Newsmaker: Tan succeeds Logan as IHG’s development head

Clarence Tan, senior vice president development AMEA, InterContinental Hotels Group (IHG)

THE number of Asian professionals who head development for international chains in their own region can be counted on one hand.

Clarence Tan has no development background and is the first Asian to be appointed senior vice president development AMEA at InterContinental Hotels Group (IHG), replacing Paul Logan who retired January 1 after 25 years at the role.

In this Newsmaker interview, Tan tells Raini Hamdi why Asians are rising to the top of their professions in the region, how IHG grooms leaders horizontally, and challenges and opportunities for expansion in the region in the coming months.

Clarence Tan, senior vice president development AMEA, InterContinental Hotels Group (IHG)

You joined IHG Asia-Pacific in 2004 as head of finance. Why does it make sense that you’re its head of development AMEA today?
A lot of it is due to us looking to connect the dots for hotel owners and investors. Today, why someone like me makes sense is because there are lots of cross-regional flows of capital – China to Singapore, India to somewhere else, and so on. Cross-referrals from IHG China, for instance, have been tremendous for IHG AMEA; we now have Chinese investing in Africa, or Hong Kong developers investing outside China.

Having been in China, Japan, South-east Asia, having the ability to speak Mandarin and Chinese dialects, and having the cultural sensitivity and operational know-how in the different countries in the region, I could connect those dots better.

How did you journey from finance to development?
I joined IHG in January 2004 as CFO Asia-Pacific, at the time including Greater China (now an autonomous region). Since 2009, I started supporting Jan (Smits, CEO AMEA) in Singapore in operations while remaining head of finance. In 2011, I was relocated to Tokyo to head up the second phase of the joint venture IHG bought into in 2007. In 2013, I was relocated to Bangkok to set up our South-east Asia resorts plan and launch the Holiday Inn Express.

In Tokyo, just after I arrived, the tsunami hit; in Bangkok, it was the red/yellow shirts riots and the floods. So I became somewhat of an ‘expert’ at crisis-handling. My time in both places up to 2014 were spent more on recovering the business, then Paul (Logan) made the call to retire and I was earmarked for the role.

Why?
I think a lot of it had to do with how I interacted with the regional and global team, operations members and owners. I’ve always been operational and commercial in my approach. They (Smits and Logan) felt confident I could converse with owners, GMs and our corporate functions globally, besides having the financial acumen. With my experience, I’m able to say, yes, I’ve been there, I’ve held owners’ hands, GMs’ hands and I know what exactly you’re talking about and offer solutions.

That’s important especially in emerging markets. The whole thing about development is building relationships and trust. So I may not look or ‘smell’ like a developer, but I’ve the DNA to be one, plus I’m inheriting a very strong team that Paul has built. So a huge part of my job is to ensure the team gets good directions, coaching, leadership to achieve our ambitions.

So was 2014 to 2015 ‘training’ and handover from Paul to you?
Actually it is a long, planned transition, the idea being for me to take bite sized portions of the regions (north Asia/South-east Asia) and gain more confidence, learn new skills, manage challenges, etc.

Then since mid 2014, Paul started coaching me strategically, things like when an opportunity is real, when not to get excited – he’s my fall back and I grew more confident. It’s like learning to drive, you have the instructor next to you at first.

For a company like ours, whenever we lose a senior leader like Tony South (Logan’s predecessor) or Paul, it’s comforting to have someone from within to step into those shoes and I’m grateful for the opportunity to contribute to the region.

I would have loved to spend more time in operations but in a company like ours, mobility, moving internal resources is important.

What was the most valuable lesson you’ve learnt since then?
The power of listening – to not give immediate feedback. That’s a challenge because in finance or operations, if an owner said, I’ve got this issue, the finance or operations guy will say, this is how you solve it, it’s quite direct.

In development, it’s quite different because often the owners do not even know the real issue of what they are trying to address. So you need to allow the owner to share his thoughts and you need to listen first. Especially the new relationships where partners are ‘shopping’ before deciding who to go with. They are judging your opinions, answers, whether you’re the best brand fit, etc – you can’t just cut the conversation short. On top of it, you need to be culturally sensitive and aware. How I engage a Middle East owner will be different from the Indian or Thai owner – the three powerhouses of AMEA are all different.

AMEA is a huge area. Which countries specifically are expected to be the star areas for you?
In terms of emerging markets, India and Indonesia are exciting. In India, we have 23 hotels in operation and a pipeline of 47 hotels, mostly Holiday Inn and Holiday Inn Express to open in the next five years. That’s net growth over seven years, as we exited properties that didn’t represent us well when their contracts expired.

We’ve also been successful in conversions, and our other brands are getting recognised. Recently, for instance, we introduced Crowne Plaza into Chennai (the property was formerly under Starwood Hotels & Resorts) and opened an Inter-Continental in Chennai.

Indonesia too remains big for us because of the growing middle class. Our portfolio is small – 16 hotels in operation – but we have 27 in the pipeline to open in the next five years.

But Indonesia has a lot of homegrowns that focus on mid-range and budget.

Yes, the Tauzia’s, Santika’s Panorama’s – hundreds of brands can be good for consumers. But our strength is delivering a consistent brand experience that people know what to expect of. They know that the experience in Bali is not different from that in Bandung, save of course for the local nuances, food, scent, etc.

What about the Middle East, especially with new tensions in the region?
There are pockets of skirmishes. Saudi Arabia is both opportunity and risk. We’re still anchoring ourselves there with the biggest Holiday Inn in the world in Mecca.

Dubai will always be important as it connects key cities within a matter of eight hours. We introduced our second InterContinental there, InterContinental Dubai Marina, which is also the latest expression of the brand. Clients today have their own version of luxury, different from their parents’ generation, so our brand needs to evolve.

The market in Dubai traditionally is upper class and luxury but we feel it is opening up, thereby giving us a room to grow our midscale, select service and boutique brands. We have already three Hotel Indigos in the pipeline, to open this year and next year. The days of just pure luxury for Dubai are slowing down.

Speaking of boutique brands, will you be introducing Kimpton to AMEA?
With the acquisition of Kimpton, IHG is the largest player of boutique hotels in the world, with 126 properties in operation (62 Kimpton hotels at the point of acquisition last year, two Even hotels and the rest Indigo hotels) and a pipeline of 200 hotels. We spent the last nine months understanding the DNA of Kimpton. It’s a strong design-led hotel with great F&B offerings.

Doesn’t that cut into Indigo?
No. From a rate perspective, Kimpton is above Crowne Plaza and closer to InterContinental.

We want to grow it selectively. It’s very precious – in Jan’s words, it’d be like marrying his daughter off. The brand is predominantly in the US so we need to find the right partner to take it outside the US and set the right tone for it. We’re looking at key cities only – the likes of Singapore, Tokyo, Jakarta – and resort locations. I’m confident we will sign one or two this year.

But overall all we’re seeing are bad news everywhere.

The climate is indeed tough. But we live in a cyclical industry and we’ve learnt to absorb crises, currency or financial or whatever. There is also always a counter-balance, one country may be a bit more of a challenge, another turns to be less. In stressful times, reliable brands look more appealing than when the market is hot and booming; it’s easier to convince owners to do conversions.

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