Iberostar and IHG sign a strategic alliance for the commercialization of resorts
The Spanish chain will market up to 70 hotels (24,300 rooms) located on the beachfront that will be integrated into the IHG system under the Iberostar Beachfront Resorts brand, thus becoming the 18th brand for IHG
Iberostar Hotels & Resorts and InterContinental Hotels Group PLC (IHG) have announced today the signing of a long-term commercial agreement for the marketing of all-inclusive resorts and hotels in the Caribbean, America, southern Europe and northern Africa. Through this strategic agreement, Iberostar will market up to 70 hotels (24,300 rooms) located on the beachfront that will be integrated into the IHG system under the Iberostar Beachfront Resorts brand, thus becoming the 18th brand for IHG. The size of IHG's global system will thus increase by up to 3%. Iberostar will maintain 100% ownership, preserving its autonomy and its values as a family business with more than 65 years of experience in the industry.
The first hotels will join the IHG system starting in December 2022 and will offer IHG customers a greater variety of options in destinations such as Mexico, the Dominican Republic, Jamaica, Brazil and the Canary Islands (Spain). This agreement establishes that other properties in Spain and other tourist destinations in southern Europe and north Africa will be incorporated into the IHG system throughout 2023 and 2024. Iberostar has an excellent reputation in the operation of hotels and resorts in the best holiday destinations and with a solid commitment to quality and sustainability.
IHG customers can enjoy stays at award-winning hotels* such as Iberostar Grand Paraíso (Riviera Maya, Mexico), Iberostar Selection Hacienda Dominicus (Bayahibe, Dominican Republic), Iberostar Grand Rose Hall (Montego Bay, Jamaica) and Iberostar Selection Anthelia (Tenerife , Spain), ranging from the family segment to luxury for adults only. These hotels are in addition to IHG's 260 resorts, which include brands such as Six Senses, Regent, InterContinental, Kimpton, Hotel Indigo, Crowne Plaza, Holiday Inn and Holiday Inn Club Vacations. The agreement greatly increases IHG's presence in destinations where Iberostar Beachfront Resorts operates, and where IHG has fewer than 20 resorts.
Iberostar's hotel portfolio will be integrated into IHG's business platform, including distribution channels and the IHG One Rewards loyalty program, which has more than 100 million members. In turn, IHG will increase recognition of its existing brands with a new segment of travelers and will address the clear demand from its customers and loyalty program members for a broader range of destinations and the option to enjoy stays in all inclusive.
Demand for stays at all-inclusive resorts and hotels, a market segment with great growth potential, has been fueled by travelers' growing desire for quality experiences for relaxing vacations, especially post-pandemic , in hotels that are also part of the IHG loyalty program. In recent years, the offer of tourist complexes for travelers in luxury and high-end destinations has also increased, creating a greater number of experiences oriented towards well-being and sustainability, adapted to the changing expectations of clients.
Both Iberostar and IHG share business values that include a passion for sustainability and responsible tourism. Iberostar's Wave of Change movement, a pioneer in the sector, is a clear commitment to a circular economy, responsible consumption of fish and seafood and the improvement of coastal health. This alliance will help us inspire an even larger community, reinforcing the importance of a responsible tourism model. As part of the agreement, Iberostar and IHG will work hand in hand to create new opportunities and joint sustainability initiatives that align with the 2030 Journey to Tomorrow responsible business plan and the Wave of Change movement.
The Iberostar Beachfront Resorts brand will be included in a new Exclusive Partners category within the IHG collection of brands, along with the other Suites, Essentials, Premium and Luxury & Lifestyle categories.
Iberostar has successfully built a leading presence in beachfront and all-inclusive properties in the Caribbean, the Americas, Southern Europe and North Africa for decades, and we are excited about the opportunities that lie ahead to grow even further. the presence of the brand together. This deal increases the IHG system by up to 3%, helping to meet our growth targets. Thus, we continue to explore new opportunities with exclusive partners that demonstrate the strength and appeal of IHG's business platform." This deal increases the IHG system by up to 3%, helping to meet our growth targets. Thus, we continue to explore new opportunities with exclusive partners that demonstrate the strength and appeal of IHG's business platform." This deal increases the IHG system by up to 3%, helping to meet our growth targets. Thus, we continue to explore new opportunities with exclusive partners that demonstrate the strength and appeal of IHG's business platform."
Sabina Fluxá, Vicepresidenta y CEO de Grupo Iberostar, comentó: "Con esta alianza, continuamos el camino de extraordinario crecimiento que comenzó hace 40 años con la creación de la marca Iberostar, un desarrollo que nos ha posicionado entre las principales marcas de resorts vacacionales del mundo. La alianza con IHG combina nuestros puntos fuertes, representa un paso decisivo en la distribución de los resorts de Iberostar en primera línea de playa, así como una oportunidad de crecimiento a escala global y refuerza nuestra posición como referente en turismo responsable. Trabajando juntos haremos crecer nuestro portfolio y estaremos encantados de recibir a los miembros del programa de fidelización de IHG en nuestros resorts premium todo incluido en primera línea de playa”.
Miguel Fluxá, President, Grupo Iberostar, said: “This strategic alliance will allow Iberostar Beachfront Resorts to benefit from IHG's industry-leading technology, deep know-how and global scale. Maintaining 100% ownership of Iberostar allows us to continue generating differentiation in the hotel industry with a long-term vision for our employees, clients, tour operators, distribution partners and local communities that have been loyal to us throughout all these years. We will continue to be faithful to who we are, preserving our philosophy and values of quality and sustainability”.
More details on the deal and financial summary:
● The agreement grants IHG authorization to use the Iberostar Beachfront Resorts brand. The agreement has an initial term of 30 years with an option to renew it for additional periods of 20 years by mutual agreement.
● The deal will integrate up to 24,300 rooms across 70 properties into the IHG system over the next two years. Of these, 27 properties (8,200 rooms) still require additional third-party approvals in order to join the system. The total of 70 properties would equate to a 2.8% growth in IHG's global assets of 880,300 rooms by early 2022. The first rooms are expected to be added to the IHG system in December of this year and these rooms will represent approximately half of the total number of rooms subject to the established general agreement.
● The 70 properties are all beachfront resorts. This agreement does not include other Iberostar properties, such as its urban hotel portfolio, and interests in Cuba are also excluded. The approximate distribution of the income of the selected portfolio of 70 hotels in the various geographical areas during 2019 was: Mexico %; Dominican Republic %; Jamaican %; Brazil %; Spain %; other locations in the EMEAA region %.
● Six other Iberostar Beachfront Resorts properties, representing some 3,000 rooms, will also be added to the IHG pipeline. This pipeline will increase as Iberostar and IHG collaborate together to increase the presence of the brand through the established long-term commercial agreement.
● Total gross revenue for the existing portfolio of 70 hotels was approximately $1.3 billion in 2019, which equates to 4% growth on IHG's $27.9 billion total gross revenue. Continuing with what is stipulated in the agreement, IHG will receive a fee for marketing, distribution, technology and other items, through a mechanism similar to that of its current asset light model.
● IHG's fee structure will increase through 2025 as hotels become increasingly integrated into the IHG platform. In 2027, the fifth year of the agreement, annual revenue recognized within IHG's fare business is expected to be approximately $40 million, with a similar amount additionally recognized within System Fund revenue.
● Reflecting the investment in the integration process, the net impact on IHG's operating profit in the reported segments is expected to be slightly negative in 2022 and 2023. Thereafter, it is expected to turn positive. in 2024, before experiencing a significant increase from 2025 with the last step in the fee structure and the expected change in the mix of distribution channels.