IHG to centrally negotiate OTA deals in bid to drive direct revenues

IHG to centrally negotiate OTA deals in bid to drive direct revenues

InterContinental Hotels Group is to centrally negotiate OTA and travel agent commissions and drive a higher proportion of direct revenues.

The move comes as part of a major organisational revamp unveiled to accelerate company growth.

A “comprehensive efficiency programme” aims to produce $125 million of cost savings, according to new chief executive Keith Barr.

A new global marketing unit is being established together with a revised regional structure and an integrated commercial and technology arm.

The revised structure includes a Europe, Middle East, Asia and Africa region under London-based regional chief executive Kenneth Macpherson.

The Americas and Greater China remains largely unchanged, recognising their importance as IHG’s largest markets.

An integrated commercial and technology organisation aims to improve efficiency by removing duplication across functions. B2B sales, booking channels and revenue management will be integrated with technology “to maximise revenue delivery”.

This will include a new guest reservation system being developed with Amadeus to become a full range of hotel solutions on track to be introduced by the start of 2019.

Digital initiatives cover expansion of mobile check-out, payment via Alipay and seamless Wi-Fi login.

The global marketing organisation will see three distinct brand categories – mainstream, upscale and luxury – “to improve performance and accelerate growth”.

A new upscale brand is to be introduced this year while IHG is looking to acquire small luxury options “to incubate and grow”.

The plans were unveiled today by Barr as IHG reported a 7% rise in 2017 operating profit to $759 million over the previous year as revenues rose by 4% to $1.78 billion.

Revenue per available room grew by 2.7% as capacity increased by 4% to reach 798,000 rooms.

Barr, IHG’s former chief commercial officer who stepped up to head the company last summer, hailed the performance as “strong”.

He said: “In recent years, we have built a powerful and effective enterprise which has supported our transition to being fully asset light, and driven strong performance across our 5,300 hotels.

“Today we are announcing a series of new initiatives that build on our well-established strategy and will drive an acceleration in our growth rate.

“These initiatives are focused around redeploying and refocusing resources to leverage our scale; strengthening our loyalty programme; continuing to prioritise digital and technological innovation; enhancing our industry leading franchise proposition; strengthening our existing brands; and adding new brands where we see the greatest potential for growth.”

He added: “We remain positive in the outlook for the year ahead and we are confident that our ambitious plans will deliver a meaningful change in IHG’s growth and drive industry-leading net rooms growth over the medium term.”

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