As Red Lion Hotels thrives, foreign capital takes notice

SPOKANE, Wash. – The Red Lion Hotels Corporation is on a roll. It’s opening a hotel in Baltimore under its new Hotel RL brand next month, absorbing two other brands, reporting double-digit system-wide RevPAR growth and enticing foreign capital to take a weighty position in the company. It’s good times for the Spokane, Wash.-based hotel company.

That was the backdrop for Red Lion’s brand conference here at the Red Lion Hotel at the Park. With 130 hotels, Red Lion may be small compared to the likes of Marriott and Hilton, but what it lacks in inventory, it makes up for in pluck and ingenuity. 

All of this was on display during its conference, as Bill Linehan, Red Lion’s EVP and CMO, established under the tagline of “Make it Worth It.”
“We need to embrace the need to grow and embrace change,” he told the audience of owners and GMs.

In April, Red Lion doubled its size when it acquired 73 GuestHouse International and Settle Inn & Suites franchise license agreements (it’s now in the process of modernizing the brands’ logos and building more relevancy). "This acquisition is another step in our asset-light strategy to re-invest in quality growth opportunities that leverage our pioneering technology and operating programs," said Greg Mount, RLHC president & CEO, at the time of the transaction. 

Red Lion’s approach, not unlike other hotel companies with ownership stakes in real estate, is to divest but retain the management contract.
“We are drawing more attention from the investment community,” Linehan said. 

He’s right. Earlier this month, HNA Group, the Chinese parent of Hainan Airlines, acquired a 15-percent stake in Red Lion Hotels Corp., showing that foreign capital is not afraid to take lofty positions in hotel companies solely with a U.S-based network.

Cross-border investment in either U.S.-based hotel groups or U.S. hotel assets themselves continues to become more widespread, as foreign companies seek to diversify and park their money in the relative safe haven U.S. real estate and companies provide.

Not only is foreign money taking a shine to Red Lion, so is Wall Street. The company’s stock price has risen 29 percent in the past 12 months. “We are expanding aggressively with financial flexibility,” Linehan said. At the end of next month, Red Lion will open the Hotel RL Baltimore, its entry into the hotly competitive lifestyle segment.

Progressive Ethos
Red Lion Hotels is surely one of the more progressive hotel companies as it relates to the overall guest experience. For instance, its Hotel RL brand will have keyless entry, the ability to check into a room via a mobile phone and, soon, the ability for guests to choose the exact room they want.

Meanwhile, Red Lion is offering a new bedding program, a new terry program, new bath amenities, a new coffee experience, mobile check in, guest messaging and a new TV program. 

The company is also embracing the millennial mindset, based on the amount of influence this generation holds, including its influence on baby boomers.

Red Lion is also using such revenue management tools as Duetto and RevPak customer management solution to further engage guests and improve its hotels’ bottom lines. “Increase bookings and decrease costs: That’s what we try to do,” Linehan said.

Red Lion bases much of what it does off of Maslow’s hierarchy of needs, a theory of human motivation, which suggests that people are motivated to fulfill basic needs before moving on to other, more advanced needs, such as self-actualization. “We are creating aspiration with our consumers of today and tomorrow,” Linehan said. 

Other initiatives include a new coffee culture, with signature coffee brands, Whidbey and Victrola, for Red Lion and Hotel RL, respectively.

Tech Bent
Gordy Dhatt, Red Lion’s VP of IT, outlined new launches including new digital lobby signage, improved Wi-Fi (including free 5M premium access for Hello Rewards members), new in-room entertainment (DirecTV Residential Experience replaces Samsung REACH, with 90-plus HD channels), a larger TV (55 inches as a brand standard) and smartphones that act as room keys.

Meanwhile, Jason Thielbahr, SVP of revenue optimization and distribution services, was adamant about how hotels communicate with guests. “We must respond to reviews and we are not doing it like we should,” he said. “TripAdvisor is the digital storefront. If you respond to reviews, you’ll make more money and gain market share.”

Brigette Pence, director of relationship marketing, discussed Red Lion’s Hello Rewards loyalty program, which launched in December of 2014. Linehan disparaged today’s loyalty programs that are points based, referring to them as neither loyal nor hospitable. “We’ve reversed that trend,” he said.

“Hello Rewards is a guest recognition program,” Pence said, telling the audience about two new partnerships with Kind Healthy Snacks and Zipcar.

In addition, Red Lion in July will partner with Amazon to offer Hello Rewards members a $5 Amazon gift card after their first stay.

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