HM on location: Radisson focuses on 3 pillars for growth

Federico J. González addresses owners and managers at the 2020 Radisson Americas Business Conference. Photo credit: Radisson Hotel Group

LAS VEGAS — The theme for the 2020 Radisson Americas Business Conference, held here this week at the Wynn Las Vegas, is “Embrace, Engage, Evolve,” and as Radisson Hotel Group enters the third year of the five-year plan announced in 2018, those three actions—or three pillars, as Aly El-Bassuni, COO Americas, called them as he greeted the attendees during the opening general session—will be front and center for Radisson’s future growth plans.

Three Pillars

Two years ago, we asked you to go on a journey with us as a new company, as a new way of doing business,” El-Bassuni said—and that is where the first pillar comes in, with partners embracing the journey and the company’s plans for global growth. “Together we have transformed the identity for Radisson Hotel Group and for each of our brands. As the new Radisson Hotel Group, we set a fundamental tone for a change in culture and operating philosophy.” 

The second pillar, engaging, means forming a connection between the corporation and the customers—in other words, the owners. “We’ve asked for your feedback through owner surveys, we’ve conducted pilots to measure the success of tools we’ve delivered to you,” El-Bassuni told the attendees. “We asked for your commitment, and once again, you engaged with us.”

The final pillar, evolve, is all about how the company is realizing its potential and achieving new levels of growth. “We are poised to build on that foundation we’ve constructed over the last two years,” he said. The repositioning efforts announced as part of the five-year plan are on pace, he added, with the new room type structure now implemented in 78 percent of the company’s hotels. According to the 2019 earnings statement for Radisson Hospitality AB, the EMEA side of Radisson Hotel Group, the new Ideas revenue-management system, which enables automated dynamic pricing, has been implemented in 43 percent of the portfolio. Reported revenue per available room for leased and managed hotels was 3.3 percent above last year.

Five-Year Plan(s)

As he took to the stage, Federico J. González, president/CEO of Radisson Hospitality AB and chair of the Radisson Hotel Group global steering committee, told attendees that while the five-year plan announced two years back is targeted to wrap up by the end of 2022, new five-year plans are always being developed, and the company already is looking ahead to 2025.

In 2019, the company contracted 10,213 rooms, opened 4,022 more and removed 2,454 from the system. 

The company’s global pipeline is strong, González said, with 286 hotels and 48,000 rooms underway. In the Asia Pacific region, the company signed or opened 39 hotels and 6,785 rooms last year, and has 240 properties with 38,000 rooms open. For the Europe, Middle East and Africa region, the company signed or opened 78 hotels with 15,477 rooms in 2019, and has 545 hotels with 119,000 guestrooms open. Radisson opened or signed 72 hotels with 15,194 rooms in the Americas last year, and has 680 hotels with 76,000 rooms open. 

Five Signings

During the conference, the company announced five new signings. The new-build Radisson Red Los Angeles Arts District will have 140 guestrooms when it opens in Q1 2024. San Francisco, meanwhile, will get its second Red (after the Radisson Red San Francisco Airport, announced during last year’s conference) when the Radisson Red San Francisco Market Street opens as part of a historic building following a $14 million renovation. The 120-guestroom hotel will open in Q3 2021. The brand will make its Nashville debut when the 120-room Radisson Red Nashville Arts District opens in that same quarter as part of an existing commercial building. The renovation for the project will add six stories to the building. 

The 380-room Radisson Hotel Long Island City will open just outside of New York City in Q3 this year, while the newly signed Radisson Hotel Raleigh-Durham Airport in North Carolina will be the first new-build prototype hotel to have the latest Radisson design. The hotel will have 140 guestrooms and extended-stay rooms when it opens in Q3 2021.

COVID-19 and Outbound Chinese Travel

This Americas Business Conference is the company’s second since being acquired by Shanghai’s Jin Jiang International, and compared to last year’s event, the parent company had a significantly reduced presence. The COVID-19 coronavirus outbreak was a topic of conversation among attendees, but the company’s leadership did not seem particularly concerned about the virus’ potential effect on business.

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“So far the negative impact is considered negligible due to the limited impact of Chinese and Asian travellers on our client base,” González said in the earnings statement. During the conference, he noted that the company’s China business is “very small in terms of fees.”  

Three Radisson hotels in China have closed due to the outbreak, González said—not because of sick guests or employees, but because of low occupancy numbers. The company would be working with local authorities going forward as the outbreak continues, he added.

In 2018, Radisson Hotel Group signed two new hotels, Radisson Blu Wuhan ETD Zone and Radisson Wuhan Optics Valley. Radisson Blu Wuhan ETD Zone has postponed its opening to a later date in 2021, and Radisson Wuhan Optics Valley continue to be on track for its opening scheduled in 2024. 

González was more eager to discuss new initiatives with its parent company and efforts to attract outbound Chinese travelers—a demographic he seemed certain would return to being a powerhouse. A range of hotels in markets popular with Chinese travelers will be co-branded with Jin Jiang to attract the demographic when booking, and will get upgrades with features to help them feel comfortable—“small touches that tell them they are in a hotel that understands the consumer,” González said. 

It’s been nearly three months since Ken Greene, Radisson Hotel Group’s president for the Americas, resigned from his position “for personal reasons” after two and a half years in the role, and González said more information on a successor for the role would be coming in mid-March.