As we tentatively head towards the height of summer, the question everyone is asking each other is: “Where are you going on holiday?” The question Willemijn Geels, vice president development Europe for IHG Hotels & Resorts, is most often asked is: “We want to invest in hotels. Where can we find opportunities?”
IHG Hotels & Resorts, with head offices near London, has nearly 6,000 hotels around the world and 16 brands divided into four collections: Luxury & Lifestyle, Premium, Essentials and Suites.
One of IHG’s most recently opened hotels, InterContinental Lyon-Hôtel Dieu, is a finalist in this year’s MIPIM Awards. The hotel opened in 2019 as a partnership with French developers Eiffage Immobilier and Generim, architects Jean-Philippe Nuel and RL&A – Didier Repellin and owner Crédit Agricole – Predica. The hotel is housed in the city’s refurbished maternity hospital, a UNESCO World Heritage Site, where, it is said, a third of Lyon’s residents were born.
The other finalists for the MIPIM 2021 Award for Best Hotel & Tourist Resort are: Club Med La Rosière in the French Alps (developer Club Med); Hoshino Resorts KASUKE Tiantai in China (Greentown Group); Kyoto Higashiyama Project in Japan (Takenaka Corporation); and Villa Copenhagen (Strawberry Properties).
MIPIM World talked with Geels about how the IHG development strategy has, or has not, changed with Covid and the strong investor demand for hotels, in particular for resort hotels:
IHG looks for growth across Europe
“I see a really good opportunity for IHG Hotels & Resorts to grow further in Europe. Outside our key markets of UK, France and Germany, there are many markets where we have space to grow: Italy, Iberia, Poland and Eastern Europe, Russia, Turkey and the Nordics.
“In all these places we have a very solid foundation. We have the portfolio of brands to offer our customers and investors, and we have the room to grow in these markets, as we know there is the customer demand via our distribution channels.
We’re confident about the future of hospitality, we’re definitely in business, we’d love to do deals, we know how to partner with different types of real estate developers, and we have a fantastic brand portfolio – Willemijn Geels, IHG Hotels & Resorts
“For the real estate industry, I would like to say that we’re confident about the future of hospitality, we’re definitely in business, we’d love to do deals, we know how to partner with different types of real estate developers, and we have a fantastic brand portfolio.”
The appeal of voco, a flexible premium hotel brand, and of luxury
The Premium brand voco – Latin for ‘to invite’, ‘to call together’ – is one of IHG’s fastest growing, and newest, brands. voco “combines the informality and charm of an individual hotel with the quality and reassurance of a global and respected brand”, describes IHG.
After debuting in Australia, the voco hotels brand extended its portfolio in the UK following a landmark operating agreement with French developer and investor Covivio in 2018. Since then, IHG Hotels & Resorts has signed and opened a total of more than 50 voco hotels in more than 20 countries. The latest – the first voco in Southeast Asia – was announced this June.
“voco is the fastest brand launch ever, with only 143 days between the launch and the opening of first hotel,” says Geels, who puts the success of the brand down to its flexibility, which allows for a ‘softer’ interpretation in terms of design and amenities. “This makes it ideal for conversions,” says Geels.
IHG Hotels & Resorts is also busy expanding its luxury offering. Signings have included the first two Six Senses in Italy (see below –‘ IHG hotel opening highlights’) and an InterContinental in Ankara. Upcoming openings include Kimpton St Honoré Paris and Six Senses Ibiza, both expected 2021, and InterContinental Rome Ambasciatori Palace by early 2022. “Luxury is picking up a good momentum,” says Geels.
Hotel investors look to expand their resort portfolio
“Fundamentally our development strategy has not changed,” says Geels, when asked about the Covid effect. “We were already on the path of doing more luxury, more resorts and more leisure destinations.
“Very few projects have disappeared off the radar, even though investors are experiencing delays because of Covid as financing takes longer and construction takes longer. The good news that I take from this is that people believe in the medium and long-term health of the hospitality sector. Otherwise we would not be so busy!”
Very few projects have disappeared off the radar, even though investors are experiencing delays because of Covid – Willemijn Geels, IHG Hotels & Resorts
“A big shift from Covid comes from the investor side, where there is more appetite for resorts. There’s an element of investors and fund managers looking to balance their portfolio between business-oriented, city-centre destinations and more resort and leisure-oriented destinations, but from a client perspective, there’s also more demand for drive-to destinations.”
Investor demand for leisure destinations is across the full spectrum of IHG Hotels & Resorts’ brands, says Geels, from the Luxury & Lifestyle brands to the Essentials. Recent openings include the Holiday Inn Express (an Essentials brand) in the seaside town of Arcachon near Bordeaux and Ajaccio in Corsica.
The demand for hotel brand conversions
“We’ve started to see in the development activity a skew towards conversions as opposed to new builds. This is because bank financing for a new build can be more complicated than for conversions given the greater development risk and that the cashflow is further out in the future,” says Geels.
When it comes to brand transformation, Geels sees a flight from independent hotels to being a hotel brand part of a global company. Advantages include security, guest safety, distribution and affiliation of a large network, where learnings can be shared across regions. “All those things have a value for the franchisees, and they have become more important during the pandemic,” she says.
“City-centre retail stores make the perfect building for hotels” – Willemijn Geels, IHG Hotels & Resorts
With regards to asset transformation, IHG Hotels & Resorts has “two or three projects” in the pipeline for Hotel Indigo (a Luxury & Lifestyle brand) in the UK that are conversions of high-street retail space. “City-centre retail stores make the perfect building for hotels; a great location, the right space, and we can make it work.” In addition to preserving and repurposing buildings in this way, it also creates local jobs and brings a positive effect on communities.
How is Europe different to North America or Asia
“What I love about Europe is the diversity of the markets, and how the cycles are not the same in each of these markets. While many markets in Northern Europe are adapting themself to the cycle, moving from a new-build environment to a conversion environment, Southern Europe is taking advantage of diversification with a large array of attractive leisure destinations. This diversity in Europe makes the region unique.
What I love about Europe is the diversity of the markets, and how the cycles are not the same in each of these markets” – Willemijn Geels, IHG Hotels & Resorts
“In terms of how we do business, within Europe we are more skewed towards the franchise model than in Asia, because of the maturity of the market and the high number of very experienced and professional third-party management companies and owner-operators. Asia is more about managed contracts.
“Compared with the US, our developments in Europe tend to be more luxury and lifestyle, even though brands such as Holiday Inn and Holiday Inn Express remain growth engines for the Group.”
“A huge increase in private equity investors interested in hotels”
IHG works with a variety of partners, in particular with private equity and institutional investors, says Geels. “Has the investor appetite changed?” she continues. “A few companies went ‘maybe the hospitality industry isn’t for us, let’s exit,’ but these are very few. And then we have seen a huge increase in private equity investors interested in hotels.”
Early on in the cycle, the group also works with real estate developers. “It’s about working closely with the developer to imagine what is the best scheme, the best brand, the best possible product, and then finding the investor,” explains Geels.
Today we are not seeing any massive decrease in pricing, which is good for the industry – Willemijn Geels, IHG Hotels & Resorts
Future prospects for hotels in Europe
“Medium and long term the industry is very sustainable. People will travel again, in one way or another. All the consumer research that we have done, and are doing, shows this. So today we are not seeing any massive decrease in pricing, which is good for the industry.
“The investor appetite is there. A lot of people were after distressed opportunities, which haven’t come to market; there will likely be some, but maybe not as much as people had expected.”
The IHG future is also a sustainable one. The group launched a ten-year responsible business plan, Journey to Tomorrow, earlier this year. The plan is based on delivering “True Hospitality for Good”, using the UN Sustainable Development Goals as a road map. Geels says: “Journey to Tomorrow is central to everything we do as a company, including in development.”
In the meantime, before we meet in Cannes for MIPIM 2021 on 7-8 September, enjoy your holidays!
Other IHG Hotels & Resorts hotel opening highlights
voco – The Hague: Housed in a converted bank building in the Royal Quarter, with a Botanica kitchen & bar and the Ultramarijn wonderbar. The hotel is due to open in 2021 as the first in the market and the 14th hotel in partnership with Vienna-based UBM Development AG.
Hotel Indigo Bath: Opened in 2020 in a Grade 1-listed building in this English city, and around the corner from Bath Abbey. This was a year after the opening of Hotel Indigo Stratford-upon-Avon, where the restaurant, The Woodsman, won the Good Food Guide Best New Entry 2020. Both hotels are owned by St James’ Hotels Group.
This first Kimpton in France will open this year, complete with spa and 360° views from its rooftop bar & garden. The building converted from offices has an Art Nouveau façade and is owned by AXA IM-Real Assets.
Kimpton Mallorca: Due to open in 2022, two years after the opening of Kimpton Vividora Hotel in Barcelona. The hotel, on the site of the existing Santa Ponsa Country Club, operates under a management agreement with Calvia Country Club SA.
InterContinental Rome Ambasciatori Palace: The first InterContinental Hotel for Italy is due to open by early 2022 in partnership with Westmont Hospitality Group and funds managed by Oaktree Capital Management LP.
Six Senses Rome, in partnership with a fund sponsored by private equity firm Orion Capital Managers, is due to open 2022 as the first Six Senses in Italy. The second, Six Senses Antognolla, with the redevelopment led by London-based investment firm VIY Management, is on track to open in Umbria in 2023.
Karin Sheppard, SVP & Managing Director Europe, IHG Hotels & Resorts, is a key speaker on the panel ‘What’s hot in attracting hospitality investment?’ at MIPIM 2021.
Picture credits & Top image: IHG Hotels & Resorts