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Mass Exit of IHG from Darwin

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Mass Exit of IHG from Darwin

Just been announced that IHG are losing their entire portfolio from the Darwin market 1st May.

Both the Crowne Plaza's and Holiday Inn's management rights have been won by the Hilton International group. With this announcement, Hilton has made public, their intention to introduce a brand not currently existent in Australia - DoubleTree - which is their brand counterpart to IHGs Crowne Plaza.

Several very interesting points come out from this;

- IHG, one of the two largest hotel groups in the world, let go of four properties in one city. This has to be strategic, no company could possibly get caught with their pants down this badly.

- Hilton launching a new brand in Darwin - of all places, the market is very unique there and it's one very gutsy move. If IHG did walk away, there were bound to be reasons, such as lack of service consistency and poor revenue, which are some of the reasons why major players like Starwood do not have any properties up there.

- Gives IHGs largest rival Accor, an even larger presence.

Time will tell.

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1. Re: Mass Exit of IHG from Darwin

Very Interesting KVE. Certainly makes you wonder.

Darwin by all reports is set to boom.

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2. Re: Mass Exit of IHG from Darwin

Hi BB,

Yeah I was quite taken aback when I heard the news this morning.

As you said, Darwin is a place on the boom and even more so that hoteliers are targeting regional (I really shouldn't say that about Darwin) centers as it offers enormous growth potential laterally, in the sense it's afoot in the door for this region. Whilst I understand its harder to get real estate in larger cities, it's quite a smart move by Hilton to set up camp so to speak. I would have thought a company as large as IHG would want to keep brand presence in a place like Darwin. I'm sure they'll be back.

Darwin, Australia
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3. Re: Mass Exit of IHG from Darwin

Wow - very interesting.

I find it hard to believe IHG would be struggling with all its Darwin hotels though. It's very hard to get a room on this town certain months of the year and the room prices reflect this. Many of them are more than I think the room is worth during the busy season.

Ha - it was just announced on the local news as I type!

South Pacific
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4. Re: Mass Exit of IHG from Darwin

It's not the only big change afoot in hotelworld. Accor's franchisee in Tasmania has called in the liquidator for the Mercures in Hobart and Launceston.

Now there's a business opportunity for a brave investor. :)

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5. Re: Mass Exit of IHG from Darwin

Hi shaz,

Yeah you're so right, the prices pitch up heaps during some months and it does get extremely busy. The whole industry was stunned, especially as they've always competed so much against Accor, who've got a massive presence up there.

The thing I heard was that behind the scene, Hilton had dine their homework and pitched an amazing offer to the owner - incidentally the same guy who owns the Hilton property in cairns.

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6. Re: Mass Exit of IHG from Darwin

Hi Luigi,

Wow I hadn't heard that yet, that's really big news too. I know that Accor had been in the process of phasing out the Mercure brand in Australia - from what they've said in the past is that the Mercure brand doesn't fit into the profile, as theres little demand for a product that fits in between their Sofitel and Novotel. Bit having said that, I don't think they had liquidation in mind.

It's disappointing you know, because Tasmania has a wonderful tourism product, yet it rarely receives recognition from Tourism Australia.

And it certainly didn't help when an iconic product like Cradle Mountain was run down by a group like Voyages. Still, I hear its doing well under the MGallery branding, which in itself was a strange move by Accor to bring in a European brand to Australia.

Lots and lots of movement Luigi!

Darwin
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7. Re: Mass Exit of IHG from Darwin

The only thing that I have heard on the local news is that Crown is getting re-branded to Hilton and having a major re-furb and gee it needed it. Didn't say anything about the Holiday Inn properties. However the Darwin Entertainment Centre which is within Holiday Inn The Esplanade is as I understand it managed by NT Government and HI and has been bleeding money for quite some time.

Lou

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8. Re: Mass Exit of IHG from Darwin

Hi Lou_and_Paul,

How is the NT government involved in the management of the Holiday Inn?

It would be interesting to know from a tourism perspective, and do they aid in businesses of rival hotel groups also?

As a local, you would be able to see that happening and if the Holiday Inn Esplanade has been bleeding money, especially over a lengthy period, that would be reason enough for the owner to consider jumping ship.

Rebranding from a physical perspective is easy enough (as witnessed with InterCon Adelaide, who did it in just under three hours. Guests went to sleep at a Hyatt, woke up in an InterCon), but hotel contracts are traditionally for minimum periods of 10 years-25 years (unlike franchises who usually do the "taste test" of 1-3 years), so it's a massive commitment.

Thanks Lou_and_Paul, maybe you could keep us posted on the impact, especially on the soft and grand openings, love to hear about it. Cheers!

Darwin, Australia
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9. Re: Mass Exit of IHG from Darwin

I went to the Holiday Inn Darwin for dinner a few months ago (not my thing but my visiting parents had a voucher). The service was appalling. It took an hour for them to advise us the meal my mum and I had ordered wasn't available. After an hour and a half with no food and a poor attitude from the staff we left and got Chinese takeaway. I saw others leave as we'll.

I also heard one of the waiters tell the table next door that there were no crocs in the harbour and it was safe to swim. Soooo not true.

If that sort of service was typical I am not surprised HI was haemorrhaging money.

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10. Re: Mass Exit of IHG from Darwin

The DEC has been bleeding money, not sure about the HI which is also in that complex.

Both the HIs need refurbing. my sister stayed at the HI Esplanade and it has not changed since it was built. old CRT TVs, rooms are the same, maybe the carpet has been changed, that's it.

The CP also needs a complete overhaul.

the only decent place of any age is the Casino which has constantly been improved.