OBG talks to Richard Solomons, Chief Executive, Intercontinental Hotels Group (IHG)

Interview: Richard Solomons

What role are emerging markets playing in terms of global revenues for the hotel industry?

RICHARD SOLOMONS: The global hotel industry continues to see significant growth in emerging markets such as China and India, both in terms of outbound and domestic travel. This is a trend that is set to continue. From IHG’s perspective, emerging markets equate to 19% of our existing hotel system and 50% of our pipeline of hotels, and in 2012 a quarter of our openings took place in these markets. The emergence of middle classes is a key factor behind this growth, as is the growth in secondary and tertiary cities in China and India, for example, where there is enormous potential for expansion.

What are the challenges to increasing revenues in emerging markets in the Middle East and Africa?

SOLOMONS: In line with the positive outlook for the industry in emerging markets, we have a strong pipeline of hotels in the region. As a result, we plan to hire an extra 90,000 people across the world in the next few years, including 20,000 in Asia, the Middle East and Africa to meet this demand. The greatest challenge we face is finding talented staff to operate these new hotels and to work alongside our accomplished employees already in place. In some countries, the hospitality sector is not perceived as a good career path, in spite of the wealth of opportunities the sector provides. Therefore, we need to work with governments to ensure vocational training in tourism and hospitality and management courses are available, and demonstrate that tourism and hospitality provide meaningful careers. Indeed, nearly 20% of jobs in our sector are skilled or specialist jobs, a figure that continues to increase.

How big of a challenge is it to source qualified local staff in the Middle East and Africa?

SOLOMONS: It is our greatest challenge globally, not just in the Middle East and Africa. We have a very strong pipeline of hotels, for which we need to recruit talented staff. The rising number of hotels, restaurants and leisure facilities in the Middle East and Africa has resulted in a highly competitive jobs market in the sector and our challenge is to recruit the most talented candidates for our hotels in the region. To help us with this objective, we launched the IHG Academy programme, which provides local people with the opportunity to develop the skills needed for a career in the hospitality industry and to improve their employment prospects.

In what ways is Egypt’s hospitality industry showing signs of recovery?

SOLOMONS: Despite the unrest in the Middle East and North Africa in 2011, industry trends for the region remain positive and demand drivers are strong. The short-term impact of the unrest is being tackled collaboratively by the various governments. In Egypt, for example, where tourism accounts for around 10% of GDP, the government launched a campaign to promote Egypt as a tourist destination once more. At the same time, IHG developed a number of new sales and marketing initiatives, including promotions for our corporate bookers, meetings and events offers, and leisure deals focused on the domestic market.

What long-term potential do you see in Egypt?

SOLOMONS: The Middle East benefits from strong demand drivers and continues to have a very healthy inbound and outbound travel market. In this context, Egypt offers travellers diversity with its ancient monuments, beautiful coastlines and vibrant culture, and continues to be a prime destination for tourists from all around the world. We therefore remain confident that the long-term outlook for Egypt remains positive, despite the short-term disruption we saw as a result of the Arab Spring. Visitor arrivals in Egypt peaked in 2010 with about 14m people, dropping to 9.4m in 2011. In 2012 we have already seen a rebound in visitor receipts by 15% over 2011. We anticipate that this will continue and exceed the peak in 2010 over the next few years as the country’s political situation stabilises.