REPORT FROM THE U.S.—InterContinental Hotels Group’s U.S. Army hotels program is marching right along.
The Privatization of Army Lodging program, which IHG has been involved with since August 2009, has IHG as the exclusive brander, manager and operator of hotel properties on U.S. Army bases. The hotels are branded under the Holiday Inn Express, Candlewood and Staybridge Suites flags. The program has been in existence since 1996, when the U.S. Congress allowed the military services authority to utilize private capital to develop hotels.
When the program started, IHG oversaw 10 locations comprising 3,200 rooms. That has grown nearly fourfold to almost 12,000 rooms today at 75 hotels in 25 states, said Arthur Holst, VP, operations, for IHG Army Hotels. This fall, IHG added 1,300 rooms to its Army portfolio, including the largest global Candlewood hotel located on an Army installation in San Antonio, Texas.
While the program represents just a small slice of IHG’s total business, Holst said there is value in the 200,000 people who come through the hotels annually. Many of those people are staying at an IHG-branded property for the first time.
“From a growth vehicle perspective for the company, what we’re doing is exposing hundreds of thousands of people who were not exposed to the brand,” he said.
He added: “We all want to drive great financial results and drive all the metrics and everything else the people want to talk about in the industry, but at the end of the day, it comes down to (helping) people.”
Operating on post
The properties are developed and owned by Lend Lease, a global property and infrastructure group. Elizabeth Lloyd, senior VP of lodging for Lend Lease (U.S.) public partnerships, wrote in an email that most of the guests staying at the properties are soldiers traveling for training, as well as soldiers who are in the process of relocating to a new base.
She said the biggest benefit of the program is what it means to soldiers and their families who are in need of a place to stay. Holst said almost 900 million IHG Reward Club points have been given out to soldiers and their families on post, a number that will reach 1 billion by the end of the year.
“The (privatization) program is focused on providing both immediate improvements and long-term sustainment of hotel assets for the next 50 years,” Lloyd said. “All profits from the (privatization) program are reinvested back into hotel maintenance and upgrades, ensuring the facilities will remain top-notch for decades to come.”
There are unique wrinkles to operating on a U.S. Army post, Holst said. For example, the hotels have to deal with lock downs should there be an on-base emergency.
“We deal with all of the crisis management plans,” he said. “We have to work in conjunction with the post. We have government oversight on this project in addition to the owner and investor and IHG’s oversight. It’s not like your typical hotel deal where you have an individual owner.”
Thus far, the Privatization of Army Lodging program is the only such program in existence. Holst said he has no timeline in mind for how big the portfolio might become overall for IHG.
“We’re not saying, ‘OK, we’re going to build three hotels in this new location,’” he said.
Another reason why Holst declined to provide growth estimates: Working with the federal government can be unpredictable, he said.
“If someone asks where we’ll be in five years, I’d say I have no idea,” he said.