InterContinental Hotels: Priority Club & Inter-Continental Ambassador - InterConti to open second London hotel

InterContinental Hotels Group plans to open its second property in London in time for the 2012 Olympic Games.

The 254-room, six storey InterContinental London Westminster is set to open in late 2011.

IHG has signed a 20 year management contract with Splendid Hotel Group for the new hotel which is to occupy the former Queen Anne’s Chambers, originally built in the 19th century.

More at http://www.travelmole.com/stories/1139090.php?mpnlog=1&m_id=_r_r_rb~An

[Sorry, cross-posted in New Hotels thread. I need to improve my cut-and-paste skills.]

If its near Scotland Yard, then it must only be a stones throw from the Crowne Plaza. I don't think much of the location, to be honest - difficult to know who would choose to stay there. On the face of it, it is walkable to a lot of tourist attractions but it lacks the cache of the Park Lane address and the surrounding streets are pretty lifeless. The area near Victoria Station is not known for its five-star hotels (although there is a boutique luxury place tucked away down there somewhere, the name of which escapes me!).

If I was IC, I would have been looking for something in Knightsbridge especially given the strong Middle East profile of the guests at IC Park Lane.

There was an article about this in today's Times as well - talking about how having a second London hotel would allow IHG to sell some/all of the equity in the Park Lane

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article6889719.ece#

I know Queen Anne's Chambers, they're very close to St James Park tube and a very short stroll from Birdcage Walk and the park. I think it's quite a pleasant area.

There was an article about this in today's Times as well - talking about how having a second London hotel would allow IHG to sell some/all of the equity in the Park Lane

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article6889719.ece#
Right, there's bound to be someone here who knows about these things (In fact I can't think of a better website!) so someone tell me, in general, why ICHG would want to sell off the equity in their 'big 4' ICs?

Obviously, I appreciate that cash is more useful then fixed assets in general, especially if you're millions in debt. But equally, a balance sheet showing you're awash with cash but have next to no fixed assets doesn't look great either does it?

If ICHG are committed to being a purely franchise-only operation then it would perhaps make sense to get out of managing those hotels and concentrate on the core business, but especially at a time like this, why would they be interested in selling off these assets, unless they're desperate for the cash? (Or the board intend to liquidate what they can, take as much out as they can get away with , and scarper)

Anyone with a better big-business mind than mine care to speculate?

Three reasons:

1. IC does not want to be seen as a property company, it wants to be seen as a hotel management group. They don't actually want any fixed assets on the balance sheet, to be frank.

2. The results of the wholly owned properties create a large distortion in their accounts. Every penny that is taken at IC London goes into their 'revenue' line in the accounts, whilst only the 5% management fee at, say, IC Dusseldorf gets credited. Their financials are therefore distorted by the good or bad trading at the wholly owned properties.

3. The IC share price becomes disconnected with the underlying trading and more in line with the state of the property market

The only reason IC keeps full ownership of the main IC's is that they believe that the brand would be weakened if they were not in London, Paris, HK and Sydney, and moving to a management contract is therefore too risky for them since they could lose the hotel at some point. Having a second London property gives them more certainty of having a London presence long-term. To be honest, I've always been quite impressed by the long-term nature of this stance given that if they sold the properties they would retain an initial 20-30 year management contract anyway.

IMHO it's a pity that they didn't look to a new(ish) building. I understand that for a lot of people, staying in a museum is synonymous with luxury, but there are plenty of luxury hotel customers who don't.

With one museum in the brand in London, for a second property it's disappointing that ICHG didn't go for a more contemporary building with a more contemporary feel throughout - perhaps something like the IC SF.

You can't call the Park Lane property a museum - it may be a 1960's exterior but the interior was totally gutted during the refurbishment and is as modern as you could reasonably expect from a London five-star. It is not substantially different from the Four Seasons at Canary Wharf which I would guess is the newest new-build London five-star.

A clever move by IC - clearly reading the current political climate. In the later half of 2010 under the Tory government there will be a shake up of MP's second homes allowance. Then they'll all be staying in suites in the new IC instead...followed by a Telegraph story in 2012 on how they are all taking their families on holiday using PC points..

The area near Victoria Station is not known for its five-star hotels (although there is a boutique luxury place tucked away down there somewhere, the name of which escapes me!).


The Goring, perhaps?

You can't call the Park Lane property a museum - it may be a 1960's exterior but the interior was totally gutted during the refurbishment and is as modern as you could reasonably expect from a London five-star.

I can and do. Regardless of the refurbishment, half the rooms in the IC London are smaller than my wife's closet, and the general ambienece of much of the hotel is antiquated. As I acknowledged, there is a market for that kind of thing - but there is surely also a market for spacious, contemporary luxury hotels in London.

Just one example from my recent travels - the Radisson in Pudong, which is certainly no Luxury hotel, could teach the IC London a thing or two - and most of the staff there speak better english than those at the IC London. But San Francisco is a great example of how you can have 2 ICs in the same city - Mark Hopkins catering to the Olde Worlde crowd and the new IC catering to people looking for a more contemporary perspective on luxury - and enough space to swing a cat. (though I'm not suggesting that there is not scope for improvement at the ICSF).