Despite the recession and an unprecedented slump in the travel industry, scent and sound still matter to the world's biggest hotel company.
InterContinental Hotels Group PLC (IHG) is in the midst of a major overhaul of its Holiday Inn locations around the world, which will see systems installed in every hotel that pump a customized scent into corridors and lobbies.
Meanwhile, a hotel soundtrack featuring soft hits from musicians such as John Mayer and Jack Johnson will welcome guests as they check in.
The scent, which has been described by the company as “simple and clean, open and airy, and warm,” is part of a major effort by the chain's owner to persuade guests that a Holiday Inn isn't just a stopover point for road trips any more, but a destination in itself.
Customers want an experience that goes beyond just a bed and a TV, said Jim Abrahamson, IHG's president for the Americas. “And scent is a pretty powerful attractor.”
The chain that has been an icon of the travel industry for almost 60 years has been grappling with a falloff in occupancy rates and a major slump in revenue from business meetings and conventions.
But the weak market hasn't dissuaded its owner from an ambitious, billion-dollar plan to revamp its 3,200 Holiday Inns around the world, aiming to attract younger travellers and their families.
No one is certain when the tourism industry will rebound after the downturn, but IHG wants to be ready when that time comes.
“There is a hopeful recovery on the horizon,” said Mr. Abrahamson, who is based in New York. “It's just that the horizon is out of sight for us right now.”
In the first half of the year IHG's global revenue of $726-million (U.S) fell 20 per cent, but Mr. Abrahamson points out the positive: The company's revenue per available room – an important measure in the industry – outperformed its competitors by three percentage points in the U.S. in the quarter ended June 30.
And the plan to keep renovating hotels throughout the recession seems to have paid off to some extent – the average revenue per available room for recently relaunched hotels is slightly higher than hotels that haven't yet been revamped.
“We've decided not to pull back, but to press forward on issues related to quality,” Mr. Abrahamson said.
“We've seen a lot of companies trying to save their way to prosperity. But when others retreat, we've been advancing so that sets us apart.”
Bobby Bowers, Nashville-based senior vice-president of Smith Travel Research, said many hoteliers succumb to the temptation of trying to fill rooms by slashing their rates.
“It's going to take years to try to recover that,” Mr. Bowers said.
“But when you're in a market like we're in right now, business owners panic. So you're at the mercy of your most stupid competitor – when they cut their rates because there's such a lack of demand, you have to do the same,” he said.
Instead of cutting rates, Holiday Inn has tried to attract travellers through special offers. Members of the chain's Priority Club could get a third night free and the company worked with WestJet to offer packaged deals including airfare and a hotel stay.
Mr. Bowers said the airline-hotel promotion is an effective way for hotels to offer low prices to customers while not letting on exactly how little the room is costing.
“They don't break out what you pay for the airline and the hotel,” he said. “And the hotel component of it tends to be discounted a lot more.”
In Canada, the chain's leisure market has been feeling the pinch as fewer Americans have been crossing the border since new U.S. passport rules came into effect, but increased domestic travel within Canada has made up for some of the loss.
That said, business travel makes up 60 per cent of Holiday Inn's clientele and Mr. Abrahamson says the company has been heavily affected as fewer companies are willing to hold out-of-town meetings and conventions.
“It's the first thing that companies do in a recession – they choose to cut travel,” said Gopal Rao, IHG's Toronto-based regional vice-president for Canada.
“We expect it will stay challenged for the next little while. But we do feel very strongly that travel will come back but perhaps not at the giddy levels from before.”
The company is also counting on its global presence as a comparative advantage that will help it bounce back.
Mr. Rao said the chain could get a boost if China were to give Canada “approved destination” status, which would open up travel for millions of Chinese tourists who are currently restricted from visiting Canada.
“We're exceptionally well positioned because we've been in China for 24 years,” Mr. Abrahamson agreed.
“We did a recent study in China that people thought Holiday Inn was a Chinese brand. Our network is already established.”
