PHOENIX—The Red Lion brand has always occupied a spot in Greg Mount’s heart, the result of nostalgia-steeped trips up and down the West Coast with family as a child. But when the hotel executive received a call in late 2013 to potentially take over the troubled chain, reality quickly cut through to the flaws.
“The company had become not relevant,” he said during a break at last month’s Lodging Conference at the Arizona Biltmore in Phoenix.
“My first thought was, ‘We could do something really special here, but we have to get the right people. We have to look at this through a different lens,’” he said.
He raised those concerns with the board during the interview process. Mount stressed the need for change, for a new way of thinking that embraced calculated risks and aspired beyond a West Coast footprint.
“They agreed with that strategy, and the rest is really history,” he said.
Fast forward 10 months since Mount officially stepped into the role of president and CEO, and Red Lion Hotels Corporation is almost an entirely different company. Logos have been refreshed; a new tech platform has been introduced; prototypes are being rolled out; new executives have been brought onboard; and the company that years earlier was in the throes of financial turmoil with shareholders calling for an outright sale now appears to be on the fast track for growth.
“We’ve spent the past nine months really rebuilding the organization in its entirety, working on our technology, our e-commerce, our digital marketing—basically our complete ecosystems and building those from the ground up, retooling both our (Red Lion) Inn & Suites and our Red Lion (Hotels) brands just to make them more relevant for the current consumer,” Mount said.
Red Lion Inn & Suites is midscale without food and beverage, he explained, while the Red Lion Hotels brand has F&B outlets and meetings space.
The most recent page in the company’s reversal story turned with the introduction of 3-star lifestyle brand Hotel RL.
“We had to create a conversion brand in the 3-star space to really bring in the lifestyle, upscale feel to a 3-star brand, which we feel is lacking in the marketplace, and to provide owners and operators a great brand to bring to those top 80 (metropolitan statistical areas) they can use to convert those 20-, 25-, 30-year-old boxes at a price point or a basis that’s really competitive for them,” Mount said.
The company also will continue to serve the owners in the Leo Hotel Collection which, as a soft brand, benefits from the RLHC guest distribution system.
Red Lion shares (NYSE: RLH) are up 0.9% year to date. The R.W. Baird/STR Hotel Stock Index, by comparison, is up 13.9% by comparison.
Customers first
Everything executives are doing is driven by the company’s two customer bases: guests and owners, Mount said.
Guests are getting a refreshed Red Lion experience that starts with enhanced digital marketing and e-commerce efforts, including new, responsive websites that allow guests to book with only a few clicks.
Once on property, the physical experience is changing as well. Executives worked with design firm Gettys to introduce new prototypes for the two existing brands as well as the new Hotel RL brands. Mock rooms are being built in the company-owned Red Lion at the Park Spokane, with a further 1,000 refreshed rooms to be rolled out through the system by the first quarter of 2015, Mount said.
Also new to the chain is the Hello Rewards loyalty program.
“Hello Rewards, which is our new loyalty program, is a complete reversal of the typical loyalty program that you see in our industry,” Mount said. “It’s not a points-based program. It’s a retail-oriented program. It’s more surprise and delight and reward and recognition.
“Instead of saying to the customer, ‘You need to stay and do things for me, and I’ll give you this,’ we’re saying, ‘Gee, you just stayed with us? Thanks for staying with us. Here’s a free iTunes song. You stayed with us seven times? Great. Here’s a free room.’ It’s more of an immediate recognition of the consumer who’s coming in.”
The top-to-bottom changes at Red Lion also reflect the needs of owners and operators, Mount said. From rolling out the new rooms designs or signing franchisees to Hotel RL, flexibility is the name of the game.
“We’re flexible,” he said. Regarding the rooms prototypes, “we’re going to say, ‘We have these 30, 40 signature moments. We want you to pick 10 that work for you. Use these 10 to really create that experience for the guest in your location.’ But we’re not about saying, ‘You have to have all of these things right away.’”
Such flexibility extends to Hotel RL as well, he said.
“We’re going to be open to popcorn ceilings or through-the-wall units or things that you typically see in a 20- or 25-year-old box that has good bones and is in a good location,” Mount said. “We’re not going to look to owners or operators to spend a lot of dollars where they’re not going to get a return.”
Terms will be more flexible, too. Termination clauses, for instance, will put the power back in the hands of owners, Mount said, freeing them of binding agreements that encumbers the asset for 20 or 30 years.
And in a break from traditional brand franchising contracts, Hotel RL will offer a flat fee structure instead of royalty fees.
Red Lion also has introduced for owners “RevPak” which brings together “disparate companies that are best in class, figures out a way to create one platform for them all to work on and to deliver that platform,” Mount said.
Executives see it as an all-in-one platform comprising: point of sale; property management system; customer relationship management; central reservation system; revenue management services; and more, each sourced from a difference third-party provider.
“What that allows us to do is to provide our owners and operators the best systems, the most cutting-edge systems that are out there,” Mount said. “And if one of them becomes obsolete, we can unbolt it and bolt something else on.”
Mount thinks his team has put together an enticing offering that will see Red Lion Hotels Corporation expand across the continental United States.
“Our goal is to grow at a pace of 20 to 25 hotels a year and to really take opportunity of what we think the market is right now,” he said. “We brought on an exceptional franchise development team. These are folks who have proven track records in the industry, have been very successful. We’ve put them throughout the nation. We’re really excited and feel confident that we will grow at a strong pace. Our goal is really 100 hotels in 100 weeks, and that’s where we think we’re going to be.”