Costing $1 billion and involving nearly 3,400 hotels and 430,000 rooms, the recently completed relaunch of the Holiday Inn brand family was the most ambitious, wide-ranging hotel industry initiative ever undertaken. Nearly six years since its inception, the program is substantially complete, with 91% of the portfolio refreshed and the remaining hotels in the process of renovating to meet the new standards.

At IHG’s Americas conference last fall, CEO Andy Cosslett said the relaunch “will not only be known as one of the great business turnaround stories, it will be known as one of the best business stories ever.”

The initiative wasn’t without casualties, however, as more than 1,100 properties left the system rather than go through the expensive (about $250,000 or more per property) regimen that probably wasn’t right for all the hotels in the system. Some properties were old, but many were in markets in which consistent demand generators closed, moved or became less relevant.

MAINTAINING LEADERSHIP
By the middle of the last decade, IHG management realized the Holiday Inn brand was slipping in its traditional leadership role in the midscale segment of the industry.

“While Holiday Inn Express has served to reinvigorate the brand over the years, Holiday Inn was losing the advantage it had over competitors since the 1950s in terms of consideration [to use] and preference,” says Kevin Kowalski, senior vice president, global brand management, for IHG. “We never got to the point where we lost leadership, but the advantage over our competitors certainly was narrowing.”

For IAHI (the IHG owners association) Chairman Bill DeForrest, the rationale for the relaunch is even more basic. “The Holiday Inn brand must be right if we hope to keep consumers loyal to the IHG brand family,” says DeForrest, who is also president and CEO of Lane Hospitality. “An IHG customer is a customer for all the brands, and if Holiday Inn doesn’t meet his expectations then it becomes very difficult to keep that customer loyal to the family.”

Starting with research covering more than 10,000 customers in major markets around the world, the Holiday Inn team began to build its relaunch plan. First phase of the strategy was to forcefully enforce quality standards already in place. Those properties able to complete this phase were able to move on to the other physical and staff-development aspects of the relaunch.

From there, the strategy moved to the outside of each hotel with a new, fresher logo and signage and upgraded landscaping and exterior lighting. The lobby was decluttered, with unnecessary furniture and marketing materials removed. The check-in process was improved to be more efficient and friendly. Signature Holiday Inn scent and sound programs were added to the lobbies.

In the guestrooms, improvements centered on the sleeping and bathroom experiences. Upgraded bedding, linens and pillows give guestrooms a residential look. In the bathroom are upgraded amenities and linens, a curved shower rod and a signature shower curtain with an opaque space at the top to allow light into the shower area.

The final, and probably most important, component of the relaunch is an extensive and ongoing “Stay Real” training program. The program sought to build on Holiday Inn’s six-decade legacy of service, which Kowalski describes as “real and genuine. Unlike some of the competition, Holiday Inn has always been a place where guests can take off their game faces, relax and be themselves. It’s always been that way, and now we’re reinforcing it with a great service program.”

According to Carolyn Carter, director of global brand integration, Stay Real evolved from an existing service program in the Americas region that was tweaked and adapted for a global roll out.

As a starting point, each hotel identified a Guest Experience Champion to “promote the program and create excitement and momentum around the idea of service,” she says. That person, along with the property GMs, attended regional Stay Real workshops. Once back on property, the GEC and property management led staff training sessions on the four core values of the service program: be ready, care, take action and be loved. A second stage of the program rolls out in the second quarter to reinforce the program and provide sustainable training activities.

TIMING IS EVERYTHING
Perhaps counterintuitively, Kowalski believes the timing of the relaunch—during the biggest slump in the modern history of the hotel industry—was ideal. To him, companies with staying power and the ability to invest in a downturn will be the winners once the cycle turns positive. DeForrest, who has two relaunched Holiday Inns in his Lane portfolio, agrees.

“The decision to proceed with the relaunch was made in 2005 and ’06 when business was good,” he says. “The initiative was important then, but it was even more important when you’re competing in a tough environment but don’t have a product to compete with. When things got tough it was crucial to have Holiday Inn well-positioned in the midscale segment.”

IAHI was active throughout the planning and implementation stages of the relaunch. Brand-specific committees within the association, as well as the group’s leadership, provided “critical input and guidance throughout the process,” says Kowalski.

“These are the most influential owners in the IHG family who recognized the need to do this for the Holiday Inn brand and became strong, ardent and vocal supporters throughout the process,” says Kowalski. “Once they’re on board, the IAHI leaders are great salespeople among their peers in the ownership community.”

GETTING OUT THE WORD
Marketing the relaunch was a complex task that reached a variety of audiences with a message that must resonate around the world. Timing was also important.

“We didn’t want to bang the drum too loudly in 2008 because just a small percentage of the estate had gone through the process at that point,” says Kowalski. “By 2009, the message was about the fact the brand is changing, and in 2010 it shifted to reestablishing a strong emotional connection to our guests.”

The 2009 marketing theme was “signs of change,” says Verchele Wiggins, vice president of global brand communications. The campaign focused on the brand’s new signage and other changes and directed consumers to a website that pinpointed the location of relaunched hotels.

“We wanted to train consumers that when they saw the new sign they knew they arrived at a relaunched hotel,” says Wiggins. “We needed to portray a modern and up-to-date picture of the brand. The communications were more forward looking than focused on the heritage of the brand.”

The brand saved its big splash for 2010, when it unleashed its largest advertising campaign ever. The $100-million global effort, tagged “Stay You,” used TV primarily, but also tapped into a wide range of media, including print, digital, outdoor and collateral.

“The campaign targets everyday heroes and their values,” says Mollie Tregembo, director of global brand communications. “Often, these everyday heroes are frequent travelers who have pride in who they are and in staying true to themselves. They have affinity with the Holiday Inn brand because for them it’s like staying in their neighbor’s house.”

ACROSS-THE-BOARD LIFT
The relaunch makes for good press, but its real measures of success are more basic: guest satisfaction and operational performance. Judging from early numbers, the initiative has been a success. In its 2010 earnings statement, IHG said hotels in the U.S. that completed the relaunch at least a year prior have seen RevPAR growth six percentage points higher than non-relaunched properties. Outside the U.S., the RevPAR growth advantage is five points.

Of course, lodging is a local business, and the news is good there, too. The Holiday Inn University Center in Pittsburgh was one of 19 hotels in the pilot program for the relaunch. The FelCor-owned property completed the program three years ago and is gearing up for a complete property renovation later this year.

“The results following the relaunch have been fantastic,” says General Manager John Severino. “We’re in a strong market, but our performance is outpacing the competition. And, more importantly, our guests have been very pleased with what we’ve done.”

In the year following relaunch, the 22-year-old hotel saw a 17.7% lift in RevPAR, a 1.2% increase in ADR and a 16.7% increase in occupancy. Guests responded, too. Quality scores increased 1.5%; an intent to recommend measure went up 3.4%, while intent to return was up 4.5%. Severino says the property finished 2010 with a 76.4% occupancy, versus 73.9% for its competitive set.

DeForrest says Lane’s Holiday Inn in El Paso prospered following its relaunch despite several obstacles: a 64% increase in supply in its sub-market and a drop in business due in the market to the swine flu scare in Mexico.
“We now have the number-one hotel in west Texas for guest satisfaction and the property is much more competitive than it was prior to the relaunch,” he says.

Kowalski believes the relaunch will also help the brand increase business among a group he calls “disloyal acceptors,” travelers who stay at Holiday Inn and Express intermittently as their hotel needs dictate but aren’t necessarily loyal to the two brands. He believes the elements embedded in the relaunch—particularly the enhanced service culture—hold the promise to make more of these guests loyal to Holiday Inn and to all IHG brands.

The relaunch gives IHG development executives a good story as they seek to grow the Holiday Inn and Holiday Inn Express brands on a global basis. While the flag lost 1,100 properties during the relaunch, it also added 1,200 hotels, creating a much-younger, fresher portfolio. In fact, company officials say at completion of the relaunch, 40% of the Holiday Inn estate is now less than 10 years old.

Now, with 800 properties in the pipeline, Kowalski says IHG has “the largest global pipeline of any hotel company” in the world, and Holiday Inn and Express are number one and two in terms of global growth brands. Like other hotel companies, Holiday Inn is targeting developing markets such as China and the Middle East for much of its growth. Yet, Kowalski says there is still a lot of potential at home, and “a big chunk of that pipeline is here in North America.”