CEO INTERVIEW: InterContinental Hotels Group's Kenneth Macpherson
At the beginning of 2018, Kenneth Macpherson took the helm of InterContinental Hotels Group's newly formed Europe, Middle East, Asia & Africa region — which now has 1,000 operating hotels in its portfolio.
To say that Kenneth Macpherson looks after many hotels is perhaps somewhat of an understatement. Moving from being the CEO of IHG’s Greater China region, he was appointed to lead a new operating region formed by IHG: Europe, Middle East, Asia & Africa (EMEAA).
When I spoke to Macpherson, the region he handles was just under a thousand hotels. But towards the end of June 2018, that milestone was achieved with the opening of InterContinental Phu Quoc Long Beach Resort in Vietnam. With eight brands and 500 hotel owners already in this kitty, IHG’s EMEAA development pipeline stands at 321 hotels (63,500+ rooms) set to open in the next three to five years.
He says that the merging of the AMEA and Europe region was part of the operator’s global programme “which is all about accelerating our growth”. He explains further: “The way I think about it is that the EMEAA region is going to be four empowered businesses. Really what we are building is proximity to market, teams that are as close as possible to our owners and our guests, and that are able to take decisions as needed to support the performances of the hotels for guest experience, and then returns for our owners.”
Revealing that his first point of action has been to focus on cementing the establishment of the new region, he quickly notes: “Really, what does that mean? That means that Pascal [Gauvin, IHG’s managing director for India, Middle East and Africa] and his team are as able as possible to deliver that growth and support that we are committed to, to everybody.”
The new EMEAA CEO says that another element to this new region’s operations is working out synergies between the sub-regional offices. He notes that this is in terms of smooth transference of expertise. “We have superb managed expertise in parts of the business and superb franchise expertise in other parts of the business, and actually we have got a real opportunity to leverage that scale and bring those capabilities to all parts of the region and do that over time. So we have been working on, not only the new model, but actually how we apply our best practices in more places and all the time,” Macpherson says.
There is, he says, a roughly 50/50 split between managed and franchised properties in this region, with consistent growth being seen in both models. More interesting to him is the growth in the mid-market sector specifically. He comments: “One of the conversations we have been having a lot at AHIC [Arabian Hotel Investment Conference] with our owners is about the growth of mid-scale. We have got such an advantageous position with Holiday Inn and Holiday Inn Express.” He also notes regional owners have been asking questions about the Avid brand launched in the Americas last year. He adds: “I can see that as the markets here are restructuring, there is a diversification from the supply side and the demand side that’s going to open up mid-scale and we are in a great position.” He notes the master development agreement signed with Al Hokair Hospitality for Holiday Inn Express in Saudi Arabia (rollout of at least 10 Holiday Inn Express hotels over the next 15 years), and the opening of the largest Holiday Inn in the UAE (also a flagship) in April 2018 as further proof of that statement.
At the other end of the spectrum is the acquisition of a 51% stake in Regent Hotels & Resorts. Macpherson says that he has been delighted by the interest shown in that brand, which will allow the operator to develop markets where it already has a strong footprint with InterContinental (Regent is positioned above InterContinental in brand scale).
Macpherson continues: “We have had an overwhelming level of interest from exactly the kind of partners you would want to work with. They have got beautiful assets — either existing or future — and very keen to talk to us about Regent. We have said that we want to grow that to maybe 40 hotels globally, make sure that each is a true representation of the brand, and do that properly.”
He touches on the lifestyle brands: Hotel Indigo is opening in Dubai in H2 2018, and interest is being shown in Kimpton, although nothing is signed here yet. At the time of our conversation, Macpherson teases the new upscale brand, which was revealed a little over a month later to be ‘Voco’. The first signing was announced for Australia, and the roll-out of Voco will begin in Macpherson’s region, with plans to take it to the Americas and Greater China over time.
With the opening of Hotel Indigo in the UAE, IHG will have six operating brands in the region. Does he see all of them entering the Middle East at some point? Macpherson is diplomatic when he says: “That’s a long-term opportunity but what we need to do is bring them in at the right pace with the right partners to make sure that we can deliver the right performance on them as well.”
He says the operator is now around the mid-point of developing and rolling out its growth acceleration programme. “Our organisation at a global level unlocks considerable operating efficiencies which we can then invest behind the new brand portfolio — so whether it’s Avid and rolling that out, whether it’s the Regent acquisition, whether it’s the new upscale brand (Voco), and then getting more resources behind our existing brands.
“At the moment [my focus has] been: establish the new region, the investment capacity that’s going to allow us to do a better job for guests and owners, and getting these new opportunities up and running.”
He spins my question about challenges faced with overseeing such a large region into a positive answer. “One of my biggest challenges is there is so much development and growth and opportunity. I’ll take that challenge any day.
“For me, to make the EMEAA region really work, we have got to spin that best practice and capability across it but it’s about having this highly responsive and empowered team.
“My mission — and it’s an absolute commitment to all those partners out there — is that we will have [everything I mentioned], so they see an IHG moving at pace, deploying this new portfolio with increased investments by our core brands as well.” And with that, Macpherson signs off, no doubt ready to conquer his region with aplomb.