Solid growth kickstarts Carlson’s momentum

NATIONAL REPORT – For Carlson Rezidor Hotel Group, 2016 is shaping up to be a year of intense domestic development. The company is pushing forward with a plan to grow its Country Inn & Suites brand from approximately 480 to 600 hotels in the Americas by 2020, a plan bolstered by the addition of around 150 hotels, primarily in the U.S., Canada and Mexico.

According to Greg O’Stean, chief development officer, Americas, Carlson Rezidor Hotel Group, the decision to focus on the expansion of Country Inn & Suites started with the launch of a new prototype (Gen 4) for the brand two years ago. Now, with the industry seeing high occupancy and rates rising each year, Carlson is pushing for the expansion of this brand into as many markets as possible.

“We will get to 600 properties, and exceed that number, but to do that we can’t just focus on tier-1 cities,” O’Stean said. “Country Inn is found in a mix of markets already, but is now consisting of more and more conversions.”

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Country Inn was previously known primarily as a new-construction brand, and the Gen 4 prototype was specifically designed to buck the trend. While the prototype included an expected design refresh, the update also included new, more flexible guidelines for the conversion from competitor brands. In addition to this, the redesign is now more flexible in its requirements for new-build development, and O’Stean said the brand is now more adaptable for urban and suburban locations. The team focused on  lowering building and operating costs in hopes of attracting attention from more lenders and operators.

“This allowed us to look at properties that would not have been conversion properties in the past, but can now still hold onto our Carlson DNA,” O’Stean said. “It’s going to be a big growth vehicle going forward.”

This strategy, according to O’Stean, allows Carlson to take advantage of the hospitality industry’s need for consolidation. “Many of our competitors are oversaturating markets that are already oversaturated with new hotel construction,” he said.

Knowing the markets
Carlson will still be targeting tier-1 markets for development, including Boston; New York; Miami; Nashville; Austin, Texas; San Francisco; San Jose/Silicon Valley, Calif.; Portland, Ore.; and Seattle. These locations were chosen particularly for the company’s new Radisson Red brand, which is targeting millennials by combining design, art, music and fashion. The brand already has two properties under development in Colombia, one in Brazil and another in Minneapolis, the first in the U.S. The company plans to open 60 Radisson Red hotels worldwide by 2020, with other locations under development in Belgium, South Africa, the U.K. and China. 

“The short answer for why Radisson Red is in tier-1 cities is because it’s where the millennials are,” O’Stean said. “They are in the tech markets, the Denvers and the Bostons. It’s a lifestyle select brand that generates the most return in a growing market with higher [revenue per available room].”

The Radisson Red Minneapolis Downtown is expected to open Q4 2016. O’Stean said the location was chosen because of its connection to the new Wells Fargo Office Tower and stadium, as well as its proximity to Carlson’s headquarters. More Radisson Red hotels are expected to be revealed for the Americas in the coming months.

“It’s in our back yard, we have every brand represented [in Minneapolis],” O’Stean said. “When developers come to our headquarters to do a discovery day they are able to see all of what we have. Beyond that, it’s a major emerging neighborhood and there are a number of other hotels coming to the area.”

In terms of international developments, O’Stean said Carlson is placing great emphasis on Asia/Pacific markets to the point of evenly distributing its brands, especially in India and China. EMEA and Latin America have similar growth strategies, with Carlson primarily growing the Radisson Blu and Park Inn brands in those locations. “Radisson Blu is in a short list of tier-1 locations for development, but Radisson can go just about anywhere,” O’Stean said.

The special few
Carlson’s selective Quorvus Collection of luxury properties is also growing abroad. The Collection launched in 2014 with three member hotels: The May Fair Hotel London, the G&V Royal Mile Hotel Edinburgh in Scotland and the Symphony Style Hotel Kuwait. In December 2015, the 231-room Hormuz Grand in Muscat, Oman, became the fourth Quorvus property. O’Stean said that Carlson was drawn to Oman because of its status as an emerging social hub in the Middle East.

“We liked the neighborhood and the hotel itself, but choosing a hotel to join the Quorvus Collection takes time,” O’Stean said. “It’s the opposite of a brand.”

O’Stean said Carlson is always investigating new hotels to be added to the Quorvus Collection, but must be very selective with the hotels it chooses because of the overall concept. “What makes these hotels unique is their approach to interior design, architecture and service,” he said. “We are looking at a number of opportunities around the world for additions to Quorvus, but they would have to be in key markets.”

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