Eighty years of hospitality history

Over the last eight decades, InterContinental Hotels Group, operating under the banner of IHG Hotels & Resorts, has emerged as a global hospitality icon, a testimony to the timeless allure of exceptional service and unparalleled experiences. In fact, it stands as a beacon of modern luxury. At the helm of this illustrious enterprise is Elie Maalouf who took the reins as Global Chief Executive Officer in 2023. For Maalouf, leading IHG marks the zenith of his career journey. “Guiding IHG, with its rich legacy and acclaimed brands like InterContinental and Holiday Inn, is an extraordinary honour. It’s not just a professional milestone; it’s the culmination of my diverse experiences in real estate, travel, retail, branding, and global operations. Steering IHG into the future is a privilege I hold close to my heart,” he says.

Strategic priorities
“We start from a great place and a great foundation,” reflects Maalouf, his voice resonating with a blend of reverence and determination. “Our journey spans across 100 countries, with 19 brands under our umbrella. It’s a testament to our commitment to innovation and excellence,” he elaborates. However, amidst the grandeur of their achievements, he is quick to emphasise that they’re only scratching the surface. 

“Despite the fact we have 6,300 hotels open worldwide, with another 2,000 under development, we’re just getting started,” Maalouf declares, his tone brimming with anticipation. As he delves into IHG’s priorities, his vision becomes clearer. “Priority number one is to take our brands and get them to their full potential,” he states, his words carrying the weight of a seasoned leader. “Every brand, from Intercontinental to Holiday Inn, holds immense potential waiting to be unlocked.”

With fervour, he discusses their expansion plans, particularly in emerging markets. “China, with 700 open hotels and 500 under development, holds immense promise,” he notes, his gaze fixed on the horizon of possibilities. “But it’s not just China; markets like Japan, Germany, India – all offer significant growth opportunities.” Yet, amidst the pursuit of expansion, Maalouf remains grounded in the ethos of partnership. “We strive to ensure strong returns on investment for our owners,” he affirms, underlining the symbiotic relationship between IHG and its stakeholders.

But it’s not just about hotels; Maalouf envisions a broader landscape for IHG. “Our ancillary businesses – credit cards, branded residences, partnerships – hold tremendous potential,” he reveals, his demeanour pulsating with entrepreneurial zeal. “As we evolve, the possibilities are endless. From hotels to resorts, from households to every facet of travel – we’re poised to redefine the hospitality experience,” he shares.

Business in high driven markets globally 
“We’re fortunate to be in an industry that has very strong tailwinds,” Maalouf says, adding, “Driven fundamentally by the growth of GDP around the world and the burgeoning middle class.” As he delves into the dynamics driving the hospitality sector, Maalouf’s gaze rests on India – a beacon of economic prowess and opportunity. “Nowhere do you see it more than in India,” he asserts, his tone resonating with admiration. “With GDP growth consistently ranking among the top of OECD countries and a middle class poised to double by 2040, the potential for growth is immense.”

For IHG, capitalising on these tailwinds means more than just riding the wave – it means becoming the preferred choice for travellers worldwide. “We capitalise on those by being the preferred choice of guests and businesses for travel,” Maalouf explains, his words underlining IHG’s commitment to excellence.

Central to IHG’s success is its robust brand portfolio, comprising 19 brands tailored to cater to diverse needs and preferences. “Intercontinental, Holiday Inn and Holiday Inn Express are our biggest brands in the world,” reveals Maalouf, his eyes alight with the excitement of untapped potential. “With a strong presence globally, including India where we’re just getting started.”

But beyond the brands lies another pillar of IHG’s success – a loyal and engaged customer base. “A strong loyalty plan for our guests who want to feel special, feel recognised,” Maalouf emphasises, citing IHG One Rewards as a driving force behind the company’s growth. Yet, amidst the focus on guests, he doesn’t forget the backbone of IHG’s success – its owners. “Ever since we started, we’ve been growing with owners,” he states, adding, “It’s about building deep relationships based on trust and mutual success.”

As Maalouf’s insights unfold, it becomes clear that IHG’s growth isn’t just a result of market forces – it’s proof of the company’s unwavering commitment to excellence, innovation and above all, trust. “Strong brands, strong guest relationships and strong owner relationships – these are the pillars that power our growth,” he shares.

Recent expansions of new brands 
In hospitality industry, adaptation is not just a strategy – it’s a necessity. For Maalouf, this ethos is a way of life. “People’s tastes change, their needs change,” he observes. “Owners want to invest in different things. We can’t have a static strategy in a dynamic industry – we need to keep evolving,” he adds.

It’s this commitment to evolution that drives IHG’s approach to brand development. “We only launch a brand when we believe there’s a need at scale from travellers and a need from owners to invest,” explains Maalouf, his words carrying the weight of a seasoned strategist, adding, “If we’re not meeting that intersection of traveller desire and owner desire, then we don’t launch a brand.”

The evolution of IHG’s brand portfolio is a testament to this philosophy. “Years ago, we used to have only one brand in luxury – Intercontinental,” Maalouf reminisces, a hint of nostalgia in his voice. “But we realised that some of our guests wanted something more exclusive, more varied.”

This realisation led to the birth of IHG’s luxury lifestyle segment, comprising brands like Six Senses Hotels and Resorts, Kimpton, Indigo and the Vignette collection. “Collectively, they represent only 14 per cent of our rooms open, but they are 23 per cent of our pipeline,” reveals Maalouf. “They’re almost going to grow 50 per cent from what’s under development today.” But IHG’s commitment to meeting diverse traveller requirements extends beyond luxury. “At the mainstream end, around Holiday Inn and Holiday Inn Express, we’ve added avid, Atwell Suites, and Garner,” Maalouf shares, his voice brimming with enthusiasm. “We’re meeting the needs of travellers across the spectrum, ensuring that every guest finds their perfect fit.”

The success of these new brands is a proof to IHG’s unwavering focus on innovation and guest satisfaction. “Immediately after launching the Garner brand, we’ve gotten great traction,” Maalouf reveals. “And I look forward to bringing it to India in the near future.”

Garner in India soon!
IHG specialises in crafting brands for global expansion and distribution, with a keen understanding that today’s corporate travellers share similar tastes and preferences across the globe. Maalouf explains, “Rarely do we develop a brand solely for a specific market. Global travellers appreciate a degree of customisation in food and beverage options, and they seek consistent service standards, all while craving exceptional experiences.” 

He emphasises on the significance of travel as not just a journey, but a breath of inspiration. “Our guests have traversed the globe, experienced diverse brands and understood their essence. When a brand resonates strongly in one market, our goal is to elevate it to a global scale,” he says. Maalouf also points to India as a prime example of this strategy. “India boasts a robust domestic travel market, with outbound travel projected to skyrocket fivefold in the next decade, reaching nearly 80 million travellers,” he notes, adding that this exponential growth underscores IHG’s commitment to establishing a strong presence in India, fostering lasting relationships with travellers. “By earning their trust here, we ensure that when they venture to Europe, Southeast Asia, the Middle East, the United States, or anywhere else, they choose IHG hotels and brands,” he says.

For Maalouf and the IHG team, this global distribution of brands is pivotal. “It’s about more than just accommodations; it’s about cultivating loyalty. Our aim is for travellers to return home as ambassadors of our new brands, further fuelling our global expansion,” he asserts.

IHG expansion and global presence
“In analysing large-scale opportunities, we use India as a prime example of our approach. First and foremost, we seek out regions with a burgeoning middle class, either already established or on a trajectory of growth. India’s middle class is poised to swell from approximately 100 million households to nearly 200 million within the next decade, presenting an immense opportunity,” explains Maalouf.

He emphasises on the scale of this expansion, remarking, “When you consider an average household size of four, you’re essentially adding 300-400 million individuals to the middle class, whether that transition occurs over 10 or 15 years. It’s not just a demographic shift; it’s akin to the rise of multiple nations, almost constituting a continent in itself. That level of growth is undeniably enticing.”

Maalouf also underscores the importance of infrastructure in facilitating this socioeconomic transformation. “A robust middle class requires mobility, necessitating a comprehensive infrastructure network,” he observes. “In India, we’ve witnessed significant strides in infrastructure development over the past decade, with the construction of approximately 10,000 km of new highways annually, alongside the expansion of dozens of airports. Plans for an additional 120 to 150 airports, as well as high-speed rail projects, further underscore the country’s commitment to enhancing connectivity.”

The Global Chief Executive Officer, IHG Hotels and Resorts, points out the favourable fundamentals underpinning India’s attractiveness as a market. “Factors such as healthcare, education, stable governance and a growing GDP all contribute to India’s allure. These are the key criteria we evaluate when assessing the potential of a market for expansion,” he observes. Reflecting on IHG’s longstanding presence in India, Maalouf expresses optimism about the future. “Despite our 60-year history in India, I believe we’re just scratching the surface of the opportunities this market presents,” he says.

Sustaining strong financial performances 
Maalouf says IHG has demonstrated a strong track record that, despite the pandemic’s disruption, showcases the resilience of their business model. “Even during the most challenging times of the pandemic, we remained cash flow positive, albeit with necessary cost adjustments like many others. However, we swiftly rebounded and achieved record-breaking revenue and profit figures last year. We increased dividends, initiated share buybacks, and continued delivering value to both our guests and owners,” he says.

Highlighting IHG’s commitment to sustained growth through ongoing investments, he shares, “Our strategy hinges on continually reinvesting in our business, be it in our brands, technology, rewards programmes, our workforce or nurturing owner relationships. We recognise that the highest returns, for both us and our investors, stem from capitalising on the global rise of the middle class and GDP growth,” he asserts. 

A pivotal aspect of IHG’s success lies in its asset-light model. “By partnering closely with owners who invest in hotels, we can allocate our resources and efforts globally. This approach allows us to maximise returns, ensuring a highly productive and profitable operation,” explains Maalouf. Another cornerstone of IHG’s strategy is maintaining discipline. Talking about the same, Maalouf shares, “We avoid distractions and focus on what we do best. While we’ve acquired brands like Six Senses in the past, we only pursue such opportunities when they align with our stringent criteria for high-quality investments. Our organic growth remains robust and acquisitions are carefully considered to ensure they contribute to our overall profitability,” says Maalouf.

He also underscores IHG’s unwavering commitment to cost discipline. “Given that many costs must be justified to owners, we adhere to strict cost management practices through our system and marketing funds,” he notes, adding, “Drawing from our experience, we grow responsibly, prioritising profitability for both owners and investors.”

Fostering long-term partnerships
“At the core of our approach lies trust. Our owners entrust us with their capital, whether it’s their own funds, those of their families and friends or institutional investments. We take this responsibility seriously, prioritising transparency, honouring our commitments and nurturing long-term, trusted relationships,” emphasises Maalouf. He also talks about the importance of maximising returns for owners through operational excellence. “Efficiency is key in every aspect of our business, from designing hotels and brands to delivering exceptional guest experiences. Whether it’s the luxury offerings of Six Senses or the everyday comfort of Holiday Inn, we ensure our properties are productive investments, yielding strong returns and Gross Operating Profits (GOPs),” emphasises Maalouf. 

He highlights the role of technology and procurement in driving profitability. “From implementing cutting-edge technology to optimising procurement practices, we empower our owners to achieve high revenues while minimising distribution costs,” Maalouf explains. He adds IHG’s robust loyalty programme, IHG One, exemplifies this synergy, delivering 55 per cent room nights at a low cost of distribution. “Guests attracted through this channel spend 20 per cent more per room night and are 10 times more likely to book directly,” he says.

Emphasising on the significance of IHG’s global commercial platforms in driving value, Maalouf says, “Our extensive sales network ensures that business flows to IHG hotels worldwide, not just in India but across the globe,” he notes. “This level of commercial support is difficult to replicate for independently managed properties, underscoring the importance of aligning with a strong brand like IHG Hotels and Resorts,” he adds. Successful partnerships are built on mutual prosperity, asserts Maalouf. “When owners achieve profitable returns, it strengthens our relationship and fosters loyalty. Nothing solidifies a partnership more than shared success and a mutually beneficial working relationship,” he says.

Opportunities in Indian travel, tourism and hospitality sectors
“We find the ongoing growth and prosperity of this vibrant democracy truly exciting,” enthuses Maalouf, adding, “The fact that people have the freedom to make choices, and they’re making good ones, is a testament to India’s dynamism. The continuous rise in GDP is particularly thrilling, with projections for the next five years placing India at the forefront among OECD countries.”

Discussing the expanding middle class, Maalouf emphasises on its pivotal role in driving the hospitality industry. “The doubling of the middle class over the next decade serves as a cornerstone for our aspirations in India. At present, we have only six out of our 19 brands in the portfolio in the market. There’s immense potential to introduce more, with 46 hotels already open and another 50 under development. This is just the beginning, and we anticipate continued robust growth in the years to come,” he shares.

Maalouf envisions a future where India boasts hundreds of IHG hotels across various segments, driven by economic expansion and increasing domestic and international travel. “Even if no one travelled in or out of India, the domestic market alone offers tremendous potential, amounting to hundreds of millions of room nights annually and growing,” he elaborates.

Highlighting the inherent wanderlust among Indians, Maalouf underscores the importance of catering to unique cultural aspects such as weddings. “Indians are enthusiastic travellers, and weddings here are elaborate affairs that span entire weeks. Expanding our wedding proposition for travellers is a key focus area for us,” he says.

In line with their optimistic outlook on India’s potential, Maalouf affirms IHG’s commitment to increased investment in the country. “We’re bolstering our presence in India by expanding our team, ramping up marketing efforts and allocating more resources. This reflects the strong promise we see in the Indian market,” he asserts.

Maalouf opines that as infrastructure grows in India, IHG too will grow with it. “We’ve announced hotels and opened hotels in Lucknow and Amritsar and we’ll continue to do so, keeping spiritual tourism in mind. We have a lot of experience from the Middle East where we’re the number one operator in Saudi Arabia, the biggest religious pilgrimage place for Muslims around the world. We also understand the highly seasonal patterns that come with it and what those travellers look for. It’s different than leisure or business travel but our global experience allows us to localise it as a terrific opportunity,” he observes.

Balance between managed and franchised hotels 
At the core of IHG’s approach is the principle that guests should not perceive a difference between a franchise and a managed hotel, explains Maalouf. “When executed correctly, which is nearly always the case, this seamless experience is achieved. However, we don’t adhere to a rigid philosophy regarding the proportion of managed versus franchised properties. It’s a decision influenced by the specific dynamics of each market,” he says.

Elaborating on the situation in India, he notes, “In markets like India, where the third-party management sector is still evolving, we predominantly favour managed properties. This ensures consistency and allows us to maintain quality standards. Over time, as the industry matures, we anticipate a shift towards more franchised properties. For the foreseeable future, our focus remains on managed properties.” Maalouf emphasises that while IHG’s global growth is predominantly driven by franchising, the balance varies depending on local market conditions. “As the Indian hospitality industry expands, we’ll adapt accordingly. However, expanding the franchise model brings its own set of challenges, particularly in ensuring all properties adhere to the brand’s template and maintain consistent standards,” he adds.

Role of sustainability in growth plans
“Our responsible business strategy is integral to our growth plans. We’ve established pillars of true hospitality that are deeply ingrained in our approach. One key aspect is our commitment to energy and carbon reduction, with a target to reduce carbon emissions by 46 per cent by 2030,” states Maalouf. He emphasises on collaboration with owners and colleagues worldwide in achieving these targets. “We’re actively engaging with our partners to implement sustainable practices across our properties. Additionally, we’re dedicated to enhancing the lives of 30 million individuals in our communities, as part of our broader commitment to social responsibility,” he says.

Maalouf also underscores the positive impact hotels can have on communities, from generating employment opportunities to fostering inclusivity. “Our hotels serve as hubs of prosperity, offering jobs and opportunities for individuals of diverse backgrounds, including those with disabilities,” Maalouf notes, adding, “By empowering people to remain in their communities and contribute to local economies, we’re aligning our responsible business strategy with our core principles of true hospitality.”

Emphasising that these initiatives are not just good for business, but essential for ensuring a sustainable future, he feels that true hospitality for good is not just a philosophy; it’s a fundamental component of IHG’s global strategy. “Through initiatives such as energy reduction, colleague development, and community empowerment, we’re striving to leave behind a healthy, thriving planet for future generations.”

Bhuvanesh Khanna

BW Reporters Bhuvanesh Khanna is the CEO, BW Communities