IHG executive discusses hotel industry recovery

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"The most resilient business today has been domestic, mainstream business and drive-to business," said Elie Maalouf.
"The most resilient business today has been domestic, mainstream business and drive-to business," said Elie Maalouf.

After bottoming out in early April, the U.S. hospitality industry is starting to see signs of recovery. STR reports that RevPAR levels across the U.S. have climbed steadily in recent weeks, with leisure markets across Florida, Texas and South Carolina seeing solid occupancy levels of late. Hotels editor Christina Jelski spoke with Elie Maalouf, CEO of InterContinental Hotels Group’s Americas region, to get his take on which sectors of the market might bounce back sooner than others.

Q: With the summer travel season in full swing, can you provide an update on the hotel industry’s recovery status?

A: The drop in the industry was historic, profound and very quick, [but] we’ve fared relatively well throughout this. In the Americas, at the end of the first quarter, 10% of our hotels were closed across North and South America. But since then, every week we’ve been reopening more hotels, and I expect almost all to reopen in the near future. So that trajectory has been improving. 

Anecdotally, in some parts of the country, whether it’s Florida, Southern California or some of our other resort locations, we’ve been at full or nearly full for the last several weekends. Now, that’s not a national phenomenon. Those aren’t national occupancy levels, of course, but in pockets, you’re seeing people moving as the lockdowns and travel restrictions have lifted. And we do believe the industry will [recover]. Whether it’s 2022 or 2023, I think time will tell and others will prognosticate, but we’ll return. 

Q: How well positioned is IHG when it comes to tapping into these turnaround trends?

A: I think we’re well positioned going in. Within this domestic market, we have a very large, mainstream-brand business, not just an urban, upper, upscale and luxury business, [though we do have] a strong business there, too. But we’re heavier in mainstream, limited-service brands like Holiday Inn, Holiday Inn Express, Staybridge, Candlewood, Avid, distributed in drive-to locations across all 50 states. And the most resilient business today has been domestic, mainstream business and drive-to business. So our strength in mainstream brands and drive-to markets is helping us, I think, perform better than the industry at this point.

Q: With urban areas being more heavily impacted by Covid-19, do you think cities will struggle to rebound as quickly as smaller, drive-to markets?

A: It’ll come back. I mean, people’s desire to congregate, to travel, to visit a gateway location and beautiful cities, experience their vitality, their culture, their restaurants and bars, their events and sports teams, that will all come back. People are craving for those moments to return. It’s just going to return a bit later, because you’ve got restrictions on group meetings of more than 50 people in some places, or more than 100 in others, and certainly over 1,000. Those restrictions have to lift. People have to feel comfortable getting into those groups.

And then those groups have to be booked because they’re usually booked two or three years in advance. If you canceled it, now you’re not going to have it in the fall. It’s probably a year or two before you have it. So that’s why we and others in the industry believe that large, urban group and meeting convention business will be the last to come back, but it will come back.

Q: Many U.S. cities have seen widespread protests and civil unrest in the wake of George Floyd’s death. Could this affect comeback efforts in those markets?

A: First of all, we’re very saddened, shocked and alarmed by the loss of life of George Floyd, Ahmaud Arbery and others who have lost their lives in unjust situations. We clearly need [to address] it. The violence that has followed, unlike the peaceful and rightful protest, has been equally distressing at a time where we’re all dealing with a pandemic that’s cost the lives of 120,000 Americans. It’s just a difficult time to absorb it all.

And then unfortunately, some business owners in various cities, not just New York City but Atlanta and Philadelphia, who were starting to reopen their businesses, may now be delayed from that. And we recognize that it’s just another element of what’s been a very distressing year for many small-business owners, retail operations, restaurants and hotels. We also believe in strength and resilience of not just our industry, but of these cities, of the people in these cities, of the entrepreneurs in those cities, and of their customers. And yes, it’s one more challenge, but it’s one more challenge that they will overcome.

Q: Covid-19 has certainly brought cleanliness to the forefront. Can you talk about IHG’s strategy on this front and how much investment properties will need to make to achieve enhanced standards in today’s “new normal”?

A: We actually introduced our trademarked IHG Way of Clean five years ago, in 2015. We have enhanced it during this coronavirus crisis, adding social-distancing signage and floor markers and protective barriers at the front desk, hand-sanitizer stations in high-traffic guest and colleague areas, masks worn by all hotel colleagues, gloves in certain high-touch interactions, cleaning [during your stay] performed only upon request, and we’re rolling out mobile check-in and checkout through our app.

[We’ll also have] a “Clean Champion” [to oversee the culture of clean] in every hotel. In terms of additional labor, it shouldn’t require any. In fact, having stay-over cleanings only upon guest request probably reduces labor. And the Clean Champion is somebody designated on property already, not a new position. There could be some additional expense for the distancing elements, masks for the colleagues or the availability of masks or disinfectant wipes for the guests. However, with the reduced housekeeping and reduced food and beverage protocols -- because in many hotels, we’ve gone from buffets to grab and go -- we’ve also balanced cost reduction. We’re very cognizant that our hotel owners are in a difficult situation today, with low occupancies and still having their debt service and needing to keep their staff. So we’re not looking at incremental costs.

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