Can InterContinental Hotels be the leader of the pack?

InterContinental Hotels Group (NYSE: IHG) faced a potentially existential crisis in 2020 when the COVID-19 pandemic led to global travel restrictions that brought business to a near-complete halt in the hotel industry. However, InterContinental has rebounded sharply and pursued an expansion strategy that has largely focused on developing its Holiday Inn brand to become a ubiquitous presence around the world.

However, InterContinental is far from the only hotel company pursuing similar aspirations. with hospitality company rivals like Marriott International (NASDAQ: MAR) i Hilton Worldwide (NYSE: HLT) Also looking to capture greater market share in some of the world’s fastest-growing areas, the industry is open to disruption. In this third and last article about InterContinental for al Voyager Walletyou’ll learn more about the exact plans InterContinental executives have in place to try to fend off their rivals.

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A city street with signage in Chinese. — Image source: Getty Images.

China remains one of the fastest growing regions in the world, and InterContinental sees the market as key to furthering its global growth. As InterContinental’s top regional executive Daniel Aylmer recently pointed out, this dynamic market is seeing new ways to travel, and a relatively young consumer class is exploring different ways to use hotels as part of their travel plans.

InterContinental already has more than a dozen brands in the Greater China region, including more than 1,400 existing or planned hotels in more than 200 cities. The company anticipates new hotel openings in the first half of this year that should showcase the scope of its diverse product line, offering a mix of different cities that will highlight the different types of local traditions that travelers are looking for. InterContinental’s strategy is expanding beyond top-tier cities to develop a wider footprint in both mainland China and Taipei.

InterContinental may not surprise most investors as a technology value, but that doesn’t mean the hotel company isn’t trying to use new technology. In early January, InterContinental appointed Wei Manfredi as its top AI executive, tasked with guiding the company’s AI strategy to strengthen its IT architecture and foster partnerships with leading technology companies to ensure continued competitive advantages.

Artificial intelligence plays a number of roles at InterContinental, ranging from helping hotel property managers maximize revenue and streamline operations to delivering AI-based applications that can improve the traveler experience and deliver more repeat business. Manfredi’s experience with major consumer-facing companies including McDonald’s (NYSE: MCD), Mul
lulhemon (NASDAQ: LULU)i visa (NYSE: V) will be a valuable asset in guiding InterContinental’s current aspirations on the technology front.

Perhaps most importantly, InterContinental recognizes that its mid-market reputation in its core Americas market has room for an upgrade. Mark Sergot’s recent appointment as director of regional development included hints that the new leader will pay more attention to luxury and premium properties, as well as those with suites. This could help InterContinental complement more effectively with Marriott and Hilton, which already have broad portfolios in the US covering all levels of the hotel market.

It is this margin for improvement that makes the InterContinental seem attractive. Also, while the travel stock has rebounded nicely over the past five years, it still lags the performance you’ve seen from similar hotel chains. Greater emphasis on growth initiatives could help InterContinental close this gap and generate superior returns for shareholders.

So expect to see the Voyager Wallet add InterContinental shares after the applicable mandatory disclosure periods and trading guidelines have passed. I look forward to renewing my childhood memories of InterContinental hotels in the years to come.

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Dan Caplinger has positions in Lululemon Athletica Inc. The Motley Fool has positions and recommends Lululemon Athletica Inc. and Visa The Motley Fool recommends InterContinental Hotels Group Plc and Marriott International. The Motley Fool has one disclosure policy.

Can InterContinental Hotels be the leader of the pack? was originally published by The Motley Fool

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