As a Senior Consultant at Denneen and Company, and a frequent traveler, I can’t say I was enthusiastic about Intercontinental Hotels Group’s (IHG) recent announcement that they were acquiring Kimpton Hotels and Restaurants.
Established in 1981, Kimpton has built an independent chain of stylish and quirky hotels that, in my opinion, offer a unique experience along with amenities not often found in larger, more corporate chains (e.g. free happy hour, mini bar credit, free Wi-Fi, and a much broader array of free personal items to name a few). However, as both a consumer and a brand strategist, the corporate Intercontinental, and boutique, independent Kimpton brands don’t appear to be a good fit.
While it remains to be seen how much the acquisition will impact Kimpton (and perhaps my future interest in staying at one of their properties again), it prompted me to think more about parent and portfolio brand strategies in takeover situations and how companies need to have a solid understanding of their brand equities and their consumers when considering connecting the brands, given the potential equity impact and changes in consumer appeal that result.
Not surprisingly, many parent companies remain anonymously in the background, while others openly identify and connect with their underlying portfolio brands. For example, Ben & Jerry’s operates independently (figuratively and physically/culturally) from parent company Unilever, and leaves it to consumers to read the fine print on packaging to notice that the anti-corporate, pro-environment, seemingly independent brand is actually owned by one of the largest consumer packaged goods companies in the world. This is a smart move by Unilever. Ben & Jerry’s audience is attracted to the strong brand/company identity they have cultivated over the years and continued growth requires that Unilever not upset the connection between the brand and its loyal audience. With that said, I would argue that Ben & Jerry’s equity has actually been hurt/softened by the acquisition given that Unilever hasn’t been able to remain completely anonymous. However, the distribution gains and other “scale” benefits of being part of massive global company perhaps more than make up for it.
On the other hand, anyone who has watched P&G’s “Thank You Mom” advertising during the past two Olympic Games knows that P&G openly links itself to the major brands in its portfolio. This works because of the compatibility between the P&G brand and its product brands. P&G’s purpose of “Touching Lives, Improving Life” and message of thanking Mom fits well with the vast majority of their portfolio brands, while the great products within P&G’s portfolio (which are largely targeted to Moms) help build the equity of the corporate brand too. By the way, it’s not surprising that you don’t see Old Spice in the “Thank You Mom” spots.
In both cases, Unilever and P&G clearly understand not only their target consumers, but also the equities of their brands (both corporate and portfolio). Unilever purposefully allows Ben & Jerry’s independence from headquarters, while P&G successfully builds equity (with Moms) across their portfolio by linking brands, including the corporate brand, together.
Returning to Intercontinental and Kimpton, I was encouraged when I learned that IHG also owned Holiday Inn and Crown Plaza, and have seemingly managed not to mix their brands (surely equity dilutive to Intercontinental). Upon further research however, it appears as though IHG openly mixes their portfolio brands in their reward program. While a frequent Holiday Inn-goer might be pleasantly surprised by an offer from Crowne Plaza, I doubt the reaction is quite so positive when a loyal Intercontinental guest is given the option to stay at a Holiday Inn. This lack of consistency in IHG’s corporate and portfolio-branding strategy is somewhat concerning.
Regardless, my hope is that IHG takes the time to understand the Kimpton consumer and equity before making any rewards program and/or stereotypical “corporatizing” or cost-cutting decisions. Sure, IHG’s infrastructure can help accelerate Kimpton’s global expansion, but in the end, IHG will hopefully realize that they need to stay firmly in the shadows and allow Kimpton the flexibility to continue to operate as if there were the unique, independent chain they are today. If not, IHG runs the risk of taking away some of Kimpton’s unique and desirable points of difference, diluting Kimpton’s equity, and alienating loyal Kimpton guests. If that happens, I’ll likely look at other boutique hotel options the next time I travel.