I recently met Richard Solomons, chief executive of InterContinental Hotels Group (IHG), in the lobby of the magnificent InterContinental on Park Lane in London.
Richard has been at the helm of IHG since July 2011, and is guiding the world’s largest hotel group by rooms through a period of impressive growth and expansion.
Before taking up the role of chief executive, Richard was the company’s CFO and head of commercial development. He was responsible for corporate and regional finance, group financial control, asset management, strategy, investor relations, tax, treasury, internal audit and commercial development. He is a qualified Chartered Accountant and, prior to joining IHG, worked in banking for seven years with Hill Samuel Bank.
He had a compelling story to tell about the group’s outlook. IHG reported a 6 per cent increase in profit and $878 million in revenue for the first six months of 2012, up from $850 million for the same period of 2011. IHG also announced plans this summer to return $1 billion to its shareholders through a special dividend and share buyback programme.
The group’s footprint has grown to more than 666,000 rooms in close to 100 countries. The company operates nine hotel brands – InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, EVEN Hotels and HUALUXE Hotels and Resorts. IHG’s core aim is to create ‘Great Hotels Guests Love’.
As we were having dinner, what immediately caught my attention was how well Richard knew and got on with his hotel staff; at one of 169 InterContinental Hotels and one of over 4,500 in the group. The other admirable trait I noticed was Richard’s firm command of the key indicators for both IHG and the group’s competitors.
In terms of opportunities, Richard classified these as brands, people and delivery. His insight on achieving long-term sustainable business success follows:
- The heart of our company has always been our people. It is our people who bring our brands to life for our guests. IHG’s Winning Ways are how we behave every day – a set of behaviours based on our values that are helping us to become one of the very best companies in the world. They reflect the values that are important to us and were developed through research with our employees across the world into how they behave at work every day – and how they want the people they work with to behave. It is vital for an ambitious company to embrace and engage its employees. They are the most valuable asset and help construct a winning business model.
- It is crucial to define your brand to differentiate it from competitors. We have a range of brands that are focused on different customer categories and regions. The premium brand in the group is InterContinental and, given its overall strategic importance, all of these hotels are managed by the Group, whereas other brands are franchised with substantial safeguards in place to protect them. Our strategy is to build the hotel industry’s strongest operating system focused on the biggest markets and segments where scale really counts.
- Make the most of your global presence. Guests choose brands that they know when they travel. We use our worldwide scale and market knowledge to convert more hotels to our brands.
- Success is derived from leveraging scale. Concentrating on between 4 per cent and 5 per cent of the world’s total number of hotel rooms, our central reservation infrastructure on the web, our contact centres, and our comprehensive marketing campaigns are essential and drive the majority of our bookings. Keeping the pipeline of new hotels growing in the new economies is the principal driver of profitability.
Richard’s focus on talent aligns with the findings of a recent survey of more than 300 senior executives that the Economist Intelligence Unit carried out for the AICPA and CIMA (Talent Pipeline Draining Growth). The survey emphasised the importance of a robust talent management strategy, and highlighted how inadequacies in talent management are hurting the competitiveness and financial performance of firms.
It is also essential for organisations to have a real grasp of how they make money – or deliver value – to ensure that their business model is actually delivering the right results now and in the long-term. CIMA and the AICPA will be exploring resilient business models in depth in 2013. We’ll also be producing a series of tools and reports focusing on the theme of risk and innovation early next year.
Business leaders know that it’s one thing planning the strategy and deciding what to do, but the real skill is in making it happen. A key element of this is effective performance management. CGMAs can ensure that performance indicators and incentives reinforce the right behaviours towards achievement of the desired outcomes.
Charles Tilley is chief executive of the Chartered Institute of Management Accountants (CIMA).