Already entrenched in rolling out a renewed focus that includes an emphasis on staff training and an improved bedding program for the brand, InterContinental Hotels Group has announced a goal to reposition the brand to the upper-upscale segment. In doing so, the franchisor will take a hard look at each of the nearly 400 hotels in the portfolio and expects about 40, or 10% of the brand, won’t fit the mold for an upper-upscale product and will be removed from the system.
“We’re following what we call our ‘Rest to Best’ strategy where we want to get all of the hotels to move up to where the top-performing hotels are,” said Janis Cannon, VP of global brand management for Crowne Plaza and Hotel Indigo. “There are plans to remove hotels from the system. It’s either move up or move out.”
IHG does not have a brand that operates in the upper-upscale space, an issue that has turned off franchisees who are looking to develop in that segment. Mark Carrier, SVP of the B. F. Saul Company, which owns three Crowne Plazas, said although he has invested capital for his hotels to compete in the upper-upscale space, performance is lacking from a brand perspective.
“Crowne Plaza needs to step up from the lower position to fully upper upscale so it can compete effectively with Marriott, Hyatt and Sheraton full service,” he said. “In certain locations the product is not up to that. Now IHG is executing a multi-year project to make sure that’s right. They’re going to be bringing the brand into that competitive position.”
Case in point: When executives from ownership group Lane Hospitality were finalizing the necessary product-upgrade plan for the Crowne Plaza in Clark, New Jersey, president and CEO Bill DeForrest took a close look at the local market and the property’s competitive set. Hotels in the competitive set included a Hilton Hotel, a Renaissance by Marriott, a Hotel Indigo and other upscale assets.
DeForrest knew IHG had plans to move the Crowne Plaza brand into the upper-upscale segment. If he committed to repositioning his Crowne Plaza, his hotel would be another player in an already crowded space.
“We saw the chance to re-evaluate our strategy to achieve optimal market positioning,” DeForrest said.
Lane Hospitality chose to renovate and rebrand the hotel as a Holiday Inn. “Owning the upper-midscale segment will give us a very strong, open niche,” DeForrest said.
“The market we compete in has had significant new supply added in the upper-upscale category both within the immediate and surrounding areas,” he said. “The upper-midscale market however has had numerous assets formally in the market leave the category, mostly choosing to compete in lower-tier categories. We see a significant opportunity for a newly renovated, redesigned asset competing with an industry leading upper-midscale brand.”
Changing the landscape
IHG will take a page from the Holiday Inn relaunch playbook to help execute the Crowne Plaza repositioning. It will be a “multi-year journey,” Cannon said, and most of the face-lifting will occur in the U.S., where Crowne Plaza hotels aren’t as uniform in their standards.
Currently, there are 394 Crowne Plazas open, 163 of them in the U.S. Cannon said most of the growth outside of the U.S. has taken place in Asia and India, and that will continue to be the case. There are 115 Crowne Plazas in the pipeline, with about 90 executed contracts in Europe and Asia, with the balance in the U.S.
Growth in the U.S. will come primarily by way of conversion, and IHG hopes to get Crowne Plazas in key gateway markets such as San Francisco, Los Angeles and Boston.
In China, Cannon said, the efforts will be more about awareness and uniformity rather than repositioning, since the brand was introduced as upper-upscale there.
“It’s all about getting a more consistent global portfolio of hotels,” she said.
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