Red Roof looks to build on 2021 momentum

DALLAS—Red Roof’s 2021 regional meeting in the Lone Star State—the first with George Limbert as official president—has served as a kind of victory lap for the brand. From celebrating the company’s strong performance throughout COVID-19 to celebrating its strong development push going forward to celebrating Limbert’s promotion, the mood has been decidedly upbeat.

Limbert took over as president at the end of August after serving as interim president since October 2020. He had served as Red Roof’s general counsel for the previous eight years. Since his appointment, he has been conducting a “Look & Listen” tour, visiting properties in a number of states. The tour has allowed Limbert to meet with individual hotel owners and operators to introduce himself and discuss issues related to their property to identify best practices and also discuss individual concerns.

“I didn't think there'd be much change [taking over as president] since I was essentially doing the job before but there has been a lot of change, and it's been very positive change,” he said. “It has been nonstop and we've accomplished a lot. Just last week, we continued our Look & Listen tour and went to 11 properties in two days. We're doing 12 this week in two days. My goal is to do about 25 a week over four days.”

The visits have highlighted the strength of the company and its partners, Limbert said.

“Having visited dozens of Red Roof properties these weeks, it’s become clear that we have the most unique, resilient and dedicated people in the industry who have weathered the challenges of the pandemic period with amazing success—and are poised for limitless growth in the years ahead,” he said. “Using all the tools at their disposal—new brand growth options, technology innovation, and creative marketing and sales approaches among them—2022 promises to be the most dynamic year in our company’s storied history.”

HomeTowne Studios Growth

One of those brand growth options Limbert mentioned is the newly redesigned HomeTowne Studios by Red Roof brand.

Related: New HomeTowne Studios prototype takes aim at efficiency

The prototype, which was unveiled in August, has a contemporary room design, a cost-effective development footprint and a layout that “sets new standards for improved operational efficiency,” according to the company.

The new design clocks in at 52,000 square feet, down from a little over 69,000 in the original, according to Michael Sharp, VP of design and construction.

“In a nutshell, if it was not income producing square footage or needed for operations, it's gone,” Sharp said of the new design. “People use the term ‘think outside the box.’ We thought inside the box, what goes on constructionwise behind the walls, what can we do to save money?”

Cost per room for the new design comes in at $65,000, including furniture, fixtures and equipment.

“It's not just a pretty picture on a page or a sales pitch,” Sharp said. “This is what these contractors are willing to build this for. So when the franchisees say, ‘Really, you can do it for this,’ I'll give them at least two contractors that we've worked with to put this prototype together that say ‘Yes, we'll build that for that number.’ So, it's a deliverable.”

The new prototype reportedly requires only six employees to operate each location. It has 124 rooms but can be scaled larger or smaller depending on lot size and demand.

Red Roof currently has 67 open and operating HomeTowne Studios properties.

Big Picture

From January to September 2021, Red Roof’s performance numbers were a sign of strength, according to Alex Cisneros, the company’s SVP of revenue generation. Average daily rate reached $63.92 in 2021, up 4.8 percent over 2019, while revenue per available room was $40.47, an increase of 3.8 percent over 2019. Revenue was up 13 percent over 2019, reaching $657 million through the first nine months of the year. Occupancy was the only metric that didn’t surpass 2019 levels, although it came close: the 63 percent achieved was 0.4 percent lower than in 2019.

Cisneros also shared that RevPAR index was up 4.2 percent over 2019. In addition, 70 percent of Red Roof’s bookings were direct bookings and 23 percent were provided by the RediRewards loyalty program.

“The mistakes the industry made in 2008 of dropping rate, discounting, panicking—we didn’t do it this time,” he said. “Even though we were facing such a serious challenge as COVID, many of you did not panic; you really leveraged the support that we provide.

“We have done a fantastic job and I am confident that 2022 will be even better.”

In terms of development, the company has 72 executed franchise agreements in the pipeline, according to Matthew Hostetler, chief development officer.

“We have a robust pipeline that we're finishing in six weeks, we have some good good applications in the house, in great markets with news to come,” he said.  “I'd like to see that total number be closer to three digits and I think we'll be able to get there. 2022 is going to be what I like to [call] a coming-out for this franchise development team, specifically with HomeTowne Studios.”

The company has 668 properties with nearly 60,000 guestrooms open.