Interview: Karin Sheppard, IHG Hotels & Resorts

Karin Sheppard is SVP & managing director, Europe, at IHG Hotels & Resorts

Karin Sheppard is SVP & managing director, Europe, at IHG Hotels & Resorts, responsible for driving sustainable long-term growth and the performance of its hotels across the region. Over the course of her more than 15 years with IHG, Sheppard has held several senior roles in Europe, Australasia and the Middle East, spanning commercial, operations and brand development.

According to its Q3 results published last month, IHG systemwide RevPAR in the quarter increased 1.5 per cent year over year to $95, while ADR increased 1.7 per cent to $132.72. Systemwide occupancy declined 0.1 percentage points to 71.6 per cent. In EMEA, RevPAR increased 4.9 per cent, with occupancy up 0.9 per cent to 74.6 per cent, and average daily rate up 3.6 per cent.

BTN Europe: We last spoke in January 2021, almost a year into the pandemic, for a BTN Europe podcast when travel was pretty much grounded. It’s difficult to talk about business travel recovery without referring back to 2019, but tell us what you’re seeing now.

Karin Sheppard: We have all become so used to going back to 2019 as the benchmark of recovery and it probably is relevant in the context of corporate travel because we have spoken multiple times about how corporate was the slower segment to recover. But in the last 12 months we've really seen that pattern starting to shift and at the end of 2023 we were at 89 per cent of 2019 [for business travel] and that is now projected to get to 95 per cent this year, so we would say we have normalised in corporate.

That is great to see because I think there were a lot of concerns around what might happen to corporate travel. There are some variations in that normalisation… we saw an initial pattern of fewer trips, but longer stays, and that seems to have shifted back to shorter stays again. And, interestingly, we’re also seeing longer advanced booking windows, probably driven by a financially cautious environment.

BTN Europe: Before Covid, IHG reported that corporate travel accounted for 60 per cent of its business. Where is that now?

Karin Sheppard: We have definitely seen leisure remain very strong. What makes it hard to nail those numbers now is that we continue to see a blend [of trips] – the trackability of corporate versus leisure has actually become harder and harder. [IHG has since told BTN Europe that business demand accounted for around 52 per cent of IHG's revenue in Europe in H1 2024.]

I think another interesting segment is business events. We have been positively surprised in terms of just how strong that segment has been. That's where we've seen the strongest increase year-on-year from 2023 to 2024, both in the volume of meetings bookings and also in the rate. What's behind that is that there is likely to be some impact from the fact that there are still a lot of people that work remotely or flexibly, which then leads to an increase in small meetings and events. But we see that [growth] in some of our very large meetings hotels too. So if you take an Intercontinental in Berlin where the core business is large events, that's really starting to come through quite strongly.

BTN Europe: The cost of travel has risen rapidly in recent years. How does that affect corporate appetite?

Karin Sheppard: We are focused on how we deliver value for those rate increases. We have to remember that all the cost lines have gone up in hotels, whether that's payroll, energy, or just general inflationary pressures. So it’s important that we price ourselves accordingly. Our focus is on making sure that we deliver the best possible experience for whatever the rate of the day is.

BTN Europe: What are you seeing in terms of sustainability demands from corporates?

Karin Sheppard: We are really focused on how we can reduce our own carbon footprint and how we can help clients do that too. Interestingly, nine out of ten corporate accounts in 2023 included ESG-related questions in their RFPs. We build business partnerships by being able to actually demonstrate what we are doing and how we can help people travel responsibly. We are definitely seeing enhanced attention to being able to hold sustainable meetings too.

BTN Europe: Is there any sense that they are just going through the motions with those, or are they meaningful questions?

Karin Sheppard: They are definitely meaningful and I think another interesting stat which supports why I believe it's meaningful is because 90 per cent of our top global customers have made their own net zero or carbon neutral commitments. Corporates are making active decisions to stand by the commitments they're making publicly.

I think the questions will only get sharper and sharper and our responses will only get sharper and sharper as we all start coming up with common measurements and the ability to be as transparent as possible – and that is a journey across the industry.

At the moment we partner with third party accreditation schemes, including Green Key, which means that in RFPs we can say that this hotel or that hotel is compliant with Green Key standards. There are many other programmes too and we try and map against them, but that’s one of the challenges – that there are multiple platforms.

BTN Europe: Are you witnessing any other particular trends in corporate RFPs or demand for particular sectors?

Karin Sheppard: I think there's definitely a desire to become as digitally enabled as possible in terms of booking portals which absolutely makes sense. And I would say we’re seeing demand across all sectors. When we go through perhaps more uncertain economic times, we always see our mainstream brands do really well – Holiday Inn and Holiday Inn Express are consistently in a strong place as companies face perhaps uncertain times.

At the other end of the scale, luxury certainly had a moment after the pandemic, particularly driven by leisure and that pent-up demand there. And then with meeting and events coming back, the premium categories, which for us is our Crowne Plaza and VOCO brands, they do very well in terms of having an offer that is very fit for purpose for meetings and larger conferences, and a choice that is perhaps not as elaborate as if you went for one of our luxury brands.

BTN Europe: You signed a partnership with Novum Hospitality in Germany earlier this year. What does it do for IHG?

Karin Sheppard: It will essentially double our presence in Germany in a very short period of time. We are adding 108 already open hotels and there's another 11 in the pipeline. Out of those 108, half of them are under the Holiday Inn – the niu brand which are fabulous new-built hotels and very aligned with the Holiday Inn brand, but with some nuances that we want to retain from an aesthetic and design perspective.

The other half, over 50 hotels, will become Garner properties which is a new brand that we launched globally at the end of last year. It’s a mid-scale brand offer with a more flexible and very conversion-friendly offer for owners. Where Holiday Inn Express is very consistent, there will be far more flexibility in terms of the design and the footprint of the hotel, but with some common quality denominators and some consistent threads through it.

The third element of the deal was Candlewood Suites, where we are rebranding Novum's existing Acora serviced apartments or aparthotels and making them Candlewood Suites. If you think about our Staybridge Suites brand, Candlewood is more in the mainstream segment at a more affordable price point. It’s a less elaborate offer than Staybridge Suites, but very fit for purpose for project workers that go on extended stays in key cities.

BTN Europe: Does the proliferation of hotel brands cause confusion among customers?

Karin Sheppard: We have 19 brands currently which probably puts us on the more moderate end of the scale among branded chains. We've always had the view that there has to be a clear purpose for each brand and if we add a brand it must fill a space where we are not currently set up for success, either because owners tell us they have opportunities for us or guests tell us that we are not meeting their needs.

BTN Europe: Where in Europe is IHG looking to expand its presence?

Karin Sheppard: Southern Europe is definitely where we are seeing accelerated growth. There is definitely investor interest in those markets, much of it driven by leisure destinations, it has to be said. We see great opportunity for further growth in countries like Spain, Portugal, Italy and Turkey, and we have many new brands entering those markets.

BTN Europe: Is staffing still an issue for the hospitality industry or has that passed?

Karin Sheppard: It has gotten a lot better. I think there are markets, like the UK, where it is a continued reality that we need more people to come in and there are still certain skills gaps – trained chefs, we all want more of them – but we are fortunately in a situation where it has stabilised and we are no longer in that crunch time we were in straight after the pandemic.

BTN Europe: What did the pandemic teach you about the travel and meetings industry?

Karin Sheppard: I think we've seen the resilience of the hotel industry. Despite the worst predictions about the end of corporate travel and large meetings, we are all enjoying travelling again and realise that face-to-face meetings is the way business gets done. So while I’m sure the unpredictable economic outlook means corporates will be rigorous in how they allow their people to travel, there is a realisation that it is serving a purpose that really drives future growth for companies around the world.