Poland IHG invests in urban micro-hotels

For hotel owners, the Ruby brand offers a flexible premium concept in the segment known as ‘urban micro’ (urban microhotels). IHG intends to expand the concept rapidly worldwide.

Founded in 2013, the Ruby brand has 20 hotels (a total of around 3,500 rooms) in major European cities, with another 10 hotels (around 2,200 rooms) under construction. Nine hotels are located in Germany (Cologne, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart), three in the UK (London), three in Austria (Vienna), two in Switzerland (Geneva and Zurich) and one each in Italy, Ireland and the Netherlands. Hotels under construction are due to open in the next three years in other European cities, including Edinburgh, Marseille, Rome and Stockholm.

The Ruby brand has recorded a compound annual growth rate (CAGR) of 26 pct over the past five years. The seller expects the portfolio of hotels under the Ruby brand to grow significantly, and IHG plans to develop the brand together with other hotel owners in Europe and worldwide.

By joining forces with IHG, Ruby Hotels will benefit from a large distribution platform and technology, as well as the IHG One Rewards loyalty programme. IHG expects the urban micro segment to continue to be in high demand among travellers worldwide, which in turn will translate into continued growth in room supply at a faster pace than the global hotel industry as a whole. IHG plans to have Ruby ready for sale in the United States by the end of the year. IHG aims to grow the brand to over 120 hotels in the next 10 years, and then accelerate to over 250 hotels in 20 years worldwide.

We focus on markets in large, attractive segments of the industry and on utilising our experience in integrating and developing brands and portfolios of hotel facilities. The urban micro segment is a franchise-friendly proposition that is economically attractive to owners, and we see excellent opportunities not only to develop a strong Ruby base in Europe, but also to rapidly introduce this unique brand to the Americas and Asia, as we have successfully done with previous acquisitions.
Elie Maalouf, CEO, IHG Hotels & Resorts

The seller's operating company will not be acquired by IHG and will continue to manage the currently open hotels and all future hotels that the seller will develop under the Ruby brand.

We have chosen IHG as a partner to help take the Ruby brand and our international expansion to the next level. The combination of IHG's global reach and resources with the efficiency of our operating and construction model will deliver better returns for both our investors and real estate partners.
Michael Struck, founder and CEO of The Ruby Group

The integration of all 20 existing Ruby hotels into the IHG system is expected to begin in 2025 and be completed by 31 March 2026.

Under the master franchise and development agreement with Ruby, the initial franchise fees that IHG is expected to receive from the 20 existing hotels and 10 in the pipeline (all to be opened by the end of 2027) are estimated at around USD 8 mln in 2028, which will be the first full year when all 30 hotels will be in the IHG system. Taking into account further growth led by the seller, including the opening of additional hotels beyond the current plan, along with IHG's plans for global expansion of the Ruby brand in cooperation with other hotel owners, franchise fees are projected to exceed USD 15 mln by 2030.

IHG Hotels & Resorts is a global hospitality company with a portfolio of more than 6,600 existing hotels in over 100 countries and a pipeline of more than 2,200 new hotels. IHG's brands include Six Senses Hotels Resorts Spas, InterContinental Hotels & Resorts, Vignette Collection, Kimpton Hotels & Restaurants, Hotel Indigo (Luxury & Lifestyle sector), voco hotels, Crowne Plaza Hotels & Resorts (premium), as well as Holiday Inn Express, Holiday Inn Hotels & Resorts, and apartments under the Atwell Suites, Staybridge Suites, Holiday Inn Club Vacations brands.