IHG plans up to 40 Holiday Inn Expresses in Australia as it targets time-poor tech-savvy travellers

The InterContinental Hotel Group (IHG) has plans to build up to 40 Holiday Inn Expresses across Australia over the next 10 years with construction of its first Holiday Inn Express in Perth soon to begin.

The London-based hotel group, which operates nine other hotel brands including InterContinental and Crowne Plaza, manages over 2,000 Holiday Inn Express hotels globally.

‘We are looking at second and third tier cities for future Holiday Inn Express location rather than build four and five star hotels,” Phil Kasselis, head of development in Australasia for IHG, tells Property Observer.

The group will consider developing future Holiday Inn Express hotels in Newcastle, Wollongong, Geelong as well as in locations in the capital cities where the government is looking to develop new hotels.

The 224 room Perth Holiday Inn Express to be built at 257 Adelaide Terrace, overlooking the Swan River, is due for completion in 2015.

Site works are due to commence in the third quarter of the year in partnership with Perth-based developer Sunfire Asset.

Holiday Inn Expresses are targeted at “savvy business and leisure travellers” within the “limited service mid-market” sector with IHG opening on average two new Holiday Inn Express hotels ever week around the world.

IHG typically partners with investors to build or develop new hotels, and operates them as managers or under a franchise agreement.

In Australia, IHG tends to manage its own hotels, but is looking at implementing a franchising model.

Investors typically include institutional investors and high-net-worth individuals.

“We describe our typical [Holiday Inn Express] guests as Everyday Heroes – they are independent, self-sufficient and they believe in working hard so they can enjoy life,” says the Holiday Inn Express investor brochure.

The chain is promoted with the tagline “Everything you need. Nothing you don’t” as well as through a series of very funny “Stay Smart” television commercials, including this one featuring a white rapper.

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As part of its expansion plans, IHG has conducted research to identify "emerging traveller identities", which it says will shape the next decade of tourism.

It has identified four types of travellers: 

• New global explorers from emerging markets, such as China, India, Indonesia, Egypt and Vietnam, who want to follow well-trodden paths and visit the must-see sights of well-known destinations.
• Laptop and latte workers – a new breed of business traveller – are young and accustomed to not having set hours or location for work, and are therefore happy to share spaces and mix business with play.
• New family groups from both developed and emerging markets, representing the changing face of the traditional family unit, from single person households to multi-generational families booking entire hotel floors.
• Expansive mid-lifers are older travellers – the fastest growing and most affluent age group in the world – but don’t want to be defined purely by their age, as they seek out new experiences while demanding services and amenities that suit their needs.

Kasselis says hotels need to cater for the current and future needs of customers including obvious things like providing Wi-Fi, but also less obvious region-specific ones like interconnectable rooms in its Middle Eastern hotels to cater for larger family groups.

“Travellers expect hotels to deliver certain things, rather than be surprised by them,” he says.

He says the Australian hotel market has somewhat lagged other first-world markets but is starting to catch up.

He says it is appealing to offshore investors because of its transparency, the ease of doing business and proximity to Asia.

In addition, many investors know the Australian market through personal experience or because their children have studied in Australia.

“There is new money coming into the market from the Middle East and from sovereign wealth funds,” he says.

IHG generates more than $3 billion in sales every year from its half a million hotel rooms.

In Australia, IHG has partnered with hotel developer Jerry Schwartz to develop the Crowne Plaza hotels in the Hunter Valley and Newcastle as well as with Eureka Funds Management on other projects.

Recent projects include transforming the Clarion Hotel in Parramatta into the Holiday Inn Parramatta.