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InterContinental Hotels Group CEO Banks on Branding

Jul 02, 10 | 1:56 am

By Shelley DuBois

The hospitality industry has taken a hit during the recession, but some chains are climbing back. And if they want to stay on top, brand strength is going to be a key part of the rebound, says InterContinental Hotels Group CEO Andrew Cosslett.

Brands are especially relevant to Cosslett -- InterContinental (IHG) spans seven different nameplates, and each one needs to tailor to a different customer, he says. We'll see if the strategy works: First quarter revenue rose just 3% year over year to $362 million.

Cosslett has big projects in the works, including a major redesign for one of InterContinental's best-known brands, Holiday Inn. He's also planning to open 30 new hotels in China this year. He filled Fortune in on homegrown Chinese hospitality, how a Meatloaf song helped him realize the importance of background music, and what a Holiday Inn should smell like. Edited excerpts below.

You have so many brands, how do your hotels cater to target different customers?

You use what we call "psychographics." This is how people feel. It all sounds like hocus pocus, but it's very simple: You try to identify groups of people who think the same, and then offer them brands and products that they really buy into.

The history of the hotel industry has been that all the brands have been pretty much based on price stratification. Now the industry's trying to change -- we're hopefully leading that. We're trying to pull our brands apart, one from the other.

How do you think about separating them?

Well, Holiday Inn is an icon of the industry. We're bringing it up to date. A lot of that is about the physical property, because the brand is very clear in its position about being authentic and real. You know, down to earth.

Intercontinental is for the internationally minded person. That doesn't mean that they have to travel internationally, it just means that they have an outlook on life that is more cosmopolitan. They like to have special knowledge of a place or culture wherever they are, even if they're an American traveling in America.

So who is traveling in this economy?

Everybody. The genie's out of the bottle on that one. In the downturn, we saw almost a complete absence of corporate travel, but the leisure side stayed up. Most people are amazed when they hear this, but we had more leisure travel last year than the previous year. That tells me that people are now placing leisure travel higher up the list of must-haves than it used to be.

What's driving the market today is that business travelers are coming back. The fact is the world runs better when you have meetings, and people have really missed them.

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Source: cnn.com