Badly hit by falling revenue, IHG (InterContinental Hotels Group), is removing franchise hotels as part of their overall plan to revamp its India portfolio. The company looks to move from franchise to the management model to increase its revenue earning.
IHG has chosen not to renew its franchise contract with the Lalit hotels at New Delhi and Srinagar, which expired in January 2009. “We have had a long relationship with The Grand Group (now The Lalit Suri Hospitality Group), which has served both parties well. However, priorities and strategies have changed, and IHG and The Grand Group have mutually decided to move forward separately when the franchise agreements run their course,” said Jan Smits, regional managing director IHG Asia, Australasia.
The Lalit Suri Hospitality Group’s general manager, marketing communications, Anjali Chatterjee, said, “We have a great working relationship with IHG; presently our Mumbai and Goa hotels are still operated under the InterContinental banner. The Delhi hotel contract with IHG was concluding last year and we decided to not renew as we were introducing The Lalit brand for all our hotels.”
Smits says IHG’s plan is to focus on managing its hotels but options are not closed for franchising. “We would like to work with owners (and franchisees) who share the same passion for our brands”.
The company has completely restructured its team to spearhead the revamp process. They have decided to have two business units – Greater China (Keith Barr, Regional MD), and Asia Australasia (Jan Smits, Regional MD). “Both these units are set up to drive operational excellence and revenue generation. IHG is extremely committed to the Asia Pacific” said Smits.
According to sources, its current India head Michael Herrmann will be leaving in September this year. Eight people have already been sacked or relocated in the first tranche followed by another eight from the customer relationship office which has now been moved to Philippines. One vice president in India was given Voluntary Retirement Scheme (VRS); the Singapore team is expected to relieve more. However, the company refused to confirm all this restructuring.
The company is aggressively relaunching its Holiday Inn brand and developing 31 hotels in India. “We have 31 confirmed projects across various cities in India and a significant number of openings are scheduled for 2010, closer to the Commonwealth Games. We are committed to growing our portfolio and business in India, and are focused on opening new hotels of the highest quality to meet customer needs in the future,” said Smits. IHG will drive growth through the three brands – InterContinental Hotels & Resorts; Crowne Plaza Hotels & Resorts; Holiday Inn Hotels and Resorts.
