‘Our company can double’: Why IHG’s new CEO is optimistic

SINGAPORE — Elie Maalouf says even though his company has been around for 80 years, it’s still very young regarding its potential.

The CEO of UK-based IHG Hotels & Resorts has only been at his job for four months but is no stranger to the company after spending the last nine years on the executive committee and the last six on IHG's board. But he appreciates the different view.

“When you get into this role, you see something different, which is the power of the enterprise on a global basis,” Maalouf said. “I see a ton of potential for our company. We’re in the early stages of where we can go as an organization.”

When Maalouf talks about being optimistic, he mentions a market like China where the number of rooms per capita is still far less than markets like the U.S. but is poised to double again and again in the coming years.

“So that’s a big, pleasant surprise. I knew those statistics. But when you step back and look at it in total, not only are some of our regions poised to double over the years, I think our company can double over the midterm,” he said. “And that’s exciting. I think the next 10 years in this industry can be some of the best.”

IHG CEO Elie Maalouf (center) supports greater China's tourism industry during a recent visit.

Maalouf was interviewed on October 24 by Jeff Higley, president of The BHN Group, as part of the Hotel Investment Conference Asia Pacific (HICAP) event in Singapore. He said that being a global business means you have no choice but to focus on China.

“If you’re going to be a major global multi-brand hotel company, you must be strong in certain markets. You can’t escape it. You have to be strong in North America, strong in Europe, strong in Asia and then strong in China. That’s where most of the population is,” Maalouf said. “Realistically, you cannot build a powerful global organization that is relevant to guests, relevant to corporate customers, and able to deliver performance to owners and investors if you’re not strong in those regions.”

Maalouf said while traditional markets like North America will always be big for IHG and its competitors, more of the growth will be coming from another direction.

“More of the growth is going to come from the East, where populations are growing more rapidly, and the GDP is growing… The Middle East, Central Asia, Southeast Asia through China -- that’s why we’re investing in opening up offices and putting up more of a presence in this region.”

Not only are some of our regions poised to double over the years, I think our company can double over the midterm... I think the next 10 years in this industry can be some of the best.

Elie Maalouf

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In terms of the development pipeline, Maalouf said IHG’s view is it has “bottomed out” and will continue to grow, including new construction. “We’ll continue to do conversions. But we’ll get back to doing more new construction," he said.

For its third quarter earnings, IHG said it expanded its global footprint and development pipeline by opening around 8,000 rooms across 50 hotels and adding 17,000 rooms from 123 properties into its ongoing pipeline.

Maalouf thinks the next 10 years can be the best ever for the hospitality industry because guests have shown they are willing to pay for experiences.

“We are at record room rates around the world. That’s a sign that guests are willing to pay for the experience," he said. "And sometimes, let’s face it, they’re paying and not getting the experience. So, we have to step up our game in some parts of the industry and some parts of the world.”

He said that means guests’ expectations have risen across the board.

“They’re paying more… they’re spending more time in our properties. They have higher expectations. They also have higher expectations for [food and beverage.] Everybody’s become a foodie!” he said. “Their expectation of the food and beverage experience in our hotels has gone through the roof. So we have to step up to it… Between us and our owners, we have to make sure that we deliver it because that’s what’s delivering that rate and our asset value.”