IHG sees big hotel potential in Korea post-pandemic

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IHG sees big hotel potential in Korea post-pandemic

Published: 13 Jun. 2022, 19:09 Updated: 13 Jun. 2022, 19:38

Rajit Sukumaran, managing director of Southeast Asia and Korea for IHG Hotels & Resorts [IHG HOTELS & RESORTS]

After suffering through the pandemic, IHG Hotels & Resorts is planning an aggressive rebound.

The British multinational hospitality company, which operates four hotel brands in Korea — InterContinental, Holiday Inn, Holiday Inn Express and voco — opened its first voco-branded hotel in Korea on April 23.

With 151 rooms, voco Seoul Gangnam is in Garosu-gil, the hippest part of Gangnam in terms of restaurants and retail stores.

It has a contemporary feel, using the brand's signature bright yellow and navy as accent colors in the interior and furniture.

The voco brand is relatively new, launched in 2018, and now has 60 hotels around the world. It tries to be unconventional in different ways per property.

In the case of voco Seoul Gangnam, each floor has a kitchenette, which makes sense considering its target customer basis. There are a lot of companies in the area, and many guests are on long business trips and need a place to cook during their stay. The district is also home to many plastic surgery clinics, with some patients booking long-term stays while they heal from their surgery.

The voco Seoul Gangnam is also planning to rent its suites by the hour, decorating the rooms for special occasions such as parties or romantic proposals.

Another voco hotel is coming to Pyeongtaek, Gyeonggi, slated to start construction this year.

The Korea JoongAng Daily sat down with Rajit Sukumaran, managing director of Southeast Asia and Korea for IHG Hotels & Resorts, at the voco Seoul Gangnam on May 27 to talk about the company's Korean business and plans for its new voco brand.

Below are edited excerpts from the interview.

The pandemic has been hard on the hotel business. How did IHG Hotels & Resorts deal with it?

The pandemic is probably the biggest problem the industry's ever faced. In a lot of ways, it forced the industry to do things that it wasn't comfortable doing, pivot and try new things.

But the good news is we're definitely on the road to recovery and we’re already seeing markets open up. We announced a RevPAR [revenue per available room] increase of 61 percent in the first quarter compared to [the same period] last year, which is just about 82 percent of 2019’s figure. Rates are actually going up in a big way, with [first quarter] average daily rate [the average rental revenue earned for one occupied room per day] increasing almost by 27 percent compared to [the previous year]. Occupancy is picking up and I am confident that it will start exceeding the numbers we saw in 2019.

But it wasn't easy, and there are a few things that the company had to do. For a company like ours, where a lot of business comes from international travel, when borders are shut you need to make something of what business is available.

In Korea, there was still demand for people to have personal connections, demand for people who travel for business, but all done domestically. So, we had to pivot from focusing on international guests to domestic guests.

F&B [food and beverage] was another big thing. F&B was traditionally focused on serving hotel guests, but we had to serve local consumers as well.

IHG Hotels & Resorts operates hotels in over 100 countries. How important is the Korean market?

Korea is a really important market for us, and it's important on two fronts. One, it’s an important outbound market. Pre-pandemic, Korea was a key source market for inbound travel to international destinations for the Intercontinental brands.

Inbound, Korea is also very important because we had huge interest [in people traveling to Korea from abroad] and even domestic guests [showed interest in] traveling locally. According to IHG Search data between January to May, it shows that Seoul ranked in the top five searched destinations in the Southeast Asia and Korean region by international travelers, with the United States and Singapore as largest inbound markets. I think it’s a market with a huge potential.

The other great thing about Korea that I personally like is that things like contemporary design, luxury and lifestyle brands resonate very well in Korea, and we have a strong portfolio of brands in those categories. Take this hotel for example, the voco. This is something that fits right in there — a contemporary lifestyle brand that we believe will do well in Korea.

Are there any specific strategies for the Korean market?

We do believe that contemporary design, luxury and lifestyle brands resonate very well with what Koreans are looking for. And it's where IHG Hotels & Resorts can find a lot of potential.

It's all about a deliberate strategy — picking the right brand, the right location and the right partners, and that's something we want to stick to.

While IHG Hotels & Resorts has done business with a global mind set as a global player, we also want to act locally. The pandemic taught us that you need to be close to the ground and be locally relevant to be successful. In line with that, we actually have invested in a team in Korea and we have doubled the size of the team in Korea. I'm looking to add more people in Seoul and looking at building up the infrastructure. Growth doesn't just involve growing the portfolio of hotels, but also growing the infrastructure to support those hotels.

The lobby of voco Seoul Gangnam [IHG HOTELS & RESORTS]

The company recently opened voco Seoul Gangnam and is planning to open another in Pyeongtaek. Is there a reason why you chose the two different locations for the brand?

Both Gangnam and Pyeongtaek are great for different reasons. And when we grow, we tend to look for the right location for the right brands, and find the right partners.

Take voco Pyeongtaek City: it will be the first upscale international hotel in Gyeonggi when it welcomes guests in 2023. We also feel that it’s a unique opportunity to be both a leisure and a city hotel, where you can satisfy both corporate and leisure demand.

It’s located within the Mixed-use International Market Place, next to Pyeongtaek Special Tourism Area and Naeri Cultural Park. So, it’s ideally positioned to welcome leisure guests visiting cultural sites, business travelers from the growing number of corporations located in the area, and guests to the Samsung Electronics Pyeongtaek Campus and U.S. military base Camp Humphreys.

Do you have plans to open more voco hotels in Korea?

There are definitely huge inquiries about the brand. And that happens with all our brands. We see opportunities to bring more voco hotels to Korea as contemporary brands really resonate well with Korea. So, the country is a perfect market for voco and we see more opportunities for its growth in city and resort locations across the country.

There are many big local companies in Korea's hotel industry. How does IHG Hotels & Resorts compete?

What a Shilla or Lotte would provide would be quite different to what we would provide. And I think there is no reason for us to provide what they provide and go into competition. What we offer is something that some of the regional and local brands are not able to offer, which is the whole connection to a global system.

If one market shuts down because it's gone through a difficult situation, you can actually switch forward and get another market coming through business. And the pandemic has shown the importance of doing that. If one of the largest markets closes down and goes into border control, you have to start thinking then where else? And get a business there. International brands are able to do that with their global systems, and I think that’s really important.

The other thing is loyalty programs. We are the first ones in the industry to launch a loyalty program in 1983 when Holiday Inn launched one. Recently, the reinvented loyalty program IHG One Rewards was launched on April 13. It can empower our members with more choice, value, and with richer rewards, attracting the next generation of travelers. And I think that's given guests more reasons to stay with us, because they actually get the benefits of being part of our loyalty membership.

BY LEE TAE-HEE [[email protected]]