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InterContinental Hotels Group Planning Atlanta Metro Area Expansion; Wish List
Includes Hotel Indigo, Crowne Plaza and a Holiday Inn

By Leon Stafford, The Atlanta Journal-ConstitutionMcClatchy-Tribune Regional News

March 13, 2011--If Atlanta is looking for a next act in its push to become an accommodations mecca, it need look no further than Dunwoody and the home of the Americas headquarters for InterContinental Hotels Group, one of the globe's biggest hoteliers.

The London-based company, better known for its biggest brand, Holiday Inn, has set its sights on Atlanta for new development.

That could be good news for a city that just a few years ago upped its ranks in the hotel world with new lodgings by St. Regis, Rosewood, Loews and Palomar. The chains came here based on a luxury movement, supported by dreams of rich visitors from Asia and top-of-the-line shopping at the proposed Streets of Buckhead.

Since then, however, the industry has come back down to earth as new construction has become virtually non-existent.

Americas President Jim Abrahamson said his wish list is to put a Hotel Indigo in Buckhead, a Crowne Plaza in Midtown and an iconic Holiday Inn in downtown, among other locations.

The company, whose brands also include Staybridge Suites, Candlewood Suites and Holiday Inn Express, is currently scouting locations for some of the brands, but has no firm deals yet, Abrahamson said.

But don't expect another InterContinental Hotel, the luxury tier of company's portfolio, in the city anytime soon. Atlanta historically has struggled with sustaining high room rates, he said, a pre-requisite for luxury hotels.

IHG had looked at opening an InterContinental Hotel as part of the 1400 Peachtree Street mixed-use development, but those dreams were dashed when the project collapsed, along with separate plans for a Mandarin, Trump and possible third Ritz-Carlton hotel.

"We love our location in Buckhead and we'd love to have another signature asset in downtown or Midtown, but it's going to be awhile," Abrahamson said. "You know, all those projects crashed and burned and it may be a while before some of them come back."

After a tough 2009, IHG had a strong year in 2010. Revenue per available room, an industry measurement of hotel health, grew 4.3 percent in the United States, including a 7.5 percent in the fourth quarter. The company put the finishing touches on a $1 billion makeover of Holiday Inn and saw franchise royalties grow 11 percent.

"Our leisure customers look at travel as a birthright, as an entitlement," Abrahamson said. "It's part of what we do, it's how we live, how we operate our families."

Atlanta is important to the company. While its base is in Europe, the majority of the company's hotels -- about 3,500 -- is in the Americas, which makes Atlanta ground zero for operations.

And what the Atlanta office is overseeing is a company that has smartly focused on growing its mid-scale brands. Those holdings saw less of the free fall in room rates and occupancy than other segments during the economic downturn of 2008 and 2009, said Mark Woodworth, president of Colliers PKF Hospitality Research. The investment in Holiday Inn, for instance, has rebooted the chain's image and acted as a business magnet.

"They have moved the needle for Holiday Inn, especially in the investment and development community," Woodworth said. "By pruning the system of under-performing and outdated hotels, they have raised the bar on quality."

That also will translate to new customers, said Mark Newton, program director of the hotel, restaurant and tourism management program at Gwinnett Tech.

"If you ask someone what they think of Holiday Inn, the last thing you want them to say is 'old,'" Newton said.

But a bigger challenge awaits this year. The company plans to revamp its business class Crowne Plaza brand, including removing under-performing hotels from its system. Woodworth forecast that Crowne Plaza would see improvements in occupancy and revenue per available room, but that the segment will not recover as fast because it's outside consumers' current sweet spot.

Debbie Cannon, director of the School of Hospitality at Georgia State University, said if the company is looking for a place for its Crowne Plaza brand, she would love to see it come downtown. She said it would be a great fit because it would improve the mix of hotels, offering a place for mid-size meetings that are too small for the big convention lodgers.

While 2010 was a strong recovery year for IHG, there have been bumps. The deal for a Hotel Indigo downtown in the Carnegie Building, which had been under way for several years, fell through at the last minute when ownership of the building changed. The hotel is now operating as a Courtyard by Marriott.

And the number of new hotel signings in 2010 was down because of tighter credit in the industry and an oversupply of rooms. IHG signed 201 contracts for its brands in the U.S. last year, which Abrahamson said was healthy, given industry conditions.

The one caveat is that about half those signings were to "reflag" or convert existing hotels with IHG brands. Normally, reflaggings account for about 10 percent to 15 percent of signings.

"That was way up [because] the environment for re-financing for existing hotels continues to be strong," Abrahamson said.

As if the renewing of its Crowne Plaza brand was not enough, the company is also looking at the possibility of creating another. Abrahamson said the brand could be geared toward the millennial generation, women business travelers or the tech-savvy.

Whatever it is, it won't mimic the W, a brand he admires for its use of technology, design-forwardness and an active food and beverage program. But the brand's success is limited to metro cities with a more trendy population, he said. IHG wants its next brand to have a more broad appeal and a bigger location base.

"I call it 'hip to it hurts,'" he said, smiling, of the W. "We think that's a niche play. We're a scale player."


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