The end of an era; The most lucrative free-night hotel brand gets sold.

For several years, I’ve used Kimpton has my go-to domestic US hotel chain, as they have an excellent top-tier loyalty program, now called Kimpton Karma Rewards.

Costing 430 million dollars in cash, IHG Hotels have announced that they have bought our Kimpton Hotels.

Some notes on the buy-out from IHG:

• Kimpton is the world’s largest independent boutique hotel operator and a sophisticated food and beverage operator.
• Kimpton is a fully asset-light business that manages 62 hotels in the most attractive cities and resorts in the US with a further 16 hotels in the pipeline. It operates 71 hotel-based destination restaurants and bars.
• Acquisition makes IHG the clear market leader in the boutique segment, the fastest growing segment in the industry.
• Highly complementary with IHG’s Hotel Indigo and EVEN Hotels brands; creates a leading boutique and lifestyle hotel business, with over 200 open and pipeline hotels across 19 countries.
• Significant opportunities identified for IHG to accelerate the growth of the Kimpton brand within the US and to launch it globally.
• Compelling financial rationale with Kimpton EBITDA expected to double by the end of 2017.
• The transaction will be earnings enhancing in its first full year and achieve returns above IHG’s cost of capital by year three.

I have some grave concerns about this buy-out:

• Will Kimpton Karma Rewards be merged with IHG Rewards Club? Kimpton’s Karma Rewards Inner Circle status is one of the most lucrative in the industry, offering free nights at new properties, consistent upgrades, lavish welcome amenities, and other can’t-be-found-elsewhere perks. While IHG Rewards Club has its perks depending on the tier, they can’t match Kimpton’s boutique feel.
• Will Kimpton be kept as a separate hotel group, or will they be merged into one of IHG’s brands – such as Holiday Inn, etc.?

Kimpton recently re-branded their loyalty program from InTouch to Karma Rewards, so I’ll be surprised if they decide to merge the programs soon.

I received an email from Mike Depatie, CEO of Kimpton Hotels in an email to Kimpton Karma Rewards members:

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Dear James,

As a loyal member of our Kimpton Karma Rewards program, I wanted to share some very exciting news with you. We’ve just announced that Kimpton Hotels & Restaurants has signed an agreement to be acquired by one of the world’s leading hospitality companies, InterContinental Hotels Group (IHG) www.ihg.com. We’re thrilled to be joining IHG, alongside the nine successful brands already in their portfolio, and see great alignment between our two companies.

Rest assured, this news doesn’t have any immediate impact to your benefits or how you experience Kimpton. We’ll continue to offer the same great perks and benefits through our Kimpton Karma Rewards program across our 62 Kimpton hotels and any reward nights you’ve racked up stay perfectly intact. For the time being, the Kimpton Karma Rewards program and IHG Rewards Club will continue to run as separate loyalty programs.

We’re excited by the opportunities that lie ahead and look forward to expanding the unique Kimpton brand of hospitality.
As I’m sure you can imagine, transitions of this nature always take time. Please know we’ll continue to keep you informed. We just wanted to be the first to share the good news.

We’re always listening and love to hear from you.

Warmest Regards,

Mike Depatie
CEO
Kimpton Hotels & Restaurants

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There’s some important things to note about Kimpton and how their business operates, in my experience and opinion:

• Kimpton operates hotels in major US cities only. So, if you want to stay in a small town in Kansas, you won’t find a Kimpton.
• Kimpton is a boutique hotel chain, so when you call their reservations center, you feel as if you’re calling the hotel itself. Reservations agents are empowered to bend the rules, and consistently seek to please the guest.
• Kimpton Inner Circle members have direct access to talking to the CEO, something very unique for any hotel chain.
• Kimpton has one of the most lucrative loyalty programs in the industry – Inner Circle members get free nights at new hotels, all members get 2 free nights upon staying in 10 unique properties, and all members get 1 free night at any hotel after just 7 stays.

So, it will be interesting to see how IHG treats this as things move forward. I’ve just re-qualified for Kimpton Inner Circle status, and was certainly looking forward to next year and a new series of hotels. In fact, I was in the process of planning a long weekend in Santa Barbara at the Goodland Hotel. I had a great stay a few months ago at their Cupertino, CA property, and continue to have the same good luck across all of their properties.

You can find out more about the buy-out here.

I’m hopeful IHG will not ruin the Kimpton brand. What do you think about the merger?