PHOENIX—For a U.S. born-and-bred hotel brand, Red Roof Inn has made significant strides beyond domestic borders in the last year, namely in Brazil, Canada and, most recently, Thailand.
During a break at The Lodging Conference, Hotel News Now spoke with Red Roof Inn President Andrew Alexander and Chief Development Officer Phil Hugh about the company’s international partnerships, as well as its growth trajectory in the United States.
Company-wide, Alexander said the brand has made significant growth quickly, yet still has room to expand.
“At the end of 2013 we had 357 properties, and we’re at over 425 now,” he said. “That’s a 20% growth in just 18 months.”
Hugh, who joined the company in December 2013, said he built a sales team and went after development goals that have resulted in what he
calls a “really robust” pipeline.
“We have 425 now. (We’ll have) 450 by the end of this year and 500 right around the corner,” Hugh said.
Domestic growth
“The brand has a lot of runway, especially west of the Mississippi,” Hugh said, referring to domestic growth plans. “We’re really focusing on California, Washington, Oregon—the mountain states.”
He said major cities still elude the brand to some extent, though he has high hopes.
“I’d like to see us do more city-center locations—get into Manhattan, Los Angeles, Seattle, some of these larger cities downtown,” he said. “We have great representation in Chicago, which is a good example of what the product can do, but we need to see some expansion into some of the major metropolitan areas.”
Red Roof’s Plus tier is a big part of the company’s growth plans, Alexander and Hugh said. The company has 38 open now, with an additional 20 in the pipeline, Alexander said. It’s been more than a year since the company rolled out the Plus tier, and Alexander and Hugh said they can see marked improvements in the properties that upgraded.
“As a brand, we should expect to see another dozen or so Plus properties join in 2016,” Alexander said.
Overall, Hugh said he expects Plus properties to make up anywhere from 10% to 20% of the total brand.
Global growth
As the company matures and grows its brand offerings, international expansion opportunities have popped up, most notably over the last year in Brazil, Canada and Thailand.
“What excites me the most is the partnerships we’ve created,” Alexander said. “We have three phenomenal partners, and we wouldn’t be in any of those countries if we didn’t have the partners.”
In mid-September the company signed a deal with Thailand’s Paragon Hotels Limited to develop new-build Red Roof Inn properties across the country’s major tourist markets between 2017 and 2020.
Hugh said Paragon has “a great strategy” and is working on its prototype for the new-build Red Roof Inn hotels in the works. The plan calls for Paragon to break ground on the first properties next year and eventually expand Red Roof across the Asian continent to places such as Myanmar, Laos and Cambodia.
In Brazil, Hugh said the company’s partnership with Nobile Hotéis signed last December “is moving along quite well.”
The deal calls for Nobile to develop 35 to 40 conversion and new-build hotels across Brazil in the next 25 years. The first hotel as part of this partnership opened on 1 September in Curitiba, Brazil.
“Nobile saw a lacking for a consistent (hotel) product, and when they came to the U.S. to find a brand, we were the most consistent they could see in that segment,” Hugh said.
In mid-2014, the company signed a 20-year deal with Pacrim Hospitality Services to develop 40 Red Roof and Red Roof Plus hotels across Canada.
“We’ll start construction by the end of the year … and I think we’ll see some massive growth there in 2016,” Hugh said, pointing to Pacrim’s leader, industry veteran Glenn Squires, as the impetus behind the project.
Overall, Hugh echoed Alexander when he said the company’s growth beyond the U.S. has been due to “really, really great strategic planning by our partners. They’re embracing our teams and what we want to accomplish with the brand.”
What’s next?
Alexander said the company continues to push owners to stay on top of product improvements—an initiative the company leads. (Red Roof’s portfolio is 72% franchised and 28% corporate-managed, he said.)
“Our message to our franchisees is to get your house in order and renovate your properties,” he said. “They’re doing it. Our quality and consistency … is getting even better. That’s always the secret weapon to our success.”