• IHG’s Indigo innovation

There is an argument often made in economic history books that recessions are the engine of innovation as easy profits are hard to make in a downturn and people are forced to think a little more to make money.

The hotel industry has historically been less than radical in its approaches but there are signs that some operators are beginning to engage. The latest example might prove to InterContinental with its Indigo brand.

Indigo was officially brought across the Atlantic this week with the formal opening of a property in London's Paddington that is owned by London Town Hotels.

For InterContinental with its big box brands such as Holiday Inn, Crowne Plaza and InterContinental, the brand is a way into Europe's city centres which offer few sites suitable for big hotels.

The original concept, which first opened four and a half years ago in Atlanta, was a reaction to Hilton's Garden Inn and Marriott's Courtyard, said IHG's EMEA president Kirk Kinsell.

These rivals had a clear head start so IHG decided to tackle them by inventing a brand that tapped into the "cultural sphere" and sought guests who were looking for an experience rather than just another hotel to stay in while on business.

The Indigo concept has evolved, moving further up the scale pecking order from below Crowne Plaza to a positioning above it. What the brand is not, however, is a response to W, stressed Kinsell.

Indigo is a conversion brand that so far is succeeding in straddling the difficult line between hard enough brand standards but flexible enough to fit difficult properties. Among its distinctive features is a focus on the Fibonacci sequence of numbers which, while passing most guests by, does serve to anchor the concept and introduces design ideas such as spirals which replicate those found in nature.

Other features include seasonal renewal where items such as the scent, background music, pictures, menus, signage etc are changed every three months. Local identity through artwork, big bedroom murals and oversized bed are also key aspects.

What IHG seems to have grasped is that it is the keeper of the brand, maintaining its integrity and investing in its development. Despite the economic conditions, IHG has not slashed its support for this as it sees it as integral for its future.

To these ends IHG is building some of the hotels itself, such as in San Diego. Half of the 21 hotels in the US are conversions, mostly franchised although some are managed.

IHG CEO Andy Cosslett said at the Paddington opening this week that the brand is a "play into conversions". Its strength is that it can accommodate small hotels and does not require meeting rooms or extensive kitchens. "A lot of the ongoing cost of managing upscale hotels is not there," added Cosslett.

One difference in coming across the Atlantic has been an uprating of the food offer. In the US fast-casual is the focus with TurboChefs much in evidence. In Europe, there will be more freshly prepared food.

Koolesh Shah, managing director of London Town Hotels, which has six central London hotels and one in Nottingham, described Indigo as a brand with depth. He wanted to tap into the "turbo charged V12 engine" pushing bookings which the IHG system offered.

London Town Hotels was formed in 1988 and has grown mostly through Choice franchises to date. The Indigo site was nine town houses which have been converted to the 64-room hotel with the help of 250 tonnes of steel. There is the opportunity to add another 75 rooms on the site.

IHG has also signed up City Site Estates to open three more Indigos. These are Cannon Street with 37 rooms, Philpot Lane with 43 rooms, and Kensington Church Street with 51 rooms.

Rob Shepherd, vice president hotel services EMEA at IHG, said that there had been a drop-off in new build opportunities but conversions were now a stronger prospect. Recent conversions include an office building in Stevenage that is now a Holiday Inn and another office in Birmingham that is now a Crowne Plaza.

Indigo, however, offers much stronger conversion opportunities thanks to its ability to take smaller and more difficult sites.

The roll out of Indigo has now started on a global basis with the first hotel in China scheduled to open in Shanghai next year. There are 56 hotels in the pipeline with the rather modest (and therefore perhaps more realistic) target of 200, although this has no timeframe.

Last week, IHG announced it had signed an agreement with Foremost Hospitality in Germany to open 20 new Holiday Inn and Express properties by 2016. Seven of the hotels are already under construction including the previously announced 328-room Holiday Inn at Potsdamer Platz in Berlin due to open in March 2011.

IHG currently has 55 hotels in Germany. Its pipeline in the country is a dozen strong including five signed with Foremost.

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