Red Roof's Red Collection soft brand aims for different demographic

The first hotel in the collection is the St. Clair Hotel, a property located in downtown Chicago, set to open in 2018.
The St. Clair Hotel will be the first in the Red Collection when it opens in early 2018.

Every major hospitality company now has at least one soft brand in its portfolio—but many of these brands skew upscale or luxury, leaving a significant portion of the market behind.

Enter Red Roof Hotels’ Red Collection, first announced at the company’s conference in September and slated to debut in Chicago next year with The St. Clair Hotel.

In contrast to Marriott’s Autograph Collection or Tribute Portfolio, or Hilton’s Tapestry Collection, the Red Collection will cater to the “upscale economy to midscale unique” sector, as Andrew Alexander, president of Red Roof, described it. “Upscale economy really came from the notion that the economy traveler really wants the same things that a midscale or upscale traveler wants,” Alexander said. “They want 100 percent consistency.”

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Not "Hip" or "Trendy"

The new brand grew out of customer feedback, according to Marina MacDonald, chief marketing officer at Red Roof: While Red Roof guests (predictably) wanted affordable rates and prime locations, they were uninterested in anything defined as “hip” or “trendy.” Instead, those words were deemed synonymous to “expensive” for the company’s target guests. “We thought for sure ‘hip’ and ‘trendy’ was what they wanted to hear, and we were so surprised by that because they said it was pricey, and we're an affordable brand and we know what people want to have. They want to be in central locations and accessibility and they want affordability…Our guests prefer words like ‘central,’ ‘accessible’ and ‘modern.’ They like things that are downtown.”

In conducting its research, Red Roof found that its guests would be willing to pay an additional $10 to $50 per stay for enhanced amenities and loyalty incentives. The top three drivers of hotel consideration were affordable rates, proximity to local attractions and free Wi-Fi—and all were rated above a free breakfast in customer demand.

At the same time, the company reviewed feedback from the franchisees who wanted to operate unique hotels rather than traditional prototypes. “They want to be on a platform that affords them marketing, distribution and purchasing, but they want to be able to have a design that makes the hotel unique," MacDonald said. "So we married all that listening to what we know is entering into the soft brand category.”

Upscale Economy

Red Roof Plus promoted the concept of “upscale economy,” Alexander said, with significant investment from the franchisees. The Collection hotels, on the other hand, will “adopt the flair and feeling” of their locations—typically in downtown areas, Alexander predicted, and typically with a higher average daily rate. “They are going to be above even a typical Plus property in terms of quality and amenities,” he said.

Red Roof has not yet filed its franchise disclosure documents, so discussions on further growth of the Red Collection beyond the initial Chicago property have been limited—“although we've received many expressions of interest,” Alexander said. “We're looking at cities as big as New York and Austin and Phoenix. We're also looking at cities that have a unique cultural environment—capital cities where there are significant historic and cultural events that occur within the locale, or university towns that have a particularly strong culture tied to the university.”

Beyond the target upscale economy segment, Alexander said, what will set the Collection apart from other soft brands is the support they expect it to get from franchisees. “Those in upper-upscale and luxury spaces, as they've announced their soft brands, often the franchisee community feels like, ‘Well, this is just another way to put a similar level of hotel right next to mine,’” he said. “And so they don't always get a positive reception.” The Red Collection has been received with enthusiastic support from franchisees, he said, because it is designed to bring in new customers who want affordable authenticity. “Introducing this concept into the cities you love to visit will help us attract a new customer who then will be exposed to Red Roof Plus, and Red Roof and will have an opportunity to grow the brand as a result,” he said. “So there's not a competition here because the properties are going to be in locations that typically would not be a perfect location for a Red Roof to thrive.” At the same time, he added, having a Red Collection property will allow franchisees to achieve the higher ADR and the higher revenues per available room that those environments can provide.

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