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Interview: Andy Cosslett takes IHG into China

12 February 2009 by
Interview: Andy Cosslett takes IHG into China

He's not so much a hotelier as a branding expert, but that's the way the market is going, according to Andy Cosslett, head of InterContinental Hotels Group. Gemma Sharkey catches up with the man charged with leading the biggest hotel group in the world into new Far Eastern territories and delivering growth despite the global economic downturn

When we asked for a one-on-one interview with the chief executive of the world's largest hotel company, InterContinental Hotels Group (IHG), we didn't envisage it would take place in a car while going through immigration control at the Chinese border. Yet Andy Cosslett is making his way to Shenzhen via Hong Kong to make his annual speech at the IHG Asia Pacific leadership conference, and we're grabbing him en route. The speech is something his PR informs me he does as a matter of priority and, given the importance of China to the group's future, that makes a good deal of sense right now.

Cosslett is a tall man, imposing, dressed in a plain white shirt and dark trousers. His expression is relaxed and refreshed, remarkable given the 11-hour night flight he's been through from the UK. Cosslett puts it down to sleeping drugs. "The doctor prescribes them for my health because of the amount of travel I do," he explains matter-of-factly in a thick Mancunian accent.

We fill out our visa cards for the approaching border and then Cosslett runs over the speech he has written for the conference. It's all silent for a few minutes while he red-inks his script, then Cosslett shoves a handful of mints into his mouth, leans back into his seat and waits for the first question.

So exactly how important is China to IHG right now? "Well, we've now overtaken the UK with the opening of our 100th hotel in China. And as there are now 120 million outbound Chinese people, with a further 100 million expected in the next few years, that matters in other ways, too. If you are the number-one brand in China, the likelihood is they will choose you when they travel as well."

China is Cosslett and the group's number-one focus. In 2007 IHG signed 47% of all new international hotel deals in China it has 100 hotels in the pipeline and in October signed a multi-brand, multi-location deal with real estate company the Shimao Group. It has also just signed its first deal to launch its boutique brand Indigo in Shanghai.

But Cosslett is adamant that the UK remains a key market for the group. "The UK is very much a significant area for development," he says. "We have a very clear strategy that describes our core markets where we put particular focus, and the UK is one of those. We are always keen to grow our business there. We've got a strong position in multiple segments and we're still growing, with 50 hotels still in the pipeline." The pipeline includes 10 Staybridge Suites, the group's serviced apartment brand, which Cosslett thinks will continue to grow in the UK, as in the USA it is now the fastest-growing segment. He also says the group will continue to roll out Holiday Inn Express, "because they are so successful".

The £500m worldwide rebranding of Holiday Inn is another of IHG's main focuses and, given the downturn, it seems quite a large amount to be spending. Was it the right thing to do? "We began the work three years ago, but even if we knew then what we know now, we would have still wanted to go ahead, because it's so important and it takes so many years. 2011 is a long way from today and the world will have changed again by that time. The industry will go through cycles, and you have to plan with that in mind, otherwise you would never do anything."

Extended deadline

Still, later in the conference, Martin Z Y Jia, the chairman of IHG's Chinese investment group Shanghai Jinjiang Tomson Hotel Company, says he is in talks to extend the deadline on the renovation process because of the economic climate. Holiday Inns in the USA have also been given an extended deadline.

There is little doubt that branding and marketing are the real loves of Cosslett's professional life. He even admits that the reason he got the job, usurping Richard North in September 2004 - when asked if North was happy to leave, Cosslett shrugs. "I dunno, I haven't spoke to him. I doubt it" - is because the company's focus was moving towards "global brand management".

"They [the board of directors] looked at the way the world works and they said, ‘OK, this ownership of assets is not working - let's sell the assets, try and grow faster, use more of our international position to grow quickly.' When you look at the skills you need to do that job, it's brand management, and I'd come out of two branded companies." Cosslett has even bigger ambitions for the branding of IHG, even going so far as to claim that he can make people "love" his brands. "Marketing is an endless spectrum of opportunities. We want people to talk about loving us like they love their favourite band or restaurant or football team. You can do it - we've seen it work in other industries, such as the car industry. There's no reason why it can't work for hotels."

Cosslett also demonstrates unshakeable faith in the future of brands, proclaiming the "inevitability" of the hotel sector becoming even more dominated by big brands. "I think it increases the fun, having more brands to choose from. Plus, today's hotel owner has to deal with an ever-increasing mountain of regulations on food, on safety and security. The world is more regulated technology is ever more complex and, whatever we like to think, being part of a system will give you a lot more security and ability to deal with all those pressures and be a profitable and successful company."

His faith in the strength of branding also comes across in the hotel's newest addition to the UK - the Indigo brand, which is "branded boutique". Isn't that a contradiction? "No - we will have all the benefits of a boutique. Each one will be different, with a theme running through them, a thoughtful sense of design. I think boutiques can be much more inclusive, and make people feel relaxed and comfortable and still have a unique experience but as they're still part of a chain, they have the benefits of loyalty points and security."

As Cosslett talks, the words trip off his tongue with practised fluidity. He is, at all times, "on message", and it's impossible to speak to him without his PR on hand. Occasionally, Cosslett interrupts his flowing corporate delivery with an observation about the Chinese countryside unfolding around us - "Nice bridge!" he suddenly interjects - but somehow always manages to re-join his original train of thought seamlessly. It's perhaps not surprising for him to be like this - as most chief executives are with shareholders to answer to - but has he always been this way?

Cosslett was born in Manchester in Wally Range, next to the infamous Moss Side. His father was an accountant and "a great rugby player". "My dad's an interesting fellow. He had a shop in Manchester, so we've always been in the commercial and mercantile way." His mother worked for Bupa. After leaving school in Chorlton, Cosslett went to Manchester University, where he gained two degrees, one in economics and then a masters in European politics.

"I thought I was going to be part of the European system of government as a political scientist, but in my year they weren't taking quotas, so I had the prospect of sitting the course out for 18 months or doing something else."

Piece of luck

In the end it was the "something else" that won. In 1979 Cosslett joined Unilever's graduate management programme, which was, he says, "the first of a number of breaks. Being persuaded to go to university by my next-door neighbour was the first piece of luck, because I wasn't going. Then I was lucky to get into Unilever: out of thousands of applicants they only took 20 in my year. I guess whatever they were looking for, I had it."

Cosslett is proud of his working-class northern roots, and he certainly comes across as grounded rather than a patrician tyrant. Does he agree that his background helped him to get where he is today? "My first job was selling ice-cream in Liverpool in winter, so that taught me a lot about life, and I've never forgotten it. I know what it means to get these nonsensical memos from the centre when you're out on the front line. Money is tight for most people, and you can't lose sight of that. You have to remember the basics of how hard people work. You need to spend time out there living, knowing, and seeing that."

He sounds terribly serious, but Cosslett also likes a good laugh, too, whether it's Alan Partridge, John Cleese or Phoenix Nights. "Business is serious - you're working with other people's money. But there's a way of doing things in a lighter way. You have to stay confident and cheerful." At this point we reach our hotel and, right on cue, Cosslett gives us a cheery wave and he's off to give his talk at the conference.

We meet again after Cosslett has given a speech in which he manages to talk about redundancies in the current climate while still sounding optimistic - quite a balancing act. We push him further on the job picture for the coming year, but he becomes reticent. "We're looking at the overall cost base, and we've been doing that for more than a year," he says. "We think we can be more efficient by using global procurement, but we're also looking at manning levels and making sure you don't have too many people in one area."

It doesn't sound too positive and, sure enough, IHG later announces that it will be making redundancies in the UK, while declining to quantify exactly how many.

Reduction in certainty

Despite Cosslett's apparent optimism, the group's October results revealed a sharp decline in global revenue per available room (revpar) of 4.5%. This will surely affect the group's ambitious growth plans. "The pipeline works at different speeds," he says. "Projects in the pipeline that are already far advanced will continue as planned. But the further out you go in the pipeline, three or four years from now, there has been a reduction in certainty of exactly when they're going to open."

No doubt Cosslett will take the advice he dished out to his employees: "Stay the course and it will come right. We're part of an industry that will do well in future." Here's hoping.

A career in branding

Unilever

  • 1979-81 Graduate trainee, Walls Ice Cream, London
  • 1981-85 Product manager, Walls Ice Cream, Gloucester
  • 1985-87 Marketing manager, Bird's Eye Frozen Foods, London
  • 1987-90 Marketing director, Marine Harvest, Edinburgh

Cadbury Schwepps

  • 1990-91 Marketing director, Schweppes GB, London
  • 1992-94 Managing director, Schweppes GB, London
  • 1993-94 Managing director, northern Europe, Cadbury Beverages
  • 1994-95 Managing director, Schweppes Cottee's, Melbourne
  • 1995-98 President, Schweppes Asia Pacific Beverages, Melbourne
  • 1998-2000 Chief executive officer, Cadbury Asia Pacific, and chairman, Cadbury Schweppes Australia, Melbourne
  • 2000-03 Managing director, Great Britain and Ireland
  • 2003-05 President, Europe, Middle East and Africa

InterContinental Hotels Group

  • 2005- Chief executive, IHG

Cosslett's top business tips

• Understand what your customers want first - and really work it out. Stay close to the ground, to the customer, to people in the field. Be out there with them so you can see what's going on.

• Have a loyalty scheme in place. Your most loyal customers are your bread and butter. Going out of your way to look after and nurture them is the most important aim at any time, particularly now.

• If you do have to make savings, protect what matters most. Don't apply personal prejudice to the decisions.

• Keep activity in and around your brand. Keep giving your customers reasons to come back to you and reasons for other customers to come and try you.

• Be part of a big company, because doing so gives you the ability to reduce your costs.

• Learn how to sell properly - by communication, doing what you say you're going to do, having other peoples' interests at heart and being persistent.

• Business is important, but you have to show a lighter side. Wherever I've gone in the world the same attributes work.

The portfolio

  • Brands encompass: InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Hotel Indigo, Holiday Inn, Staybridge Suites and Candlewood Suites (USA only)
  • More than 4,100 hotels
  • More than 608,000 rooms
  • In 100 countries and territories worldwide
  • Business model: 85% franchised, 14% managed, less than 1% owned
TagsHotels
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