Intercontinental Hotel Group, a pioneer in hotel standardization with 4,700 Holiday Inns, Candlewood Suites, and other brands worldwide, announced the acquisition of beloved boutique hotel collection Kimpton Hotels for a cool $430 million cash.
IHG CEO Richard Solomons, reached on his way to Davos for the World Economic Forum, told Bloomberg News the acquisition of Kimpton’s 62 boutique hotels was necessary for IHG because “we just couldn’t replicate it.”
They’d already tried, with the 2004 launch of the mass-produced boutique hotel chain, Indigo.
Solomons says, “The culture and values of both companies are well aligned.” Let’s take a quick look at those values.
IHG corporate goal: “Our strategy is to build the hotel industry’s strongest operating system focused on the biggest markets and segments where scale really counts.”
Kimpton corporate goal: “We believe that human, heartfelt connections are what make life worth living.”
IHG loyalty program: IHG Rewards Club lists among its member perks, “collect points, points never expire, no blackout dates, complimentary weekday newspaper.”
Kimpton loyalty program: Karma Benefits includes—for now—Raid the Bar (exactly what it sounds like, no $11 potato chips), birthday offer, $30 in-room spa credit, and custom stay preferences.
These benefits translated into a fiercely loyal following of travelers who felt recognized, because they truly were. A friend who is a frequent Kimpton guest finds a Heineken and a plate of chocolate-chip cookies whenever he checks into a Kimpton. And Karma members get free WiFi just for signing up. Other innovative benefits included an invitation to dinner with Kimpton’s CEO.
I can’t imagine the Heineken and cookies will survive an integration into IHG’s rewards program, or that Richard Solomons will skip Davos for dinner with my friend. Other distinctive and charming aspects of Kimpton hotels will need to be watered down—or will disappear altogether—so that the hotels can fall into the IHG production line, that “operating system focused on the biggest markets and segments where scale really counts.”
Kimpton’s 71 destination restaurants were a big part of the draw for IHG, and one of the distinctive elements unlikely to survive the scale-up. Big chains make money by leveraging supply chain efficiencies. If Kimpton’s restaurants have to order meat from a large, national supplier instead of local, farm-raised products chosen by the chef, are the chefs, known for their neighborhood connections and passion for innovation, going to be able to create destination-worthy food?
It’s like your favorite steakhouse was just purchased by Outback.
So who’s happy? Analysts. The hotel sector is down overall, but the market is bullish on IHG this morning (stock falls after acquisition announcements in more than 50% of cases; IHG is up). The next press announcement from IHG will be their plans to roll out Kimpton Hotels across the globe.
Solomons says that with Kimpton’s CEO and COO staying on, the deeply personal experience won’t change. But Kimpton’s loyal guests aren’t buying it. The boutique brand’s social media crew is working overtime reassuring loyal followers, many of whom feel overlooked, or flat-out dumped:
In good news for real boutique hotel lovers: San Francisco’s Serrano Hotel, once part of Kimpton, just joined Stash. That means travelers can earn points for free nights without having to watch their favorite boutique hotel implement standardization: Jasper’s Corner Tap and Kitchen will still serve Arrogant Bastard on tap, instead of beer from whatever large company scores the IHG/Kimpton contract.