InterContinental's like-for-like swap fails to reassure investors

The hotel group's share price has been hit after CEO Andy Cosslett's surprise resignation. But do investors have anything to worry about?

by James Taylor
Last Updated: 19 Aug 2013
Replacing your CEO is never an easy task, particularly when you're a big public company. But on the face of it, today's news from Intercontinental Hotels that CEO Andy Cosslett is leaving - to be replaced by CFO Richard Solomons - seemed as good a way as any. After all, Cosslett is leaving the hotel group in a pretty strong position - and by promoting an internal candidate to replace him, the succession should be as smooth as humanly possible. Nonetheless, the news has wiped 4% off IHG's share price this morning. Admittedly the group has suffered in the fall-out from Japan in the last few days - but that's still a nice ego boost for Cosslett as he ponders his next move...

Cosslett is clearly very highly-rated by the markets for his work at IHG, which he joined in 2005 from Cadbury Schweppes. He's focused on becoming an asset-light operator - in other words, selling off the group's property portfolio and letting hotel owners use the brand under licence. He's also done a good job of reviving the Holiday Inn brand, which has been going great guns recently, particularly in China. And although it suffered along with the rest of the industry with the post-recession decline in business travel, revenues have bounced back lately - suggesting IHG is well-placed to cash in as the market picks up.

The question is: will the new man at the helm do anything massively different? It looks unlikely. Solomons has been with IHG for nearly 20 years, and in addition to his CFO role has also been operating as head of commercial development - so he's been working closely alongside Cosslett on all things strategic throughout his tenure. The two men even did the same degree at the same university - so they're clearly cut from pretty similar cloth.

Of course, Solomons will want to put his own stamp on proceedings at IHG (never an easy task for someone that's played second fiddle for so long). And that creates a level of uncertainty that may spook investors slightly. Perhaps, if anything, we’ll see more engagement with Government on ways to boost the leisure industry, an area in which IHG is taking an increasing  interest these days.

But it's hard to imagine a massive strategic departure. And given IHG's recent performance, shareholders are unlikely to complain too much about that. As for Cosslett, we doubt he’ll be short of job offers...

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Want to encourage more female leaders? Openly highlight their achievements

A study shows that publicly praising women not only increases their willingness to lead, their...

Message to Davos: Don't blame lack of trust on 'society'

The reason people don't trust you is probably much closer to home, says public relations...

Dame Cilla Snowball: Life after being CEO

One year on from stepping back as boss of Britain's largest advertising agency, Dame Cilla...

How to change people's minds when they refuse to listen

Research into climate change deniers shows how behavioural science can break down intransigence.

"Paying women equally would cripple our economy"

The brutal fact: underpaid women sustain British business, says HR chief Helen Jamieson.

Why you're terrible at recruitment (and can AI help?)

The short version is you're full of biases and your hiring processes are badly designed....