US$1b Renovation To Boost Holiday Inn Sales

Source : The Business Times, October 25, 2007

(LONDON) InterContinental Hotels Group plc said Holiday Inn owners and franchisees will boost sales by investing US$1 billion on renovations and new bedding, along with the first change to the chain's green logo in 50 years.

InterContinental will spend £pounds;30 million (S$89.7 million) to speed the rebranding, which will be reported as a one-time charge, the Windsor, UK-based company said yesterday. The first revamped hotel will open in the United States next year, with the improvements finished across the chain by 2010.

Holiday Inn, founded in 1952, will have 'significantly higher' revenue per available room after the renovations, InterContinental said. The chain's US sales growth has trailed the British company's more upscale brands, such as Crowne Plaza.

The International Association of Holiday Inn, which represents about 3,000 Holiday Inn owners and operators, said in the statement that it 'strongly supports this development and looks forward to the business improvement it will deliver'.

InterContinental shares slipped 8 pence, or 0.7 per cent, to 1,028 pence at 8.28am in London. Before yesterday, the stock had fallen 20 per cent in 2007, after adding about 75 per cent over the previous two years.

The company owns, manages or franchises more than 3,800 hotels in nearly 100 countries. It has sold hotels to property investors and turned to management or franchise contracts to make its revenue stream more stable.

Holiday Inn's third-quarter revenue per available room (revpar) in the US rose 4.5 per cent in the third quarter, compared with 5.4 per cent growth for all InterContinental US hotels. Crowne Plaza's so-called revpar grew 7.7 per cent, while the InterContinental brand increased 8.9 per cent.

Bass plc, InterContinental's now-defunct former parent company, bought Holiday Inn in 1998. -- Bloomberg