Intercontinental Hotels Group

Topics: InterContinental Hotels Group, Hotel chains, Holiday Inn Pages: 8 (2921 words) Published: May 25, 2011
Intercontinental Hotels Group

Intercontinental Hotels Group (IHG), formerly Bass PLC, was founded in 1777 by William Bass, when he established a brewery in the English town of Burton-on-Trent. The year 1876 was a landmark year for Bass, when it was recognized as the largest brewery in England. Even more notably, it was also this year that Bass’s red triangle trademark became the first trademark to be registered in England. During the 1960s, Bass made two strategic and significant mergers. In 1961, Bass merged with Mitchells & Butler, becoming Bass, Mitchells & Butler. In 1967, Bass, Mitchells & Butler merged with Charrington United Breweries to become Bass Charrington Ltd [30]. The year 1970 marked Bass’s entrance into the world of hospitality, as it purchased about 50 hotels from the oil giant Esso [31]. These hotel holdings became known as Crest Hotels. Renamed Bass PLC in the early 1980s, the company’s leisure subsidiaries, including its hotel division, “contributed substantially to Bass’s growth and profits” [32]. In 1988, Bass made the first significant international move into the hotel industry by acquiring the international assets of Holiday Corporation outside the United States, Canada, and Mexico for $ 475 million [33]. The year 1989 saw the advent of legislation on the brewing industry through Beer Orders. Through Beer Orders legislation, the government sought to limit the vertical integration within the brewing industry by limiting the number of pubs a brewer could own [34]. Bass’s response was to continue to focus on and develop its international hotel business. Therefore, on August 25, 1989, Bass made a monumental decision to purchase Holiday Corporation’s flagship Holiday Inn chain for $ 2.23 billion. Included in this purchase were 1,410 franchised Holiday Inns and 177 company-owned and - managed Holiday Inns [35]. Founded by Kemmons Wilson in 1952, Holiday Inn quickly grew into the largest lodging corporation in the world. A 1951 road trip to Washington, D.C., with his wife and five children had convinced Wilson of a great need for a brand - name hotel/motel that families could trust anywhere they traveled. Importantly, Wilson was aware of the coming construction of a $ 76 billion federal interstate highway system and planned to take full advantage by building Holiday Inns alongside it. His foresight paid off as the interstate highway system popularized travel from coast to coast. “It has been said that what John D. Rockefeller did for gasoline and Henry Ford did for automobiles, Kemmons did for lodging: standardizing a product and making it available to the masses at a reasonable price anywhere they went” [36]. When Bass purchased Holiday Inn, the chain was in the midst of a decline due to aged properties and poor services. Additionally, the hotel industry was seeing great growth in budget hotel chains such as Hampton Inn. To counter these issues, Bass began a $ 1 billion renovation project for the Holiday Inn brand, launched its own budget hotel chain called Holiday Inn Express in 1991 to add a complementary brand in the limited - service segment, and launched its high - end Crowne Plaza Hotels in 1994 to move the group into the upscale market [37]. It entered the profitable U.S. upscale extended–stay segment with the introduction and development of Staybridge Suites by Holiday Inn in 1997 [38]. With the money raised through the sell-off of various retail businesses, Bass outbid Marriott International, Patriot American Hospitality, and Ladbroke Group to acquire the Intercontinental hotel chain from Japan’s Saison Group for $ 2.9 billion in 1998. Included in the acquisition were Intercontinental’s 211 hotels in 77 countries [39]. Thomas Oliver, then chairperson and CEO of Bass’s hotel division (Holiday Hospitality), summed up the acquisition well when he said that Intercontinental provides an “excellent geographic complement to Holiday Hospitality’s current structure and gives us a broader portfolio...
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