brand development process

Jim Anhut Senior Vice President, New Brand Development Innovation IHG innovation Sleep advantage Breakfast bar Express shower New brands Staybridge Suites Candlewood Suites Hotel Indigo Staybridge-Analyst-07Dec04-RR-qal -2- Brand History Conceived during 2002 in conjunction with a review of consumer trends and IHG brand portfolio opportunities Launched brand April 2004 First hotel opened October 2004 Second hotel to open late spring 2005 Staybridge-Analyst-07Dec04-RR-qal -3- Brand Development Process Opportunity Phase Integration Phase Concept & Development Phase Staybridge-Analyst-07Dec04-RR-qal -4- Our key competitors Unique competition position Upscale segment based upon > $100 ADR Capture guests trading for value and experience Staybridge-Analyst-07Dec04-RR-qal -5- Our target customer is… Best described utilizing psychographics and consumption habits versus demographics Staybridge-Analyst-07Dec04-RR-qal -6- Our target customer is… Affluent or aspiring to affluence Technology and media savvy Seeking experience over pure function Style conscious with an eye toward value Trading up to affordable luxuries such as Mercedes Benz CClass and Starbucks coffee Not fooled by imitation or gimmicks, seeking authenticity Motivated, seeking a sense of accomplishment Traveling for business and leisure, oftentimes extending business trips to experience a locale Staybridge-Analyst-07Dec04-RR-qal -7- What this brand is all about An innovative lifestyle hotel experience Designed to appeal to the style savvy guest who is looking for Affordable luxury Genuine quality An alternative to traditional “beige” hotels without sacrificing business amenities Staybridge-Analyst-07Dec04-RR-qal -8- The most important ways we make that real are through our… Inviting culture: involved and inclusive service model that is similar to retail in that everyone works the “floor” Inspiring product: forced product renewal on frequent cycles drives change and suggests fresh and new Intriguing story: constantly evolving story centered around the universal design constant known as the Golden Mean. Our guests will repeat our story due to its intriguing nature Staybridge-Analyst-07Dec04-RR-qal -9- How we communicate that to guests Internet (i.e., keyword searches, permission email) Cross brand promotions and communication (USA Today) PCR communication PR Local sales Staybridge-Analyst-07Dec04-RR-qal -10- What guests think about us (verbatim comments) Inviting Front-desk setting invites you to interact with staff The bed is so comfortable I slept through two wake up calls! The place is peaceful and quiet Inspiring The place surprises you because of its tremendous value I wouldn’t mind coming with a book and a cup of coffee and just sitting down and reading The food selection is me: Starbucks, muffins, panini and pizzetas Intriguing The hotel is an oasis in an urban location The place conveys freshness by surprising you The lobby chairs, too much! Source: Guest comments from Hotel Indigo – Atlanta Midtown Source: Guest comments from Hotel Indigo – Atlanta Midtown Staybridge-Analyst-07Dec04-RR-qal -11- Profile of a typical hotel (Target) Rooms: ADR: Occ: RevPAR: Rooms Revenue: Non Rms Rev %: Total Revenue: Conversion cost/key: Location type Meeting space: % Franchised: Source: IHG 120-180 $100+ 72% $72 $3.2 - 5.0m <15% $3.6 - 6.m $12 - 20k Urban/Mid-town/Near Urban/Close-in suburbs Varies 100% Staybridge-Analyst-07Dec04-RR-qal -12- Our typical hotel franchisee… Forward thinker, early adopter Embraces the Hotel indigo story and service culture Owns or acquires an under-flagged, underperforming hotel Most likely will be a multi-unit owner/operator or institutional investor with professional or third-party management Staybridge-Analyst-07Dec04-RR-qal -13- Why an owner invests in Hotel indigo IHG Enterprise Systems IHG track record of launching successful brands Re-position under-flagged and under-improved hotel assets to increase value Unique position in marketplace Staybridge-Analyst-07Dec04-RR-qal -14- Our current objectives and challenges Objectives Over 84,000 suitable rooms converted each year – key objective is to gain share Sign base of franchise agreements in 2005 Pre-empt competitors by cementing our category creator status Challenges Franchisee “wait and see mentality” Unproven segment in industry Source: STR, total Upscale, Midscale without F&B and Midscale with F&B conversions Staybridge-Analyst-07Dec04-RR-qal -15- Growth strategy for Indigo Growth Driver Focus Units √ As a new brand launch focus is firmly on unit expansion Focus is on conversions to Hotel Indigo but we have also seen new build interest RevPAR Royalty rate Staybridge-Analyst-07Dec04-RR-qal -16- Conclusion Create unit growth for enterprise with a complement to IHG brand portfolio Reinforce IHG position as industry innovator Tap a consumer trend with a uniquely positioned product Staybridge-Analyst-07Dec04-RR-qal -17-