As part of the Americas Lodging Investment Summit’s Patron sponsorship program, ALIS organizers asked Kimpton’s Tiffany Cooper eight timely questions as we prepare for the 22nd annual event January 23-25, 2023, at the JW Marriott/Ritz-Carlton Los Angeles L.A. LIVE. Following are her responses.
1) How has inflation and the threat of a recession affected the U.S. hotel franchising and development segments?
IHG, Kimpton and hospitality overall will never be immune to economic uncertainty. However, while we’ve had to navigate recent challenges, we’ve yet to see a sharp business correction. Our 2022 Half Year Results indicate continued high demand for our brands among owners and guests. During the first six months of the year, we signed more than 100 hotels and opened another 42 in the Americas. For Kimpton, our robust growth trajectory includes more than 40 new domestic and international properties in our pipeline.
Our organization and owners are confident in our long-term potential and the strength of our business model to attract new owners and expand the portfolios of those already in our system. Owners see hotels as a long-term investment and expect fluctuating cycles. For IHG and Kimpton, it’s more critical than ever that we support our owners in running an efficient and productive business.
2) Most forecasts show supply growth checking in at about 1% each year for the next two or three years. How do you see it playing out based on Kimpton’s pipeline?
There’s still white space remaining for brand introduction into secondary and primary cities, as well as suburban locations that have urban sensibilities. The beauty of the Kimpton brand is how we can show up in a variety of different spaces and places with our own unique flair – whether that be conversions, new build hotels or historic adaptive reuse projects, which we first pioneered in the 1980s and have been redeveloping now for more than four decades. Recently, we announced our entry into the growing all-inclusive resort space with the signing of a new property in Riviera Maya, Mexico.
There’s a long runway of opportunity, and Kimpton’s distinctive look and feel are right at home in the family of IHG brands. Our iconic brand has yet to benefit from the effects of globalization and recent expansion, but we anticipate our international success anticipated to cross over into the domestic market soon.
3) What’s the message to hotel owners, investors, and developers from the lending community in general as 2023 approaches?
While the industry is encountering challenges with supply chain, escalating costs, higher interest rates and inflation, Kimpton is a nimble brand that proudly works collaboratively with our ownership community. Opening and operating hotels during COVID-19 allowed us to re-evaluate our day-to-day handlings and create programs that would both add value and reduce costs. The only real constant in our business is change, and often the challenges the hospitality industry encounters are what force us to innovate and be even more thoughtful and collaborative. At IHG and Kimpton, relationships matter, and our ability to listen, anticipate and respond to our owners’ and guests’ needs will keep our brands top of mind.
4) Based on your portfolio and what you’re seeing throughout the industry, what segments are the most sought after for development and franchising opportunities? Why?
Globally, IHG has emphasized – and achieved – significant growth within our luxury and lifestyle portfolio, namely across our Six Senses and Hotel Indigo brands. This category accounts for 12 percent of our overall system size and 19 percent of our pipeline (up from 13 percent just five years ago).
The footprint of our Kimpton likewise has evolved from an urban stronghold to include growth in secondary and suburban markets – namely through vibrant mixed-use properties – and resort locations. Kimpton has multiple international destinations opening within the next 24 months, from Bali to Mallorca to Mexico City, and many markets remain ripe for growth.
There’s also growing interest in conversion opportunities, which have evolved to represent nearly one-fourth of IHG’s recent global signings and openings. The conversion model offers a degree of certainty for owners given supply chain challenges and rising construction costs, along with access to IHG’s brands, scale and enterprise platforms.
5) How has the labor shortage affected the hotel development process? Is it something that the industry will deal with long term?
Labor shortages are a challenge across every aspect of hospitality, including the hotel development process. While we support our owners in finding solutions to operate and serve our guests, we’re also reinvesting in our culture and positioning our properties as attractive destinations for talent. Our Kimpton culture celebrates inclusivity, diversity and employee empowerment, and we’re proud of our decade-plus placement on Fortune’s “100 Best Companies to Work For” list. Our reputation and competitive benefits also offer an additional edge among a limited labor pool.
6) What’s the status of the shortage of materials and the supply-chain issues and their effect on development? How much time have these issues added to the development process?
In the short-term, we’re still seeing some markets and individual openings impacted by COVID-related supply chain disruptions. However, we’re working closely with our owners to reduce the costs and time required to build and operate, also understanding that the needs of each owner and property will vary.
We recognize that flexibility has been – and will be – critical to help owners and developers navigate supply challenges. As an owner and developer ourselves for nearly four decades, Kimpton’s collaborative approach has helped our team and our partners overcome similar gaps. We work to find customizable solutions that fit each hotel and need rather than making owners and developers “check a box.” This new era of hospitality presents many unfamiliarities, and we’re committed to delivering the same level of understanding and partnership that we’ve always employed.
7) What’s the most under-estimated challenge the hotel industry faces, and why?
Competition is fierce, with a red ocean of competitive brands fighting for their fair market share and seeking the lowest cost of guest acquisition via sophisticated global distribution systems and loyalty programs. At Kimpton, our unique blend of heartfelt hospitality, sophisticated design and locally loved restaurants and bars with creative activations allows for more of a blue ocean strategy and the benefit of not only attracting, but retaining the guest.
Earlier this year, IHG launched our One Rewards loyalty program to further reward long-time guests for their support of our brands and entice new guests to find the right environment for their desired stay experience. In doing so, we also can attract a higher premium traveler audience at a reduced cost of capture – in a way that is fun and supportive.
8) What’s the most under-estimated opportunity for the hotel industry, and why?
While not necessarily a new trend, dual branding is becoming a more popular avenue to right size properties and attract a broader guest spectrum than possible with a single brand concept. Dual branding allows hotels to deliver a broader range of services and choices to guests while accelerating operational and economy of scale advantages to owners.
At IHG, we’re continually evaluating creative and even atypical opportunities to pair two of our 17 global brands together. We’ve opened several new dual brand hotels this year, including a joint Hotel Indigo and Atwell Suites property in Miami and our first avid hotels and Holiday Inn property near Nashville. A new Kimpton and Staybridge Suites dual brand hotel also is in development and scheduled to open in 2024 within St. Louis’ Midtown market.
* as of November 23, 2022