This week’s news that Carlson Hotels Worldwide is setting up a tiering system for its Radisson brand is a sign that some “normalcy” might be returning to the global hotel industry.
The fact that a franchising company is asking its franchisees to pony up cash for refurbishments with the idea of moving its brand up a level shows that at least one company believes the industry has hit bottom. It will take at least US$8,000 per room to upgrade a standard Radisson Green property’s guestroom softgoods to the Radisson Blu designation. That’s not chump change, but the early reaction from owners is many are ready to make the commitment.
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Hubert Joly |
Carlson also is going to aggressively add Park Inn properties to its North American roster. And it is pushing its successful County Inns & Suites brands into global expansion. That’s not all. During a press conference on Thursday, President and CEO Hubert Joly said the company was moving toward launching a new upscale lifestyle brand this year but backed off because of the bad economy. He declined to say anything more—adding it just isn’t the right time to discuss such things. An upscale lifestyle brand—think Hilton Garden Inn, Courtyard by Marriott, Hotel Indigo and Hyatt Place—is a big void in Carlson’s brand lineup. So is an economy brand. We’ll keep watching for signs the new brand is back on the front burner because if and when that is announced, it will signal the beginning of an upcycle. Remember the last upturn? Something like a zillion brands were launched during a three-year span from 2005 through 2007. That could be repeated when the inevitable upturn occurs and eager developers are looking for any and all opportunities to spend money.
Meanwhile, Carlson has a challenge in upgrading its North American Radisson properties. With a revenue-per-available-room index in the mid-80s, there’s plenty of room for improvement. What’s encouraging is each and every Carlson executive was singing from the same hymnbook during the company’s global conference this week. Their message was clear: Don’t expect an overnight turnaround. The Ambition 2015 program that includes the Radisson remake is a five-year strategy that will have stops and starts along the way.
Good for Carlson for making some bold moves with a brand that has some issues. It has tried to clean up the brand a couple of times during the years, but never has a tiering system been proposed for Radisson. The Radisson Blu brand, which traces its roots all the way back to when SAS Airline envisioned putting upper-upscale hotels at all of its airport hubs, has some serious name recognition in Europe. By adding it to the brand rosters in North America and the Asia/Pacific region, Carlson is making a good calculated risk that it will catch a big upside.