IHG: We Want to Be the Market Leader in Georgia

IHG: We Want to Be the Market Leader in Georgia

IHG: We Want to Be the Market Leader in Georgia

The FINANCIAL -- Russia, the CIS and Georgia is a priority market for InterContinental Hotels Group (IHG) and the company’s long-term strategy for this market has not changed due to the unrest in Ukraine. Crowne Plaza Borjomi is scheduled to be opened in 2015.

There are three hotels in the pipeline in Georgia - InterContinental Tbilisi, Crowne Plaza Borjomi and Holiday Inn Batumi. IHG is looking to grow its distribution in key cities such as Kutaisi and increase its presence in Tbilisi. A lack of suitably qualified people is the main problem for the company.

“Georgia has become a more stable and investor-friendly country in recent years. The new government promotes Georgia in the global arena as a destination for business and leisure travellers. The natural beauty of Georgia and historical sites are unique in Europe, making this a key destination for tourists. No visa is required to visit Georgia and the people are friendly - with a strong hospitality heritage which attracts visitors to the country and opens doors for investment in the hospitality industry,” Aron Libinson, Associate Vice President, Development, Russia, CIS and Georgia, InterContinental Hotels Group, told The FINANCIAL.

Crowne Plaza Borjomi will be an 84-room hotel featuring 16 club rooms, a spa and fitness studio, six meeting rooms, an all-day dining restaurant, a fine dining restaurant and a cocktail lounge. The hotel is scheduled to open in 2015.

“Globally, our Crowne Plaza brand targets business travellers who want to be productive and feel successful away from the office, in meetings and when they stay in a hotel while travelling on business. They are goal-oriented, ambitious people who choose hotels that understand that they want a hotel brand that values them, values their time and makes it easy for them to get their job done.

This resort property will attract high profile MICE (meetings, incentives, conferences and exhibitions) guests and business travellers who often stay in Tbilisi during the week and travel to Borjomi at the weekend; as well as guests who travel to Borjomi for spa treatments and leisure. It’s great that we have other hotels in Georgia, such as Holiday Inn Tbilisi, so that our IHG Rewards Club members have multiple hotel choices.”

Q. Another ongoing project in Borjomi is Rixos Likani. Do you think that the Borjomi region might face the problem of an oversupply of luxury hotels?

A. Borjomi is a resort town and its natural beauty has attracted a number of hotel properties. In terms of our investment in Borjomi, a full macro and micro evaluation of the market was carried out from all angles before we decided to develop there. We look at the demand drivers in a market and the degree of competition as part of the evaluation, and on this occasion, we decided it was a good opportunity to develop an international upscale hotel. We have a first mover advantage in Borjomi being the first international branded hotel company to establish a hotel in the area.

It is imperative that the supply of hotels in Borjomi matches demand and it is unlikely that a hotel company would invest in a market that is heavily saturated without being distinctly different from the competition.

Crowne Plaza is a global brand with a great reputation and we’re confident that this hotel will be the market leader in Borjomi. Having another international hotel in Borjomi will benefit the destination and help promote Borjomi to international guests.

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We don’t just open and close hotels overnight. Russia, the CIS and Georgia is a priority market for IHG and our long-term strategy for this market has not changed. We will continue to monitor developments closely as we do in all of our markets. The safety and security of our guests and our staff is always our primary concern.
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Q. How would you estimate your business development in CIS countries and Georgia?

A. We are sure that with our brands and partners, IHG branded hotels will soon become the market leaders in Georgia in terms of penetration, number of rooms and presence. So far we’re present in three key destinations in Georgia; the capital Tbilisi where we have our Holiday Inn Tbilisi and an InterContinental that opens in 2015; the major seaside city of Batumi where we have a Holiday Inn opening in 2015 and the key resort destination of Borjomi with our Crowne Plaza. We’re confident that this is an excellent market for our brands and we are optimistic about the long-term prospects of Georgia for our business.

We want to be the market leader in Russia, the CIS and Georgia and we are on track to reach our target of 100 hotels open or in the pipeline by 2020. This region is really exciting because of the significant growth opportunities; so we are acting decisively in order to ensure we stay ahead of the competition and achieve bigger market share through the long term. We currently have 20 hotels (5,402 rooms) in total open in the region and 18 hotels (4,040 rooms) in the pipeline. We are expanding more and more into regional centres and fast-growing cities that have well-established business communities and tourist attractions and Borjomi is a great example of this. We already have five of our brands operating here - InterContinental, Crowne Plaza, Hotel Indigo which launched in the region this year, Staybridge Suites and Holiday Inn. Our Holiday Inn Express brand is debuting in Russia this year also with the opening of Holiday Inn Express Voronezh - Kirova. We hope to bring this brand amongst others to Georgia when the time is right.

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All of these countries are of strategic importance to IHG and we see a potential in each destination to develop our brands. With local hotel owners in Russia and the CIS comprising 66% of the market, we estimate the market for branded hotels to be strong and represent a long-term business opportunity for our owners and a great opportunity to grow our brand distribution.
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Q. Please can you name the regions and cities of your hotels in Georgia and what the volume of your investments will be?

A. We are looking to grow our distribution in key cities such as Kutaisi and increase our presence in Tbilisi. We do not directly invest behind building hotels but license our brands via franchise and management contracts in the projects where we determine that our brands will add value.

Q. What are the main problems in the Georgian tourism sector?

A. From a business perspective, there is a high turnover of staff and hospitality is somewhat still in its infancy in this region of the world. This means that there is a lack of suitably qualified people. We are working hard to invest in people and show them how rewarding a career in hospitality can be. We do this through our IHG Academies which train and provide motivated, engaged people to work in our hotels, delivering a better service for our guests. It’s the only programme tailored to local needs around the world and we opened the Moscow branch of the IHG Academy in February 2012. Our aim is to deliver international-standard hospitality training in this region and we are constantly looking for education and hospitality partners to develop more of our academies with.

We are also challenged by the roads and utilities infrastructure and these problems have been identified by the Georgian Government as opportunities to improve as part of the Government’s strategy for tourism development. We believe that these problems will be addressed in the right way to support promoting Georgia as a tourist destination.