IHG fast-tracks India expansion with 14 hotels
British hospitality firm InterContinental Hotels Group (IHG) has fast-tracked its India growth plans by doing the single-biggest flag change (rebranding a hotel taken over from a rival brand) in the domestic hospitality sector, a move that will expand its room strength by nearly 50 per cent to 9,000 in about a year.
A flag change cuts the gestation period to a few months, while building a new hotel could take four to five years in India.
SAMHI, an Indian hospitality firm with multiple assets, decided to partner with IHG to convert its 14 hotels into the Holiday Inn Express brand in November last year. These hotels were earlier branded as Formule 1, a budget brand of French hospitality major Accor. IHG inaugurated the first of these 14 hotels in Gurugram last week.
“It did not take us long to sign the partnership with SAMHI. We knew this opportunity was available. We knew our brand could be a great fit for it and SAMHI knew the brand well, though this was the first time they worked with us. The brand was a perfect fit for them,” Pascal Gauvin, managing director, India, Middle East and Africa, IHG, told Business Standard.
When you rebrand an existing hotel, you have some challenges, said Gauvin. “The existing rooms and set-up need a complete makeover. But we love to do this transformation. In the case of Holiday Inn Express, we were very demanding with SAMHI to ensure that the hotel truly reflects our brand,” he added.
Teams from both the companies spent a lot of time to get the design right, manage the space, and plan the public area layout, with the brand and guests in mind. All the hotels had to be closed for renovation, running into five-six months on average. “As we speak, 10 hotels are closed. It means no revenue for the company. So, besides the investment in transformation, there is this investment in terms of loss of revenue. It was demanding, but that it how we wanted to work on this. A lot of times we had debates, but we managed to come to a conclusion,” said Gauvin, who oversees operations of 132 hotels for IHG in India, Middle East and Africa from his Dubai office.
“We will have 14 hotels up and running in a very short period of time. This will make a massive difference. Sometimes between the signing and hotel opening, you may have a gap of three-four years. A lot of permissions, approvals and licences are needed,” he added.
When all these Holiday Inn Express hotels are operational in about a year, IHG will have 20 hotels in the country under this mid-scale brand. The total number of operational hotels is, however, expected to reach 44-45. IHG also runs hotels under brands like Crowne Plaza and InterContinental in the country.
The company has 57 hotels in the pipeline in India and all of these are set to be operational in the next two-three years. “We believe in the next three to five years, we should have 150 hotels, including operational and pipeline properties. We are on track to get to that number,” Gauvin said.