In Vantage deal, Red Lion Hotels adding breadth just tip of the iceberg

Red Lion's leadership. From left: Bernie Moyle, Roger Bloss and CEO Greg Mount. Photo: Christine Thome

LAS VEGAS—A union cemented in October is having its ceremonial reveal this week at the Hard Rock Hotel here.

Red Lion Hotels Corporation acquired Vantage Hospitality Group for approximately $27 million just two months ago, growing RLHC's franchised network exponentially to more than 1,100 hotels with 73,200 rooms.

Still, questions remained about how the two companies would integrate and whether Red Lion would ostensibly be swallowing Vantage whole. Turns out, Vantage—and its key executives—aren't going anywhere.

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Such was the backdrop for Vantage's annual conference, which this year was combined with Red Lion.

One of the executives sticking is Vantage's founder and now former CEO, Roger Bloss, who, with Red Lion, has assumed the title of EVP and president of global development. He greeted the audience, made up primarily of Vantage member hotels, by essentially assuaging any anxious feelings.

"What's been going on with the OTAs, Marriott acquiring Starwood, major hotel companies are combining marketing to leverage buying power," he said.

Added Bernie Moyle, who co-founded Vantage with Bloss and was COO and CFO, "Since day one, our commitment hasn’t changed: Expand your resources. We found the ideal partner in RLHC."

But Bloss admitted that there was impetus for the sale, and that, as he put it, last years vote at this same conference was an alarm. "We weren’t moving," he said, "in technology, in the upscale segment, the Marriott/Starwood sale had happened, and it brought people out of the woodwork talking about it."

The genesis of the deal will be remembered for its alacrity. Bloss approached Greg Mount, Red Lion's CEO, during September's Lodging Conference and the rest is history. "We were looking for the next-generation of leadership."

A New Chapter

After Bloss and Moyle spoke directly to the crowd, they welcomed to the stage Mount, whom, like Bloss, allayed any unease with the deal.

"This is a new and exciting journey," he said. "We will be stronger technologically, while maintaining your unique culture. We are owners and operators just like you. It's a perfect fit."

Moyle, ever the realist and as a CFO focused on two things: money and profit.

One of the refrains for Red Lion/Vantage is 17 in 17, or a 17-percent increase in revenue in 2017. "Members are excited about that," Bloss said.

In regard to integration, Red Lion is currently working on bringing over Vantage websites into a singular environment and working on a new Internet booking engine.

For current Vantage members, not too much, however, is changing. New in-room collateral and signage is not yet a necessity (it will be long term) and the appendage "by Vantage" is sticking on the ABVI and Lexington brands, for now. (New franchises, however, will not).

On the voting docket this year are four measures: breakfast standardization for ABVI; PMS for all select-service brands; a fee vote through 2019 and an alternative conference date next year.

Tech Pivot

Without question, one benefit of the merger is technology. Red Lion has built its reputation on it and evolving technology is a hallmark of the company.

Post-sale, Red Lion held some 25 town-hall meetings with Vantage members to discuss the future. "That member-first philosophy will continue," Mount said.

But it won't stymie progress. With Red Lion at the wheel, Vantage-branded hotels can expect a jolt when it comes to things such as distribution, digital marketing, et al.

"We are growing and expanding online channels that drive the highest margins. Our direct channel will increase exponentially now with RLHC," said Andrew Kraemer, VP of IT & electronic distribution at Vantage Hospitality.

"Consumer behavior is changing and we need to make booking easy and on the platform of their choosing. Our guests expect this."

Kraemer also pointed to the growing ubiquity of mobile bookings and an ever-shrinking booking window, citing this: In October, over one-third of Vantage-brand reservations were booked the day of.

Following Kraemer, Red Lion's marketing guru, Bill Linehan, whose actual title is EVP and CMO, made it clear that everything starts and finishes with brands. They "are our possibilities and we won't leave that to chance," he said.

Linehan pointed to customers and their "shifting mindset."

"Travelers have a different mindset today—from booking to checkout, it’s all changed," he said. "They are obstacle averse and tech savvy. You have to know how they research and book and must assimilate to that new mindset."

In regard to engaging customers, Linehan explained the concept of "perpetual merchandising," or "ongoing promotions to drive engagement and reservations, like in retail," he said, adding: "Digital marketing is sophisticated."

One thing is certain, Red Lion is not scared to go against the grain. Back in August, Red Lion and Expedia announced a newly enhanced partnership by which Expedia.com and Hotels.com will offer RLHC’s Hello Rewards’ member-only rates to existing program members as well as those who opt to sign-up for Hello Rewards via either website. While both Expedia.com and Hotels.com will continue to offer RLHC’s standard rates at the hotel company’s 114 upscale, midscale and economy properties in the U.S. and Canada, travelers who choose the Hello Rewards rate receive the benefits of the hotel program as well as Expedia+ and Hotels.com Rewards loyalty points.

This arrangement showed that a hotel company was not scared to get into bed with an OTA and that the benefits—if correctly strategized—outweighed the cost.

He touted five points that he saw were now indicative of the broader hospitality industry:

1) Consolidation among OTAs and brands. Seventy percent of the OTA market is controlled by Expedia and Priceline. "We must focus on delivering guest experience," Linehan said.

2) Different channels to market and price differently. "Rate parity is a thing of the past," he said.

3) Guest recognition that builds relationships and consumer engagement are paramount to loyalty programs. Do these programs work? Guest recognition needs to be relevant.

4) Hyper-connectivity. "We need to reach consumers at all points."

5) Consumer-generated content tells the brand story. "We must differentiate through unique positioning," Linehan said.

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