IHG CEO Keith Barr to Leave Legacy of Expanding Hotel Group’s Competitiveness

Keith Barr said Friday he would step down as CEO of IHG Hotels & Resorts. Elie Maalouf, who’s headed the American operations, will become the new chief of the UK-based group on July 1.

• “I’d characterize Keith Barr as a hotelier’s hotelier,” said Scott Berman, who spent three decades at the hospitality and leisure consulting practice at one of the Big 4 firms. “Barr’s as versatile a CEO as we have in the hospitality industry. He brings a passion for service and excellence, care for his fellow humans, and an unparalleled intellect and instinct around strategic execution.”

I went back to the goals that IHG’s board set in 2017 when Barr took the leadership reigns. Here’s a quick view of his legacy marked against those goals.

Expanded IHG’s Presence

• Barr leaves IHG with 18 hotel brands, roughly a third more than what it had when he became CEO. Having more distinctive brands improves the chance it can cross-sell and do more direct marketing to its guests as their trip needs vary.
• Since 2017, IHG has added Six Senses, Vignette Collection, Hualuxe, Voco, Regent, Avid, and Atwell Suites.
• The latest addition came late last year when IHG added Iberostar’s all-inclusive resorts through a long-term partnership.

Leaned Into Luxury and Lifestyle

• Barr’s strategy was to build up its offerings in luxury and lifestyle hotels that have become increasingly popular with travelers. Owners like these properties because of the high fee income.
• “The company’s acquisition of Regent and Six Senses, both established luxury hotel brands outside of the U.S., will prove to be prescient, and like most good leaders, Keith’s value to IHG will only be fully realized years from now,” said Baron Ah Moo, managing director, U.S., PKF Hospitality, a consultancy. “Elie has some big shoes to fill.”
• Today, roughly a fifth of its total hotel and resort pipeline is in luxury and lifestyle, nearly double the proportion five years ago.

Overhauled IHG’s Loyalty Program

• In 2022, Barr’s team unveiled the first big overhaul of IHG’s loyalty program in many years.
• The changes to the IHG One Rewards program and a marketing blitz led to about 12.2 million people signing up as new loyalty members in 2022.

Enhanced IHG’s Most Valuable Markets

• Barr focused on improving IHG’s capabilities in two critical markets: China and the Americas.
• Barr spent more years working in China than his hotel group CEO peers. His on-the-ground expertise influenced how he set strategy as CEO.
• IHG has claimed that it basically had the greatest market share in China in 2022 of foreign players. In full-service hotels, it claimed the number one spot, too.
• IHG has 454 hotels representing about 94,000 rooms under development in Greater China. The only company claiming a bigger pipeline in China is Hilton Worldwide, with 680 projects/123,403 rooms, according to Lodging Econometrics. Barr has said some nuances clouded that figure because Hilton has a third-party partnership to grow Hampton Inn and another third-party relationship for Home2Suites.
• The Americas were the other big growth opportunity for IHG. As of this month, it has more than 4,300 hotels in the Americas region, a majority of the company’s more than 6,100 properties globally.
• A multi-year repositioning and refresh of the group’s best-known brand, Holiday Inn, appeared to be paying dividends. A refreshed prototype may appeal to developers, and a nicer breakfast may appeal to guests. About 50 hotels in the Americas are slated for renovation this year.

Fine-Tuned IHG Company Culture

• A hotel operator is all about personal service, and Barr fostered a culture that strives to retain and attract the best people. Because he was a 25-year veteran of the company, working his way up, many IHG team members found Barr relatable.
• One sample change: IHG moved to a new headquarters this January, and the building is designed to be in a location to enhance worker well-being and commutes as well as in-office and hybrid collaboration.
• “Barr’s desire to invest in people, particularly the next generation of hospitality professionals, is genuine, as is his care for leaving that generation with a better planet culturally, socially, and environmentally will be one of his many legacies,” Berman said.

Taking IHG’s Climate Impact Seriously

• It’s difficult for asset-light hotel operators like IHG and its peers to reduce carbon emissions. Operational control captures less than half of emissions, according to Skift Research’s March Report “Progress in Sustainability: Hotel Company Analysis.”
• But Barr hasn’t let the asset-light strategy get IHG off the hook in its climate responsibilities, said Willy Legrand, a professor at IU International University of Applied Sciences in Germany.
• ”On the contrary, the company aims at 100 percent new-build hotels to be low to zero carbon emissions by 2030, which requires all parties, investors, developers, owners, brands and property teams, to pull on the same string,” Legrand said.
• “While most hotel businesses have yet to implement ESG metrics linked to leadership compensation, under Barr’s guidance, IHG has taken a lead on that governance issue by establishing an executive directors incentive plan that includes targets related to decarbonization,” Legrand said.

Worked With Owners

• By franchising its brands and managing hotels on behalf of third parties, IHG focuses on increasing fee revenues and fee margins with limited capital requirements.
• Barr’s teams led efforts to reduce the cost of building, opening, and operating its hotels. In 2022, this included changes to procurement programs, streamlined housekeeping models, and a loosening of some brand standards. (For context on the broader issue, read: “This Hotel Asset Manager Wants the Industry to Rethink How Hotels Run.”)
• Barr led initiatives to refresh all of its hotel brands during his tenure. Last year, for instance, the wellness-themed Even brand got a new prototype with a more cost-efficient design and a changed restaurant.

Tackled Net Rooms Growth

• In 2017, Barr wrote in IHG’s annual report: “Since my appointment in July, I have been clear that the right foundations for success have been carefully put in place and that we must now build on this and execute our strategy at a faster pace, to deliver industry-leading net rooms growth over the medium term. Important changes to our structure and how we operate are underway, and with greater focus and agility, we will deliver more for our owners and guests.”
• Yet IHG appears to have had the slowest portfolio growth in the past decade of its peer companies: Marriott, Accor, Hilton, and Hyatt.
• IHG finished 2017 with 798,075 rooms open. It had a pipeline of 244,146 rooms, representing a 13 percent share of the active industry pipeline.
• It finished 2022 with 911,627 rooms open and a pipeline of 281,468 rooms.
• That was roughly a 3 percent annualized growth rate, on average, over five years, in net rooms and pipeline. That wasn’t industry-leading. Many competitors of roughly equivalent size came in at roughly 4 percent, despite the pandemic.
• Perhaps a rebound is in the offing. In 2022, IHG exceeded its target for net system growth, boosting it by 4.3 percent, excluding the company’s exit from Russia. A further 1,800 hotels in its pipeline represented future growth of over 30 percent, as measured against today’s system size.

Boosted IHG’s Tech-Savvy

• IHG’s board approved an overhaul of the hotel group’s guest reservation system before Barr became CEO. But Barr has overseen a phased deployment of the cloud-based, next-generation guest reservation system built by Amadeus, a vendor. Many company functions, from setting rates to merchandising rooms to improving its loyalty program, are being enhanced as this system grows in power. Deadlines for the project have been mostly met except for setbacks during the pandemic.
• Barr’s related tech push was to transform most travelers’ booking journeys across IHG’s digital channels, emphasizing its revamped mobile app. These steps could help encourage direct bookings and make marketing expenditure more efficient in the long run.

For more on Barr’s strategy at IHG, listen to this podcast from my interview with him in the second half of last year. Or watch the video below.

What’s your view of Barr’s legacy? I always read tips and feedback. Contact me at [email protected] or through my LinkedIn profile.