Consumers may be traveling less these days, but when they do travel, they’re more likely to choose value lodging, said Eric Pearson, CMO for the Americas division of InterContinental Hotels Group. This is exactly the reason why brands like Holiday Inn fare better than higher end hotel chains in a recession, Pearson said. Parent company IHG has kicked off a global relaunch of its Holiday Inn and Holiday Inn Express brands. Though the project was conceived before the downturn occurred, Pearson said there is no better time than the present to change consumers’ perception of the brand. Even returning customers will get to experience the new Holiday Inn for the first time. And the effort has already attracted widespread attention—and impressions—including the recent Holiday Inn key card hotel display in New York City. Pearson chatted with Brandweek about Holiday Inn’s relaunch, why tough times present opportunities for hoteliers, and how business travel is starting to pick up again. Some excerpts from that conversation are below:
Brandweek: In April, you were promoted from svp-distribution to CMO of IHG in the Americas. What are your top three goals for the job?
Eric Pearson: For this and next year, one of the key priorities is the successful relaunch of the Holiday Inn and Holiday Inn Express brands. That is the biggest and most important. Second is to drive top line revenue performance for all of the hotels in America and more importantly, how do we deliver that overall brand promise to meet and exceed customers’ level of expectation as they stay and experience our hotels.
BW: Speaking of which, IHG’s 1/3 of the way through with its global relaunch of the Holiday Inn and Holiday Inn Express brands. Why embark on such a big undertaking, especially in a recession?
EP: You have to roll back four years ago, when the basis of the research was done. We started [this project] with the consumer in mind. We executed one of the biggest pieces of research the industry has done. It was market research and focus groups, and not just really understanding our customers, but all travel customers—what they wanted and expected from our products, what were the key values and [attributes] they expected and would like to see in the hotels we owned.
We carried that into how Holiday Inn and Holiday Inn Express have done and how they are [perceived] in our consideration set. What consumers said about [these two brands] was, “I grew up staying there. It has a lot of emotional and sentimental value to me, but you know what it doesn’t really represent? The new, more contemporary hotels that people are staying at.” That was really hard, but good feedback for us, and that set us on a journey to relaunch a major hotel brand like Holiday Inn around the world…It’s [about delivering on and improving] these moments of truth, whether it’s [guests’] arrival, expected curb appeal, having a great night’s stay, [if you’re sleeping on] soft or hard pillows, the shower experience, amenities and the actual service you experience that go along with [your hotel stay].
BW: So, timing-wise, the relaunch is actually benefiting brands like Holiday Inn and Holiday Inn Express because of their value-oriented appeal?
EP: This was all done before this environment kicked in and, as it turns out, ironically, it’s been a blessing in disguise. Not that that’s something to be wished upon—an economic climate like this—but consumers that had stopped considering us or those who were seeking more of a luxury or high-end stay, [are coming back to us]. [In this economic environment], where there is increased public and shareholder scrutiny, people are experiencing Holiday Inn for the first time because [either] corporate requires it or they’ve become more value-conscious.
Consumers are trading smart. They’re trading down from upscale, expensive stays to value stays, which is what you typically find in this segment called “mid-scale.” It’s high value, a good, functional stay and an overall good product experience. That’s been helpful to us in [reintroducing] our hotels to consumers. At the same time, leisure travel is really beginning to pick up. We saw that, too, after the last recession, post Sept. 11.
BW: Holiday Inn aside, what other marketing initiatives are you working on for brands like Crowne Plaza, Hotel Indigo and Staybridge Suites?
EP: Staybridge [operates in] the extended stay category, where people stay from seven to 10 days. So, think consultants, insurance claim adjusters, etc. We [were ranked highest in customer satisfaction in the extended stay category] by J.D. Power and Associates [in its 2009 North America Hotel Guest Satisfaction Index Study.] That’s a brand that’s [12 years old.] As with any smart brand, we’re going through some product improvements. We’re testing some new room concepts as we speak.
With Crowne Plaza, 40 to 50 percent of the brand will have been relaunched by the end of this year. We’re in testing for new hotel product features and amenities in several markets, to get consumers’ reactions based on their output and interest. And once we do that, we’ll definitely begin to explore [implementing some of these features on] a more wide scale and global basis.
The more recent launch is the Hotel Indigo brand. We have 29 hotels open and 50+ are under construction or conversion. That’s a branded boutique experience, so it’s basically catering to consumers who want the assurance of a brand, but like the experience of an independent boutique. It’s more of a local neighborhood type of experience. We bring in local musicians and artists. It has that boutique feel but the assurances of the brand.
BW: How well positioned is IHG to weather the recession, given its portfolio of brands, which cut across different consumer segments?
EP: We are very strong, as I said, in this mid-scale segment. We think that’s been quite resilient. The industry measurement is what’s called RevPAR (revenue per available room). It’s a measurement of the overall revenue that’s being generated per room available in the hotel and that has dropped off 16 to 17 percent for us through the mid-year, whereas the industry average is anywhere from that to as high as 30 percent. That’s the decline year over year, and the higher up you go on the upscale or luxury segment, the greater the decline.
BW: You mentioned earlier though, that you’re starting to see hotel bookings pick up again?
EP: Corporate travelers are starting to book into 2011. They are starting to get back to the meetings they had with clients, with corporate employees. There is nothing more powerful than to have that face-to-face encounter and meeting and we’re seeing corporate travelers and businesses begin to show evidence of that. We’re starting to see some momentum.
BW: So has IHG spent more or less on marketing in tough times?
EP: We’re a big believer that in tough economic times, smart brands invest to gain market share and we’ve done that. This year alone,…we increased our global sales team by 25 percent. We put more feet on the ground to further enhance and develop existing relationships with corporate customers and partners. We’ve invested more aggressively in tactical ad campaigns…We came out with a strong business offer, the richest offer we’ve ever served, which is our big Free Night offer. You stay any four nights in any one of our hotels around the world and we’ll give you a free night in any one of our hotels in the world. We saw a huge increase in typical reservations, a 40 percent increase in reservations over previous years.
To celebrate that, we launched—with a PR campaign—the Biggest Bed Jump event in New York, London, Paris and Shanghai. It was the largest bed ever—a 42-feet wide bed and 11 feet high. We had a big, single day event sequenced around the world with Facebook, live videos. The idea was to celebrate the biggest free night ever, come jump on the biggest bed ever.
BW: IHG seems intent on breaking through the clutter, lately. First the bed jumping event, and, most recently, the 400-square feet Holiday Inn key card display in New York City. Why the need to push the envelope? Is the 30-second TV spot not enough?
EP: Consumers are being inundated with marketing messages, not just because of pure volume and the number of outlets available, but because of the proliferation of new channels—social media, the Internet, mobile phones—so there is this challenge of “How do you break through that clutter?”
With the key card hotel, we came up with this idea because everyone comes home with their key card, but what do you do with it? So we worked with our PR agency to build the biggest prototype hotel from key cards, hired Bryan Berg, who’s known for building things with play cards, and asked, “Can you build a room, complete with a bathroom and front desk, out of key cards?” and he said, “Yes,” and four months and more than 200,000 key cards later, we unveiled it in NYC. It was an overwhelming success. We had over 15,000 [media] placements in 200 countries, with over 180 million impressions around the world, and the feedback was very positive both from consumers as well as the [Holiday Inn hotel franchise] owners. What’s important about this idea is there are mass amounts of media messages out there, but how do you break through the clutter?