Richard Solomons, chief executive of InterContinental Hotels Group, is stepping down to be replaced by another long-serving company executive, as one of the world’s largest hoteliers aims for a smooth succession while it continues a rapid global expansion.
The FTSE 100 group, which owns the Crowne Plaza and Holiday Inn chains, announced that Mr Solomons will step down as CEO in June and “retire” from the company in August. He joined the company 25 years ago and has served as chief executive for six years.
He will be replaced by Keith Barr, IHG’s chief commercial officer. Mr Barr joined the company in 2000 and has served in a number of leadership positions, including heading up its Greater China business, a territory that the company sees as a key market for future growth.
Speaking to the Financial Times, Mr Solomons said: “It’s been a long run and the business is in good shape. I’m 55 [years old] and Keith is more than ready to take over. It just felt like the right time . . . there was certainly no pressure, internally or externally.”
Patrick Cescau, chairman of IHG, said of Mr Barr’s appointment: “Keith is uniquely qualified. He’s got a global footprint . . . and very involved in our digital and technology strategy.
“We thought about if we needed an external view to challenge the business and clearly the answer was no, because we see strategy and succession at IHG as continuous.”
Mr Solomons has been credited with successfully transitioning the company to an “asset-light” model over his tenure in the top job.
The strategy, which followed a number of its peers in the aftermath of the financial crisis, led to a disposing of properties to concentrate on management and franchising — a model that makes it easier for hotel companies to expand. IHG said it has plans to add 232,000 more rooms to its current network of 767,000 as it presses ahead with expansion plans.
Simon French, an analyst at Cenkos, described Mr Solomons as an “outstanding leader of the business”, adding that Mr Barr’s appointment “should ensure a smooth succession and we expect little change initially to group strategy”.
However, in recent years the company has been criticised as it struggled to respond to digital upstarts such as home-sharing site Airbnb, which was flooding the market with alternative accommodation helping to squeeze hotel occupancy rates.
Last year, Morgan Stanley said these issues were helping to lead the US hotel industry, a key market for IHG, to enter a cyclical downturn. The bank’s analysts reported that US revenue per available room has been slowing since 2014 and forecast industry revpar to turn negative in 2018.
In response to these trends and after a wave of consolidation across the industry, IHG was overtaken as the world’s largest hotels group by room numbers last year after Marriott completed its $13.3bn takeover of US rival Starwood. French hotelier Accor bought the owner of the Fairmont, Raffles and Swissôtel chains for $2.9bn at the end of last year.
But rather than engaging in major dealmaking, under Mr Solomon’s leadership, IHG has been returning cash to investors. In February, IHG returned $400m in a special dividend, following on from another special dividend of $1.5bn last year. “We are not focused on short term gains or short term growth through extremely expensive acquisitions,” said Mr Solomons.
On Friday, the company offered an upbeat assessment of trading this year “despite the uncertain economic and political environment in some markets,” saying sales and room occupancy rates were rising.
It added that revpar — the industry’s preferred measure of sales — had increased 2.7 per cent in the first quarter of this year. This compares with 1.5 per cent revpar growth over the same period last year, although it admitted that these results benefited from the later timing of Easter this year.
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