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Winning in Windsor

Two years into his reign at the helm of InterContinental Hotels Group (IHG) and Andrew Cosslett can still get worked …

Two years into his reign at the helm of InterContinental Hotels Group (IHG) and Andrew Cosslett can still get worked up discussing the many outrages upscale hotels visit upon beleaguered business travelers. High on his personal list are hotels where a bellhop makes off with your luggage while you’re busy paying a cab driver, carries it 10 feet and then expects a tip. The hotel bartender who plays “Girl from Ipanema” for an audience of under 40-somethings also rates a mention.

“This whole five-star experience [dates] from the Lusitania,” asserts Cosslett, referring to the 1906 luxury ocean liner. “It has to be tailored more toward what the people interested in it-international business travelers-want.”

The 52-year-old CEO is doing his bit to find out exactly what that is- and to make it happen. Soon after joining IHG from British packaged goods giant Cadbury Schweppes, he spearheaded an ambitious research effort examining IHG’s brands (the InterContinental and Crowne Plaza Resort Hotels; mass-market favorites Holiday Inn and Holiday Inn Express; extended-stay chains Candlewood Suites and Staybridge Suites; and the relatively new boutique-style Hotel Indigo), as well as those of its competitors and the markets in which they operate, in an effort to fine tune its strategy for growth. “We’ll end up with more profound, better-grounded innovation and development that actually makes a difference in the quality of someone’s experience at a hotel,” promises Cosslett.

It’s an ambitious undertaking, but then so was the transformation Cosslett has already achieved. “I inherited three operating regions that were pretty much each doing their own thing,” he recounts. “We had a classic fight going on between the British and American business, which had a massive infrastructure and accounted for 70 percent of our global business; Asia-Pacific, where there was huge growth opportunity; and Europe, Middle East and Africa.”

Cosslett lost no time creating a strategic agenda and enticing the company’s operations into alignment. Asking the operating heads to dismantle frameworks they had spent years developing might easily have led to corporate bloodshed, but IHG was able to weather the upheaval. “I believe people understood that we had to take this difficult journey-and that’s why we’re all still in the boat,” says Cosslett.

One of the biggest changes involved a massive shift in the company’s business model. Once a major stakeholder in hotel real estate, IHG began selling off its property holdings in an effort to both build up its coffers and court investors. Some £3 billion in hotel properties has since changed hands, with IHG retaining the management contract and lease on the locations. The strategy was decided upon before Cosslett came on board and is one of the reasons he was chosen as CEO.

“Hotel stocks have traditionally been very low because the City hates the fact that all of this asset value is tied up in assets that never get sold,” explains Cosslett. “Selling the properties took the organizational focus away from capital asset management and onto building brands. So they were looking for someone who understands brands.”

Cosslett had honed his brand-building expertise at Cadbury Schweppes and Unilever. With both inbound and outbound tourism on the rise in China, his experience running the Asia-Pacific region for Cadbury Schweppes was doubtless an added boon-and one that appears to be paying off.

Already the largest international hotel group in China, IHG recently inked a joint venture to manage all Nippon Airways’ 13 owned and leased hotels in Japan, making the resulting partnership the largest hotel operation in Japan. At the same time, IHG has been actively invading new territory, debuting 26 InterContinental flags, including hotels in Los Angeles, Red Square (Moscow), Tokyo and Chengdu (China) and more than 700 Holiday Inn franchises in the last two years.

What’s next on the agenda? Using the wealth of market data to develop distinct brand propositions for each of its seven hotel chains and adapting them to suit local markets. “We have to deliver different things in different markets,” says Cosslett. “For example, we want the same core proposition for Holiday Inn in America as for China but we want to interpret that in their way, not in our way.

 “One of the flaws of global branding is that often the values of the donor country are enforced on the recipient country. That’s not global branding; it’s tyranny.”

About Jennifer Pellet

As editor-at-large at Chief Executive magazine, Jennifer Pellet writes feature stories and CEO roundtable coverage and also edits various sections of the publication.