Ruby SARL (Ruby Group) has agreed on a strategic cooperation with InterContinental Hotels Group PLC (IHG), by which the Ruby Group will use IHG’s global distribution platform, the IHG One Rewards loyalty program, and IHG’s marketing and sales network at the global level. The deal involves IHG acquiring the Ruby brand and, consequently, the franchise business opportunity, while the Ruby Group focuses on, and continues to grow, its business with its current lease model. The Ruby Group remains independent, with no changes at the shareholder level. The move is expected to accelerate Ruby Group’s already strong growth, providing the company with growth platforms outside of Europe, particularly in the U.S. and Asia. In parallel, the Ruby Group aims for the cooperation to further improve its price realization and hotel margin contribution.
Since its establishment by Founder and CEO Michael Struck in 2013, the Ruby brand has redefined upscale urban hospitality, blending contemporary design, space efficiency, and a disruptive approach to hotel operations. With 20 hotels open across Europe and 10 more in the pipeline, including Stockholm, Edinburgh, and Marseille, the Ruby brand has built a strong reputation as a stylish, space-conscious lifestyle brand that delivers affordable luxury experiences – Ruby refers to its philosophy as ‘Lean Luxury’ – in sought-after city destinations.
Cooperation delivers multiple benefits
The Ruby Group now joins forces with global hospitality leader IHG to accelerate the company’s international expansion. The cooperation provides access to IHG’s distribution platforms across the world and will help to accelerate the growth of the Ruby Group across new markets, where it has set its sights particularly on the U.S. and Asia. In parallel, the Ruby Group expects the cooperation to improve its hotel margins, both by reducing distribution costs and increasing revenue per available room (RevPAR): Via lower OTA commission rates and credit card rates, more direct bookings, and more business from global corporate accounts, particularly from source markets with a higher price propensity.
Opportunity for real estate partners
For real estate partners, this collaboration presents a powerful opportunity, enhancing profit margins and, consequently, rent potential. Additionally, the brand divestment further strengthens Ruby Group’s already strong financial covenant. This comes at an opportune moment: The brand’s highly adaptable, space-efficient model is met with an increasing number of opportunities for adaptive re-use of underutilized office and retail spaces – an area where the Ruby Group, from its inception, has built a strong track record, based on innovative planning, construction, and design solutions. With Ruby’s growth set to accelerate, the goal of Ruby Group’s founder and his team now appears to be within close reach: To establish Ruby as a ‘love brand’ and a leader of the globally growing Affordable Luxury segment.
Well-balanced cooperation framework to sustain success model
While there are no changes at the shareholder level and the Ruby Group continues to operate independently, the cooperation involves IHG acquiring the Ruby brand, with the aim to grow a third-party franchise business. A strategic cooperation framework agreed between the Ruby Group and IHG specifies how IHG and the Ruby Group will collaborate closely in the future development of the brand to preserve its distinctive spirit and its role as disruptive innovator in the industry. The framework also provides for highly efficient collaboration processes in hotel planning and construction, preserving the Ruby brand’s flexibility, space efficiency and investment efficiency, which the brand owes not least to its distinctive modular architectural system. Lastly, and most importantly, the framework agreement safeguards Ruby Group’s highly efficient operating model, including the automatizations and self-service elements which it has developed to achieve its low labour cost ratios combined with high, personal service levels.
About Ruby Hotels
The Ruby Group under the leadership of founder and CEO Michael Struck is breaking new ground with its Lean Luxury philosophy. With a lean organisational structure and concentration on the essentials, Ruby succeeds in creating a contemporary, affordable form of luxury for modern, cost and style-conscious customers. Founded in 2013, the group operates 20 Ruby hotels across Europe, with an additional 10 hotels currently under construction or in the planning phase. Ruby also offers Ruby Workspaces – perfectly equipped workplaces and a creative atmosphere with access to an inspiring office community. Financially strong shareholders support Ruby’s expansion: ECE Group; the Austrian Soravia Group; Franger Investment, a German family office; Ocean Link, a private equity fund; the investor Michael Hehn; and Michael Struck jointly hold the company shares.
