TO ATTRACT DEVELOPERS of its new Avid Hotels, InterContinental Hotels Group is offering incentives to the first 100 signed licensed agreements.
Avid Hotels is the franchiser’s midscale offering. The brand strategy was announced at the IHG conference in Las Vegas in June and the name and design revealed in September.
Heather Balsley, senior vice president, Americas brand and marketing, at IHG, told Asian Hospitality about 150 prospective owners have indicated interest in building an Avid Hotel.
Royalty fee for an Avid Hotel is 5 percent. For the first 100 franchisees, the royalty fee will be 3 percent gross room revenue in year one and 4 percent GRR the second year, Balsley said in an email Q&A with Asian Hospitality.
IHG expects to find many of its first franchisees among those who own Holiday Inn Express hotels, an upper midscale, select service brand. Asian Americans comprise most Holiday Inn Express owners in the U.S.
Balsley said the reason IHG announced its intentions for the midscale brand in June was to give owners of other IHG hotels time to consider investing in the new concept.
In the process of creating Avid Hotels, IHG turned to a group of seasoned hoteliers to provide feedback. The owners advisory board weighed in on “key areas,” said Balsley, “such as optimizing the room size for guest experience and efficiency of build, and ensuring furniture design and selections are operationally sound – a smart layout and easy to clean surfaces, for example.
“Between all the owners on the advisory board, they have built hundreds of hotels, and we know that their experience with construction and their operational knowledge is invaluable as we launch this brand,” she said.
“IHG worked with IDEO and forpeople on the brand definition and design of the overall guest experience; we worked with Gensler on the prototype design and architecture.”
The prototype is a 95-room, three-story structure that fits on 1.5 acres. The brand will have two room types – a 222-square-foot king and a 275-square-foot double queen.
The goal is to keep development costs low enough that an owner can realize a return on an ADR that will be $10 to $15 less than the average rate commanded by a Holiday Inn Express, Balsley said.
The strategy echoes that launched by Hilton Worldwide when it developed and rolled out its midscale brand, Tru, in January 2016. Smaller rooms on a smaller footprint were meant to keep costs around $85,000 a room. But all the value engineering did not foresee the rising cost of construction. Owners of Tru hotels have said price per key has escalated by as much as 12 percent, which is parallel to the increased cost of construction over the past year.
“Since day one, we have been laser-focused on how this brand will deliver for our target guests in the midscale market while focusing equally on how Avid Hotels will deliver for our owners,” said Balsley. “Through each phase of prototyping and design, we are working with our owner advisory board and third-party contractors to estimate costs and value engineer where needed.”
Eliminating the bells and whistles that drive up an owner’s cost, IHG is focused on providing travelers with the fundamentals – including a good night’s sleep. Balsley said guest rooms will have “high-quality mattress and linens, specific design decisions to help reduce noise and intuitive in-room climate control.”
“Rooms have been right-sized to remove additional amenities guests do not want to pay more for. The want to invest in the things that matter,” she said.
Strong Wi-Fi and other technology-focused amenities are also givens as is good coffee and a simple breakfast.
The company expects the first Avid Hotels to begin construction in early next year, with the first hotel to open in early 2019.