Remaking the Holiday Inn Brand Family Kevin Kowalski SVP Holiday Inn Brand Management June 2010 1
Our rifle shot brand is the Holiday Inn master brand with four sub-brands 2 2
Holiday Inn is a global icon HI History video 3
We are the largest player in a major segment of the industry Industry GLOBAL BRANDED ROOMS Industry GLOBAL BRANDED REVENUES Holiday Inn brand family Midscale ex Holiday Inn All other segments combined Holiday Inn brand family Midscale ex Holiday Inn All other segments combined Source: STR Global 2009 data 4
We make up the majority of the rooms and revenues in the IHG portfolio IHG s Global System IHG s Total Gross Revenues* Holiday Inn brand family All other IHG rooms Holiday Inn brand family All other IHG total gross revenues Source: IHG 2009. *Total Gross revenue is defined as total room revenue from franchised hotels and total hotel revenue from managed, owned and leased hotels. It is not revenue attributable to IHG, as it is derived mainly from hotels owned by third parties. 5
In 2006, IHG conducted ground-breaking research to validate the future for the midscale segment Growing middle class Ageing population The wired generation Travel becoming less discretionary Emerging markets: Growth in outbound travel More room nights due to improved wealth/ infrastructure Branded hotels growing at the expense of independents More construction financing available for midscale deals 6
In 2007, we did more research to validate our positioning 7
We identified a sizeable global target audience 27% 73% Target The rest of full-time employed population Source: Roper Global Values Study 2005/6 8
They have a strong affinity for what Holiday Inn has always represented Seek An Unpretentious Environment Top 2 Box* Target Guest Prefer come as you are hotels 88% Don t like being showered with attention 80% I don't need all of the amenities of an upscale hotel, but I want more than no frills 84% Source: Landis NA Study *Top 2 box score: describes me extremely/somewhat 9
Including a desire to relax and be themselves Work/play balance seekers When traveling for business, look for ways to mix business with pleasure Like to cut loose and be myself after my business is done Successful at balancing work and private time Top 2 Box* Target Guest 85% 64% 67% Spare time is fun time; time to cut loose 57% Source: Landis NA Study *Top 2 box score: describes me extremely/somewhat 10
These insights were the inspiration of the brand relaunch BELIEF CORE NEED Life gets narrower when I m on the road. I focus on immediate priorities such as making my flight, avoiding delays, getting to the meeting or managing my family. I become a smaller slice of me, not the real me. Therefore, I want a hotel that recognizes and respects the real me. Help me take my game face off, relax and truly be myself. IMPLICATIONS Familiar great first impression Inclusive genuine, upbeat, non-judgemental service Purposeful the stuff I value done well without pretence or frills, particularly in the room Social opportunities to connect and interact with other guests 11
However, we had three key issues to address Consistency Differentiation Emotional Connection 12
In EMEA and the Americas, we had inconsistent quality and curb appeal Consistency 13
In fact, a large percentage of properties in the Americas were below our quality thresholds 2006 Global Satisfaction Scores Consistency HOLIDAY INN HOLIDAY INN EXPRESS Failing/Action Required Acceptable/Commendable Excellent Failing/Action Required Acceptable/Commendable Excellent Source: IHG data 14
We were no longer perceived to be different or leaders in the industry Differentiation Offer something different to other brands 39 60 49 52 Are brands that are setting the trends 42 54 49 49 Source: Millward Brown Brand Equity Study 15
While leading in awareness, we were doing less well in appealing to our guests Emotional Connection Adore 87% 79% 73% 70% Appeal Acceptance Acquainted 42% 69% 57% 52% 50% 54% 37% 48% Source: Millward Brown Brand Equity Study 16
There Is No Question That You Either Take Charge Of Change Or Change Will Take Charge Of You Kemmons Wilson Founder of Holiday Inn, 1952 17
Relaunch
The relaunch encompasses five key actions RELAUNCH Remove poorer hotels Add High Quality New Hotels 100% Quality Compliance Complete Service Training Install Hallmarks Our owners have invested $1bn behind the relaunch 19
Rooms removed We have removed the properties that were damaging brand equity Global Holiday Inn brand family rooms removed 2004-2010e Source: IHG c.180,000 rooms exited 2004-2010 (>1,250 hotels) 20
Rooms added We have replaced them with better hotels including many new builds Global Holiday Inn family rooms added 2004-2010e Source: IHG c.190,000 rooms added 2004-2010 (>1,600 hotels) 21
Holiday Inn Long Island City New build property opened 1 January 2009 136 rooms (average US franchised hotel = 177 rooms) Consistently exceeds required guest satisfaction thresholds Within nine months RevPAR exceeded that of local competitive set 22
Required satisfaction thresholds have been raised and tightly enforced Guests Satisfaction Scores 104.6 102.8 100.7 100.7 100 100 102 102.7 07 08 09 10 07 08 09 10 23 Source: IHG data indexed from 100. 12-Month Rolling average, ending March 2010
AFTER BEFORE Holiday Inn Hasbrouck Heights 24
Holiday Inn Hasbrouck Heights Holiday Inn Hasbrouck Heights Guest Metrics Improvements 11 12 8 Guest satisfaction Intent to return Intent to recommend Source: IHG. Percentage point change from Q1 07 to Q1 10 25
% complete A service training program has been implemented that reinforces our positioning 120 100 Stay Real training regional status 80 60 40 20 0 Americas EMEA Asia/Australasia Greater China Source: IHG. As at April 2010 26
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As of this week, 2,429 hotels are operating as relaunched Holiday Inns 31
Communication
We launched a new brand campaign that communicates our positioning We believe you are at your best when you can truly be yourself. At Holiday Inn you always can. STAY YOU. 33
TV helps establish an emotional connection with our target Play Rip 34
The role of print and digital is to highlight the tangible benefits of the relaunch 35
As well as sponsorship and promotion 36
In Asia Pacific, print has to do double duty 37
In EMEA, we have TV in the UK and Germany Show UK TV spot 38
Other channels play a similar role to those in the Americas 39
We are using the 2012 Olympics to further validate Holiday Inn as a global icon 40
RevPAR premium to midscale segment (%) 841 84 2,296 1,438 1,028 1,641 These efforts are driving relative RevPAR outperformance and increasing our premium As of March 2010, 239 US hotels that had been trading as relaunched hotels for over 1 year were showing a RevPAR outperformance of 6%pts* compared to those that had not yet relaunched. US Holiday Inn brand family RevPAR premium to midscale segment 35% 30% 25% 20% 15% 10% Relaunched Not relaunched 5% 0% Sep-08 Sep-09 Mar-10 Source: IHG, Smith Travel Research 12months to 31 Mar 08 vs. 12months to 31 Mar 10 41
Number of rooms( 000s) Since 2007, we have replaced 21% of the estate and grown our premium 500 400 300 Global Holiday Inn family rooms 2008-2010 16 ( 89 ) 75 200 413 325 415 100 0 US RevPAR premium to midscale Closing system size Dec 2007 Exits Existing hotels relaunched New build rooms added Conversion rooms added Est. closing system size Dec 2010*** $6* $14** 42 Source: IHG. Smith Travel Research * All US Holiday Inn Brand Family hotels at 31 Dec 07 **Relaunched hotels as at 31 March 10 ***Assumes 2010 exits of ~40k rooms
We are experiencing improvements in guest satisfaction Global Holiday Inn family guest metric improvements 2.1 1.8 2.2 1.2 1.1 1.4 Guest satisfaction Intent to return Intent to recommend Source: IHG Not Relaunched Relaunched 43 %pt global change Q1 07 to Q1 10
Our customers, owners and hotel staff agree 44
Unique Experience Innovation
Going forward, we will focus on our public space, service and our food and beverage offer 1. Social Hub 2. Stay Real Training next generation 3. Food and Beverage 46
Summary The Holiday Inn brand is a global icon, a leader in the hotel industry and a key driver of IHG s success The positioning of our brand family remains consistent after 60 years We have not ignored the changing times or our consumers needs Our insight-driven approach helped us crystallize our positioning and the changes needed to differentiate our brand from the competition The result: a refreshed and more consistent system with increased guest satisfaction and improved financial performance The brand family is well positioned to remain relevant in the future 47
In closing, here is an examples of what our guests now experience across the customer journey Video from Singapore 48
49 Q&A
Appendices 50
System delivery Holiday Inn Other IHG channels IHG Websites Hotel direct excl PCR Source: IHG rooms revenue at 2009 constant UDS rates. 51
System delivery Holiday Inn Express Other IHG channels IHG Websites Hotel Direct excl PCR Source: IHG rooms revenue at 2009 constant UDS rates. 52
Remaking the Holiday Inn Brand Family Kevin Kowalski SVP Holiday Inn Brand Management June 2010 53