New hotel brands have come thick and fast these last couple of years, as the major chains attempt to cover every nook and cranny of the marketplace.
New brands also allow hotel franchisors to put more hotels into locations where they are already present without infringing on existing properties.
Actually IHG (InterContinental Hotel Group) has been reasonably conservative in terms of brand creation compared to some of its competitors.
Indeed, the last new brand to enter the group's portfolio was the boutique Kimpton flag when IHG acquired the chain in late 2014.
'avid' enters the midscale arena
IHG had already announced its intention to introduce a new midscale concept at the NYU Hospitality Investment Conference in June.
On 18 September, the chain formally launched the new brand, dubbed 'avid', a midscale flag that will enter the market.
As the 13th brand to join the Hilton 'family', avid's logo is the first to feature IHG’s master brand mark, “An IHG Hotel.”
Why another midscale brand?
The question could be asked, however, as to why IHG needs another midscale brand given the uncontested success of its Holiday Inn flag and especially of its newer derivative, Holiday Inn Express.
In fact, avid's price is expected to be about US$10-15 (CHF 9.70- 14.6) cheaper than Holiday Inn Express, which, along with Holiday Inn, is technically classified by STR as 'upper midscale'; meanwhile avid is to be simply 'midscale'.
According to IHG's CEO of the Americas, Elie Maalouf, the only other midscale brand in IHG's portfolio is Candlewood Suites, which is a “pure extended stay brand and not a transient brand. It doesn’t address the market we’re going after.”
Furthermore, Maalouf notes that there are some 14 million travellers in the brand's target market which is worth estimated US$20 billion annually.
Competing with Moxy and Tru
The new brand seems to be a direct response to millennial-focused 'affordable chic' concepts already introduced by IHG's arch competitors, which include Marriot's Moxy, that was developed in Europe and announced at the IHIF (International Hotel Investment Conference) in Berlin in March 2013, and Hilton's Tru flag which was launched almost three years later in early 2016.
Makarand Mody, assistant professor of hospitality marketing at the Boston University School of Hospitality Administration, notes that the segment “is crowded in the sense that companies are in the process of creating brands for it.”
However, the brands in the segment “are not fully established brands yet, and thus IHG is smart to be jumping onto the bandwagon,” according to him.
Indeed, even though Moxy was launched well over 4 years ago, there are only 23 open today (though there are 36 more in the active pipeline, due to open over the next two years).
Meanwhile, Tru seems to be advancing at a more rapid pace with 5 hotels already open and 9 more in the pipeline due to be operating by end 2018.
So, actually, if IHG hurries up, they can probably catch up with the competition.
So far IHG claims to have lined up interested developers for 150 properties.
This figure should be viewed with caution, however, as the chains tend to set aggressive targets about the ramping up of their new brands which are rarely achieved.
In any case, IHG estimates that the first avid properties should be under construction by early 2018 with openings expected to begin in early 2019.
In keeping with the new brand's lower price point, construction costs for owners will be lower than for Holiday Inn Express and there will be no pools. As is the case with most of Hilton's portfolio, avid will be a pure franchise product.
The royalty fee will be 5%, but the first 100 signed licensees will be eligible for 2% fee discount in year one and 1% in year two.
So what's so special about 'avid'?
First of all, this new concept is not designed for conversions.
All properties will be new-builds, given the quite precise specifications of the concept, and are planned for sites of 1.5 acres (6,071 sq m). The hotels will have 95 to 100 rooms and a minimum of three stories.
There will be only two room types: king (220 sq ft or 20.4 sq m) and queen (275 sq ft or 25.6 sq m). Interestingly avid's room sizes will be almost identical to those of Hilton's Tru brand which feature king rooms measuring 231 sq ft and double queen rooms measure 275 sq ft.
In keeping with millennial preferences, bathrooms will have only showers – no bathtubs.
Guests can choose their own room
One novel feature of the new avid concept is that guests will be able to choose a specific room or room zone before they arrive at the hotel, thanks to IHG’s new cloud-based guest reservation system.
“Eventually we’ll have more and more features like this with all of our IHG brands, and this brand will have it from the beginning”, notes IHG's Elie Maalouf.
The only other major hotel company offering a similar type of feature is Hilton.