IHG Hotels & Resorts acquires Ruby, its 20th brand, and targets global expansion

InterContinental Hotels Group PLC (IHG) has acquired the Ruby™ brand and associated intellectual property from Ruby SARL for an initial purchase price of €110.5m (~$116m). A premium urban lifestyle brand for modern travellers in popular urban destinations, Ruby offers hoteliers efficient design and an attractive, flexible concept that IHG expects to rapidly expand globally.

Founded in 2013, the Ruby brand currently has 20 hotels (3,483 rooms) in major cities in Europe and another 10 hotels (2,235 rooms) in development. There are nine hotels in Germany (Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart), three in the UK in London, three in Austria (Vienna), two in Switzerland (Geneva and Zurich) and one in Italy, Ireland and the Netherlands (Ruby Emma in Amsterdam). Hotels under development will open in more European cities, including Edinburgh, Marseille, Rome and Stockholm, over the next three years.

Ruby hotels offer stylish yet relaxed charm, combining soulful design and authentic stories rooted in the cities where they are located. The brand's 'Lean Luxury' approach includes signature touches ranging from a great bed and shower in rooms created with recovery and relaxation in mind, to unique cocktails in 24/7 bars, all coming together to connect guests to popular cities at the right price.

If our 20^e brand, Ruby will enhance IHG's appeal to modern, lifestyle-oriented travellers and offer hotel owners a cost-efficient and highly flexible premium hotel concept in a segment characterised by high barriers to entry and space constraints, often referred to in the industry as 'urban micro'. Owners can benefit from efficiency space-saving designs and a high degree of operational standardisation and automation, including self-service kiosks for quick check-in.

Ruby is already an established name in Europe and has proven successful for new build sites. It is also very conversion-friendly, including adaptive reuse in a range of commercial property types, with several successful office conversions. The Ruby brand has achieved an annual growth rate (CAGR) of 26% over the past five years. The seller of the brand expects to grow its portfolio of Ruby hotels significantly further and IHG expects to grow the brand with other hotel owners in Europe and globally. This builds on IHG's proven track record of successfully internationalising brands it has developed and acquired itself. IHG expects to have the brand ready for development in the US by the end of the year.

Joining forces with IHG allows Ruby hotels to leverage a powerful business platform of distribution and technology systems, as well as one of the world's largest and most powerful hotel loyalty programmes: IHG One Rewards. IHG expects the urban micro-segment to continue to experience strong demand from travellers from around the world, which in turn will drive room supply growth at a faster rate than the global hotel industry. IHG aims to grow the Ruby brand to more than 120 hotels over the next 10 years and accelerate to more than 250 over 20 years among owners worldwide.

Elie Maalouf, chief executive officer, IHG Hotels & Resorts:
"We are very pleased with the acquisition of Ruby, which further enriches our portfolio with exciting, distinctive and high-quality offerings for both guests and owners in popular urban destinations. This acquisition demonstrates our focus on building our presence in large, attractive market segments and leveraging our experience in integrating and growing brands and hotel portfolios. The urban-micro segment is franchise-friendly with attractive benefits for owners and we see excellent opportunities not only to expand Ruby's strong European base, but also to rapidly take this brand to the Americas and Asia, as we have successfully done with previous brand acquisitions."

Michael Struck, Founder and CEO of The Ruby Group, adds:
"We have carefully selected IHG as the right partner to take the Ruby brand and our international expansion to the next level. IHG's distribution strength, the fact that Ruby is a perfect complement to IHG's portfolio and its proven track record in successfully maintaining identity and culture when integrating brands gives us great confidence as we embark on this next chapter together. Combining IHG's global reach and resources with the efficiencies of our operational and construction model will deliver superior returns for both our investors and our property partners. Moreover, the timing could not be better. Our unique solutions for efficient reuse of office space are in high demand, which positions us for strong growth."

More details on the acquisition agreement and a financial statement:

• The initial purchase price of €110.5m (~$116m¹) for IHG for the acquisition of the Ruby brand and associated intellectual property consists of an upfront payment of €109.9m paid on completion of the transaction and a fixed deferred payment of €0.6m to be paid when about half of the hotels join IHG.
• As part of the master franchise and development agreement with Ruby, the initial franchise fees received by IHG from the current 20 hotels and the 10 hotels under development (all of which are expected to open by the end of 2027) are expected to be around $8m in 2028, which would be the first full year in which all 30 hotels would belong to IHG's system.
• Taking into account further development by the vendor to open more hotels than those under development and combined with IHG's plans to extend the Ruby brand to other hotel owners worldwide, franchise fees are expected to exceed $ 15 million by 2030.
• The seller's operating company will not be acquired by IHG and will continue to operate the current open hotels and any future hotels the seller develops under the brand.
• Open hotels, hotels under development and all future Ruby hotels operated by the vendor will enter into individual franchise agreements with IHG and pay brand royalties and System Fund fees to IHG.
• To encourage further growth of the brand by the seller, there may be potential additional payments due in 2030 and 2035 ranging from €0 to €181m ($190m¹). Future payments depend on the number of Ruby-branded rooms operated by the seller at the end of the previous year. A payment of €9m ($9m¹) would be paid to the vendor if it operates more than 10,000 rooms under the Ruby brand. This increases to the maximum potential total if they grow to more than 20,000 rooms, a scale about six times larger than current open hotels. IHG's planned growth of the brand with other hotel owners is not included in the calculation of a potential additional payment to the vendor.
• Integration of all 20 Ruby hotels currently open into IHG's system is expected to begin later in 2025 and be completed by 31 March 2026. This would increase IHG's global system by about 0.3%. The 10 hotels under development would add another ~0.2% to IHG's system after opening.