InterContinental Hotels Group accompanied its first-quarter earnings with the news that group CEO Keith Barr will be replaced by IHG‘s Americas CEO Elie Maalouf on June 30. Barr has led IHG for six years, and Maalouf has been in his role since 2015.
Barr cited personal reasons related to his family moving back home to the U.S. as he addressed his stepping down at the start of the company’s 2023 first-quarter earnings call on Friday, May 5.
“On a personal level, it’s been a very difficult decision,” Barr said. “But after nearly 20 years away from the U.S. working in different countries, now is the right time for me and my family to return to the U.S. given my daughters will be studying there.”
Barr called his 30-year journey with the company an “incredible privilege.”
“IHG is a very special company, and to have spent the last 6 years as CEO has been an honor, as has working alongside our talented colleagues and in partnership with our hotel owners who all share our passion for hospitality,” Barr said.
Barr has served as CEO since July 2017 and as chief commercial officer for four years before that. He held key roles across IHG’s international groups in China, North America, and Australia. He initially joined IHG following the acquisition of Bristol Hotels and Resorts in 2000.
“I’m delighted that Ellie will be succeeding me,” Barr said. “I will be here in an advisory capacity until the end of 2023, but from July, Ellie will take over as Group CEO and be based here in the UK.”
Maalouf has led the Americas region for eight years.
“These eight years running the Americas have been one of the best periods in my career,” Maalouf wrote on LinkedIn on Friday. “Record profit levels; we’ve grown our estate from around 3,700 hotels to more than 4,350 hotels; strengthened our existing brands and brought seven new ones to market; significantly strengthened how we drive value for our owners; and championed important progress in the DE&I [diversity, equity, and inclusion] space.”
On an analyst call, Bernstein Senior Analyst Richard Clarke noted that, with Barr’s stepping down and Maalouf’s succession into the group CEO role, it put IHG’s entire Americas leadership into the group’ C-suite. Clarke asked what it meant for the company’s focus on improving its Americas performance and management. Michael Glover, took over as IHG’s group chief financial officer in March after previously serving as chief financial officer of the Americas and group head of commercial finance.
Barr responded by outlining the importance of succession planning for the company and what he said was IHG’s fortunate position of having leaders who have been exposed to the key strategic initiatives across the company’s various markets.
“The Board takes succession planning as one of the key responsibilities. And I think that it was a great reflection of my move into chief executive having been built out by [my] being in the Americas, being in Greater China, then being in the center — gave me the skills and the background experiences to help strengthen the brand portfolio, loyalty, and technology and build a very, very strong enterprise platform with the executive team.”
“Elie has been on the board for 6 years running the Americas,” Barr said. “He’s has been in the global roles previously. Michael, again, was my CFO in Greater China. He’s also been the group controller based in the UK. So what I think you have with the move of Michael and Elie are people who know the entirety of the business, who have been exposed to all of the key strategic initiatives.”
“We’ll be making moves to make sure we backfill with key leadership positions into the Americas,” Barr said. “So Americas is always going to be a focus given the scale and the size of that business, and we’re fortunate to have leadership who’s been in multiple roles, either on the board or who’s worked in multiple regions overall, too. So I think Elie is a great appointment, and I’m thrilled to have Michael sitting across from me right now.”
Barr’s Strong Legacy
Barr’s nearly six-year tenure saw IHG expand its offerings significantly.
“When I took over as CEO,” Barr told Skift’s Sean O’Neill in September, “one of the things that I talked to our team about was there are customers who want to stay with us, and we don’t have a brand. And there are owners who want to work with us, and we don’t have a brand. We acquired Regent and Six Senses, we’ve launched the Vignette Collection, we’ve launched Avid and Atwell and Voco, and we’ve just filled in…. It was like a puzzle: we had the pieces, but we hadn’t put them in. And now we have.”
Barr’s legacy includes acquiring the luxury brand Six Senses (which IHG a capability in luxury it previously lacked), a rapid expansion in China to have the greatest share of the development pipeline there of the largest non-Chinese hotel groups, and a full revamping of the company’s loyalty program.
Robust First Quarter
IHG said its first-quarter revenue per available room, a key industry metric, was up 6.8 percent compared with 2019 levels, driven by its average room rate being up 10 percent compared with the pre-pandemic period The figure for the Americas, in particular, rose 18 percent.
The company typically doesn’t report net income or total revenue in its second quarter updates.
The company’s net system size growth in the quarter was 4.2 percent year-over-year. That represented a return in the right direction.
In February 2022, the company anticipated its 2022 rooms growth would return toward 2018 levels, which was just shy of 5 percent and then the strongest IHG had seen in a decade. At the year’s start, IHG set an annualized target of 4 percent for system size growth.
But in the third quarter, its adjusted net system growth was 2.6 percent. Through most of last year, IHG didn’t see the net rooms growth larger rival Marriott reported for a few quarters. The company blamed an “abnormally high removal” of underperforming Holiday Inn and Crowne Plaza hotels from its portfolio.
“Keith has been an exceptional CEO and a driving force behind IHG becoming the leading global organization it is today,” Maalouf wrote on LinkedIn on Friday. “We’re a very different business now to the one I joined back in 2015, and we have a huge amount of potential to get even stronger for our guests and owners and really capitalize on what we’ve put in place.”
UPDATE: This article has been updated to include Keith Barr’s and Elie Maalouf’s comments, made during IHG’s first-quarter earnings call and on LinkedIn. Sean O’Neill contributed reporting.