Next up, we have got InterContinental Hotels Group. Elie Maalouf , CEO. Michael Glover, CFO. Thank you very much, James, for popping over from NYU, and from London, to see us, so maybe we'll start with, you know, one of the big topics uses the demand environment. Obviously, you reported Q1 what six weeks, seven weeks ago something like that. You sounded pretty positive about life there, and I think you talked about things looking better as you were coming into summer months. Maybe you could talk a little bit about what you've been seeing at the sort of U.S. country level, first of all.
Yeah, look, so what we said a few weeks ago when we reported Q1, I think it was May 6th or 7th, right, was that, you know, we did 3.3% RevPAR growth in Q1 globally, 3.5% in the US. And, of course, March and April were affected by the Easter shift. So the combination of March and April, and April not having been our Q1 results, of course, but the two months together were flat. And, May and June looked flattish too. But what we had on the books globally for the rest of Q2 was up on the year before. And then if we looked later into the summer after June, things were looking up globally too. Now, of course, the booking window's short. 50% plus of our bookings come in the last seven days, over 30% last 48 hours.
I think that's similar to the rest of the U.S. industry. And so things could change in one direction or another. But what we felt more broadly was that there had been an impact in March, not just from the Easter shift, but also from some of the macro turbulence, the tariff turbulence, the noise, the market drop, all that, but that we were on a path, a glide path, towards smoothing out that turbulence. And I think even since we reported, I think we were probably the first to say back then that we actually felt that turbulence was attenuating. Things were smoothing out. Things have been smoothing out more since then. Markets have, at least in the U.S., have mostly recovered from the drop. Trade tensions have turned into mostly trade talks.
There's still some bumps and tensions and spits and spats, but it's mostly, you know, some, and trade talks have turned into some trade deals and so forth. So we think that is the most likely path forward, which is more constructive for travel. Meanwhile, you've got this unusual situation, actually only in the U.S. initially, but more broadly, even in Europe and even into China, where you look at consumer surveys, consumer sentiment surveys, they're generally bad.
And except for last week, consumer sentiment had been down and expected to be down more, but went up much, but still not great. And same thing in China, same thing in Europe. And yet consumer spending in the U.S. hasn't been bad. It's been up. Retail sales are up. Not every retailer's doing well, but in total, retail sales are up. Unemployment is low.
Number of people employed is still nearly at a record. There's real wage growth. So as long as people are employed, they are still spending, especially on experience, especially on travel. Some sectors they're not spending on as much, but they're still spending on travel. They're definitely still spending on travel in Europe. And they're definitely still spending on travel in China.
Not on everything, not on luxury goods, not on residential real estate, but they're still spending on travel. So I, I don't know if people just are oversurveyed and sick of surveys. I, frankly, don't fill out any. I just, there's a survey like you leave a bathroom, they add, there's a survey, literally. Enough. So maybe surveys just aren't as reliable anymore, or people maybe feel like they've got to tell you things are bad anyways.
Like if you went to our company and said, "How do you feel about everything?" "Everything's great." "How do you feel about pay?" "It's not great." Well, obviously, they're gonna tell you that. So I don't know if surveys are as reliable anymore. We do think that there's definitely a disconnect between sentiment surveys and actual spending, and we're relying more on the spending, which seems positive.
Interesting. Well, one of the themes, and one of the, what you said, you know, matches what the other hotel companies have said so far, which is, you know, surveys don't always equal reality. But one of the themes has been there's been a definite shortening of the booking window, and the bookings are coming in, but they're just coming in quite late. You know, something you've still been seeing? And is that making your managers nervous and causing them to panic a bit in a couple of weeks?
Let's disaggregate that for a bit there. A few questions in your question. First, there was some of that, clearly, in March. Part of it is probably some of the Easter move. Part of it was quite likely the beginning of the turbulence that we saw, the market drop, the noise, the media coverage of it, which made a lot of people nervous.
And yet then still the bookings materialized towards the end, which was that shift out of the booking window. But I don't think we've had enough time to say that it is a pattern versus just a bump that then we normalize. I think we're sitting here at the beginning of June, so I don't know that two, three months can tell us that that is a real pattern.
In a way, given that what we've said is our on-the-books globally is still positive going into the summer, if the booking window has narrowed and there's more to come, closer date of arrival, like we're okay with that too, because it seems it would say that we have actually a little more upside, right, than what we're seeing on the books today.
But we'll have to wait and see. On the pricing thing, I think that there's always been a decreasing amount over the last several years, but there has been, of course, this tendency to, you know, want to not have unsold inventory, right, and try to get something for it, which is one of the reasons, Jamie, that we have rolled out our new revenue management system, which I've spoken about a few times.
It's not the only thing that I think is driving us to in Q1 and actually for most of last year, outperform the U.S. industry in terms of chain scales. But I think it is a reason where we have a much more reliable, advanced, machine learning-driven, AI-driven revenue management system that our owners trust more, that gives them more confidence, because it was so even before the recent bumps.
You have over 30% of the bookings in the last 48 hours, 50% in the last seven days. It would make anybody nervous, right, in a normal circumstance. But the reliability system is giving them the confidence that, hey, the bookings are coming. You can hold your rate. You can close out these groups. You can take this business. You can use or not use OTA.
And so it's very sophisticated, a lot more than, say, your average person at a hotel can be. It's taking data science and putting it in the hands of your average person at a hotel who's not gonna be a data scientist. So I think there's great value we're bringing, which is giving more people confidence in their rate and yield management.
Is that why the company's outperformed in the U.S. in Q1 by nearly a couple of points, or are there other factors behind that?
I think everything we do as the whole enterprise is designed to make our business outperform. I wouldn't isolate one factor. It is a factor. We've been investing in a new revenue management system, which is now in over 4,000 hotels around the world, almost all in the U.S.. But we also made our brand stronger. Every one of our brands, Holiday Inn and Holiday Inn Express, Staybridge Suites, Candlewood Suites have been redesigned, updated, upgraded.
Their social scores have been growing relative to their peers for every year since the pandemic. Our GRS system, our revenue, our guest reservation system we rolled out five years ago is now in 3rd-Gen , where we're monetizing features like higher floors, better views, better amenities. Our you know, our loyalty plan has accelerated from 100 million members to 145 million members.
We've gone from 50% room nights booked around the world to 60% room nights booked through IHG One Rewards, and now 70% in the U.S. , which is right up there with everybody. 70% of every booking, every night in the U.S. is through IHG One Rewards. We have a million people stay at IHG every year, every night, not every year. One million people every night around the world. 60% of those are IHG One Rewards members, 70% in the U.S. . That's a 10-point move in loyalty, room night contribution.
That is helping the hotels perform better. So it's a variety of things, and that's why I love about it. It's not just one thing that we're doing, which builds, I think, a bigger and deeper moat for us. It's a variety of things that we're doing. Then we keep innovating. Can't stand still. We keep innovating, but we're doing better across every front that we think are helping our owners succeed better.
Do you think the summer could be better than expected in the U.S. this year? The summer period could be better than expected because gas prices are quite low. Holiday Inn's got a big price-driving brand. Maybe a few Americans going abroad and they're concerned about reception to them. Is that why you're sounding a bit more confident about the summer?
Yeah, I'm going abroad. I don't have any problems with people being, you know, spend a month in Italy last summer. I'm gonna spend at least two weeks this summer. I think people are very friendly, for the most part everywhere. I think there's been a lot more narrative about that than there is reality. I, I don't want to feed any more of that reality. We're a global company in 100 countries and so many cultures. I think for the most, by far, by far, everybody's very welcome to everybody.
But no, I don't think, can the summer be better?
Sure. I, I hope so. I, I look, if you look at the fundamentals, again, if you're just talking just U.S., unemployment's low, which is if you have to pick one thing that we think is determinant of corporate travel and, and leisure travel, it's unemployment, right? You know, if you're keeping your employment up, you're investing in your people, they're having to go visit customers, they're having to go for business, they're having to go check on their plants, on their stores, on their factories, on their fabrication, on their clients, so they're gonna travel.
And if you're employed, you have disposable income and you're feeling better about life than if you feel like your job is in jeopardy. So I think that if you pick just one thing, but also the recovery, I think in the financial markets help. 60% of U.S. households own equities. I don't think it's even 15%-20% in the U.K., right? So people are sensitive to the performance of financial markets in the U.S. It's not just for the wealthy people. It's everybody's got some share of the equity market.
The recovery helps. I think that there is a possibility that if we continue on this glide path of more resolution of open issues, then not. I think we've been on this glide path of more resolution, less turbulence. I think there's an opportunity for the summer to be better. We're a few weeks away, and we'll see.
Outside the U.S., I mean, most markets are pretty good with the obvious exception of China. Why do you think RevPAR's still down as much as it is, or?
Yeah.
Quite easy comps?
Yeah. I mean, first, you're right that most markets are still good. Middle East, RevPAR's good. Southeast Asia's been very strong. Japan is very, very strong. And Europe is holding on quite well despite some muted GDP growth. I think part of it is low supply, but also high inbound into Europe, not just from the United States, but from the Middle East, from Africa, from Asia, even from China.
Now there's increasingly return of inbound into Europe. And then they tend to spend, and there's limited supply. We're a very low position here. So China, last year, our occupancy was flat, 40 basis points. Now let's call it flat. And RevPAR and rate was down two to three points. So it was mostly rate decline. Similar pattern in Q1, flat occupancy, still weaker rate.
I think the comps get easier as we go. I know the comps get easier as we go through the year. So there is some chance that we could be, you know, slightly north or south of zero for the year in RevPAR. I've been quoted, and I'm happy to be quoted again, that we think things are bottoming out in China, which mostly is the digestion of the residential real estate. It takes time to digest a massive residential real estate overbuilt.
It's a custom in the U.S. GFC, five to six years to digest it. China's in probably year four of that digestion. It can give you indigestion while you're doing it, but they're on the way, but let's not forget it's a $20 trillion economy, super diversified in many aspects, not just real estate, but technology, machinery, exports, innovation, consumer.
I mean, it's got a lot of cylinders to it than just real estate. So what's been happening on the RevPAR is three things. First, you don't have the international inbound, which is a highest-rated business. Not a huge part of the business. It's a very small part of our business, but it's high-rated in the key cities, Beijing, Guangzhou, Shanghai, Shenzhen. And clearly from the West, that hasn't been coming back. It's coming back now from it's being replaced by Asian international inbound, by Middle East, but slowly. But that's all upside as if and when it comes back.
Number two, you do have some overhang on the consumer from the real residential real estate overhang because so many Chinese families are investors in residential real estate, and they've seen either those values drop or not be liquid or their apartments weren't built. And so, yeah, they don't feel great about that.
On the other hand, because they're not investing, they're high savings, and they are very I mean, the savings rate in China's 30% I think it's gone up to 35% in a household. 35% of income is being saved in cash because you're not putting that money. They don't put it in the stock market, can't do crypto, can't take your money out of the country, and you're not buying more apartments. So you may not feel great about the economy, but you have the cash.
And so spending a few thousand dollars on a holiday doesn't feel like a bad thing. And so we've seen actual number of trips taken still grow. You know, Lunar New Year was a record number of trips. May holiday was a record number of trips. And what's happening on these trips is not only are they domestically high, but you've got outbound strong to mostly Asia Pac: South Korea, Japan, Vietnam, Indonesia, Thailand, Singapore, where we've been up double-digit in RevPAR.
So we're getting that travel, whether you're staying in China, you don't go to China. We're getting it even at higher rates in Asia Pac. But it's taking the higher-rated leisure travel out of China. And so in our, in our resorts in China, we're still getting good occupancy, but we're not selling the suites at the highest rates that we used to.
We're still filling them at low rates. But you know what? We're getting that customer outside of China, which actually leads into one of the theses for why we're still optimistic on China, why it's important to be strong in China because of the strong outbound. China today is second or third largest outbound market in the world. It'll be the largest outbound market in the world.
You know what? Maybe they're not gonna come to the U.S. in droves anytime soon. But we're in 100 countries around the world. We're big in Asia Pacific. We're big in the Middle East. We're big in Europe. They're, we're big in Japan. And that's where they're going. And to be strong with them when they travel to those outbound markets, you can be stronger in China. Been there 50 years in China.
We celebrated our 50-year anniversary in January, opened our 800th hotel, got 600 hotels under development. We had a record year of signings and openings last year, a record year of signings and openings probably coming this year. We're gonna get to 900 hotels early next year and probably 1,000 in another less than 24 months. So it's important to be strong in China. We think that we're bottoming out on RevPAR. And I think the comps get better. It, you know, we're constructive on the future in China.
Are you surprised by the strength of signings in China? I mean, every international company's been signing record amounts. You as well, opening a record amount. Is there a risk of maybe oversupply? And why will the signings when the demand environment's a bit weak? Is there a disconnect?
Yeah. I mean, two, yeah, two questions there. Am I surprised? Not, well, I'm pleased. Not a surprise as one would obviously be if you just looked at the surface. You say, "What's going on here?" Well, what's going on here is the demand is still pretty good, though. Like, occupancy is flat. Demand, number of trips taken is good. There's rate pressure due to three things I talked about earlier.
Two of them are temporary. One is actually we'll reverse a bit. You've had now a year and a half of people being able to travel outside of China. China's done a lot of these visa-free agreements with a lot of Asia-Pacific countries. So there's been a surge of outbound. I'm okay with that because we're in all those other countries. But I don't think that's sustainable.
I think some of that travel will stay, will come back domestically as it did in 2023 when it was all domestic, when you couldn't leave China. So I think that, you know, those two factors will normalize. The key factor that our hotel investors are looking at and signing and opening up in the hotels, and 100% of our hotel investors in China are Chinese. There are no, you know, we don't invest, and neither do foreign parties invest with us. It's all Chinese.
They're looking at the fact that middle class is doubling in the next two years. They're looking at the strong demand, you know, resilient occupancy. They're looking at the fact that there are 150 million people that are gonna join the middle class. That's not population growth. That's just population wealth in the next, 10 years.
The fact that when people join the middle class, they're gonna travel and that the occupancy's pretty good, and they wanna be investors in this asset class. These are assets for 20, 30 years that they're building. I think I'm not surprised because I think they're coming to a good investment decision. I do think, yes, externally, you, you always think that supply reacts immediately to RevPAR. In a developing market in a country like China, the fundamentals are gonna be different than in a developed market.
And sort of similar question to the U.S. Any sort of concerns from your owners here on development, given sort of concerns about tariffs and financing, or are you still seeing a robust?
I mean, actually, the last thing I'd say about China is in terms of oversupply. Remember, you got one-seventh the rooms per capita in China that you have in the U.S. with the population that is still getting wealthier. So one-seventh, there's a lot of headroom before you talk about oversupply here if you're building, you know, for the growth.
Look, in the U.S., conversion business is robust. You know, whether we're converting to Voco, to Vignette, to Indigo, to Kimpton, to Garner Hotels, which is now 150 open under development around the world, you know, there's financing for that. The demand is robust. There's demand from our owners that do new build. We're signing Holiday Inns, Inn Expresses, Avids, Atwells, New builds. They're not getting financing as quickly as they used to. We all know that.
The new build financing is thawing out, but very slowly. We said that. I do think that, you know, probably the turbulence that happened at the beginning of this year with tariffs doesn't accelerate that thawing out of new build financing. But with the performance of hotels that you have today, which is strong, with the strong demand and the low supply, the environment for new development is there. You know, it is an asset class that performs.
You don't wanna build office. I don't think too many people are excited about that. Right? Real retail, you're gonna be very selective about. Hotel, as a real estate asset, is performing. There's a lot of interest in building. We grew our openings in the Q1 of this year. You know, I think we doubled them over the last year.
I'm not saying we're gonna continue that rate for the rest of the year with this strong quarter of openings, so there's a lot of interest here. We're optimistic. I'm not gonna make predictions quarter by quarter. We're optimistic that our rate of growth in new builds and in conversions in the U.S. and in the Americas will continue to grow, but not at a V-shape. It's just gonna continue to just improve.
What's the scope for sort of portfolio conversions like NOVUM or Iberostar?
You know, that we've done now two in four years or in three years. We're always looking. Clearly, when you get to 119 hotel portfolios, there aren't that many, not just I don't think there are any in the U.S. There aren't that many globally. We're looking at a variety of opportunities that may be smaller but still all attractive. I will tell you that what I am encouraged by is that since we've done the NOVUM transaction, or, you know, conversion, of those 119 hotels, and we're more than halfway through with those.
And since we acquired the Ruby brand in Europe, earlier this year, we've seen just a lot of interest from owners in Europe, to do similar things. And I was talking to, I won't name the, the group, but a large very well-known U.S. ownership and management group, yesterday, and again this morning.
They're just saying they have a big portfolio of independent properties. They're saying, "Look, it's just getting harder to be independent." It's getting harder to be independent, because we used to believe that having a great location, strong product, good management team, we could overcome, you know, the value and the cost of being in a brand family.
Just today, between the strength that loyalty can bring, the need for weekend and weekday group occupancy, the technology spend, we just find ourselves trailing the comp set and needing to look at branded opportunities, the value that brands bring. So I think the first. I think it's a structural theme, a secular theme. I think we've proven in examples like NOVUM that we can bring value. We were with the CEO of NOVUM in Berlin a couple of weeks ago.
Stuart and Michael and I were there for a variety of meetings. And he was saying, just for an example, they had 300 people in their corporate staff, before they did the franchise conversion with IHG, which is not even complete. Now they're down close to 100. They had 26 people in IT.
Now they're down to six. Why? Because we're able to extend investments and platforms that we've already created at very small marginal cost to them. But for them to replicate those would be an impossible cost. So there's a huge value creation arbitrage here where we can extend to guests and to owners the value of investments we've made over a decade now, right?
Whether it's in generics, whether it's in loyalty, whether it's in brands, whether it's in technology, whether it's in revenue management, extend it to them at a very low marginal cost, but they just cannot access those on their own. And so I think that there is more to do, whether it's small or large or medium-sized. We'll keep working at it. I wanna make sure that Michael gets in here.
Yeah. I think ultimately on that specific example, one, just a reminder that neither one of the Iberostar or the NOVUM deals were acquisitions. Those were normal deals where we just did key money franchise deals. And I think the other aspect of what we bring, you mentioned the cost savings, but we can also drive revenue. For example, by any right, NOVUM was a very successful company in Germany, grew by 117 hotels, but they could never penetrate Lufthansa, obviously a German company.
Couldn't get them to come stay with them. So as soon as they came into our program, it came into our global sales organization, and all of a sudden, they were able to get Lufthansa into their room nights and started booking. Why is that? Well, Lufthansa wants to work with fewer suppliers as they can. And so they didn't want to have a number of suppliers. We had our global sales program in there, and we were able to drive revenue directly to those hotels.
As you said, there wasn't a key money. Key money. Behind that,
There was at NOVUM, not at Iberostar.
Yes. In the last year, which is not quantified. But as we see more conversions going forward, do you think key money stays at this sort of high-ish level, or could it normalize a bit when?
When we said actually it's gonna normalize a little bit, James, I think, you know, we had the NOVUM deal. A large portion of that came in last year. We've got a little bit this year as well. And really the reason key money, it was a big topic at Q1, as you know. And we really called out, you know, a couple of things. One was NOVUM.
The second was more our move into luxury and lifestyle. If you looked at our openings in luxury and lifestyle in 2019, they were like 25% of our openings. And last year, they were 50%. So almost double what it was back in kinda 2019. And so when you have more luxury and lifestyle, they're bigger boxes, bigger expensive boxes. They tend to come with more key money.
And so really the reason we saw a step up in key money is actually that increase in luxury and lifestyle. And then the third thing is that you have more conversions. And so they, when key money's done, it's actually done when you sign a deal. And a lot of times, those developments can be in there for three to five to six to even seven years or longer, depending on how big the hotel is.
When you do a conversion, it sits in the pipeline a lot less time. And so that, by the fact that we've been signing more conversions where we have key money, that has come out a little faster. But we, like I said, we expect that to normalize as we go into this year.
Other questions before I carry on? Objections. Just sticking with net unit growth then, I know you don't guide, but what's your confidence level in the consensus number for sort of circa 4% this year, including the Venetian loss?
Yeah. So, I mean, if you look at where consensus is, you know, it's roughly about 4.4%. If you take out Venetian, it gets a little bit below at 3.8%. It's about 70 basis points. I think we feel comfortable with where that sits. Actually, if you looked at our Q1, we were 0.7% growth. Actually, a pretty strong growth.
Year to date.
Year-to-date growth in Q1. Last year Q1 that was flat, so that's without the Venetian, of course, and so actually, we started out the year pretty good. I think that gives us confidence that we can continue to grow and, and hit that number where consensus is at. We've got some NOVUMs that'll still come in, so we feel confident that we can hit that number.
Looking forward, do you think that 4% or 3.8% might accelerate a bit? I know you've not got NOVUM next year, so this is not like three and a half X NOVUM, but could that number be north of 4% next year, do you think? What holds you to that?
I mean, look, we're always looking to do better.
Michael's about to say yes, but okay, and if you think about the sort of mix of where the hotels are, obviously you've got a big exposure to luxury and lifestyle, which helps you, but also in China, which is against you. Is 4% net unit growth also 4% to fees, do you think, or is it more, or is it less?
I think when we look at the growth algorithm, I think when you, I think what you're getting is that blending of fees between luxury and lifestyle. And we are moving up in luxury and lifestyle. 13% of our system size today is luxury and lifestyle, 21% of our pipeline. That is gonna allow us to go up a little bit in the terms of the kind of the fee contribution.
But remember, on the other side, is we've got a lot of growth in China. And, and so, and that tends to be in tier two to three markets, with lower RevPAR. So I think in the short term, you see that kind of probably canceling each other out in there. And so we would still go back to our growth algorithm that between the combination of kind of RevPAR and system growth, we would be looking in that fee revenue growth in that high single-digit area.
Right. And other components of revenue line and similar income, you successfully renegotiated the co-branded card last year, which we're gonna travel your income from. You've got the step up in loyalty point sales. Is there anything else? Residential,
To be clear, on the credit card, we expect about 40 million more this year, which is double what it was in 2023. We did say by 2028, it'd be three times. On top of that, we have the co-branded point sales that we're now taking to the P&L. That was 25 million last year. We'll be 50 million this year. In terms of growth on that, obviously, the credit card is doing really well.
And we would expect that to continue to grow past the guidance that we've already given. Then we would expect also the loyalty point sales to grow as we grow our loyalty base and continue to move forward there. We also have many opportunities for credit cards outside of the U.S. Now, it won't be the same scale or quantum.
We're working on, you know, several deals around the world, for with credit card partners. And then I think the other ancillary, piece of revenue that we have is branded residences. It's really a small amount that we have in the P&L today. But we already have 30 branded residences projects underway. And with our new brands like Six Senses, Regent, Kimpton, InterContinental, we see that as a great opportunity to continue to grow that ancillary fee stream. And we see them as really great, additions to hotel builds and being able to drive more residential units as part of that.
Two more quick ones, probably a bit premature to ask it, but Section 889, was it last week? Could that accelerate relisting in the U.S. to reduce the risk of sort of overseas?
Well, I think it's really early to see what's gonna happen with Section 889. To be honest, I think our teams were way on this in advance. We were really well aware of this and actually started working with the U.K. government quite early. I had meetings with them. Members of our board had meetings with members of government.
And this started to raise the awareness there. And I think as we know now, we've seen it in a lot of news, news articles raising awareness there. We've also been lobbying on this side, in the U.S. Elie spent a number of days in Washington talking to folks and explaining our position on how we feel on 889. I am actually in the U.S. I will be in Washington, D.C., next week, meeting with some congressmen and women as well. And so, I think it's still early days.
We don't know exactly how it's gonna play out. So we need to see that. And even if it does still get into the U.S. bill, it doesn't mean that the U.K. is actually targeted with that. And so there's a lot of things that can still happen or in a lot of water to go under that bridge, so to speak. And so I think we've got a lot of time to kinda think through that. We also have ways that we can work through this and within our structures to deal with it. So I think so still some time to go there and let's see what happens.
And then, last question on the impact of AI. Is this more of a sort of, you know, revenue beneficiary? Is it cost driver? Any other factors you think?
I think it's a lot of different things. And, you know, it's early, first of all, in that the whole global AI journey, and certainly in ours. We have identified a series of very specific opportunities where we talk about the revenue management one.
Anywhere where you have very large amounts of data and/or very repetitive activities, that are either being performed inefficiently or being performed at a high labor cost, those are clearly candidates for applying AI to accelerate performance, free people off to do more productive things. So revenue management is one of the massive amounts of data, global application. Number two is customer contacts.
I mean, we are empowering our reservations agents with AI-driven solutions, AI-driven translation, AI-driven text, to have live conversations in many cases with either text conversations or live conversations, but that are AI-assisted or have AI assist directly customers with simple questions. It is quite, quite impressive. I'm gonna use the word impressive. How many people still call to confirm their reservations? Sort of like our parents used to do with flights, called, you know, 10 days prior.
They still call to confirm, "It's, you know, I'm going to the Holiday Inn next Saturday. Just wanna make sure I'm..." "Yes, sir, ma'am. It's fine." But that's perfect for it. I still can free our people to do more value-added things, less repetitive things. In marketing, in advertising, in promotion, in production, we, we are much faster. We're gonna be much faster with that. That's an application right there. Security clearly is an area where we can be much more. We can apply AI, and it's, it's being applied at the hotel level and in, in our data level.
So, we found, you know, a dozen use cases that are applying to it. It's early. We're not gonna be sort of the Google investors in this, but I think there's huge value for us to improve revenues, make processes more efficient, reduce cost, not necessarily reduce, you know, staffing, but improve the effectiveness of our staffing. There's always gonna be a big touch of humanity to what our people do in hotels. But now they can avoid the repetitive tasks and focus on more valuable work.
Great. I think, quick question, Steven.
Just a follow-up on that. Are you generally spending that money, you know, to create your own technology, or are you partnering with, you know, big tech folks, and they're gonna be the ones who are creating the LLMs?
I think both. In many cases, we're partnering. Like with the revenue management system, we partner with somebody for that. You know, for our CRM, we're partnering on that, and that's gonna have significant AI components to it. But you know, for some things, we've got our own internal you know, AI tool called Juno that we use so we can upload our own data and keep it securely in our own space for document production, for document reviews, you know, so that we don't have to use third-party sources.
So I think it's a mix of both. But the more complicated things, we're clearly gonna use third parties. We don't wanna be a tech shop or need to be a tech shop. But I think we have some very qualified people that are able to meet the needs of certain specific tasks internally.
We've done some internally, around cost as well. Elie talked around the revenue side. Within my area, we have one where we actually had a process that dealt with customer interactions. We had 21 people doing that process, responding and resolving those issues in like 30 days. We put in these new processes. We now have three people doing it and responding and resolving those in seven days. So, not only does it create efficiency, it gives you better customer service. That was all done internally. This might be it. We're at time.
Or as you were mentioning there. So Elie, you wanna quick one?
I don't see Dan. I don't see Dan here. I'm gonna throw one more out there.
Yeah.
So this is another AI question, which is, you were saying that you've got all this data. It's very good for data that's repetitive. How do you think through comparing and contrasting your data versus, for example, an OTAs, which maybe is much broader but bigger in some cases versus it seems like you might be deeper? You know, which has a better application for AI in the way you see things right now?
I don't think it's mutually exclusive. I think we have good relationships with the online travel agencies, specifically Expedia, Booking. We're not really in competition. We just, however, believe that for travelers of a certain frequency and above, it makes a lot more sense for them and for us to be direct bookers, to be part of our loyalty plan. But, you know, for the least frequent travelers, like my younger sister who might stay in a hotel once or twice a year, it makes no sense, right? You know, I still want her to book directly at IHG, but she can do her research on an online travel agency.
They clearly have access, as you said, broadly, to many more customers, but certainly not as deeply as the people that stay with us through our loyalty plan, 145 million members, many of whom are staying, you know, six, seven, 70 times, a year. That's a customer lifetime relationship, that we are gonna look to come closer to, to bring more value to with our new CRM system.
We have, I think, the leading app in the industry that is the most interactive, most communicative, also most gainful app where you can pick your awards and change your awards and pick your milestones. It's a variety of things that we do, especially if you're an IHG One Rewards loyalty member, which I'm sure you have, Steven, that we, that I think keep us much closer.
OTAs are gonna be much broader for the infrequent traveler, for those need periods where hotels have unsold inventory at the right rate, for the right time, with the right customer. They're a good channel for us. But for the rest, for those 70% of people that are booking in the U.S. and that are IHG One Rewards members, being part of our system and then sharing that information mutually so we can make their stay more valuable.
Just one last example before I turn off. I mean, we're working with Google on an AI-assisted tool within our app where you can just tell what your itinerary is, what you wanna do, where you wanna go, how you'd like to travel, and it'll spit out some recommendations and itineraries that are, of course, IHG-based. But that's gonna be available only to IHG members. I think that that's where going deeper with our membership is more valuable.
I think also it's not just the data you have. It's the data you can get. If you look at our pricing algorithm and tools that we've just mentioned, Elie talked about earlier, the revenue management tool that we've done, we go out and get lots of data and pull that data in.
We go out and buy data, and there's more and more data becoming available. In knowing where that data is and how it impacts things like demand is really the key. Building the algorithms to help use that to drive it is what's the key. I think more and more data is available. It's not just what does the OTA have? What do we have? It's what can you get and how does it correlate to what you're trying to do?
Great. Well, look, we've gotta leave it there. But Elie and Michael, thank you very much for your time. That was.