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IHG Branded Residential

  1. IHG Branded Residential October 2021 *CONFIDENTIAL – FOR INTERNAL USE ONLY* © 2 0 2 1 I H G
  2. EMEAA Branded Residences Landscape M A Y 2 0 2 1
  3. 3 G L O B A L B R A N D E D R E S I D E N C E S L A N D S C A P E Branded Residential – EMEAA Landscape Marriott continues to dominate the branded residential landscape in EMEAA, and is expected to continue to do so, however with IHG commanding a strong #2 position ahead of Four Seasons. Accor’s footprint is growing fast. 1 2 1 5 2 7 12 11 16 2 1 2 4 2 6 10 11 14 18 Hyatt Hilton Jumeirah Rosewood Aman Mandarin Oriental Accor Four Seasons IHG Marriott Open Pipeline Open + Pipeline (# projects)1 34 25 23 17 8 7 5 4 2 2 With Resi Without Resi % Upper Luxury Signings with Branded Resi – EMEAA (2017-2020)2 The percentage of signings without branded residences is slightly higher in EMEAA. As the model gains traction, we can (eventually) expect this to gravitate towards the proportion seen in the Americas. Urban Resort 50% 50% 70% 30% Open Pipeline The split between urban and resort locations for the existing portfolio is even. In the pipeline, urban locations effectively forms 3 out of 4 projects in EMEAA. These projects are mostly located in key gateway cities across both developed and developing countries; demonstrating developers’ growing belief that brands can drive material sales premiums and pace. n=46 n=56 % Branded Resi. by Location Type1 Source: Company media and publicly available information 1. Branded residence projects are defined as those with residential units for-sale to individual buyers and under the following brands: Ritz Carlton, St. Regis, W, Luxury Collection, Bvlgari, Edition, Four Seasons, Fairmont, Raffles, Mandarin Oriental, Rosewood, Banyan Tree, Aman, Waldorf Astoria, Jumeirah, Park Hyatt, Andaz. 44% 56% n=68 2. Publicly available signings of Aman, Raffles, Four Seasons, Park Hyatt, Mandarin Oriental, Waldorf Astoria, Ritz Carlton, St. Regis, and Rosewood announced in 2017-2020
  4. 35% 37% 10% 3% 17% 18% 32% 8% 6% 24% 29% 50% 19% 29% 8% 6% 3% 31% 43% 1% 4% 45% 45% 26% 0% 25% 7% 71% 14% 13% 36% 48% 21% 80% 14% 50% 0% 17% 50% 40% 5% 0% RC StR W LC BV ED FS FAIR RAF MO RO BT AM WA JU AN PH SX RE IC KI 4 Inclusion of a branded residence component in projects is growing – On average, 33% of all pipeline projects have a residence component vs. 25% of open. Out of 21 brands, 13 have a higher proportion of residences in pipeline projects vs. open projects. G L O B A L B R A N D E D R E S I D E N C E S L A N D S C A P E EMEAA Luxury Branded Residence* Landscape (for-sale projects) Source: Company media and publicly available information *Branded residence projects are defined as those with residential units for-sale to individual buyers and under the following brands: Ritz Carlton, St. Regis, W, Luxury Collection, Bulgari, Edition, Four Seasons, Fairmont, Raffles, Mandarin Oriental, Rosewood, Banyan Tree, Aman, Waldorf Astoria, Jumeirah, Park Hyatt, Andaz. IHG averages are materially below comps – 23% for open (vs. 20% comps) and 20% of pipe (vs. 30% comps). Open Pipeline
  5. 5 Since 2017, on average ~41% of all new luxury signings in EMEAA have a branded residential component (vs. ~55% globally). G L O B A L B R A N D E D R E S I D E N C E S L A N D S C A P E Branded residential is a major driver of luxury signings in EMEAA • Source: STR global, IHG research • Note: Stats shown above include projects with serviced residences, and not just limited to for-sale residences New signings across upper luxury “mono” brands reflect a very high proportion of branded residential, confirming the growing trend of upper luxury hotel developments forming part of larger mixed-use developments, and validating the need to have a strong branded residential offering to grow within upper luxury While growth in branded residential is a global phenomenon, prevalence in the Americas is significantly higher in recent signings vs. EMEAA and GC 2017 – 2020: Global Luxury Signings with Branded Residential (% of total signings) % Signings with Branded Resi. by Region Americas EMEAA Greater China With Resi Without Resi 72% 28% 56% 50% 50% 43% 40% 36% 25% 25% 20% 19% Mandarin Oriental Aman Raffles St Regis Four Seasons Rosewood Ritz-Carlton Park Hyatt Waldorf Astoria IHG 40% 60% 41% 59%
  6. 6 The rapidly growing branded residential segment is also seeing the business model evolve fundamentally. As IHG’s branded residential business grows, we will need to refine and adapt our offering to stay competitive. G L O B A L B R A N D E D R E S I D E N C E S L A N D S C A P E Key Trends in Branded Residential Steady rise in luxury brands announcing standalone residential projects, driven by: • Continued escalation in prime residential (and land) capital values, prompting developers to enhance the product and service offerings, and to try and differentiate their offerings from the competition • Brands recognizing the fee potential presented by such deals, and leveraging on existing on-the-ground operations in mature markets to roll out a solution Examples: 20 Grosvenor Square, London 706 Mission St., San Francisco 9000 West 3rd St., Los Angeles Passeig de Garcia, Barcelona 685 5th Avenue, New York Icon Siam, Bangkok Cairnhill Road, Singapore Sunny Isles, Miami Buckhead, Atlanta HCMC, Vietnam (4k units, multi brand) Luxury Standalone Branded Residential Enhancing the Residence Owner Offering Upscale and Other Segments Luxury brands continue to dominate branded residential, but the share of upscale and upper upscale brands is set to grow: 85% 12% 2% 1% Current Footprint Luxury Upper Upscale Upscale Other 73% 22% 4% 1% Pipeline Luxury Upper Upscale Upscale Other Brands are increasingly developing new “value add” elements to their residences offering to stay competitive and validate the license fee ask: Examples: “Rosewood Reserve, an exclusive program available to residence owners, offering advantages and benefits at all properties across the globe. Benefits of Rosewood Reserve include preferred rates on rooms, food and beverage and spa, room upgrades, and additional VIP courtesies including access to a global concierge to assist with all travel-related requests.” “All residence owners have access to Mandarin Oriental’s Residences Elite programme. Owners enjoy exceptional recognition when traveling to any Mandarin Oriental hotel around the globe, including VIP status, room upgrade, complimentary continental breakfast for two, and WiFi. Additionally, all Mandarin Oriental hotels have trained Residences Elite Ambassadors, on hand to ensure that owners receive the acknowledgment they deserve.”
  7. IHG Branded Residences Business M A Y 2 0 2 1
  8. I H G E M E A A B R A N D E D R E S I D E N C E S IHG Global Residences Portfolio 8 With close to 50 open and pipeline residences across the globe, IHG is a leading force in branded residential C U R R E N T R E S I D E N C E S ( 4 ) S H A N G H A I , C H I N A J A K A R T A , I N D O N E S I A P O R T O M O N T E N E G R O , M O N T E N E G R O B O S T O N , U S A F U T U R E O P E N I N G S P H U Q U O C , V I E T N A M C U R R E N T R E S I D E N C E S ( 1 2 ) T I A N J I N , C H I N A * * C H E N G D U , C H I N A * * C A I R O , E G Y P T * * J A K A R T A , I N D O N E S I A * * B E I R U T , L E B A N O N * * W A R S A W , P O L A N D * * D O H A , Q A T A R * * D U B A I , U A E * * B O S T O N , U S A H A N O I , V I E T N A M * * P H U Q U O C , V I E T N A M S A I G O N , V I E T N A M * * F U T U R E O P E N I N G S ( 6 ) N A N J I N G , C H I N A X I ’ A N , C H I N A H U A H I N , T H A I L A N D A B U D H A B I , U A E * * D U B A I , U A E * * H A L O N G B A Y , V I E T N A M C U R R E N T R E S I D E N C E S ( 6 ) M A L O L O , F I J I C O U R C H E V E L , F R A N C E Z I L P A S Y O N , S E Y C H E L L E S I B I Z A , S P A I N K A P L A N K A Y A , T U R K E Y C O N D A O , V I E T N A M F U T U R E O P E N I N G S ( 1 4 ) K I T Z B U E H E L , A U S T R I A C A Y O R O S A R I O , B E L I Z E M A N T I Q U E I R A M O U N T A I N S , B R A Z I L G U A N A C A S T E , C O S T A R I C A G A L A P A G O S I S L A N D S , E C U A D O R L O I R E V A L L E Y , F R A N C E L A S A G E S S E , G R A N A D A O S S U R A V A L L E Y , I C E L A N D U M B R I A , I T A L Y P A L A W A N , P H I L I P P I N E S C R A N S M O N T A N A , S W I T Z E R L A N D F O R E S T I A S B A N G K O K , T H A I L A N D L O N D O N , U K N E W Y O R K C I T Y , U S A C U R R E N T R E S I D E N C E S ( 6 ) B A N G K O K , T H A I L A N D * * C A Y M A N I S L A N D S * C L E V E L A N D , U S A * M I A M I , U S A * N A S H V I L L E , U S A * S A C R A M E N T O , U S A * F U T U R E O P E N I N G S ( 1 ) K A W A N A B A Y , G R E N A D A
  9. I H G E M E A A B R A N D E D R E S I D E N C E S Illustrative Legal Structure and Key Documents 9 9 IHG Owner Unit Owner Unit Owner Unit Owner Unit Owner ▪ Residence Marketing and License Agreement (“SMLA”) : Agreement between IHG and Developer to allow Developer to use IHG brands for promoting and marketing residences in exchange for payment of a brand license fee ▪ Residences Management Agreement (“RMA”): Agreement between IHG and Developer (i) governing the ongoing branding of the residences post completion and handover, and (ii) detailing scope and fees of basic services to be provided. ▪ Sales and Purchase Agreement (“SPA”): Contract between Developer & Unit Buyer detailing terms of sale and purchase of unit ▪ Maintenance Management Agreement (“MMA”) : Contract between Developer & Unit Buyer governing provision of Basic Services, maintenance, repairs and capex (could involve the home owners association, if one is created and/or required by law). ▪ Governing Documents: Documents detailing the internal rules of the residences that all unit owners need to comply with (could involve the home owners association) ▪ Service Agreement (“SVCA”): Agreement between Hotel and Property Manager for the Hotel to provide Basic Services directly to the residences in exchange for cost recovery agreed and fees ▪ Property Management Agreement (“PMA”): Agreement between Developer and Property Manager to provide administrative and capital planning function for the Residence. PMA may be novated to HOA upon its formation. License Fees (% of gross sales proceeds) Gross Sales Proceeds from Unit Sales • IHG to provide residences with Basic Services (e.g. common area maintenance)2 • Unit owners to pay periodic and other assessments to the HOA (or Developer directly), portion of which is passed on to IHG for provision of Basic Services (including a percentage of fee paid to IHG on a “cost plus” basis for mgt of such services) Key Documents SMLA 1 SPA 3 MMA 4 Governing Documents 5 1 2 3 4 Home Owners’ Association (“HOA”)1 5 Property Manager Providing administrative and capital planning services (for a fee) (if applicable) MMA / PMA (post novation) 7 4 PMA (initial phase) 7 SVCA 6 6 1. A private association usually formed to act as a unified front representing the home owner’s interests. A legal requirement in some jurisdictions. 2. IHG and Developer to agree on scope of services to be provided by IHG. Certain services may be provided directly by Developer to the residences, and will be excluded from fees charged by the IHG. RMA 2 7
  10. IHG vs. Hotel Owner / Developer – Who does what (operations)? 29 October 2021 ©2020 IHG. All rights reserved. Proprietary and confidential. 10 Scope of Residential Services and Responsibilities Project Name Hospitality (e.g. reception/concierge) A-la-Carte Services (e.g. housekeeping) Common Area Maintenance (CAM) In-Unit Repairs and Maintenance Capex Planning & Budgeting Home Owners Mgt / HOA Mgt 1. Mandatory rentals and serviced resi. Regent Residences Phu Quoc* - Fully managed by Hotel/IHG due to mandatory rental pool participation requirement - Operating costs sit with Hotel, and funded via Hotel Owner share of revenue split Managed by Developer / Hotel Owner Six Senses Con Dao InterContinental Phu Quoc Residences InterContinental Residences Halong Bay* Serviced Residences (all brands) Fully managed by IHG per HMA with Hotel/Residence Owner (no individual third-party ownership of units) 2. Optional or no rental programs Regent Porto Montenegro Residences Provided via Hotel Selected list of services agreed with Hotel Owner For units participating in optional rental program (limited to in-unit items) Managed by Developer / Hotel Owner Six Senses Residences Courchevel Six Senses Zil Pasyon Seychelles Regent Residences Shanghai Pudong Mix of dedicated (e.g. reception, bellman) and via hotel (e.g. concierge) Direct by home owner or via Hotel Owner (if offered) Managed by Hotel Owner (for common areas) Regent Residences Jakarta Mangkhulur City InterContinental Residences Hua Hin* 3. No rental program or other factors Residences at the InterContinental Boston Provided directly by Hotel Owner / Property Manager Selected list of services agreed with Hotel Owner Provided directly by Hotel Owner / Property Manager Direct by home owner or via Hotel Owner (if offered) Managed by Developer / Hotel Owner or via property manager (for common areas) Managed by Developer / Hotel Owner or via property manager The Residences at Seafire (Kimpton) Regent Boston (Echelon Seaport) Six Senses Fiji Malolo Island Six Senses Kaplankaya Critical to define early on what IHG can and cannot do. Some guiding principles to illustrate below, but every project is unique. * indicates pipeline projects
  11. Key Commercial Terms – SMLA 29 October 2021 ©2020 IHG. All rights reserved. Proprietary and confidential. 11 L I C E N S E F E E : • 4.0-5.0% on all sales revenue generated by sales of the units, with such amounts paid to IHG upon receipt of funds by developer S A L E S A N D M A R K E T I N G A D V I S O R Y F E E • US$300k-1m, which is non-refundable and payable as follows: ➢ (a) 50% upon signing of the SMLA; and ➢ (b) 50% within 6-12 months after the date of the execution of the SMLA. • Owner will receive a credit of such amount against the License Fee payable to IHG. R E F E R R A L F E E : • For any sales resulting from a lead generated by IHG sources, a referral fee (in addition to the license fee) of 2.0% of sales revenue will apply R E S A L E L I C E N S E F E E : • For residences re-sold through the developer's sales office, IHG will receive 20% of the commission earned by the developer T E C H N I C A L S E R V I C E S F E E : • A consolidated fee will be proposed by IHG to cover technical services to be provided to the hotel and residences. L E G A L F E E : • Owner to reimburse IHG for external legal counsel costs incurred by IHG in structuring, negotiating and documenting the branded residences aspects of the project • IHG and owner will mutually discuss and agree on any applicable cap to the reimbursable amount. P R O M O T I O N A L M A T E R I A L S : • Owner shall, at its own cost and expense, and consistent with the terms and conditions of the SMLA, develop a marketing plan to market and sell the units • IHG to review and approve all such materials S A L E S A N D O T H E R D O C U M E N T A T I O N A P P R O V A L S : • IHG to review and approve all contracts between developer and unit buyer/owner – SPA, RPA, MMA, governing docs O T H E R I T E M S : Prior IHG approval and necessary indemnities and other provisions in the documentation will be required if the units are to be offered for sale in the United States or to U.S. persons, or any other jurisdiction where the sales of branded residences may be regulated (i.e. this may also apply to UK/EU depending on the structure of the offering)
  12. Key Commercial Terms – RPA 29 October 2021 ©2020 IHG. All rights reserved. Proprietary and confidential. 12 R E V E N U E S H A R I N G • As per IHG proposed waterfall • Prefer unit owner % split to be “clean” i.e. no further deductions (except property taxes, insurance, etc – if paid by developer) U N I T O W N E R U S A G E A N D C H A R G E S • Unit owner to get a specific number of room nights per year (typically 20-40 depending on market) • IHG and developer to agree on placing certain restrictions on minimum stays, peak periods, advance booking notice, etc • Unit owner to pay a nightly usage charge during such stays to cover basic operating costs (cleaning, utilities) F F & E A N D B R A N D S T A N D A R D S • All participating units will be required to purchase an approved FF&E package before they can participate, and will be subject to periodic brand audits (same as hotel) G O V E R N I N G R U L E S • Unit owners to abide by governing rules, to be agreed between IHG and developer (e.g. no direct short or long term leasing, restrictions on alterations, etc) A D M I N I S T R A T I O N • Developer to be fully responsible for administering all aspects of the RPA with unit owner Note: Above terms are subject to negotiation, contract and IHG board approvals. Terms of the residences management agreement (“RMA”) and rental program agreement (“RPA”) are not included in the above list.
  13. What makes a resi deal attractive? 29 October 2021 ©2020 IHG. All rights reserved. Proprietary and confidential. 13 I T E M What is attractive What is harder to solve for P R O J E C T ✓ “Co-located” with a hotel vs. standalone residences  No hotel, or minimal hotel vs. resi unit count O W N E R & O F F E R I N G ✓ Experience in developing and selling luxury residences ✓ No “clever” add-ons e.g. guaranteed returns, heavy discounts, etc  No residential experience, not team/capabilities in resi  Complex/opaque offerings do not align with luxury positioning F E E S ✓ Aim for 5% license fees (at least stay in the 4-5% range) ✓ Look for projects that have at least ~$3m+ in license fee potential ✓ At least $300k or 10-20% of total fee potential as upfront payment  Fees below 4% will set an undesirable precedent in the market  Hard to justify interest in projects below $2.5-3m in fee potential  Low or zero upfront payment projects are not preferred S T R U C T U R E ✓ IHG managed projects preferred; highly selective with franchising resi ✓ Developer to stay in the structure – no direct contractual relationship between IHG and unit owners or HOA  Any franchise proposal to require strong strategic reasoning and rationale of how/why we are comfortable with developer/owner  We will consider HOA management only in highly strategic and/or competitive deals, if required by owner/developer T I M E L I N E ✓ Hotel and resi to be developed and opening together, or hotel first ✓ At the time sales of units commence, good to see construction progress so buyers can perceive that the project is “real”  Resi opening first is risky as resident experience will be compromised  Fully off-plan sales with zero construction progress is not preferred, unless developer is highly experienced and reputable in market D E S I G N ✓ Differentiated resi vs hotel product is critical to establishing a strong IHG resi identity and tarck record – tailored to each project ✓ Especially with rental programs, need to ensure there is no cannibalization between hotel and resi inventory  Relabeling of hotel inventory for resi offering should be avoided – Dilutes/erodes IHG branded resi value proposition, and creates conflict of interest issues for rental programs R E N T A L P R O G R A M ✓ Adapt and follow IHG preferred structure and template documentation – allows us a high degree of visibility and control ✓ Optionality for participation is preferred, and no income pooling, especially for RG/SS, however some projects may be more suited to mandatory programs with pooling (e.g. Vietnam)  Approving owner RPA structure and docs, especially if very different from IHG template – much harder to diligence and control  While flexibility around participation is recommended, need to try and secure commitment from unit owner for minimum 3 year terms to give hotel ops team stability in inventory year on year
  14. IHG Branded Residential Team M A Y 2 0 2 1
  15. Six Senses Support Functions Branded Residential IHG Development 15 T E A M S T R U C T U R E & R E S O U R C I N G IHG Branded Residential Team Structure Build and monitor IHG branded residential strategy, and drive key brand and commercial principles SVP Luxury Brands Jane Mackie VP Luxury Brands Tom Rowntree Brands VP Branded Residential Ananth Ramchandran Distribution Tax D&E New Openings Finance Joel Eiseman (AMER) Developers CEO Neil Jacobs COO Neil Palmer Market Strategy Ongoing Requirement TBC Development/Deal Advice Deal by deal basis Resi Unit S&M (Agents) Various – e.g. Sorores IHG Support Functions External Advisory Driving signings and fee income, support business. Utilize IHG resources as needed and align with key commercial and legal principles across the group. Partner with branded residential team / CIT to understand IHG branded residential strategy and leverage resources and tools developed to drive growth Coordinate various IHG functions and external advisors to develop and refine owner offering and internal processes to drive deal signing and license fee income Loyalty Manager Branded Residential Duta Alamsyah Operations IA GT Reporting Brands PMs Various across regions CDO Omar Romero Legal / BRR Sales / Commercial Corp Dir Residences Viri Kaur (Oct 2021) Six Senses Various VPDs (EMEAA) Kent Sun (GC) Legal TBC CFO Yvonne Thomsen CCO Bryan Gabriel VP Mkt./Comms. Elena Black Tax D&E New Openings Finance Operations IA Reporting Legal Distribution Loyalty GT Sales / Commercial Six Senses Development Frank S. (APAC) Robin C. (EMEA) Andrew M. (AMER) Denotes resources with involvement/support across both Six Senses and broader IHG branded resi. business Pichaya P.
  16. Appendices 16 S E C T I O N T I T L E
  17. EMEAA Key Competitors Overview M A Y 2 0 2 1
  18. 18 I H G B R A N D E D R E S I D E N C E S B U S I N E S S Competition Overview – “Mono” Brand Upper Luxury Players in EMEAA Four Seasons remains the clear leader, with Mandarin Oriental’s resi business now almost as large in EMEAA Key Takeaways “Mono” Brands Pipeline in EMEAA with Residences • Four Seasons and Mandarin Oriental have the lion’s share of the market (~65%) driven by brand recognition, residential track record, and capabilities • Broad mix of markets and urban vs resort mix → reflects high level of owner confidence • Biggest competition to Regent for deals with resi and hard to beat → combination of brand preference + residential track record and expertise ➢ Four Seasons: Dedicated residences sales and marketing, operations and finance experts in Toronto and in select markets ➢ MO: Dedicated head of sales and marketing for residences Bangkok at Chao Phraya River Marrakech at M Avenue, Morocco Bengaluru, India Makkah, Saudi Arabia Delhi NCR, India (Standalone) Madrid, Spain El Gouna, Egypt Mumbai, India Hvar, Croatia Marbella, Spain Tel Aviv, Israel Kuala Lumpur, Malaysia Okinawa, Japan Twenty Grosvenor Square, London, UK (Standalone) Bali, Indonesia Moscow, Russia Bangkok, Thailand Melbourne, Australia Dubai, UAE Tel Aviv, Israel Dubai (S. Zayed Rd), UAE Vienna, Austria Munich, Germany Da Nang, Vietnam Mayfair, London, UK Etiler, Istanbul, Turkey Muscat, Oman Bali, Indonesia Doha, Qatar Jakarta, Indonesia Hermana Mayor, The Philippines Hoi An, Vietnam Yangon, Myanmar Castiglion del Bosco, Italy Nai Lert, Bangkok, Thailand Niseko, Japan Tokyo, Japan (Standalone) Brisbane, Australia Bangkok, Thailand Bodrum, Turkey Dubai, UAE • Rosewood’s growing footprint and brand recognition allowing them to win more deals, mainly in Asia (with Residence component) • Opening of Rosewood HK has enhanced their brand perception
  19. 19 I H G B R A N D E D R E S I D E N C E S B U S I N E S S Competition Overview – Marriott Residential in EMEAA Marriott is the clear leader ($40m+ in annual license fees), and increasingly aggressive in competitive situations with brand offerings and fees Key Takeaways Marriott Residences Pipeline in EMEAA (May 2021) Upper / Uber Luxury • ~50% of Marriott’s residences pipeline is still upper/uber luxury driven • Strong focus on the Middle East, Turkey, and Balkans → resort-driven • Mostly co-located projects (hotel and residences) • Major threat to Regent growth – IHG needs to compensate for (i) lower brand recognition and (ii) limited track record → need to enhance value of overall offering Amman, Jordan Limassol, Cyprus Porto Montenegro, Montenegro Istanbul, Turkey Bodrum, Turkey Colombo, Sri Lanka Dubai Creekside, UAE Amman, Jordan Jakarta, Indonesia Al Mouj, Muscat, Oman Dubai, UAE Belgrade, Serbia, Marsa Arabia, The Pearl, Qatar Horton Sq, Colombo, Sri Lanka Doha, Qatar Moscow, Russia Colombo, Sri Lanka Saigon, Vietnam (Standalone) Jeju Island, South Korea New Cairo, Egypt Algarve, Portugal Koh Samui, Thailand Belgrade, Serbia Seminyak, Bali Cairo, Egypt Tangier, Morocco Dubai, The Palm, UAE Daegu, South Korea Saigon, Vietnam (Standalone) Penang, Malaysia Cebu Mactan Island, The Philippines Phuket Grand Bay, Thailand Istanbul Esenyurt, Turkey Manila Sonata Place, The Philippines London City, UK Entry-level Luxury / Lifestyle • ~40% of projects are in Upper Upscale level (Marriott, Sheraton, Westin) → This is expected to grow and make market share winning harder for IHG • Projects across this segment are much more diversified across EMEAA • Standalone projects still few in EMEAA; but a 4,000+ keys project in Ho Chi Minh City is expected to drive more interest and signings. • Overall, Marriott is very aggressive with brand offerings and flexibility on deal parameters ➢ Example 1: MAR offered JW Marriott for a tier 2 market in Turkey where IHG offered voco ➢ Example 2: MAR offered full flexibility on FF&E to developer for residential units with rental program under Luxury Collection brand; while usage may be low, there may still be third-party guests in unit i.e. brand risk (IHG lost deal to MAR) • MAR is also able to provide owners with a much higher level of visibility on residential services, costs, HOA budgets, resi-specific build standards and costs, etc → this is driven by their in-house expertise (US based)
  20. 20 I H G B R A N D E D R E S I D E N C E S B U S I N E S S Competition Overview – Accor Residential in EMEAA Accor is the up and coming competitor to IHG; with aggressive fees and flexibilities in securing deals Key Takeaways Accor Pipeline in EMEAA with Residences • ~70% of deals in Luxury / Upper Luxury; mostly Raffles • Strong momentum in Middle East and SEAK; leveraging on Raffles and Fairmont brand strength • Minimal traction in Europe as Raffles and Fairmont brands are not well recognized • Highly flexible on structure and deal parameters, often discounting fees heavily to < USD 2m/deal → growing threat to IHG • Accor poses limited threat vs. MAR on resi deals, however Accor’s fee levels are a major challenge to IHG in competitive situations Bali, Indonesia Jakarta, Indonesia London at The OWO, UK London, UK Praslin, Seychelles Sentosa, Singapore The Palm Dubai, UAE SO/ Sofitel Kuala Lumpur, Malaysia Pullman Singapore Newton, Singapore Swissotel Bodrum, Turkey Swissotel Citystars Sharm el Sheikh, Egypt Makkah, Saudi Arabia Marrakech Royal Palm, Morocco Rabat, Morocco Taghazout Bay, Morocco Others