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Just a few short years ago it seemed as if Holiday Inn was slipping into permanent irrelevance. Property quality lagged as old hotels became older, run down and didn’t meet the changing needs of travelers. Putting even more pressure on Holiday Inns was an onslaught of newer brands that better meshed with the consumer psyche. Plus, these hotels were - for the most part - brand spanking new.
It seemed as if the only salvageable part of the Holiday Inn legacy was the Holiday Inn Express sister brand that exploded in popularity during the 1990s, as select service hotel development exploded and one of the most memorable hotel ad campaigns of all time was rolled out. After ‘What Happens in Vegas, Stays In Vegas’ there’s a good chance that ‘I Slept in a Holiday Inn Express Last Night’ was the tourism industry’s best-known tag line.
So it came as a pleasant surprise a couple of years back when parent company InterContinental Hotels Group (IHG) rolled out a $1 billion plan to revive and rejuvenate this classic brand in the hopes of having it once again resonate with consumers. And it’s a good thing, too. It seems as if almost every American age 35 and older has great memories of staying in a Holiday Inn during a family vacation. It would have been a shame to let one of the world’s strongest brands fade away.
But strong brand equity, the cooperation of franchisees and a smartly constructed reinvigoration plan have swung the pendulum back. Now it looks as if consumers are once again feeling fond of this good old brand. It’s an incredible resurrection that has placed Holiday Inn in a great position, as more cost-conscious travelers are once again swinging to the mid-market to find good value for a night’s lodging.
“We have made a lot of progress with Holiday Inn,” said Jim Anhut, Chief Development Officer, The Americas, IHG, in an interview with Hotel Interactive late last month. “Franchisees have been meeting with us and talking about renovating hotels and applauding us for making this move. We are brining the brand back to its glory.
“For those of us involved with that, it makes you feel pretty good. And from a consumer and marketer’s point of view, you can’t pay enough for that in today’s environment compared to a new brand,” Anhut continued. “This is going to be a younger brand, but has the advantage of being an older brand too.”
The relaunch focuses on the things research shows matter most to guests: a modern, contemporary hotel with efficient, friendly service and a great night's sleep. Relaunched hotels feature:
- Upgraded and decluttered lobby areas
- A Holiday Inn scent and sound
- New bedding
- Upgraded showers and bathroom amenities
- New exterior lighting and landscaping
- New signage with the redesigned logo
- All Holiday Inn employees also go through an extensive "Stay Real" training program to ensure guests receive the level of service they expect
Anhut said IHG executives spent considerable time thinking about the future of Holiday Inn before embarking on this reinvention campaign, and no matter what ideas they considered they kept coming back to the same conclusion: There was too much value in the Holiday Inn name and it was worth saving.
So far, IHG has made considerable progress in getting Holiday Inns up to new brand standards. As of the close of 2009, 1,697 Holiday Inn-brand family properties have been renovated. And lots more have been removed from the system that simply can’t meet the needs of 21st Century traveler.
“Our focus on strengthening the quality of our system did not waver,” said Andrew Cosslett, Chief Executive of InterContinental Hotels Group PLC, of all the company’s various brands. “We opened a record 439 hotels in the year and signed 345 hotels into our pipeline, a good result given the challenging financing environment. We removed 187 hotels in the year and now have over 50% of the Holiday Inn estate operating under relaunched standards. We expect to complete this $1 billion program on schedule and we are seeing better performance from relaunched hotels.”
Those 187 Holiday Inn hotel removals equates to 28,517 rooms. Now IHG executives are talking about returning Holiday Inn to many of the markets it vacated.
"The economic environment has changed since we started the relaunch program. Now, more than ever, value has become critically important to guests. We are increasing value delivery by providing a better experience each and every time they stay with us." said Kevin Kowalski, senior vice president, Global Brand Management, Holiday Inn Brands, last November. "Research has shown that companies who invest in their brands during an economic downturn actually increase their market share and end up being more profitable on the other end, further demonstrating the viability of the Holiday Inn global brand relaunch during this time."
Though development globally has cooled in the last two years along with the economy, IHG still has what appears to be a strong pipeline. At the end of 2009, the IHG pipeline totaled 1,438 hotels (210,363 rooms). The IHG pipeline represents hotels and rooms where a contract has been signed and the appropriate fees paid. Terminations in the pipeline occur for a number of reasons, such as withdrawal of financing and changes in local market conditions. During 2009, 52,891 rooms were added to the pipeline. Overall, the opening of 55,345 rooms, combined with an increase in pipeline terminations, resulted in a net pipeline decline of 34,722 rooms.
“Our business model has proved its resilience through this downturn and, with our global scale, powerful system and attractive brands, we expect to take full advantage of the upturn when it comes,” said Cosslett. “Through the year we took decisive action to reduce costs and improve efficiencies. Our margin performance, as a result, was good and our cash control enabled us to reduce our net debt from $1.3 billion to $1.1 billion.”
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Glenn Haussman
Editor in Chief
Hotel Interactive, Inc.
Bio: Glenn Haussman is Hotel Interactive's Editor In Chief, where he manages all editorial content for the hotel industry’s leading online information resource. Here he creates unique and in-depth content that stimulates and educates the publication’s ...
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