Keith Barr stepped into Richard Solomon’s shoes as chief executive of InterContinental Hotels Group two years ago. He talks to Katherine Price about growing the company and making diversity and inclusion a priority
Following the acquisitions of Principal, Regent Hotels & Resorts and Six Senses over the last year, is InterContinental Hotels Group (IHG) still an acquisitive company?
When I took over the company, we thought about how we were going to accelerate our growth to industry-leading levels. Historically, we’ve been incredibly successful, and we said there were organic and inorganic means to do this. So we’re going to strengthen our existing brands, we’re going to develop new brands and we’re going to acquire new brands.
Last year is a good example of that – we launched the Avid hotel brand in the US and took it into Germany; we launched Voco, which we’ve now brought to the UK and Australia, and we’ve signed a significant number across Asia and Europe; and we acquired the Regent brand, so there was a balance of organic and inorganic.
We have gaps in our portfolio that we will address through organic ways, which will principally be in the mainstream areas with the big programmatic scale brands, but we’ll go inorganic for boutique and luxury. We’ll always be looking at those two options. There’s not a lot on the market right now, but we kick the tyres at every deal out there to see if it strategically makes sense for us. We’re always on the lookout.
Was the acquisition of Principal and its rebranding key for the group’s growth?
Principal was a really strategic deal for us and I’m really excited to have a partner like Covivio, which acquired the assets from Starwood Capital, to come in as a partner and give us a launch vehicle to accelerate new brands. Strategically, why did we do it? It brings a flagship Kimpton into London and accelerates the growth of Kimpton into the UK to have us really show that this is what the brand is all about.
It gives us a platform to launch the Voco brand here too, so it was making us the largest luxury operator in the UK. If it were 12 Holiday Inn Express hotels, I wouldn’t have done the deal because it wouldn’t have been strategic. I can grow Holiday Inn Express all day in the UK to accelerate growth, but the fact that it let me launch new brands and gets us an InterContinental back up in Edinburgh – it was important for us. And they’re great hotels; they’re iconic locations in the most important cities in the UK, and those are pretty irreplaceable.
At what point will you rebrand the hotels?
Starwood Capital did a really nice job renovating the hotels for the Principal brand, but now it’s how do we Kimpton-ise them or Voco-ise them? We started with the rebranding of Principal London to Kimpton Fitzroy London, then there is going to be a phased set of renovations that will take place over the next 12-18 months.
Are you looking to expand the new brands any further?
We want to continue to accelerate Kimpton, and we bought the brand four years ago on the premise of international growth. I had a huge platform in the US in that upper end of boutique, and we’re continuing to expand that.
For Voco, it’s early days, but there’s a whole pipeline that’s forming right now, and so you’ll see Voco really accelerate across the UK, Europe and into Asia. Is the UK still a key market for IHG?
Absolutely. It’s only 5% of our turnover and profit because we’re such a big company now, so it’s a small portion of our business overall, but it’s incredibly important. It’s our home market and we’re based here, so we want to make sure we have great representation of our brands.
The UK is one of the most important lodging markets globally, so we want to make sure we have a strong presence across our brands. It’s an important domestic market but it’s also a really important international market – you get so much international inbound and traffic through here that you want to make sure that, when customers are coming from China or the US or wherever, that when they see our brands they’re great representations, so when they go home they stay in them as well.
Will you be bringing more brands to the UK?
We don’t have any announced plans right now, but we always will. The general strategy that we have is this: if it’s a strategic market, we want to figure out how to launch as many of our brands as possible so we can get them to scale. And the UK is one of those markets. So we’ll always be looking at saying ‘do we have a brand that we haven’t brought to this market that we believe we could scale up?’
A lot of it is about timing and sequencing. We haven’t brought Avid [IHG’s new midscale brand] here, for example. We might bring Avid to the UK at some point if we think there is a customer proposition and an owner proposition. It’s more of a question of timing than it is about if.
Last year you chose to put profits back into the company to drive growth rather than return extra cash to shareholders. Will you continue to do this?
When I made the announcement a year ago, I said I was going to take a bunch of cost out and I was reinvesting for growth – I wasn’t going to give it to them as profit. I got unanimous support from my shareholders. They said, ‘we believe in what you’ve done and we believe in this company for the long term, so it’s investing for growth, and so we’ll continue to invest in this business for growth’. That means launching new brands, acquiring companies and investing in technology. We’ve been one of the best-performing shares in the industry globally for a decade. We continue to be able to generate cash and profits to return to our shareholders and invest in our business.
You’re on the advisory board for PwC’s Women in Hospitality, Travel and Leisure 2020 organisation, and you launched IHG’s Diversity & Inclusion committee this time last year. What issues have you identified and what are you focusing on improving?
When I started the industry was six days a week; it was nights, weekends, and it was probably one of the most family-unfriendly industries. That just has to change, because there’s a shortage of talent at all levels. The fact that we are structurally or systemically not enabling women to progress their careers – that’s just not good business.
The role of diversity, being a more inclusive organisation, isn’t just doing the right thing, it’s critical for business success. It’s not a company issue, it’s an industry issue. We as an industry have to address some of the systemic issues that have been issues for a long time. Women in Hospitality events will help bring awareness and bring focus on how we as an industry can collectively make a difference in driving diversity and inclusion, particularly enabling women to progress their careers more effectively in what has historically been an industry where they have struggled to get into some of the most senior roles.
The question is: how can we be more effective at designing roles that enable parents to continue to progress their careers? We’ve had some big wins at IHG internally, where we have created part-time jobs to enable mothers to work two or three days a week when they had a young family so that, once their kids got to school age, they’d come back full-time and they didn’t miss out on that connectivity and progression. We’re also giving a bit more flexibility to jobs in terms of people working from home for a certain number of days a week. The industry has to.
Is Brexit factoring into that?
It’s even bigger than a Brexit issue. We’ve got an industry that is growing very, very quickly and the talent isn’t necessarily growing at the same pace. Then you layer in the movement of people issues around Brexit – you’ve got to have a highly engaged workforce and you’ve got to attract the best talent to compete.
Also, when you get diversity into the room, you make better decisions. If it’s just a bunch of older, white males sitting around a table, you are going to get a certain perspective on most issues, particularly if they all went to the same universities and grew up in the same areas.
What is your strategy?
Part of it is women returning to work; part of it is helping develop career progression overall for women in the organisation; part of it is building increasing numbers of ‘lean in’ groups around the world, for different communities and how those get more momentum into new circles. We also have the RISE programme, which is about getting women to general management roles in our hotels. We piloted that in Australia and we’re now taking that globally.
It’s not just about having the LGBT community or women coming together to talk about their issues; it’s having people who aren’t in that community coming in to get a better understanding of them, and I’ve challenged the lean in circles to broaden their attendance so their agenda becomes even more well-understood in the business.
How are you measuring the success of these initiatives?
The results have to speak for themselves. Talk is cheap. When I say we’ve got one of the most diverse boards on the FTSE, we’ve got one of the most diverse executive boards in the industry, our senior talent is growing – that’s what has to speak for itself. About 30% of our executive committee is made up of women and around 40% of our senior leaders are women, and that’s tripled in the past five years.
Diversity and inclusion is no longer a ‘tick the box’ exercise. For many companies for a long time it was; today, it’s a business priority. You have to attract, develop and retain the best talent and be competitive. I look forward to even better results a year from now and a better team.
Keith Barr’s CV
Boston native Barr worked his way through Cornell University’s School of Hotel Administration by cheffing at nights and weekends. Before joining IHG, he held several senior positions at Bristol Hotels and Resorts, which in 2000 was acquired by Bass (which subsequently sold off its brewing interests and rebranded as Six Continents, and again, in 2003, as IHG).
He has held positions with the group as vice-president of operations for midscale brands in North America, vice-president of operations for the Holiday Inn brand in North America, and chief operating officer for Australia, New Zealand and South Pacific.
He spent four years in China as chief executive of IHG’s Greater China business and, two years after joining IHG’s executive committee in 2011, was appointed chief commercial officer. Barr been chief executive of IHG since July 2017.
Keith Barr on…
…cooking the dinner
When I’m not travelling, I like to make sure I’m home to cook dinner for my family. I’m ruthless about it, and it shows everyone else that it’s OK to do that.
I’ve been really fortunate to have lived all around the world. I grew up in the US and I’ve lived in Australia and China and now I live in Europe. Those experiences broaden your perspective about people. The way you lead and communicate in China is different from the way you do it in the UK or the US.
We’ve been very focused on our technology platforms, and I think it’s the next big area for this industry to continue to innovate.
InterContinental Hotels Group
Hotels 5,603 (836,541 rooms); 345 within the UK
Brands 15 (InterContinental, Regent, Kimpton, Even, Hotel Indigo, Hualuxe, Voco, Crowne Plaza, Holiday Inn, Holiday Inn Express, Holiday Inn Club Vacations, Holiday Inn Resort, Avid, Staybridge Suites and Candlewood Suites)
Development pipeline 1,900 hotels
Employees 400,000 2018 financials
Revenue £3.36b; operating profit: £519m