Red Lion Hotels CEO Greg Mount on behaving differently

Greg Mount, the president and CEO of Spokane, Wash.-based Red Lion Hotels, has been on the job now for about a year. And, when Hotel Management spoke to him around this time last year, he told us, “We will continue to accentuate what we have.” But, today, the company has so much more. It’s not only added a new lifestyle brand called Hotel RL, the hotel group, known primarily for properties on the West Coast, has also expanded into markets east of the Mississippi, including Detroit and Baltimore. In light of these developments, it seemed like a good time to catch up with Mount to see how he’s settled into the job and what he has in store for the upcoming year.

1 You’ve been on the job for a little over a year now. How has it gone and have you achieved what you set out to?

GM: This has been a year of change for us—retooling and adapting and bringing the company forward and building for the long term. We focused on our human capital—getting our talent right—building eco systems, getting the technology, reservation and digital marketing systems needed to compete in today’s environment. We also focused on ensuring our branding is right. The rollout of RL has been received very well and included the acquisition of a Baltimore asset in the Inner Harbor, which should open up by this summer. We rolled out a new loyalty program, Hello Rewards, which looks nothing like your grandmother’s program; it’s not point based, but about surprises and recognition and follows a retail ethos. It’s reduced costs to our franchisees and us by two-thirds.

2 Red Lion has primarily been known as a West Coast brand, but now you are moving eastward into markets such as Detroit, Baltimore and Cincinnati. Why the shift?

GM: What resonated for me was taking this 40-year-old organization that has a number of good people and great memories in the west, and taking that Pacific Northwest ethos and moving it east. Those were the marching orders. And now we have the platform to do that. We are talking to owners with similar system hotels who are facing significant PIPs and aren’t going to see that much of an ADR bump because there is such commodification and similar brands in those markets. We are about being in the conversion space and doing it right and focusing on things important to guests and owners. Owners see how we can deliver demand to their hotels in an economical fashion. Having spent years with Starwood, we have learned the nuance of that and understand what the consumer really sees as relevant.

3 What are you specifically doing to show brand differentiation?

GM: For example, eliminating the need for room service by providing a better pick-up menu—great quality that is served in a bento box, done just right, with bamboo silverware instead of plastic. Instead of delivering this big tray, with stainless steel covers, flowers—all the hoopla—we are reducing that expense to franchisees but providing an equally good alternative. Also, eliminating in-room coffee machines. It goes beyond the perception of what the last guest did with that machine, but to the quality of coffee; we are providing a great morning coffee experience in the lobby that is free. Also, instead of a “complete clean,” our standard is a “tidy,” unless guests want a full clean. We are looking at those things so owners can reduce costs and deliver a great experience. We also are focusing on bringing the town center back to the hotel. Years ago, the hotel lobby was the town center where people congregated. We are working on creating an authentic experience in our lobby and bring communities back in.

4 Give us the scoop on the Hotel RL brand, which you announced last October, and how you perceive it.

GM: Hotel RL is a strong three-star upscale brand, an alternative to a Radisson, Wyndham or a Crowne Plaza, and intended to go after the customer who stays maybe four times a year some place. We aren't going after the Marriott, Hilton or Starwood corporate customer who grinds out a lot of stays each year and is very loyal. We are about that 80 percent of demand that stays four nights and goes online and says, I want a good value, but I also want to go to a hotel with a strong online reputation. When we go to Baltimore, we aren’t focused on a particular comp set, our revenue management is looking at things like what’s our online reputation versus other hotels in that entire market and how are we pricing against that. We also struck a deal with Groupon as a channel that hotels can turn on or off. We are looking to behave a little different than other companies.

5 Word is you have a different take on OTAs. What is it?

GM: I actually want to embrace the OTAs. The days of fighting the OTAs are long gone. They own this space. There is no way [we] can match their spend. So the smart thing to do is to figure out how to leverage their spend and book more business at a higher rate through their systems. That’s what you are seeing us do. Again, behaving differently.

INSIDE THE DEAL

Last month, Red Lion Hotels Corporation completed a transaction to accelerate the execution of its national growth strategy. Key components included selling a 45-percent ownership stake in 12 hotels wholly owned by RLHC to Shelbourne Capital and concurrently refinancing all of the company’s secured debt. Three of the hotels, in Salt Lake City and in Olympia and Spokane, Wash., will be renovated and converted to the Hotel RL brand. The remaining nine Red Lion Hotels and Red Lion Inn & Suites will also undergo renovations. All 12 hotels will continue to be managed by Red Lion. Total debt and equity proceeds of the transaction are approximately $99 million, of which the joint venture will use approximately $26 million for planned renovations to the 12-hotel portfolio occurring over the next 12-18 months. “This transaction is pivotal to our long-term growth strategy, providing us with significant growth capital to accelerate the establishment of RLHC as a hospitality company with a national footprint,” said Greg Mount, RLHC president and CEO.

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