IHG rewards shifting growth to direct from OTAs

InterContinental Hotel Group‘s half-yearly results have a couple of asides around its tech and digital performance among the details around signings and pipelines, currency fluctuations and medium-term per annum capex guidance.

Headline figures highlight an increase in digital revenues of 7% year-on-year, accounting for more than $4 billion-worth of gross room bookings. Mobile revenues are up by 32% year-on-year. Mobile web and apps generated more traffic to the IHG web site this half  than desktop for the first time.

And the slides for investors add that mobile revenues for the previous twelve months were $1.4 billion, compared with less than $50 million a year as recently as 2010.

But the most significant digital move IHG has made is the global roll-out of  the “Your Rate by IHG Rewards” initiative following a successful trial around pricing in some key European and America markets.

Your Rate gives members access to exclusive rates and benefits when they book direct. IHG said it is already having an impact on its channel mix. On the earnings call, CEO Richard Solomon said: “Since we launched Your Rate we have seen a material 2% shift in growth rate to direct away from OTAs.”

When asked about this on the earnings call with analysts, he said: “It varies by region, by brand, by month, but overall the growth of our direct digital channels is greater than the growth we’re seeing from OTAs.”

He added that “we are not having a battle with the OTAS, we’re trying to optimise the mix. We’re happy with our OTA business but it is expensive.”

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