Intercontinental Hotels Group Earnings Call Insights: Crowne Plaza Plans

On Wednesday, Intercontinental Hotels Group PLC ADR (NYSE:IHG) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what executives shared.

Crowne Plaza Plans

Steven Kent – Goldman Sachs: I have a couple of questions, could you just talk a little bit about you gave a little bit of color on the Crowne Plaza and sort of what you’re up to and sort of what the plans are, but could you give us a little bit of sense where you are, especially relative to some of the competition were starting to rejigger some of their brand and then I was intrigued by your discussion about your technology person and sort of the focus there and what I was intrigued by is the same point you said that many of your customers, and I think I have heard this from you before many of the customers show up on a relatively short notice. I’m not even sure how many some of your customers just show up at the door and check in. So, how does technology or what are your ambitions of using the technology to go after the Holiday Inn and Holiday Inn Express customer?

Richard Solomons – Chief Executive: As far as Crowne Plaza is concerned, I guess, we – it was sort of a few months ago we talked a little bit more about it, but I think the thing about Crowne Plaza is actually effectively its difference around the world. So, it’s fastest growing upscale brand in Asia performs extremely strongly, has a very good position in Middle East and also in Europe, but in the U.S., you know, the history of it where it grew out of Holiday Inn, it just has a weaker position, the physical products, the reputation, awareness and obviously that is reflected in RevPAR. So, the brand has actually done quite well, but it isn’t where it should be against the competition or more importantly against (hotel) Crowne Plaza is in other parts of the world. So, we see it very much as the opportunity to raise the bar around the world at the same level, and that’s really what the focus is. So, we haven’t talked about specific changes to the experience of the physical product, we will do more of that at the backend of the year when we have our Big Annual Owners Conference in the U.S. what we are doing right now is we’re removing hotels so over the 400 that are out there. We’ve removed 11 or 12 so far another 30 or so to go which have been in our guidance around system size. We also put quite a bit of effort and focus around driving the top line while we go through that exercise which is we were at on it. So, very encouraged by the work that I see internally and I think we will be able to position it extremely well against its competition and I definitely see some significant upside in the U.S. business there. But it is going to be a three year roll out program as from 2013. As far as technology, I think, there we loosely we will talk about technology. The reality though is now as we look at obviously the multiplication that we got of channels and obviously websites and we were the first hotel company to allow web bookings, you’ve got mobile and we are seeing that growing incredibly fast. We’ve also got aspects of the guest experience whether it is something as basic as high speed Internet in the hotels or as the way you interact with guests while they are in the room or in the rest of the hotel. There were lot of things about technology that is driving what’s going on. So, Eric, who I mentioned, been with us 15 years. He actually started off at NASA, he worked at IBM, he has worked at Disney and he joined us actually to create our emerging technologies business and he was the guide behind what has become our enormous web business. So, we then had moved into sales and marketing. So, he was the ideal guy to put back in charge of technology because he just gets the whole piece from the commercial through the sales and marketing side. So, it was an important strengthening of the team. As you say, things are changing. So literally, people book during the day for the day on their mobile phones as they’re driving down the street, almost like search for the hotel is bang on book it. It’s just changing behavior and it’s partly demographic, it’s partly just the availability of technology. We’ve always been at the forefront and we want to stay there. So, we’re making the investments both in people and technology itself.