Building lasting guest relationships
June 2010
Hotel Indigo Scottsdale, USA
1
IHGs growth strategy to create sustainable value
Making best use of our scale to build and grow preferred hotel
brands for guests and owners in high value markets
Where we play
How we win
Markets
Powerful and distinct brands
Segments
Best demand delivery systems
Model
Aligned and engaged organisation
Rooms
RevPAR
Royalty Rate
The top 5 things you may not know about the hotel market
1
Brands matter online
Only 5% of our bookings are through online
travel agents
Vacations are a right
Rooms sold for leisure increased in 2009
Searching isnt booking
78% of hotel bookings begin with some
form of online search. Web bookings are
only 23% of our mix
Its a drive to business
Less than 30% of midscale guests fly
Hotel guests are hard
to find
Only 50% of Americans stay in a hotel in
any given year
Building lasting guest relationships
Hotel Indigo London Paddington, UK
4
Our journey to Great Hotels Guests Love
Scale in
Market segmentation and penetrating customer insight
.KNOWLEDGE
Thoughtful, innovative Brand evolution
.EXPERTISE
POWERFUL AND DISTINCT BRANDS
THAT
Consistent branded
hotel experience
BEST PRACTICE
PROVIDE
A DIFFERENTIATED
Widely available, quality
managedEXPERIENCE
and up to the mark
PIPELINE
GUEST
Great owners who buy into the strategy
.RELATIONSHIPS
High visibility, multi-media marketing
.MEDIA BUYING
THE
BEST DEMAND DELIVERY SYSTEM
Effective, tailored reservation and loyalty systems
.TECHNOLOGY
Collaborative and engaged employees
.NUMBERS
ALIGNED AND ENGAGED ORGANISATION
5
System scale drives revenue delivery
$16.8bn gross revenue* from all hotels in system
c.$1bn system funds from hotel contributions
Revenue delivered through the system up 19%pts since 2004 to 68%
Delivery driven by
Embedding lasting guest relationships
Exploiting all booking channels
Innovations
* 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.
Funding the system
All hotels contribute
c.3.0% of rooms revenue
(service contribution fee)
Advertising & Marketing
(c.25%)
c.4.75% total
PCR bill
Distribution
(Reservations and Channels) (c.40%)
Other fees for
value add services
Priority Club Rewards
(c.35%)
c.$1bn total system funds in 2009
Discretion to spend for marketing, reservations and other related activities
Marketing and reservations assessments spent in year collected
Exploiting all booking channels
InterContinental Hong Kong
8
Booking channels
$10.9bn
$13.7bn
2%
10%
5%
13%
11%
14%
14%
10%
20%
Online Travel Agency
Global Distribution System
18%
Call centres
PCR Hotel Direct
51%
IHG Websites
32%
2004
Hotel Direct
2009
Note: 2009 constant USD rates
Website upgrades to increase relevance and appeal
10
Central Reservations global scale and accessibility
Approximately 25 million calls handled per year with c.1,700 agents
Charleston
324 agents
c.4.6m calls pa
Birmingham
236 agents
c.2.6m calls pa
Bucharest
39 agents
c.0.4m calls pa
Tokyo
13 agents
c.0.1m calls pa
Salt Lake City
368 agents
c.6.1m calls pa
Guangzhou
31 agents
c.0.5m calls pa
Mexico City
48 agents
c.0.7m calls pa
Sao Paulo
10 agents
c.0.1m calls pa
Manila
225 agents
c.3.3m calls pa
Baguio
368 agents
c.6.4m calls pa
Note: 2009 full-year call volumes and year-end agent counts
11
Embedding lasting guest relationships
Crowne Plaza Lijiang Ancient Town, China
12
Online direct marketing
Top 20 Google advertiser globally
Purchasing over 3m keywords in
16 languages
Serving over 12bn online ad
impressions annually
Reaching customers during
online shopping:
Search Engines (Google, BING)
Community Guides
(Tripadvisor, CitySearch)
Mapping and Price Compare sites
(MapQuest, Kayak)
13
Targeted marketing
$28m investment over 3 years in modernising of infrastructure and processes
Enable the identification and marketing to an additional c.34m customers
Improve time to market and accuracy of campaigns
>$150m incremental revenue from these types of campaigns in 2009
14
Promotional marketing
Recent Promotions
Promotional Advertising
Biggest Free Nights Offer
High participation despite
economic downturn
Generated new Priority
Club members
Luckiest Loser
Capitalized on HHonors
devaluation of points
Over 90m print & online
media impressions
15
Social marketing
16
Mass marketing
17
Reaching corporate accounts - Sales
Our sales structure aligns with our accounts buying behavior
IHG Global
Strategic Accounts
Global
Accounts
Director
Key
Accounts
Director
Global, Regional and
Sub-regional Accounts
and touches a significant amount of our
system revenue:
$3.5bn room revenue
Key Accounts Manager
Regional Sales Center
(RSC)
Market-specific and
National Accounts
Hotel and Local
Accounts
National Sales Team
Local Market Area Sales Teams
Hotel Sales
280 Sales professionals
1,700 managed accounts
18
Recent sales initiatives
Business
Travel
Optimisation
Strategic Pricing - volume-based dynamic discount model
PCR Engagement - drive PCR penetration in all managed accounts
Easy Groups/Easy Meetings driving share of small meetings.
Meetings
Optimisation
Meeting Broker - improving lead management and processes
19
Priority Club Rewards (PCR)
Priority Club contribution +4% pts vs. 2008
Over 51m PCR members worldwide
Largest programme in hotel industry
Record hotel enrolments in 2009 (+28% YOY)
Increase value proposition of Priority Club points
Points & Cash - combine points with cash to redeem free nights faster
Flights Anywhere - redeem points for airline travel
Hotels Anywhere redeem points online for non IHG hotel rooms
Best Hotel Loyalty Programme
Business Traveller Magazine 2007, 2008, 2009
Global Traveller Magazine 2005, 2006, 2007, 2008, 2009
SmarterTravel Editors Choice Awards - 2009
20
The most valuable customers
They PAY more
10% premium on ADR versus other guests
Less price sensitive - choosing our brands for reasons other than strictly price
They STAY more
Studies show that PCR members stay >30% more with IHG post enrollment
PCR members 10 times more likely to stay at more than one hotel than non-members
They COST less
PCR members 3 times more likely to use lower cost on-line booking than non members
They use online travel agencies less
PCR members deliver more than double the profit of non-PCR members
21
Innovations
Staybridge Suites Cairo City Stars, Egypt
22
Mobile
Mobile bookings increased 600% (March 2010 vs. 2009)
Future enhancements to mobile in progress
Mobile Awareness Campaign launched March 2010
New IHG iPhone app launched April 2010
23
Retargeted online marketing
Retargeting those who leave IHGs website
YTD global campaigns generated
386m+ impressions for IHG brands
IHG
Websites
>$40m in revenue for the system
Creative messaging being used for all
brands in multiple languages
Customer Clusters
Media partners
Google, AOL, Yahoo! and Netmining
Note: Gross data all channels from 1 Jan 2010 to 7 April 2010
24
IHGs growth strategy to create sustainable value
Making best use of our scale to build and grow preferred hotel
brands for guests and owners in high value markets
Where we play
How we win
Markets
Powerful and distinct brands
Segments
Best demand delivery systems
Model
Aligned and engaged organisation
Rooms
RevPAR
Royalty Rate
25
WHY?
26
The traditional view of the hotel industry
LUXURY
$$$
UPPER UPSCALE
UPSCALE
$$
MIDSCALE WITH F&B
MIDSCALE WITHOUT F&B
ECONOMY
$
27
Then we thought we got sophisticated.
LUXURY
$$$
BOUTIQUES
UPPER UPSCALE
UPSCALE
$$
EXTENDED STAY
MIDSCALE WITH F&B
MIDSCALE WITHOUT F&B
ECONOMY
$
28
Approaching branding
House brand
Single brand
Rifle-shot brands
HOUSE
BRAND
BRAND
System
BRAND
By xx
BRAND
By xx
System
BRAND
By xx
BRAND BRAND BRAND
System
29
Our brands
Rifle-shot brands
System
30
Moving guests from like to love
Getting the basics right
is really important
is not easy
is not enough
We need to build a brand specific experience which
is consistently different and better than the competition
must deliver something that really matters to the guest
31
Moving guests from like to love - the guest journey
Make a
Awareness booking
Before
I leave
Journey Arrival &
to hotel Walk-in
Check-in Journey
to room
My
room
Ongoing
Facilities Departure Comms
32
Moving guests from like to love - the guest journey
Make a
Awareness booking
Before
I leave
Journey Arrival &
to hotel Walk-in
Check-in Journey
to room
My
room
Ongoing
Facilities Departure Comms
33
Moving guests from like to love - the guest journey
Awareness
Make a
booking
Before
I leave
Journey
to hotel
Arrival &
Walk-in
Check-in
Journey
to room
My
room
Facilities Departure
Ongoing
Comms
34
Moving guests from like to love - the guest journey
Awareness Make a
booking
Before
I leave
Journey
to hotel
Arrival &
Walk-in
Check-in
Journey
to room
My
room
Facilities
Departure
Ongoing
Comms
35
Summary
System scale key to building the best demand delivery system
Leading investment in marketing and expertise
System delivery up 19%pts since 2004 to 68%
Creating powerful and distinct brands
Psychology and emotion, not just price and function
Brought to life everywhere we touch the guest
36
Building lasting guest relationships
longstanding Priority Club Reward members
Ruth Farrell
9yrs
2009: 23 nights
Andrew Watson
12 yrs
2009: 26 nights
Michael Jorgeson
26yrs
2009: 114 nights
Jerry Harwood
12 yrs
2009: 70 nights
Robert Bonnem
20yrs
2009: 31 nights
Peter Kesterton
13 yrs
2009: 17 nights
Stephen Sohns
19yrs
2009: 21 nights
Mark Gilley
11yrs
2009: 35 nights
Martyn Cornell
12yrs
2009: 15 nights
Valerie Manso
24yrs
2009: 77 nights
Peter Duke
14 yrs
2009: 52 nights
37
Q&A
Holiday Inn Pataya, Thailand
38
Building lasting guest relationships
June 2010
Hotel Indigo Scottsdale, USA
39
