IHG Acquires Ruby Hotels, Its 20th Brand, Plans 250+ Hotels

InterContinental Hotels Group (IHG) is acquiring a new hotel group, which will be the company’s 20th hotel brand.

IHG acquires “premium urban lifestyle brand” Ruby

IHG has acquired the Ruby hotel brand and related intellectual property for initial purchase consideration of €110.5 million. As it’s described, Ruby is a “premium urban lifestyle brand for modern travellers in must-visit city destinations and provides hotel owners with space-efficient designs and an attractive, flexible concept that IHG expects to rapidly expand globally.”

Ruby was established in 2013, and currently operates 20 hotels, with a total of 3,483 rooms. As it stands, there are nine hotels in Germany (across Cologne, Dusseldorf, Frankfurt, Hamburg, Munich, and Stuttgart), three hotels in the UK (in London), three hotels in Austria (in Vienna), two hotels in Switzerland (in Geneva and Zurich), and one hotel in each of Italy, Ireland, and the Netherlands.

On top of that, there are 10 more properties in the pipeline, which will expand the brand by 2,235 rooms. Nine of those are expected to open in the next three years, adding European cities like Edinburgh, Marseille, Rome, and Stockholm.

Here’s how IHG describes the Ruby hotel concept:

Ruby hotels offer a stylish yet relaxed charm, blending soulful design and authentic stories rooted in the cities they call home. The brand’s ‘Lean Luxury’ approach includes signature touches ranging from a great bed and shower in guest rooms created with restoration and relaxation in mind, to unique cocktails in destination 24/7 bars, all coming together to connect guests with sought-after cities at the right price.

As our 20th brand, Ruby will extend IHG’s appeal to modern, lifestyle-focused travellers, and offers hotel owners a cost-efficient and highly adaptable premium hotel concept, in an industry segment characterised by high barriers to entry and space constraints, often referred to in the industry as ‘urban micro.’ Efficiencies for owners are delivered through space-saving designs and a high degree of operational standardisation and automation, including self-service kiosks for speedy check-in.

Ruby will be IHG’s 20th brand. The goal is to rapidly expand this brand, as IHG hopes to have 120 Ruby hotels within 10 years, and more than 250 Ruby hotels within 20 years. IHG sees the brand being attractive for owners, not just for new build locations, but also for conversions, including for adaptive re-use across a range of commercial property types, with several successful office conversions.

Here’s how IHG CEO Elie Maalouf describes this acquisition:

“We are delighted with the acquisition of Ruby, which further enriches our portfolio with an exciting, distinct and high-quality offer for both guests and owners in popular city destinations. This acquisition demonstrates our focus on building our presence in large, attractive industry segments and using our experience of integrating and growing brands and hotel portfolios. The urban micro space is a franchise-friendly model with attractive owner economics, and we see excellent opportunities to not only expand Ruby’s strong European base but also rapidly take this exciting brand to the Americas and across Asia, as we have successfully done with previous brand acquisitions.”

My take on IHG’s acquisition of Ruby hotels

I’ve gotta be honest, I hadn’t heard of the Ruby hotel brand before this announcement. But now that I read about it, I can totally see how this was an attractive acquisition target for IHG. At first glance, it strikes me as being similar to Hyatt’s recent acquisition of me and all hotels, as that’s also a Europe-based hotel group with lifestyle hotels that are on the cheaper side, with easy conversion opportunities.

The major global hotel groups want to grow at any cost, given that they typically get a percentage of revenue. So the more properties they add to their portfolio, the more of a cut they get. Given that interest rates are still pretty high, there’s a big focus on having brands that offer flexible conversion opportunities, with limited brand standards (meaning hotel owners can reflag their properties, without investing too much).

In terms of how Ruby would be positioned within the IHG portfolio, it seems to me like it would be much less premium than Kimpton, and a little less premium than Hotel Indigo. As far as brands at competitors go, I assume this would be along the lines of Aloft and Moxy, though perhaps with a bit less consistency, given that this brand is very conversion friendly.

Bottom line

IHG is acquiring the Ruby hotel brand. This brand currently has 20 hotels, but IHG hopes to grow the portfolio to over 250 hotels in the next 20 years. This is a lifestyle brand that’s conversion friendly, including for buildings that previously weren’t even hotels. I’m not surprised to see IHG acquiring a group like this, since it seems like a good fit for the company’s portfolio and strategic goals.

What do you make of IHG acquiring Ruby?