LAS VEGAS—RLH Corporation is in an era of transformations as it refreshes its brand portfolio and continues to reposition itself as a franchise-focused business. In the words of President and CEO Greg Mount: “We’ve literally jumped out of the back of the plane, and there’s no crawling back in.”
Brand focus and clarity is key for RLHC moving forward, Mount said. In addition to talking more about the company’s acquisition of the Knights Inn brand from Wyndham Hotels & Resorts earlier this year, Mount also talked about the company’s moves over the last year to sunset a few brands to focus on those which have provided a good return on invested capital to shareholders as well as owners.
RLHC currently has nearly 1,500 hotels representing more than 90,000 rooms across those 11 core brands, ranging from economy to upscale.
In 2017, Mount told Hotel News Now that RLHC was planning to remove some brands from the company’s portfolio and move those franchisees into different RLHC brands.
Today, the America’s Best Inns & Suites and 3 Palms brands have been sunset, according to the company, and Mount said RLHC is “not actively marketing the brands that have been sunset, but (is) continuing to help owners relocate into other similar brands within the family.”
“We talked about that last year and we pretty much accomplished it this year,” Mount said. “By the end of the year, we’ll have the bulk of those out of our system or … redeployed into other brands.
For deeper insight from Mount, HNN sat down with the president and CEO at the conference.
Q: What are some of your favorite highlights from the year?
Mount: “It’s been a busy year. We worked over the last four and half years to really get the company positioned to execute where we’re executing now, and that’s been repositioning brands; it’s been cleaning up the balance sheet; it’s been selling non-core real estate and repositioning the real estate we have. This year, we sold about $21 million dollars’-worth of (earnings before interest, taxes, depreciation and amortization). … We are moving to be a franchising company, and (we) have really put our money where our mouth is as it relates to how the company succeeds going forward. You start to look at the growth, which has been at a 20% clip for quite some time, and now we’re starting to see margin growth really start to take off, which is really the reason you make that transition from real estate to franchise.
“What I’m very, very thrilled about is the culture within our organization … a culture that is self-propelling as it relates to looking for opportunities to be innovative and to challenge the norms and to understand where we’re going three, five, 10 years from now and really start to execute against those strategies. … Lastly, we’ve implemented a program in our organization to really facilitate the growth and the promotion of women in our organization and executive roles. And that’s taken a life of its own.”
Q: How would you describe the economic environment right now, and how are you and your team coping with challenges and disruptors?
Mount: “It’s interesting. You’re seeing a number of the larger hotel companies start to lower their expectations for 2019. Nothing really dramatic … there is a little bit of a softening but not anything to panic about at this point. I think group business is still strong, and that’s usually a good indicator that people are continuing on to do business. On the equity side, you’re not seeing the frothiness for acquisitions. Hotels that you saw in the beginning of this year, there’s still a number of people looking to acquire but … there’s not as much zealousness as it relates to that.”
Q: In what ways are you seeing consumer behavior shift, and how are RLHC’s brands adapting at a pace to keep up with consumers while still delivering a quality product?
Mount: “Many of us, and myself included, have been GMs at hotels, and we understand where the rubber meets the road. You can’t succeed if you don’t understand what the consumer’s expectation is by the segment you’re in. Our goal is to make sure that by segment, we’re meeting those consumers’ expectations. To say you’re going to exceed them is really unnecessary and costly to some degree, and you’re never going to succeed if you’re below them. It’s really been a big point of discussion with us for some of the brands that we’ve acquired to make sure that we’re (moving) toward that consistency. I would make the argument that Knights Inn, with 300-some-odd hotels, has a more recognizable brand than our America’s Best Value Inn with 800-some-odd hotels. But (Knights Inn has) not done a good job over its history with being consistent in delivering the expectations of the consumer, and … we have to spend our time and will spend our time to do that.”
Q: What excites you about the company’s pipeline?
Mount: “The pipeline is always the health of any franchise organization, and we monitor ours very closely. … We have never been in these levels historically, and it continues to grow. You’re starting to see the volume and velocity kick in. What excites me is we have a really large number of midscale and upscale opportunities, and those opportunities drive a significant amount of revenue. … We’ve always built this company with the intention of being able to compete in the midscale and upscale (segments), and now we’re really starting to do it.”
Q: What can we expect from RLHC in 2019?
Mount: “You’re going to start to see us continue to separate ourselves from the other hotel companies as it relates to channel mix and data visualization, making sure that we’re providing competitive demand digitally and … you’re going to continue to see us drive down the fees we charge to franchisees.”