InterContinental Hotels Group CEO Aims to Tap into Growing Middle Class in China

February 19, 2019

By Chloe Aiello

InterContinental Hotels Group CEO Keith Barr is confident that Airbnb poses no real threat to hotel companies ー but that won't stop the hospitality group from guarding its territory or offering enhanced travel experiences.

"We continue to have to do more and more to meet changing customer expectations in the upscale, boutique, and luxury resort areas. So we are offering more and more in terms of experiences and also partnering with other companies to make sure we can deliver those," Barr told Cheddar.

IHG ($IHG) ー which owns such hotels as Holiday Inn and Candlewood Suites among others ー reported preliminary fiscal 2018 results on Tuesday that showed the strongest net system growth in a decade, driven in part by accelerating growth in China in spite of ongoing global trade tensions. Barr said the company is looking to tap the discretionary spending of the growing Chinese middle class, which he said most hotel chains largely ignore.

"Historically, a lot of the hotel companies focus on the top end of the market and we've recognized there's a growing middle-class ー which effectively is the size of the population of the United States now," Barr said.

The preliminary earnings report came just days after IHG acquired luxury spa resort brand Six Senses, with which the company hopes to launch a new "upper-midscale" tier of suite accommodations to target travelers in search of more authentic experiences. Barr wouldn't credit Airbnb with his company's efforts to offer more diverse, personalized travel, especially at the luxury level, but he did say "there is definitely this desire for more unique and enhanced experiences across the stay."

Airbnb is reportedly considering an IPO sometime in 2019. Over the past few years, the technology company has significantly upped its game, and shifted from a peer-to-peer travel site to offering local curated experiences, boutique hotel bookings, and, in the near future, travel bookings.

Hotel executives have traditionally dismissed Airbnb's impact on the industry ー Barr, for example, called Airbnb "a different stay occasion than many many hotel stays that exist today." But in recent years, hotel industry trade groups in the U.S. have pushed for Airbnb regulation in key markets, The New York Times reported.

For full interview click here.