ORLANDO—Carlson Hotels Worldwide executives this week unveiled their blueprint for the next five years, and it includes tiering the Radisson brand into two distinct products—Radisson Blu, which will fit into the upper-upscale segment, and Radisson Green, which will fit into the upscale segment.
The Radisson makeover is part of a billion-dollar program the company hopes will give it a balanced global presence. It also is one of the centerpieces of Carlson’s “Ambition 2015” campaign—a program that is designed to increase by 50 percent the number of hotels in the Carlson system by 2015. The company’s six brands have 1,059 hotels open and 249 contracted in the pipeline (the combined total is 1,308).
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Hubert Joly |
“We are very serious about it,” said Hubert Joly, Carlson’s president and CEO, during the company’s global conference in Orlando. “We are committing the resources and the tools, and we have the team to get it done. … it’s a great opportunity and a good time to invest.” Joly acknowledged the 1,500-hotel plateau is lower than some of the company’s younger executives would like to see, but his belief in under-promising and over-delivering was the deciding factor.
The Radisson makeover
During the conference, various Carlson executives revealed details of Radisson’s makeover, of which details were first reported by HotelNewsNow.com in January.
The Radisson Blu concept is not new—Brussels-based Rezidor Hotel Group has a number of them open in various locations outside of North America. Rezidor is a publicly traded company in which Carlson is a 45-percent stockholder. The first contract for Radisson Blu in the United States is ready to be signed, according to Thorsten Kirschke, executive VP and COO for the Americas. He said he was hopeful to be able to disclose the location of the hotel during the conference, but unexpected delays prevented it.
The company won’t actively roll out the Blu tier until it has critical mass in key cities, and Joly said he expects that to happen by mid-2011.
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Joly said the goal is to have between US$1 billion and US$1.5 billion in investments in the Radisson brand by 2015. “It is a comprehensive program for Radisson,” he said. It will include more than US$700 million to establish flagship Radisson Blu hotels in key U.S. cities. The other money will be spent on upgrading Carlson existing owned Radisson properties (US$50 million), upgrading franchised hotels (US$600 million), acquiring key management contracts (US$70 million) and investing in technology and Web strategies (US$10 million). An additional undetermined sum of money will be set aside for financial support to owners and developers for investment and development purposes.
On the world stage
With 422 Radisson hotels open around the world and 90 more in the pipeline, Thorsten said he figures the brand will have closer to 800 hotels open by 2015—not the 600 that Joly set as a goal. The timing of the program works well for Radisson, which in 2012 will celebrate its 50th anniversary.
“This is a bad world out there,” Kirschke said. “It’s about having lunch or be lunch. We want to have lunch.”
The brand’s performance around the world tells a story of needed improvement in the United States. Kirschke said the 300 Radisson properties located outside of the U.S. have performed well—the revenue-per-available-room index for properties in Europe/Middle East/Africa is 105 and the RevPAR index for Asia/Pacific is 103. The 122 Radisson hotels in North America have a RevPAR index of 86, Kirschke said.
“The gap between North America and the rest of the world has become too big, and that is where the opportunity lies,” Kirschke said.
The company also will slightly shift its focus to have more managed or owned hotels in North America. Ninety-three percent of the Radisson properties in North America are franchised and 7 percent are managed or owned. Kirschke said as part of Ambition 2015, the company hopes to increase the percentage of managed or owned hotels to 15 percent by 2015.
Achieving the brand
To achieve the vibrant, contemporary and engaging brand Carlson is seeking will take some tough decisions. Step one of the process is to wean out non-compliant properties; step two is to rebrand certain properties to the midscale-with-food-and-beverage Park Inn brand and lose a few where owners are unwilling to invest; step three is to upgrade properties to the new brand standards; and step four is add accretive properties to the system. Kirschke said all North American properties already have received, or will receive by the end of the year, a product-improvement plan.
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Outside of North America, all of the Radisson hotels in Europe will be grandfathered under the Radisson Blu umbrella. “But there are plenty of opportunities to explore (Radisson) Green,” Kirschke said.
Jean-Marc Busato, Carlson’s managing director of Asia/Pacific, said Radisson Blu provides an excellent opportunity for expansion in that region because the area gets more inbound travelers from Europe than the U.S. so the name recognition is already in place.
“We believe in the Blu model strongly. We think it’s the right brand for Asia/Pacific,” he said.
Kirschke said Carlson will pursue an asset-light development strategy but will place strategic investment
Joly said that five years from now, he would expect that two-thirds of the Radisson portfolio would have the Blu designation, and one-third would fall into the Green tier. He said that mix could change by region.
“Time is a challenge,” said Kurt Ritter, president and CEO of Rezidor. “You need that critical mass to push it off to a successful start, yet you can’t just nail the blue box on a few buildings. There has to be a few big cities—New York, Los Angeles, Chicago, Atlanta—where the brand can get visibility. That’s a must if you want to play in this league.”
As part of the program, Radisson has five new room concepts: And Relax, Naturally Cool, New York Mansion, Ocean and Urban. There are also two new restaurant concepts: Filini, with an upscale Italian cuisine; and rbg, a bar-and-grill concept. Other operational aspects of the new service program for Radisson include a business-class room offering and three-hour laundry service.