• IHG uses equity to secure joint venture

InterContinental Hotels Group has invested £8m in a joint venture with the hotels wing of Japan’s second biggest airline, ANA.

The preparedness of IHG to pull out cash from its pocket is probably shrewd given the recent unwinding of another Japanese alliance, that between Le Meridien and Nikko.

IHG ANA Hotels Group Japan will comprise 13 owned and leased hotels with 4,943 rooms which will adopt IHG brands over time in a co-branding arrangement, the first of which will be the flagship property. This will become the ANA-InterContinental Tokyo in April next year. The remaining 12 will be converted over the following 18 months.

The joint venture will also manage, franchise or market a further 18 hotels with 4,127 rooms. These will be offered the chance to adopt IHG brands.

As well as spending £8m in a 74% stake in the venture, IHG is to invest £10m in brand advertising and research and loan the JV up to £7m to part fund a new IT platform.

Le Meridien’s alliance with Nikko unravelled following the takeover of the brand by Starwood. JAL-owned Nikko had added 52 hotels to Le Meridien’s network when the alliance was struck in 2000. In just over a year after the signing, the share of business originating in Japan at Le Meridien’s worldwide hotels grew from 9% to 11%.

But the fragile nature of such alliances where there is no equity participation meant that the relationship eventually collapsed after Le Meridien’s multitude of ownership changes during the period in which it was current.

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