince independent hotels to affiliate themselves with IHG

Ironically IHG has what I’d consider to be the weakest loyalty program of any major hotel group, so you’d sure think that an investment in a better loyalty program could go a long way to building loyalty among customers, and in turn attracting new hotel owners to join IHG. But that doesn’t seem to be IHG’s thinking.

IHG is looking to drop around 200 hotels

Bottom line

IHG is planning on dropping around 200 underperforming hotels, which have poor feedback from customers. The intent is to make IHG’s hotel brands more consistent, and in turn attract more independent hotels to join.

All the major hotel brands have some inconsistency, though if you ask me, it’s going to take a lot more than this for IHG to truly reposition itself.

What do you make of IHG’s plan to kick out underperforming hotels?

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  1. Ghostrider5408

    Now that is great news!

  2. PM1

    That's great news. I stayed in two Holiday Inns recently and while one of them was great, the other was absolutely terrible. I hope they continue culling the herd and set a standard for each brand in their portfolio.

  3. William

    HIEs are usually fine, but the mainline Holiday Inns are such a mixed bag that I refuse to stay at them. I have a feeling that it's mostly those that are getting booted.

  4. Sel, D.

    @Lucky is there any chance they’re actually cutting the hotels because they owe them minimum revenues that aren’t sustainable? Sort of a reverse Sonesta?

  5. Eric

    Is there a list of hotels that are getting dropped? I love IHG properties for quick overnight airport stays so this is good news for me.

  6. Alan Costello

    Yeah I'd similarly love to see the list of properties if it's out there.

  7. Eskimo

    Or this is the twisted way of saying, IHG lost even more properties to Sonesta in 2021.

    Sonesta did add 88 properties per press release in Feb.

    For potential IHG owners, at least your still don't have to buy breakfast for elites.

  8. Justin

    "Half of the hotels being dropped belong to either Holiday Inn or Crowne Plaza."

    I always had the impression that Crowne Plaza was a not very competitive 4-star brand with inferior properties on average relative to Hilton, Marriott, Renaissance, Westin, Hyatt Regency etc. Hopefully this is part of an effort to turn that brand around.

  9. DWT

    I think the biggest complaint about the IHG program is that breakfast is not offered to top tier elites. But for the time being, the games Marriott, Hilton and to a more limited extent, Hyatt, properties are playing with breakfast make it a bit moot for the time being. For most of my stays at properties from the other chains recently, I’ve arrived to be told that due to “covid”, the elite breakfast benefit is...

    I think the biggest complaint about the IHG program is that breakfast is not offered to top tier elites. But for the time being, the games Marriott, Hilton and to a more limited extent, Hyatt, properties are playing with breakfast make it a bit moot for the time being. For most of my stays at properties from the other chains recently, I’ve arrived to be told that due to “covid”, the elite breakfast benefit is currently suspected. I did recently stay at a Hilton property that had breakfast available (which in itself was noteworthy), and I ended up (seriously) with a coffee, a bottle of water and two prepackaged, refrigerated, boiled eggs… to eat with my hands.

  10. derek

    Relying on customer surveys is potentially problematic. Customer surveys are really problematic for neurosurgeons, ENT, and many other specialists. Just because the receptionist is nice or the office has nice magazines not a good way to judge. For family medicine, if payment is based on outcome then fat people get hurt because obesity worsens many diseases and what doctor wants fat people if payment is based on disease outcome (which is worsened in diabetics).

  11. Creditian

    Those hotels will probably become Wyndham or Days Inn.

  12. Regis

    “Half of the hotels being dropped belong to either Holiday Inn or Crowne Plaza.”

    As far as I am concerned, IHG could drop ALL Holiday Inns and Crowne Plazas. These properties are at least 40 years old and most have never been renovated. No loss at all.

  13. Liam

    So funny that you pictured the Crowne Plaza Toronto Airport, because it really needs to be deflagged.

    It is quite an awful hotel - but can be quite cheap, so good for mattress runs but not much else.

  14. Helen McPherson

    I do hope that in dropping these hotels, especially if they are in Europe, that they are replacing them with something a little less pricey than the Intercontinental. We stay in a lot of the Holiday Inn Express while travelling in Europe

  15. Phillip

    I find Crowne Plaza to be even more inconsistent than HI but that is probably the range offered at 4 stars vs 3 stars where expectations are low anyway. Some CP properties are closer to 5*. I absolutely love the likes of CP Changi and the new CP openings in Australia are great! Compare that to some more run down CPs which could do with a full revamp!

  16. Joseph N.

    Keep in mind this is only the latest round. Over the last decade or more IHG has thrown out about a third of all Holiday Inns, including two near where I live. Judging by my personal experiences, they have not thrown out nearly enough.

    When you show up in a city and the CP is the cheapest IHG in the area, that is simply because it is the worst, most beat up hotel in the...

    Keep in mind this is only the latest round. Over the last decade or more IHG has thrown out about a third of all Holiday Inns, including two near where I live. Judging by my personal experiences, they have not thrown out nearly enough.

    When you show up in a city and the CP is the cheapest IHG in the area, that is simply because it is the worst, most beat up hotel in the area.

    IMHO worrying about a few dozen bad hotels while ruining your loyalty program is a case of hugely misplaced priorities. After the massive devaluation last month, I cannot imagine saving up IHG points, or putting any spending on IHG credit cards, ever again. I wouldn't put even a stay at an IHG hotel on an IHG credit card any more.

  17. David H

    Pre-Covid I worked for IHG, in managed properties, a VERY old but high revenue performing HI. And the largest, highest ADR and highest revenue generating HIE. The HIE had great owners who re-invested and kept the hotel looking great. The HI owners couldn't care less as it was a cash cow.
    IHG for years now doesn't know who or what it wants to be. Over 90% of its properties are franchised, with very loose...

    Pre-Covid I worked for IHG, in managed properties, a VERY old but high revenue performing HI. And the largest, highest ADR and highest revenue generating HIE. The HIE had great owners who re-invested and kept the hotel looking great. The HI owners couldn't care less as it was a cash cow.
    IHG for years now doesn't know who or what it wants to be. Over 90% of its properties are franchised, with very loose agreements. I believe Keith Barr is trying to fix that, but its not going to be easy to do. As they try to focus back on luxury and up-scale brands, the mid-tier will get lost. It will all be HIE, Regent, Six Senses and in a big way, Kimpton.

  18. Peter

    Only time I've ever stayed in a CP was the only time I've ever been "walked" to another hotel. Happened in Zurich. While I wasn't happy at the time, it was actually a pleasant stay and the hotel was very clean and staff were great. The location was far from ideal but it did allow us to explore an area of the city we hadn't been to before. With that said, I can absolutely see the the comments above about the brand being accurate.

  19. Rosalie B Zurek

    Stayed in Holiday Inn in Singapore and Adelaide a few times, very good value for money

  20. Ruddiger

    Can thing of two right off the bat -

    IC Sydney.
    CP Republiqie Paris.

  21. Dahlia a Silverman

    I hope hilton does the same. I am spire elite with ihg and diamond member with hilton. I have stayed in 7 hiltons the past 3 months. They were awful. The owners don't care. The staff is incompetent

  22. ConnGator

    If only Hilton would also do this. My wife stayed at a God-awful place in London that should not just be dropped but bulldozed.

  23. RunningJock

    The Holiday Inn La Mesa should be dropped like a hot potato!

  24. K.M.

    question: if a holiday inn or crowne plaza gets dropped from ihg, can it still carry the holiday inn naming?

    1. Ben

      @ K.M. -- Nope, if IHG drops the hotel then it would need to rebrand as something else.

  25. TM

    IHG could have the best loyalty program in the world and it still wouldn’t motivate people to stay in some dirty worn out CP or HI. Even the ones that have been renovated are lipstick on a pig at best as it’s clear that every corner gets cut and it’s done as cheaply as possibly. I’ll give IHG credit though, at least in the US they are more consistent than the competition… consistently bad!

    ...

    IHG could have the best loyalty program in the world and it still wouldn’t motivate people to stay in some dirty worn out CP or HI. Even the ones that have been renovated are lipstick on a pig at best as it’s clear that every corner gets cut and it’s done as cheaply as possibly. I’ll give IHG credit though, at least in the US they are more consistent than the competition… consistently bad!

    It’s a shame Intercontinentals are lumped in with them, because it would be nice to earn points for IC stays without having to stay at other IHG properties. The lack of decent mid-tier properties compared to Marriott and Hilton has left a huge void in their program. It seems all of the new-construction IHGs are HI express, which is fine for a quick and relatively cheap bed for the night but beyond that, IHG just doesn’t offer much.

  26. Jaded platinum

    I was Spire with IHG for much of the last decade. Found that most HI's outside of downtown or airport areas were nothing more than dorms for youth sports teams and their families. It also seemed like the Crowne's have all become locations were if you want to look like you are a high roller, you get a suite and party down. Great getting upgraded to a suite, opening the door, and it smells like...

    I was Spire with IHG for much of the last decade. Found that most HI's outside of downtown or airport areas were nothing more than dorms for youth sports teams and their families. It also seemed like the Crowne's have all become locations were if you want to look like you are a high roller, you get a suite and party down. Great getting upgraded to a suite, opening the door, and it smells like an ashtray, with liquor stains on the ceilings, cigarette burns on the counters, and carpet that kinda got shampooed.....

  27. Nate nate

    Now even fewer opportunities to use those Chase free night certs.

    Shameful that the IC Willard in DC now costs a min 42k points, making it ineligible for the Chase certs. So much for dynamic pricing being good for consumers -- the floor is higher than what the pre-dynamic points cost was.

  28. Sung

    I think the mention of better loyalty program is spot on. Loyalty program is part of the experience, if you have a lackluster program, part of the experience will be lackluster too.

  29. dan

    Simple solution send all US hotel managers to Europe and Japan to see how customer service is done properly. Its sad to think that I can stay at most run of the mill hotels overseas and the service knocks my socks off when compared to most IHGs in the states

  30. Christ

    High time. I hope the grotty Holiday Inn Melbourne Airport is one of them

  31. iamhere

    Ironically IHG has what I’d consider to be the weakest loyalty program of any major hotel group, so you’d sure think that an investment in a better loyalty program could go a long way to building loyalty among customers, and in turn attracting new hotel owners to join IHG. But that doesn’t seem to be IHG’s thinking.

    ---> True.

  32. Andrew I

    I have had nothing but great experiences at all IHG hotels in Europe and in Asia. Some of the Holiday Inns in SE Asia are higher in level of service and facilities, than many other hotels in the US.
    The IC and CP in Japan, as well as SE Asia, have been an amazing experience, and they all have given me free breakfast as well as afternoon tea, etc. (I am a Spire Elite,...

    I have had nothing but great experiences at all IHG hotels in Europe and in Asia. Some of the Holiday Inns in SE Asia are higher in level of service and facilities, than many other hotels in the US.
    The IC and CP in Japan, as well as SE Asia, have been an amazing experience, and they all have given me free breakfast as well as afternoon tea, etc. (I am a Spire Elite, as well as a Titanium Bonvoy, and Hilton Diamond). It’s disappointing when an IHG property doesn’t offer that service, or should I say, the inconsistency between hotels.
    I have stayed at two Kimpton hotels (Tokyo and Bangkok), and they are impressive. Indigo in Bangkok was a great experience as well.
    I do feel that there are many inconsistencies across the brand (any brand), between properties, and I think all brands should be considering these measures each year.
    I do wish Hyatt had more properties; I think they have one of the best services all-around.

  33. Curtis Zulauf

    As an IHG employee I see this as a positive move. I work for a new Kimpton and have stayed at quite a few IHG properties over the years.

    Customer service goes a long way on those surveys!!

  34. MYSELF

    Improving customer experience is never a bad thing if it's genuinely motivated but in this case it seems transparently obvious that that isn't the case ( imho).

    This is IHG dressing up a self beneficial cost cutting exercise where they are throwing "independent" hotel owner/ operators to the wolves to help offset the pandemics affect on occupancy rates.

    Yes before you chime in I do understand and appreciate how the parent-unit dynamic works...

    Improving customer experience is never a bad thing if it's genuinely motivated but in this case it seems transparently obvious that that isn't the case ( imho).

    This is IHG dressing up a self beneficial cost cutting exercise where they are throwing "independent" hotel owner/ operators to the wolves to help offset the pandemics affect on occupancy rates.

    Yes before you chime in I do understand and appreciate how the parent-unit dynamic works in these, obstensibly, franchise properties but there is still financial impact to the parent ( IHG) across multiple levels from branding and marketing to Group Fiscal Performance as overall Brand and Group occupancy rates play a key factor in the parents financial performance both perceived and stated. High / inflated low occupancy rates also play a direct part in the parent obtaining additional capital and the rates that that becomes available at so IHG cutting the wheat from the chaff directly benefits them as a whole.

    As Ben said, some more investment in improving and/or making their loyalty program more attractive would give more immediate and better impact to the end user so this window dressing and obfuscation of what they're really doing here hasn't convinced me.

  35. Adam

    Crown Plaza needs a complete brand overhaul, IMO. So many of them have decent bones, but are stuck in the 80s or 90s as far as design. CP has had several false starts, but lacks any real overall strategy, at least in the US.

  36. Grey

    For me, the problem with most Holiday Inns I have seen is that they seem like they were all standardised in the 80s-90s and haven't been looked at since then. Based on the name, I would expect Holiday Inn to be above Holiday Inn Express, but in all of the hotels that I have seen, the Express hotels tend to be more modern and have breakfast included.
    I think it is a difficult situation,...

    For me, the problem with most Holiday Inns I have seen is that they seem like they were all standardised in the 80s-90s and haven't been looked at since then. Based on the name, I would expect Holiday Inn to be above Holiday Inn Express, but in all of the hotels that I have seen, the Express hotels tend to be more modern and have breakfast included.
    I think it is a difficult situation, because Holiday Inn had such a strong name recognition for so long, but I think these days, that recognition is not necessarily positive. I think their best bet would be to perhaps spend more time culling the weaklings and then eventually implementing a plan to significantly invest in the remaining properties and rebuild the brand, possibly modeled after Novotel, which manages to be a business hotel with many features for families.

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Grey

For me, the problem with most Holiday Inns I have seen is that they seem like they were all standardised in the 80s-90s and haven't been looked at since then. Based on the name, I would expect Holiday Inn to be above Holiday Inn Express, but in all of the hotels that I have seen, the Express hotels tend to be more modern and have breakfast included. I think it is a difficult situation, because Holiday Inn had such a strong name recognition for so long, but I think these days, that recognition is not necessarily positive. I think their best bet would be to perhaps spend more time culling the weaklings and then eventually implementing a plan to significantly invest in the remaining properties and rebuild the brand, possibly modeled after Novotel, which manages to be a business hotel with many features for families.

Adam

Crown Plaza needs a complete brand overhaul, IMO. So many of them have decent bones, but are stuck in the 80s or 90s as far as design. CP has had several false starts, but lacks any real overall strategy, at least in the US.

MYSELF

Improving customer experience is never a bad thing if it's genuinely motivated but in this case it seems transparently obvious that that isn't the case ( imho). This is IHG dressing up a self beneficial cost cutting exercise where they are throwing "independent" hotel owner/ operators to the wolves to help offset the pandemics affect on occupancy rates. Yes before you chime in I do understand and appreciate how the parent-unit dynamic works in these, obstensibly, franchise properties but there is still financial impact to the parent ( IHG) across multiple levels from branding and marketing to Group Fiscal Performance as overall Brand and Group occupancy rates play a key factor in the parents financial performance both perceived and stated. High / inflated low occupancy rates also play a direct part in the parent obtaining additional capital and the rates that that becomes available at so IHG cutting the wheat from the chaff directly benefits them as a whole. As Ben said, some more investment in improving and/or making their loyalty program more attractive would give more immediate and better impact to the end user so this window dressing and obfuscation of what they're really doing here hasn't convinced me.

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