RLH Corporation to pursue asset-light strategy to fight hotel 'brand blur'

RLH Corporation plans to cut its existing number of brands from 13 to nine by the end of 2018.

LAS VEGAS – Greg Mount, president and CEO of RLH Corporation, is concerned about the hotel industry. He is concerned travelers don’t understand the difference between the brands that already exist in the hospitality space, and he is concerned that hotel companies continue to introduce new brands despite acknowledging this fact. That’s why, at this year’s RLH Corporation brand conference at the Hard Rock Hotel & Casino in Las Vegas, so much of his team’s discussion was centered on this “brand blur” and how to fight it.

Mount and his team have an answer: They are cutting their existing number of brands from 13 to nine by the end of 2018. Just which brands are on the chopping block remain to be seen, but the company is doubling down on Red Lion, Hotel RL, Country Hearth and its relaunched hotel/motel remix Signature Hotels.

“The brand blur is significant right now,” Mount said, addressing the crowd beneath the orange lights of the Hard Rock’s music venue, The Joint. “There are too many brands with too little differentiation, and consumers are confused. What these brands don’t understand is what is happening, that consumers are making different decisions than they were before, they are shopping differently, and it’s going to affect them.”

Its brand selection is not the only thing RLHC is focused on reducing. Mount also said that, following last year’s brand conference, the company put forth the effort to negotiate down fees its operators paid to online travel agencies. The company successfully reduced the 22-percent fees its operators paid to Expedia to 18 percent, and Mount said his goal is to bring them down further for 2018.

“I feel we delivered on our promise to reduce your costs, and we didn’t do that on a whim,” Mount said. “We had to leverage our technology, our team and our scale to do it.”

In addition, in October RLHC's board of directors approved putting 11 of the company’s remaining 18 owned hotels up for sale. All of the listed hotels, which fall under the Red Lion, Red Lion Inn & Suites and Hotel RL brands, are owned through partnerships with outside investors. At the time, the company said the long-term strategy is to achieve most of its earnings before tax, depreciation and amortization from its franchise business, and to aggressively grow its base of franchise agreements.

High-Tech Ambition

For 2017, RLHC increased revenue per available room 2 percent, and for next year the company is aiming for RevPAR growth of 1 percent to 3 percent, consistent with the rest of the industry. That brief statement on performance was all the time Mount allotted to talk numbers, and he quickly moved on to execution. When HOTEL MANGEMENT spoke with John Edwards, CIO at RLHC earlier this year, he said the company was keen on becoming a technology innovator in the hotel space, and technology took center stage at this year’s brand conference.

In an earlier panel, Edwards said the company is pursuing a mobile-first approach to property-management-system implementation. Having strong Wi-Fi in hotels is as important as offering strong water pressure in a guestroom shower these days, so offering a stronger connection isn’t innovation to Edwards. Instead, he has his sights set beyond the router and on how owners and operators are leveraging mobile devices to improve their processes. This means allowing guests to pay how they want, such as through Apple or Android Pay, WeChat, PayPal and even WalMart Pay.

“We want to move everything to mobile on both the guest and operator side,” Edwards said. RLHC is partnering with hospitality technology company Monscierge to provide direct messaging and mobile concierge services between guests and operators, something that is live today. “Guests are looking for ways to get information from hotels without calling them. The solution we have also has the ability to work on the back end, improving communication within your team.”

Edwards also highlighted the check-out process as something that can be improved by mobile technology. Currently, many travelers in the U.S. simply leave hotels without checking out, causing confusion behind the scenes for multiple departments. Often, it also leaves guests without a final folio.

“We now send a text on check-out immediately, asking if they enjoyed their stay and requesting feedback,” Edwards said. “This drove our TripAdvisor rankings up exponentially, and elicits a more favorable response in general.”

Edwards said RLHC is considering options using the Internet of Things, artificial intelligence and Big Data technology for the future, but it is still starting small.

“From what we hear about autonomous cars, we know AI is a force to be reckoned with,” Edwards said. “However, we are treading lightly and slowly as we move forward with this concept. We want to provide a stronger guest experience while making it less creepy, and without removing the human element.”

The Hotel RL Washington, D.C.

A New Lease on Franchising

The conference also was rife with new schemes to attract franchisees. Roger Bloss, EVP and president of global development at RLHC, took to the stage to offer a one-time deal: for legacy brands considering joining the GuestHouse brand, RLHC is offering a $25,000 credit for the first 25 properties to sign during the next 25 days.

It’s a unique strategy, and far from the only one on the table. Lelee Torres, VP of innovation & strategy at RLHC, dug into the brand’s new plan to drive franchisees to the Country Hearth brand: mobile franchising. In short, RLHC has developed a streamlined mobile tool allowing hotel owners to sign up for franchising using their phones. After filling out a digital form and signing, copies of all necessary documentation are sent to an email address provided by the owner. At this point they are able to enter basic information, licensing terms and enrollments into optional services. Following a 14-day waiting period, owners are able to pay initial fees and ownership fees and voila—they are then inducted into the Country Hearth family.

“This has never been done before in the industry,” Mount said. “We now allow owners to shop online for a franchise, all without having to send a salesperson anywhere.”

As the first day of the conference drew to a close, Bill Linehan, chief marketing officer at RLHC, boiled the company’s directives down to a single message: change is inevitable, so why not embrace it.

“Change is the only constant,” Linehan said. “Brands should evolve as well. All our brands are unique and authentic—there is no brand blur.”