Q4 2020 Covid development update: IHG

by | 23 Oct 2020 | Portfolio

We consider how IHG, the hospitality giant behind brands like InterContinental, Kimpton and Six Senses, has managed its hotel development pipeline in recent months with the benefit of exclusive data drawn from the TOPHOTELPROJECTS construction database.

Covid19 has ripped up the rulebook when it comes to running a successful hotel business, and even the industry’s leading lights like IHG are having to make fundamental changes to how they operate to try and navigate these uncharted waters.

IHG is no stranger to reinvention however – it traces its roots all the way back to 1777 when entrepreneur William Bass opened a brewery in Burton upon Trent, and actually made its name within the drinks trade over the course of the next two centuries. In fact, the group only sold its brewing operations in 2000, paving the way for it to refocus on hotels and hospitality instead; these days, the listed company, which is headquartered in the English county of Buckinghamshire, boasts more than 5,900 hotels and 883,000 guest rooms across over 100 countries. Its brand portfolio is pretty extensive too, spanning the likes of InterContinental, Kimpton, Six Senses and Regent in the luxury category; Crowne Plaza, Hotel Indigo, Even Hotels, Voco and Hualuxe in the upscale band; and the ubiquitous Holiday Inn family in the mainstream segment.

However, this truly global profile comes with its own challenges during a pandemic, with management having to contend with different countries imposing or lifting lockdowns and other restrictions on a daily basis in response to bewildering rises and falls in infections.

IHG continues to add more hotel projects

Amid all the worry and uncertainty about what the future holds, our research team has been quietly tracking IHG’s core development stats over recent months to find out how one of Britain’s biggest companies is responding to the crisis, which we’re now sharing for the very first time:

In progress
On hold
Cancelled this month

What immediately jumps out at us when reviewing this table, which is based on figures from our long-running database, is that IHG has actually grown its pipeline even as the virus wreaked havoc around the world. The company had 453 hotel projects in progress as of 13 May 2020, when core markets across the US and Europe were only beginning to emerge from the most draconian rules and regulations, but this number has steadily risen in subsequent months, hitting 476 as of 2 October. In normal times, admittedly, a 5% rise in the number of active projects over five months for a company of IHG’s scale would not be particularly striking, yet obviously these are anything but normal times, and so growth of any description is surely something to be celebrated.

Nevertheless, the picture is not quite so rosy when we turn our attention to the number of schemes put on ice. Our researchers report that the company had 51 projects identifying as on hold as of 13 May – a number that had risen to 57 as of 2 October. This works out as an increase of 12% in percentage terms, which may set alarm bells ringing in some quarters, although only time will tell if it proves to be a sign of worse to come or just a temporary blip.

Thirdly, we need to look at how many IHG hotel projects have fallen through since coronavirus took hold around the world. The data shows that two schemes were cancelled in the month leading up to 13 May – a number that has fluctuated considerably in the following months – whereas just one project was scrapped in the month leading up to 2 October. While some may choose to celebrate the fact that the number of failures has effectively halved in recent months, we’d like to sound a note of caution here, since the figures we’re dealing with are so small that it still feels much too early to draw any firm conclusions.

Another point that we ought to mention is that it’s standard practice for some projects to run into difficulties even without the added complication of a pandemic, perhaps because the hotel group lost confidence in the project’s viability, or the franchisee pulled out over contractual issues; in other words, not every scheme has failed because of Covid19. Plus, it’s often the case that plans are mothballed for months or years on end, before finally being brought in from the cold again and progressing through to completion when market conditions improve, so we should be wary of assuming that every on-hold project will never see the light of day.

IHG’s still growing its intercontinental presence

If we now turn our attention to the bigger picture, what’s clear in all this is that IHG is continuing to move forward with nearly all of those sites earmarked for development – and somewhat surprisingly is even expanding its pipeline. We’ve seen this activity mirrored at TOPHOTELNEWS as well, with the company having successfully launched the eye-popping 380-key InterContinental Chongqing Raffles City in China, the elegant Hotel Indigo Verona – Grand Hotel Des Arts in Italy and the chic Voco Paris Montparnasse in France over the last few months alone.

The reality is that IHG has nearly 500 live projects on the go, and has been steadily adding more despite the pandemic. The lesson: one of the industry’s biggest names still believes that travel will recover from the shock of Covid19 relatively quickly, which surely bodes well for everyone connected to the hospitality sector in these challenging times.

Click here to read our exclusive Q4 2020 Covid development update series in full: Marriott International | Hilton Worldwide | Accor | IHG | Hyatt Hotels Corporation | Radisson Hotel Group | The Ascott | Wyndham Hotel Group | What the data tells us

Many TOPHOTELNEWS articles draw on exclusive information from the TOPHOTELPROJECTS construction database. This subscription-based product includes details of thousands of hotel projects around the world, along with the key decision-makers behind them. Please note, our data may differ from records held by other organisations. Generally, the database focuses on four- and five-star schemes of significant scale; tracks projects in either the vision, pre-planning, planning, under-construction, pre-opening or newly opened phase; and covers newbuilds, extensions, refurbishments and conversions.

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IHG operates hotels in three different ways – as a franchisor, as a manager and on an owned and leased basis.