Pearson, who has been with IHG since 1997, oversees all sales and marketing activities for IHG in North and South America. Among the key initiatives he has worked on are the rebranding of Holiday Inn, IHG's forays into social media and the expansion of the company's sales staff during the downturn.
CMO Close-Up: How important is the business customer in your marketing efforts?
Pearson: In the hotel industry, roughly half of all hotel room nights are consumed by business travelers. It's a big part of the overall health and success of the industry. It's extremely important to us and a key part of our overall business, not just with transient stays but also with meetings and conferences. We're starting to see some improvements because, as the economy begins to improve a little bit, the corporate customer is coming back.
CMO Close-Up: How are you trying to take advantage of this return to business travel?
Pearson: On the marketing side, we look at our marketing activities in owned media, earned media and paid media. On paid media, we do a lot of marketing, both online and offline, and about half of our total marketing is nontraditional, with traditional being more of your TV messaging, radio messaging, print messaging. Half is nontraditional: interactive, direct marketing, loyalty marketing, etc. The earned side for us is all the media (coverage) we generate through PR from press releases and things like social media, where consumers are talking about us and the experiences they have or the promotions we're offering. And, finally, owned media: That would be all the channels that we directly own and manage: our website channels, our loyalty programs and other direct-to-consumer marketing messages. If you're doing a promotion on your website, that real estate is virtually free. There's no cost (to place an ad) on your website or on your call centers to promote an offer or through our e-mails we do for our massive loyalty program, which has over 53 million customers.
On the sales side, we have a pretty large sales organization. In the recession we increased our sales force by over 25%. We fundamentally believe that companies that invest in the downturn come out stronger.
These are the people who are literally working with our corporate accounts. It's very much a b-to-b relationship. They call on the biggest accounts, from the IBMs to the Bank of Americas.
CMO Close-Up: How big is your sales force?
Pearson: We're a franchise organization. We have over 4,500 hotels throughout the world, and roughly 90% is franchised. We have thousands of salespeople at the franchise level who are actually selling their properties as well as others; but, at the corporate level, we have globally approximately 400 salespeople who are focused on working with big corporations, with airlines and other third parties who do business with us.
CMO Close-Up: How do social media and social networking fit into your marketing efforts?
Pearson: Because we do have 4,500 hotels, it's (about) educating them on how best to represent themselves on social networking websites where consumers are commenting. How do you make sure these owner-operators make best use of these social environments? We have training programs that we provide to hotels so they know how to respond online. We're also working on tools that will aggregate the sentiments of customers for each hotel. It will cull them from all different travel sites and aggregate them into one portal. From there they can reply accordingly to all of the responses.
CMO Close-Up: Tell us about the rebranding of Holiday Inn?
Pearson: We'll spend over $100 million this year alone on the Holiday Inn relaunch campaign. And the majority of that—probably 60%-plus of that—is going to be on the paid side, because we're activating a lot of awareness with this campaign, (with) TV spots around the world and in print. When we're relaunching a brand we want to communicate the new brand using traditional media, using television for brand awareness and brand development.
Holiday Inn is one of the most recognized brands in the world. Over the years, we let some of the hallmarks, some of the specific product issues, get away from us. So we recognized about four years ago after extensive research that Holiday Inn, which is a critically important part of the whole company, needed to reinvent itself. We removed a significant number of hotels that didn't meet quality standards. Literally 1,100 hotels over the last five years we've removed from the system and then replaced those with a lot of new product and new hotels.
At the same time we went through a rigorous program to put in place a whole new bedding program, a shower experience and a guest experience, which of course came with new branding, new signage and everything else. It was a $1 billion renovation that we're just wrapping up this year.
You would think the timing would be the worst because of the recession, but it turned out to be the best timing. Consumers were very value-conscious and began to trade down from upscale to this midscale environment. So they got to experience Holiday Inn again, and many of them for the first time in years realized what Holiday Inn meant to them and what we've done in the transformation. In order to communicate that, we had a whole new marketing campaign around what we called the “Stay You.” Basically, (the message is) Holiday Inn is quality, and it's unpretentious and it's meant for the everyday hero. We're a sponsor of Major League Baseball. That's an (audience) profile very consistent with Americana, which is what Holiday Inn stands for.