Carlson changes name to Radisson as owner seeks to shed assets

The Radisson Hotel Louisville North. Photo credit: Radisson

Carlson Rezidor Hotel Group, the Minnetonka, Minn.-based hospitality company whose roots stretch back to 1938 and for decades operated as a family company with a descendant of founder Curt Carlson in a leadership role, is changing its name to Radisson Hotel Group, in a move that sees the company putting its most well-known brand name front and center.

The name change, formalized now but expected for months, comes among myriad changes at the company. Last December, Chinese travel conglomerate HNA Group closed on the acquisition of Carlson Hotels, and after some stops and starts finally settled on who will lead the company. Federico González Tejera, who was first tapped as CEO of Carlson Hotels in January, subsequently left to become CEO of Rezidor, which, according to Rezidor's October Ownership Summary, is now 67.4-percent owned by HNA. Meanwhile, John Kidd, the former president and COO of HNA Hospitality Group, is now CEO of Carlson Hotels. 

Changes were made elsewhere, too. A dramatic reorganization transpired in the Americas, where, in June, Ken Greene, the former CEO of Delta Hotels & Resorts, was named president of the Americas for Carlson Rezidor Hotel Group. From there, Terry Sanders was brought in as chief development officer for the Americas and Charles McKee was appointed chief commercial officer. In November, Mark Williams and Dinesh Chandiramani were hired as VPs of development, with responsibilities for the Eastern and Western regions, respectively. 

Radisson's now new strategy was put in motion during the company's recent Investors Day, in Frankfurt, Germany, part of which revolved around "aligning its global brand portfolio around its leading brand, Radisson, to drive the expansion plans, and marketing, commercial and operational initiatives."

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“Over the next five years, we will build on our unique service heritage of making every moment matter for our guests, owners, shareholders and employees by being a true host and best partner,” said González. “Success of our five-year operating plan means that whenever a guest plans a trip, whenever an investor or owner thinks of a partner, whenever a person wants to work in hospitality—they will all think of our company first.”

Based on an analysis by the company of the current performance and future upside of the business, Rezidor says it aims to deliver revenue growth of 6-7 percent on an annual basis. As investments are needed to successfully achieve these targets, the performance will be modest over Phase 1 of the operating plan (2018 – 2020) where basics of growth will be put in place. Higher growth can be expected between year 2021 – 2022. 

As part of the new global brand architecture launch, Rezidor will also reposition 30-35 of its hotels with a total CapEx spend of €140-150 million. The company will also invest €75-€80 million in fixtures, furniture and equipment (FF&E) and key money in new hotels. The business development strategy will focus on net opening of 13,000 new rooms. As part of a renewed asset-right growth strategy, Rezidor will also focus on entering new lease agreements in mature markets.

HNA's Predicament

As Radisson Hotel Group charts its path forward, its owner, HNA Group, rethinks its own. After a ravenous buying spree, the Hong Kong-listed company is now reportedly looking to unwind from a cluster assets that it used heavy leverage to acquire. In total, it's seeking to divest $6 billion worth of properties worldwide as pressure mounts on the company to speed up disposals so it can repay its debts at the direction of China's government.

As Bloomberg reports, the group reportedly told creditors "it could have a liquidity shortfall of at least 15 billion yuan ($2.4 billion) this quarter and that it’s targeting about 100 billion yuan in asset sales during the first half."

According to many outlets, this includes selling two parcels of land in Hong Kong for about $2 billion to Henderson Land Development. HNA has originally acquired four plots for HK$27.2 billion (around $3 billion) on four plots in Kai Tak, the international airport of Hong Kong from 1925 until 1998. HNA paid well above market expectations. 

It is not clear if HNA will hold onto the remaining two plots of land.

Warut Promboon, managing partner at credit research firm Bondcritic Ltd., told Bloomberg "is making a strategy U-turn," adding that "developers do not buy land to only make 12-percent gross profit."

HNA has also reportedly held preliminary talks with investors about selling a pair of Canary Wharf properties in London, with bidders including Brookfield Asset Management, the Canadian asset manager. 

HNA is also said to be selling U.S. properties valued at about $4 billion, including 245 Park Ave., in New York, which it bought less than a year ago for one of the highest prices ever paid for a building in New York, Bloomberg reports. The company is also looking to sell commercial properties in Chicago, San Francisco and Minneapolis.

There are reports to that HNA could sell some of its shareholdings, including its 25-percent stake in Hilton, which it acquired in October 2016. HNA Group is also shopping around for buyers for its majority stake in Spain’s NH Hotel Group, according to Reuters

The company already sold one building in Sydney for $161 million to Blackstone. 

Amid the fire sale, HNA Group says it remains committed to growing and fueling the expansion of the now former Carlson Rezidor. In January, its chairman, Bai Haibo, told the South Morning China Post that the company would be "the linchpin of a global expansion plan that includes more than doubling its portfolio in China in five years."

In China, the hotel group, which is not well known, has 22 hotels in operation and under development. HNA said it wanted to more than double that number. Globally, the expansion covers increasing the number of hotels by 25 percent and available rooms to over 20,000 from 18,000 by 2020.

"It will surely grow better, and faster in the future,” Bai told the SMCP.

HNA Group is not the only Chinese company under the gun to sell assets. 

Anbang Insurance Group, Dalian Wanda, Fosun International are also said to be on the prowl to unload assets. Blackstone is reportedly in talks to re-acquire a number of assets that it sold to Anbang, including the Waldorf Astoria and 16 Strategic Hotels and Resorts properties it sold to Anbang for $6.5 billion in 2016.

The erstwhile acquisitive Wanda Group is now a seller. Last month it sold two hotels in Australia for a reported $913 million.