SHERIDAN, WYOMING – Feb. 23, 2025 – In a strategic move to expand its portfolio, IHG Hotels & Resorts has announced the acquisition of Ruby, a “premium urban lifestyle brand for the modern traveler.” This acquisition, revealed in IHG’s full-year earnings report, marks the company’s 20th brand and signals its intent to capture a larger share of the urban micro hotel market.
IHG will pay an initial consideration of $116 million for the Ruby brand and its intellectual property, with potential future payments of up to $190 million tied to the growth of rooms operated by the seller. Ruby, founded in 2013 by Michael Struck, currently operates 20 hotels across Europe, including nine in Germany and locations in London, Vienna, Switzerland, Italy, Ireland, and the Netherlands. IHG anticipates an additional 10 Ruby properties will open by the end of 2027, expanding its presence in cities like Edinburgh, Marseille, Rome, and Stockholm.
Strategic Acquisition for Urban Growth
The acquisition positions IHG to compete in the increasingly popular upper-midscale, select-service, urban micro market. Ruby’s “lean luxury” approach, featuring “a great bed and shower to unique cocktails in destination 24/7 bars, all coming together to connect guests with sought-after cities at the right price,” aligns with the preferences of modern travelers. The brand’s space-efficient designs and flexible concept allow for adaptive reuse of commercial properties, including office conversions, which is a key advantage in dense urban areas.
“This acquisition demonstrates our focus on building our presence in large, attractive industry segments and using our experience of integrating and growing brands and hotel portfolios,” said Elie Maalouf, CEO of IHG Hotels & Resorts. “The urban micro space is a franchise-friendly model with attractive owner economics, and we see excellent opportunities to not only expand Ruby’s strong European base but also rapidly take this exciting brand to the Americas and across Asia, as we have successfully done with previous brand acquisitions.”
Growth and Expansion Plans
IHG plans to accelerate the growth of the Ruby brand, aiming to increase its portfolio to more than 120 hotels within the next 10 years and over 250 hotels within 20 years globally. The company will initially focus on expanding Ruby’s presence in Europe, with plans to introduce the brand to the U.S. by the end of the year. Ruby has demonstrated a strong growth trajectory, achieving a net-system-size compound annual growth rate of 26% over the past five years.
“We continue to strengthen our enterprise to position IHG as the first choice for guests and owners, further improving and growing our brands, driving loyalty contribution, rolling out new hotel technology and increasing our ancillary fee streams,” said Maalouf.
Financial and Operational Details
As part of the master franchise and development agreement, IHG anticipates receiving approximately $8 million in initial franchise fees from the current 20 open hotels and the pipeline of 10 hotels by 2028. By 2030, franchise fees are expected to exceed $15 million, reflecting the brand’s anticipated growth.
The seller’s operating company will continue to operate the existing and future hotels they develop, with each property entering individual franchise agreements with IHG. To incentivize growth, future payments to the seller are contingent on the number of Ruby-branded rooms they operate, with a potential payment of $9 million if they exceed 10,000 rooms and a maximum potential payment if they exceed 20,000 rooms.
The integration of the 20 existing Ruby hotels into IHG’s system is expected to begin later in 2025 and be completed by March 31, 2026, increasing IHG’s global system size by approximately 0.3%. IHG expects to incur approximately $10 million in integration operating costs in 2025.
Ruby’s Perspective
Ruby Founder Michael Struck expressed confidence in the partnership with IHG, stating, “We selected IHG ‘as the right partner to take the Ruby brand and our international expansion to the next level,’ citing IHG’s distribution power ‘and its proven track record of successfully preserving identity and culture when integrating brands.’ He also cited timing: ‘Our unique solutions for efficient adaptive re-use of office space are in high demand, positioning us for strong growth.’”
IHG’s Overall Performance
IHG’s full-year performance highlights included: operating profit up 10%; global RevPAR up 3% for the year, with Q4 RevPAR up 4.6%; U.S. RevPAR up 4.1% in Q4 and EMEAA up 6.9%; net system growth of +4.3% year-over-year with 371 hotels opened; +23% more rooms than the previous year and a 34% increase in room signings to 714 hotels.
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