InterContinental Hotels Group and Iberostar Hotels & Resorts have struck a long term commercial agreement that will see 70 of the latter’s hotels and 24,200 rooms added to IHG’s system under the Iberostar Beachfront Resorts brand. Iberostar will become the 18th brand for IHG, boosting its global system size by up to three percent.
Through the strategic alliance, Iberostar, a 65-year-old family-run business based in Palma de Mallorca, Spain, will retain 100% ownership, preserving its autonomy and values.
The first properties set to join the IHG system this December will give IHG guests increased choice in popular locations including Mexico, the Dominican Republic, Jamaica, Brazil, and the Canary Islands (Spain). Further properties in Spain and other resort destinations in Southern Europe and North Africa are anticipated to join IHG’s system over the course of 2023 and 2024.
Iberstar’s roster of resorts ranges from premium family-friendly offerings to adult- only luxury, such as Iberostar Grand Paraiso (Riviera Maya, Mexico); Iberostar Selection Hacienda Dominicus (Bayahibe, Dominican Republic); Iberostar Grand Rose Hall (Montego Bay, Jamaica); and Iberostar Selection Anthelia (Tenerife, Spain).
These will add to IHG’s existing 260 resort properties that span brands including Six Senses, Regent, InterContinental, Kimpton, Hotel Indigo, Crowne Plaza, Holiday Inn, and Holiday Inn Club Vacations.
Notably, IHG has fewer than 20 resort properties in the countries where the Iberostar Beachfront Resorts properties are located. The agreement therefore significantly increases and broadens IHG’s resort footprint.
Meanwhile, the portfolio of Iberostar properties will gain access to IHG’s enterprise platform, including its distribution channels and the IHG One Rewards loyalty program with more than 100 million members. IHG in turn will increase awareness of its current brands with a new set of travellers and meet a clear desire from guests and loyalty members for more resort destinations and the option of all-inclusive stays.
In what is considered a large and high growth market segment, demand for resort and all-inclusive stays has been buoyed by increasing traveller desire for high quality experiences and stress-free holidays, particularly post-COVID, and the ability to access such stays as part of loyalty program membership. The breadth of resort choices for travellers has also increased in recent years, with luxury and upper upscale destinations creating more wellbeing and sustainability-led experiences that tailor to changing guest expectations.
Iberostar and IHG say they share many company values, including a passion for sustainability and responsible tourism, with Iberostar’s pioneering ‘Wave of Change’ movement outlining clear aims to move towards a circular economy, promote the responsible consumption of seafood, and improve coastal health. As part of the agreement, IHG will work with Iberostar to create opportunities for joint sustainability initiatives that align with IHG’s ‘2030 Journey to Tomorrow’ responsible business plan.
The Iberostar Beachfront Resorts brand will be included in a new ‘Exclusive Partners’ category in IHG’s brand portfolio, which will sit alongside its Suites, Essentials, Premium, and Luxury & Lifestyle categories.
Further details on the agreement and financial overview:
• The agreement has an initial term of 30 years and the option to renew for additional terms of 20 years upon mutual agreement.
• The agreement is expected to add up to 24.3k rooms across 70 properties to IHG’s system over the next two years. Of these, 27 properties (8.2k rooms) still require additional approvals from third parties in order to join IHG. The total of up to 70 properties would be equivalent to growth of 2.8% on IHG’s global estate of 880.3k rooms at the start of 2022. The first rooms are expected to come into IHG’s system in December this year, with these representing approximately half of the total rooms subject to the overall agreement.
• The 70 properties are all beachfront resorts. They exclude Iberostar’s other operations, such as its smaller portfolio of urban hotels, and also exclude Iberostar’s interests in Cuba. The approximate geographic split of revenues from the selected portfolio of 70 hotels in 2019 was: Mexico 22%; Dominican Republic 13%; Jamaica 8%; Brazil 5%; Spain 40%; other EMEAA region locations 12%.
• A pipeline of six further Iberostar Beachfront Resorts properties, representing less 3,000 rooms, is also expected to be added to IHG’s pipeline. This pipeline will increase as IHG and Iberostar work together to grow the brand’s footprint through the long-term commercial agreement.
“With this agreement, we set the path to continue the outstanding growth that began 40 years ago with the creation of the Iberostar brand and which has positioned us among the top resort brands in the world,” says Iberostar Group Vice Chairman and CEO Sabina Fluxá. “The alliance with IHG combines our strengths, represents a decisive step forward in the distribution of Iberostar’s beachfront resorts, and reinforces our position as a benchmark in responsible tourism.”
“As we continue to expand the footprint of our world famous brands, we are always looking at exciting, sustainable growth opportunities in areas that can further enhance our offer for guests and owners,” says IHG Hotels & Resorts CEO Keith Barr. “This agreement increases IHG’s system by up to 3%, which helps to deliver on our ambitions for system growth. We continue to explore further opportunities for growth with exclusive partners, demonstrating the strengths and attractiveness of IHG’s enterprise platform.”