In April, IHG Hotels & Resorts inked a franchise deal with Novum Hospitality, a deal which will allow IHG to expand its presence to over 200 hotels across nearly 100 cities in Germany. Under the agreement, up to 108 open Novum Hospitality open hotels as well as 11 hotels under development are expected to join IHG’s system between 2024 and 2028.
A total of 52 open and pipeline hotels will join IHG through a collaboration between Holiday Inn and the niu, Novum Hospitality’s upper midscale brand. Novum Hospitality’s other brands, Yggotel, Select and Novum with 56 open and pipeline hotels will convert to IHG’s new midscale conversion brand, Garner, and the acora Living the City brand with 11 open and pipeline hotels will convert to IHG’s midscale extended stay brand, Candlewood Suites.
In an exclusive interview with Hospitality Investor, Novum CEO & owner David Etmenan and Mario Maxeiner, managing director, Northern Europe at IHG Hotels & Resorts shared insights into the deal and the long-term vision.
Hospitality Investor: IHG and Novum recently signed an agreement which is set to double IHG’s presence in Germany significantly. Tell me a little more about that.
David Etmenan: As you said, we signed a strategic collaboration with InterContinental Hotel Group to double the size of the entire portfolio in Germany. Novum Hospitality had the ambition over the last couple of months to find a partner who has the firepower with to distribute our entire portfolio in one system. It was very ambitious in relation to the timeline but we achieved it. For us, it’s a historical and memorable achievement.
HI: Mario, can we have more detail on the strategic reasoning behind that?
Mario Maxeiner: Yes, of course. Germany is one of IHG’s priority markets globally. Germany represents one of the largest economies in the world. And on top of that, the German travelers are one of the most active outbound travellers. So from that perspective, for us, it was very important that we have a strong presence here in the market. And with the partnership with Novum Hospitality Group, we’re doubling our portfolio; we’re going into 100 cities with more than 200 properties, meaning that the German consumer has an experience in our hotels. We’re very happy that we were able to get a quality operator on our side that can help us with growing the portfolio.
HI: The partnership introduces the Garner and the Candlewood suites to Europe, starting with Germany. What influenced your decision to launch these specific brands in this market?
MM: IHG was always looking for a mainstream midscale conversion brand because at the moment, conversion represents the majority of the deals that gets signed into hospitality at the moment. So we wanted to have a proper product in the market that covers that second tier. And with the launch of Garner, we now have the opportunity to bring Garner to Europe. And what can be more beautiful than kicking off a brand with approximately 50 hotels? And the other piece that we did together was we localized and actually defined what Garner will look like in Europe. So we had an opportunity to do that firsthand real time on existing hotels so that was great. And Candlewood is our extended stay product which we can bring to Europe as well because it's a fast growing market in this part of the world and now we can be a part of that.
HI: How does the doubling of IHG’s presence in Germany align with your broader strategy for growth in Northern Europe?
MM: Northern Europe is of course a growing market within IHG. But as I said before, Germany is a key priority market for Europe. So from that perspective, having a strong presence here is of utmost importance. The mainstream segment represents the heart of what we're doing. So our Holiday Inn and Holiday Inn Express family is very, very strong in the market as well with high quality products. That's why I think this is actually complementing and supporting our strategy - bringing in new hotels within the Holiday Inn family in a cobranding, adding 45 new built hotels that just opened in the last five years to the existing Holiday Inn portfolio and offering a great product quality to our consumers.
HI: Thank you so much. The agreement is set for 30 years with an option to extend. So what are the long term goals that you hope to achieve in this partnership?
DE: Our long-term achievement is a lifetime strategic alliance - so that means even for the next generation, we’ve set it up that we are an exclusive partner. We’re working together so we are a firepower in the German market. We also have the ambition to grow in further countries for example, the Netherlands and Austria and Spain.
MM: Yes. And for us, the journey doesn't stop with the integration of the existing hotels. For us, it’s a growth opportunity because together with Novum Hospitality, we will grow with further hotels in that partnership in addition to the other partners we have in the market. So it will allow us to go into way more destinations. Our partnership is a growth partnership. It's not the status quo partnership, that's very important.
HI: Going into the juicy details, looking beyond this current agreement, what future developments can we expect from IHG and Novum in the German market, and possibly in other markets in Europe?
MM: David can speak to that; he has secured some sites already for further hotels.
DE: We have a growth ambition that we're going to secure existing plots with existing building permissions. Our ambition is that we develop, build and hold these assets and their ownership for a long-term period.