Late last year IHG announced they would purchase Kimpton in a $430 million deal.
It was a smart move on IHG’s part, at least in theory. Kimpton has a really unique position in the market, with several dozen US boutique hotels. Their level of guest satisfaction is through the roof, because they truly do things differently. I know I’ve certainly enjoyed my Kimpton stays.
So when the IHG takeover of Kimpton happened, the obvious question was “what impact does this have on Kimpton?” That applies both in terms of the actual guest experience, as well as the Kimpton Karma Rewards program, which is quite unique. Is there a way Kimpton can join the world’s largest hotel chain while still maintaining their identity?
Well, unfortunately it looks like the answer is no. At least that’s what many of the individual hotels seem to think.
Over the past several months, seven of the nine Kimpton properties in San Francisco have decided to leave the chain.
Here are Kimpton’s San Francisco properties a few months ago:
And here are Kimpton’s San Francisco properties now:
San Francisco was Kimpton’s single largest market, so seeing more than three quarters of their hotel leave in a short period of time is rather troubling.
What’s causing Kimptons to leave the chain? Via HotelChatter:
More Kimpton hotels to be rebranded in the weeks ahead to avoid become unionized. IHG’s local union contract requires any new IHG properties go thru “card check”, and the union came a’ knockin’. Lasalle and Pebblebrook own almost every Kimpton Hotel in SFO, so Kimpton will only be left managing the Buchanan and Sir Francis Drake, which are already unionized.
Basically seven of the nine San Francisco Kimpton properties have left because IHG requires properties to vote on unionization, and that’s something the individual hotel owners weren’t up for. So they decided to leave the chain altogether.
That’s a pretty bold move. In many cases the hotels are being renamed, so they’re losing all the brand equity they’ve built up over the years. For example, the former Hotel Monaco (one of the better regarded Kimpton properties in San Francisco) has been rebranded independently as The Marker San Francisco.
What’s the perspective of UNITE HERE on the transfer?
LaSalle Hotel Properties [NYSE: LHO], Pebblebrook Hotel Trust [NYSE: PEB], and InterContinental Hotels Group [NYSE: IHG] have moved in recent days to transfer management of seven San Francisco properties away from the Kimpton Hotels portfolio. UNITE HERE Local 2 issued the following statement addressing these actions:
During the past five weeks, LaSalle Hotel Properties, Pebblebrook Hotel Trust, and InterContinental Hotels Group have taken extraordinary steps to evade contractual commitments pertaining to hotel employee organizing rights in San Francisco. This has created a climate of uncertainty and disruption at seven prominent San Francisco hotel properties. The city’s hotel workers union, UNITE HERE Local 2, denounces the move and calls on the three companies to reverse course and to honor their contractual obligations.
On June 17, 2015, UNITE HERE Local 2 requested that IHG uphold its contractual commitment to remain neutral in the event of union organizing drives at seven hotels newly managed by the company through its recently-acquired subsidiary, Kimpton Hotels & Restaurants. Three weeks after sending the request, Local 2 learned that operation of these hotels – three of which are owned by LaSalle and four by Pebblebrook– was to be transferred to new management companies. Among the affected hotels are the first Monaco-branded and the first Palomar-branded properties in the Kimpton chain.
These are certainly interesting times, and bold moves on the part of the companies which own the individual properties. This is a huge loss for Kimpton, and you have to wonder whether they anticipated this happening when the IHG takeover occurred. Individual hotels leaving a chain they were otherwise happy with and going independent is really, really bold, so they must have felt strongly about these union issues. And in a way it’s a bit surprising, since Kimpton has always been known for having amazing staff, so isn’t a chain you’d typically associate with union issues.
In just a few months Kimpton has gone from “65+” properties…
…to 59 properties.
I guess now we’ll see if any other properties leave Kimpton as well.
Are you surprised by the losses to the Kimpton portfolio as a result of the IHG takeover?