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InterContinental to launch upper midscale brand for US market

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InterContinental to launch upper midscale brand for US market

InterContinental Hotels Group PLC plans to launch a new upper-midscale hotel brand for the U.S. market in 2019, CEO Keith Barr said during the U.K.-based hotelier's full-year 2018 earnings call.

The as-yet unnamed brand will be officially launched later in 2019, with the brand's positioning, proposition, name, visualized entities and design presented to the group's hotel property owners.

"The all-suite segment of the Americas upper-midscale market has grown in scale by around 70% over the last four years, which speaks for itself in terms of the clear demand from both guests and owners," Barr said.

"Appealing to travelers looking for a design-led authentic experience on typically longer stays than your normal transient guests, we estimate there to be an $18 billion pool of guests in this segment."

A franchise disclosure document to sell the brand to InterContinental's core hotel owners in the U.S. will be made available later in 2019 following the launch, said Barr.

"In terms of the price point, it's an upper-midscale, so it's going to be sitting in the price point below where Staybridge Suites is today," he said. "Upper-midscale is where Holiday Inn and Holiday Inn Express are basically positioned. It will be an opportunity for new-build principally, but also a conversion play for appropriate high-quality upper midscale assets that have the right physical design. Whereas [our brand] Avid was pureplay new-build, this will be principally new-build, but with some conversion opportunities."

InterContinental also announced it has identified $125 million worth of efficiency savings. These will be delivered by simplifying its organizational structure, making it leaner and flatter, outsourcing more noncore activities, and introducing increased levels of automation, Barr said.

"These savings provide additional capacity for reinvestment into our strategic initiatives," he added. "This will drive industry-leading system sales growth, fueling future revenue growth and future margin accretion."