RHG focuses on rewards, refreshes to add value

ORLANDO—Radisson Hotel Group’s (RHG) 2018 Americas Business Conference, held here last month at the Rosen Shingle Creek Hotel, was a significant event for the company: It was the first time the group was able to share its strategy with its owners, operators and general managers in the Americas on a large scale since the company announced its rebranding from Carlson Rezidor Hotel Group to RHG at the International Hotel Investment Forum (IHIF) in Berlin.

And it did so amid growing uneasiness about its owner, Chinese travel conglomerate HNA, and its recent spate of divestments of U.S.-based assets, which followed the Chinese government’s seizure of fellow giant Anbang Insurance Group.

But that’s not a concern for Radisson’s executives. Federico Gonzalez, president/CEO of the Rezidor Hotel Group and chairman of the global steering committee of RHG, noted that as a shareholder, HNA has been very supportive.

John Kidd, CEO/COO of Radisson Hospitality Inc., added that HNA doesn’t get involved in the day-to-day minutiae of running the business. “They trust us to be the custodians and managers of the business,” he said. “My colleagues and I spent the last year coming up with a five-year strategic plan that will drive value up. In terms of financing the plan, we’re on top of that. There’s no problem, and as CEO, it’s my concern that we don’t have to go to our parent ever because we need money to carry on the business. We’re capable of doing that ourselves.”

Ken Greene, president of the Americas, put it plainly—he wouldn’t be at RHG if not for HNA. “When they acquired Carlson, I raised my hand and said, ‘I’m in.’ They’re the real deal,” he said. “Yeah, they’re in the news, [but] all Chinese companies are. It’s a political election year—there’s always this sort of thing in China.” And regardless, he added, “Whatever happens with HNA, we’ve got the plan, funding, people, processes—we’re measuring the right things. We’ve got the right people in the company and at the properties.”

When RHG unveiled its new corporate identity earlier this year, it also divulged several other changes: a new signature service philosophy, “Every Moment Matters”; redefined guest experience pillars; and changes to some of the brands (Quorvus Collection was replaced by Radisson Collection, launching in June, and Country Inn & Suites added “by Radisson” to its name, both moves made to better align all of the brands). The company also unveiled new customer-facing benefits and commercial drivers, including Radisson Rewards, the refreshed global loyalty program, formerly known as Club Carlson; Radisson Rewards for Business, designed to drive engagement with professional partners; Radisson Meetings, an enhanced meetings and events offering; and a new digital platform and website that will launch later this year.

“Our ambition is to deliver more guests and lower the cost of customer acquisition,” said Charles McKee, the company’s chief commercial officer. “Our strategy has five components: to create demand through efficient marketing; drive the meetings and events segment of our business; optimize our rate with advanced decision making tools; leverage the guest experience, creating brand preference and loyalty through the experience; and capture online business to drive down the cost of guest acquisition. Enabling this entire strategy is this business intelligence, the data we acquire and use.”

As part of this, the company revealed at the conference that it was waiving the first–night stay fee for Radisson Rewards, meaning the hotels only pay the 5% fee when members return. Additionally, refreshed benefits include triple points when OTA visitors book direct the next time they stay, and a quicker path to elite status.

Eric De Neef, EVP and global chief commercial officer for RHG, said, “We are confident in the way that this will help us drive enrollment.”

So confident, in fact, that the company plans to double enrollment numbers to an average of five per hotel per day globally. “Our properties have hundreds of guests per day,” said Gonzalez. “The number of conversions we should have is much higher.”

Added Greene, “The expectation in the Americas is to have 100% of OTA arrivals be converted and enrolled into Radisson. We love the OTAs. They present inventory to consumers who may not be predisposed to us. It’s another marketing channel. But when a consumer books on an OTA, our owners are spending a lot of money acquiring that customer. And shame on us, and shame on our properties, if they don’t convert that to an everyday customer for Radisson Rewards.”

Other updates announced at the conference are a new technology platform, Emma, and the refresh of the Radisson brand. Launching in 2019, Emma will touch all core functions, including reservations, property management, revenue management, guest loyalty, sales, meetings and events, food and beverage, business intelligence and analytics, among others.

And, as for Radisson? The executives noted that it’s time. “Radisson has a strong legacy and recognition in the market, and that’s what we intend to build upon as we work to refresh, revitalize and rebuild this brand,” said Aly El-Bassuni, SVP, franchise operations, Americas, Radisson Hotel Group. It’s our most strategic brand. It’s where we began, and it is now our namesake.”

He noted that there are four key points to the Radisson business plan: refreshing the brand and portfolio; securing a clear position in the marketplace; enhancing global consistency across the chain; and laying a foundation for future growth.

During the conference, the company revealed new model room designs for the brand, as well as a new tagline (“Simply Delightful”), updated logo, service icon, color palette and overall brand experience that will affect more than 160 Radisson hotels currently in operation and under development. At the heart of the new Radisson brand is natural balance and harmony of the Scandinavian way of life.

To help support the brand’s franchisees, a loan program will be available to help those qualifying to upgrade their hotel to the updated design.

“We need to elevate the quality of Radisson,” Greene said. “We have to do this to ensure we have a consistent Radisson guest experience… We don’t like to ask properties to leave, and so the idea for us strategically is to try to do everything we possibly can—we value those relationships with owners, but we want to help push, pull, incentivize, whatever we can do to get properties to meet those expectations. But, when they don’t, we’re only as good as our worst property and they have to go.” By Q3 of this year, 10-15% of Radisson hotels will be asked to leave the system.

The company has already begun to see development traction in the U.S. with its announcement of a signing for a 320-room new-build Radisson hotel in Midtown Manhattan with developer McSam Hotel Group, estimated to open spring 2019. “Our opportunity to reposition and refresh the Radisson brand starts with improving the quality of the system, but it takes a billboard property, like a Times Square property, to represent that mission,” said Greene.

During the conference, the company also signed a new-build Radisson Blu in Anaheim, CA. Expected to open by summer 2020 with 326 guestrooms, the hotel is being developed by Walter Bowen of BPM Real Estate Group of Portland, OR.

It’s part of a new strategy. “Our strategy is to put Radisson Blu hotels in every single major gateway city throughout the Americas,” Greene said. “We have 21 targeted markets in Canada, the U.S. and Latin America. It is critical for us to have those properties because they serve as a halo effect for all of our brands. We’re having discussions in every one of those markets right now, and what’s amazing for us, and really significant, is when we did our plan, we really thought we’d be looking at conversion opportunities. Almost across the board, they’re new-construction in great locations. When they open, we’ll have the best property in the marketplace.”

Ultimately, the company wants to be one of the top three hotel companies in the world. “If you ask an owner, if you ask someone who wants to work in hospitality, what are the top three companies, one of them should be the Radisson Hotel Group,” said Gonzalez. “It’s not a matter of size; it’s a matter of quality. No matter how big you are or how many countries you’re in, that we are widely recognized as one of the top three hotel companies.”

Greene noted that RHG wants to double its growth in the next five years, but top three doesn’t necessarily mean that. “To me, being top three means you guys want to be with us. I don’t know how you measure that,” he said.

But, he added, RHG has one key advantage—it only has one brand in each segment, and will only focus on five of its eight offerings in the Americas: Country Inn & Suites, Park Inn, Radisson Red, Radisson Blu and Radisson. “When you look at the big hotel companies today, that’s how they got started—one brand per segment,” he said. “Now, they’ve got multiple brands per segment. We’re going back to the roots of hospitality. Back in those days, owners put their hard earned capital into the vision of the brand and they built wonderful properties. Those brands were built on the backs of great owners. Those owners had a voice at the table on how brands migrated and evolved. Today, our great opportunity, with all of the consolidation that has gone on, is really to get back to the roots of hospitality. The pendulum has shifted from 100% owner-focused, to 100% consumer-focused. We believe you have to focus on both.”

“Having one brand per segment is a choice,” Gonzalez added. “It’s not that we can’t invent 25 brands, but we want to create memorable moments; every brand has to mean something.”

“Our distribution pie may be smaller than some of the larger competitors, but the slice of the pie we can give an individual owner in their market is much bigger,” Greene said. “And I think that’s what we’re seeing in the developer community: This sense of having to compete with five or six brands in the same segment that’s part of the same hotel company is very frustrating for an owner. They’re looking at us; we’re a great alternative.” HB