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Earlier in the month IHG’s CEO said that the company was looking at acquiring a small, asset light luxury hotel brand so that they could increase their footprint in the luxury segment, where they’re currently quite weak. There were rumors that they were in initial discussions with Belmond. That would certainly have made sense in terms of them being in the luxury segment, but it seemed unlikely since Belmond owns most of their hotels, so it’s not an asset-light company. Not surprisingly, it seems they were talking about another brand.
IHG has announced today that they’re acquiring a 51% stake in Regent Hotels for $39 million in cash, with the right to acquire the remaining 49% stake in a phased manner from 2026. The transaction is expected to close in the second quarter of 2018, and IHG will be paying $13 million in three phases — the first payment will be when the deal closes, the second in 2021, and the third in 2024.
IHG plans to bring Regent into its brand portfolio at the top end of the luxury segment. Currently there are only six Regent properties, though IHG hopes to grow the Regent footprint to 40 hotels in key global gateways over the long term.
Here’s how IHG describes the Regent brand, which seems like a bit of a stretch to me:
Synonymous with timeless modernity, understated luxury and intuitive service, the Regent brand has set the benchmark for luxury hotels globally since it was founded in 1970. It has a world-renowned heritage, built around the elegant, timeless design of its hotels and rooted in its focus on delivering a truly unique and superior luxury experience for guests.
Regent has set the benchmark for luxury hotels globally? Really?
One other thing that’s interesting is what IHG is doing with the InterContinental Hong Kong. The InterContinental Hong Kong is IHG’s flagship property, and it’s closing for a full overhaul. The hotel will be closing in early 2020, and in early 2021 the InterContinental Hong Kong will reopen as a Regent. What makes this especially interesting is that the hotel first opened in 1980 as a Regent, before being sold and rebranded as an InterContinental in 2001. So the hotel will once again be going back to its original branding.
InterContinental Hong Kong
Regent currently has hotels in Beijing, Berlin, Chongqing, Porto Montenegro, Singapore, and Taipei, and they have hotels under construction in Jakarta, Harbin, and Phu Quoc. They’re a perfectly nice hotel group, though with so few hotels, it’s tough to get too excited. I do think they’re a bit full of themselves, though, referring to themselves as “the world’s most luxurious five star hotels and resorts.”
I imagine we’ll learn within the next few months if Regent will be fully integrated into IHG Rewards Club. I imagine so, and if so, I wonder if the awesome anniversary free night certificate offered with the IHG® Rewards Club Select Credit Card will be valid at their hotels.
IHG certainly has some room for growth in the luxury sector, so the acquisition of Regent makes sense. This is a cheap transaction (at least by IHG’s standards), and Regent perfectly fits what they were looking for (an asset light luxury hotel company). However, I also can’t say I’m terribly excited about their six current hotels, and I’m also not sure they’re considerably better than InterContinental’s current top hotels.
I’m curious what this means for the future of the InterContinental brand, which has historically been IHG’s highest end brand. Will future newly built luxury hotels mostly have the Regent name, making InterContinental the second tier brand, or will they be developed alongside one another?
What do you think of IHG acquiring a 51% stake in Regent?