ORLANDO, Fla. — Radisson Hotel Group, né Carlson Rezidor Hotel Group, is hosting its first-ever Americas conference this week and its objectives are becoming clearer. The company is expanding its focus on North America as part of a plan to double its growth in five years, riding the wave of its name change and the promise of more development.
Federico González, president & CEO of the Rezidor Hotel Group, began the conference with assurances that this five-year plan is not nebulous. “We will not be sharing poetry [with you],” he said. “We will be sharing complete business plans.”
Radisson’s goal is to become one of the top three hotel companies in the world by 2022 and González said this can be achieved by increasing the company’s hotel pipeline and improving its systems contributions to owners and operators. The success of this initiative will be dependent on Radisson’s ability to leverage its name change, something John Kidd, CEO and COO of Radisson Hospitality, said took place to tap into the equity of the company’s leading brand.
“The name ‘Carlson’ was well respected, but it doesn’t carry the weight of the Radisson name,” Kidd said. “Carlson isn’t a hotel company. Radisson is.”
What good is a name that isn’t recognizable? Radisson may not suffer from this issue internationally, with roughly 380 Radisson Blu hotels—the company’s flagship upscale brand—located the world over. The challenge facing the company is that only five such locations exist in the U.S. today. Ken Greene, president of the Americas for Radisson Hotel Group, said the company has plans to open a Radisson Blu hotel in every gateway city in North America, with 21 markets currently earmarked for development in the U.S., Canada and Latin America.
“These are billboard properties; they serve as a halo for the rest of our brands,” Greene said.
Radisson is putting muscle and alacrity behind the brand. Two development contracts were signed directly on stage, adding a degree of theater to the event. The deals are earmarked for New York City’s Times Square and Anaheim, Calif., and a third property was revealed to be planned for Portland, Ore. This is all part of “Phase One” in Radisson’s expansion plans, which necessitates laying out the basics for growth, as well as a clear global brand architecture. Phase Two is all about the exponential growth to come.
Trimming the Fat
While the company is planning to open new hotels in North America, it has also been culling its underperforming properties currently operating in the region. Greene said the company is expecting to remove roughly 15 percent of its existing North American hotels by 2022, with the goal of improving the overall performance of the Radisson portfolio.
“We have a pretty thorough quality assurance process where we measure physical quality, how a hotel embraces brand standards and, most importantly, what guests think of the property,” Greene said. “These are measured every day, and we have thresholds. Our best owners embrace all of those things, and they expect we will enforce them. So we’ve already asked a number of properties to leave our system.”
With great growth comes great monetization—if the growth is managed correctly. The rising cost of acquiring customers was highlighted at this month's Asian American Hotel Owners’ Association’s annual conference, where data thrust into context the ongoing tug of war between hotels and third parties as they book guests, costing hotels money in the process. In combating these rising costs, Eric De Neef, EVP and global branding & commercial officer at Radisson Hotel Group, said that going forward Radisson will be targeting customers that spend more, but cost less to acquire.
"We have worked with teams all over the globe to achieve this goal and ambition. This is key; this is paramount. It is a philosophy we want to drive,” De Neef said. “This is not about a name change. This is about marketing efficiencies, and vertical integration across all commercial brands.”
Loyalty, Loyalty, Loyalty
Marketing efficiency was also a key topic. Charles McKee, SVP & chief commercial officer at Radisson, said in the short term Radisson wants to grow its Radisson Rewards loyalty program, which the company is encouraging by removing a longstanding first-stay fee associated with joining the program. Radisson’s goal for the program is to double its enrollment numbers.
In addition, De Neef said the company is going after guests who book through OTAs, offering an incentive to non-members who enroll on-site and complete their next points-eligible stay within six months. This reward is directly funded by the program, so operators are not required to invest any capital into it directly.
De Neef has high hopes for this program. “We don’t know the conversion ratio,” De Neef said. “What we do know is we have 10 million people booking with us through third parties. If we can achieve a 10-percent conversion ratio, that is 1 million members right away. This is part of acquiring the customer that costs less.”
Greene was slightly more candid.
“The expectation is to have 100 percent of OTA arrivals enrolled into Radisson Rewards,” he said. “We don’t dislike OTAs; they are just another marketing channel. However, our owners are spending a lot of money acquiring those customers that book through OTAs, so shame on us, it should be 100 percent.”
Greene has a lot of faith in Radisson, but he may be most optimistic about the specialized nature of the company’s brands as the company approaches U.S. expansion. With eight brands, one for each major segment, Greene said Radisson is incapable of competing against itself. Not only that, with the full support of the company behind its North American ambitions, Greene is looking at the prospect of development with hungry eyes.
“From a development standpoint, we’re excited, because all we see is white space,” Greene said. “Never before have our global efforts been so aligned with our efforts in the U.S. There is nothing standing in our way.”