Brands Proliferation? Not With IHG in Asia, Here’s why
Rajit Sukumaran, IHG’s managing director South-east Asia and Korea. Triple luck: new brands + conversions demand + sub-regions in place. Oh, add long-standing relationships with Asian owners. Photo: IHG
By Raini Hamdi, 21 March 2022
When Adrian Zecha, founder of Amanresorts, opened the Amanusa in Bali decades ago, it’s unlikely he’d imagine that one day the resort would be a Kimpton, a brand that is everything Aman is not.
Kimpton, a boutique chain of hotels and restaurants which IHG acquired in 2015, is playful, design-led and pet-friendly. Aman is all about peace, quiet and tranquility.
The former Amanusa, now called Kimpton Naranta Bali, will finally open later this year after a two-year delay. Extensive renovations will add 15 new villas to its original count of 35 suites (see article: Aman Sees no Competition With Kimpton in Nusa Dua).
Over in Singapore, the former Hilton on Orchard Road was reborn in January as Voco, a “hard” IHG brand with the malleability of gold. Voco “celebrates individuality” — in other words owners can convert their hotels in a jiffy as they needn’t conform to brand specifications. It’s the fastest-growing IHG brand with 61 hotels in operation and pipeline globally as at end-2021.
New brands and rising conversions are a potent recipe for growth. In Asia, the pandemic didn’t produce a field of distressed assets as funds had hoped. Instead, hotels on life-support or deep-pocket ownership managed to hang on to dear life. And as recovery comes into sight, the owners want branding and distribution of chains to turbo-charge business, according to Rajit Sukumaran, IHG’s managing director, South-east Asia and Korea.
“In a typical year, conversions would be less than 20 percent of our development growth in the region. Last year, it was multiple times that,” said Sukumaran.
“Independent hotels realize that when business picks up, they get a better shot of ramping up faster with a chain’s systems supporting them. That’s where conversions come in.”
In South-east Asia alone, more than 80 percent of nearly 8,800 international-standard hotels in operation are independent, according to STR, as cited by C9 Hotelworks in a review of independent hotels in the region dated November 2020.
Lucky Seven
Since 2015, IHG has added seven new brands to its list of 10, namely, Kimpton, Avid, Regent, Voco, Six Senses, Atwell Suites and Vignette Collection, in that order.
Compared with Accor’s 43 brands and Marriott’s 30 flags, IHG’s brands bank is still small, and late to the table.
Luckily for it, the timing of its brand additions is propitious.
Kimpton, Voco and Vignette Collection, brands that are new to Asia, have enabled IHG in these pandemic times to penetrate saturated cities such as Singapore, new places such as Ba Na Hills Danang, Vietnam, and must-have resort destinations such as Bali. Legacy brands that form the bulk of IHG’s estate in Asia, Holiday Inn, Crowne Plaza and InterContinental, continue to grow, but the new breadth of brands has helped accelerate IHG’s growth in the region.
So from the perspective of IHG, indeed all big chains, there is no such thing as ”brands proliferation.”
Last year, IHG signed 40 hotels with close to 9,800 rooms in Asia-Pacific excluding China, beating Marriott and Accor in roomcount signings (see chart below).
The chain kicked off 2022 with a four-hotel, 2,709-room deal in Vietnam that includes a Voco, developed by Sun Hospitality Group. This month (March), the Sindhorn Midtown in Bangkok becomes the first Vignette to open in Asia.
Fly With me
Often, it is existing owners who latch on to new brands and help them fly, thanks to mutual trust and confidence founded from previous projects. Sun, for example, owns the InterContinental hotel in Danang, while Siam Sindhorn is the owning company of the first Kimpton in South-east Asia, Kimpton Maa-Lai Bangkok, which opened in 2020.
“It’s gratifying to see growth with our existing partners, which is another trend that will continue,” said Sukumaran.
Voco Singapore is under HPL, another long-time IHG partner which also owns the InterContinental, Holiday Inn and Six Senses in the Maldives. Asset World Corporation, the largest hotel owner in Thailand with 18 properties including a Holiday Inn Express in Bangkok, was the first in Asia to sign up the Vignette Collection in 2021 for its hotel in Pattaya, Thailand.
Another IHG move that proved providential for it was its corporate restructure in 2017, and again in 2019. This created more sub-regions in Asia, put more people on the ground and gave them the autonomy to act faster.
“Thankfully due to the restructuring, we have development [executives] in Vietnam, Thailand and Korea, and [staff] cutbacks were small and not in-market but central resources. Because, once you’re locked down, there’s only so much you can do on a [computer] screen with owners.
“Also, with every restructuring, you need time for it to build in and to be understood by stakeholders. It’s a blessing we have that advantage,” said Sukumaran.
He would be pushing for more hires in the region as soon as markets reopen. “It’s not just about development but development support. You want people closer to the ground for speed to market and because they understand the local nuances better,” he said.
House Cleaning
Apart from launching new brands IHG, despite raised eyebrows, went ahead to clean up its house just before the pandemic. This saw 200 underperforming hotels exit system, according to its 2021 earnings results. The bulk, 151, were Holiday Inn and Crowne Plaza hotels.
Sukumaran said it was “a strategic decision to improve the quality of the estate, by assessing which [hotels] needed to be pushed up so that the water level rises for all.”
“A number of owners felt they could not meet our expectations so they had to find a different path. A lot more of them actually saw what we were trying to do and signed up to our vision of improving the overall quality of the estate,” he said.
In Asia, only “a handful” left, said Sukumaran.
“One reason is hotels in the region are predominantly managed by us; another is that Asian owners, especially the larger ones, do continue to reinvest, even in the midst of the pandemic. It goes to show they truly believe in the longterm potential of the industry,” he said.
Examples include the InterContinental Bangkok, which will be overhauled this year to bring back its glory. Over in Bali, the InterContinental invested in refreshing its bars and restaurants when occupancies were low, he said.
“Asian owners see the pandemic as another blip in the cycle. They’ve seen how the business always comes back much stronger after a crisis,” said Sukumaran.
“Travel does come back in a big way. The industry will look more similar in the future than different after this pandemic.
– This article is fourth in a series focusing on Western chains’ expansion in Asia-Pacific excluding China, in no particular order of chains. Up next: Wyndham. Previous:
• Hilton Sees 2022 as the Year it Seizes Growth in Asia-Pacific Beyond China
• Marriott Ties With Accor for top Spot in Hotel Signings and Openings 2021
• Accor to Launch a Midscale Collection as Conversions Continue to Soar
