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Carlson CEO talks revenue, diversity and more
March 4 2013

Carlson Companies CEO Trudy Rautio addresses key issues facing the company and the overall industry.

Highlights
  • Carlson Companies’ three divisions—Carlson Rezidor Hotel Group, Carlson Wagonlit Travel and T.G.I. Fridays—each represent about one third of the company’s revenue.
  • Diversity is a major push for the company, which has a track record of having women in leadership positions.
  • The company’s expansion plans include adding Radisson Blu projects in the U.S. as well as a number of other branded hotels around the world.

 

CHICAGO—Trudy Rautio, who became CEO of the Carlson Companies last summer, took a low profile during the company’s full-service hotel conference last week at the Radisson Blu Aqua Hotel Chicago.

While she oversees the hotel, restaurant and travel management aspects of the business, the executives of Carlson Rezidor Hotel Group took center stage during the conference.

That doesn’t mean Rautio was in hiding. She was visibly mingling with the more than 500 attendees throughout the conference and had meaningful discussions with a number of the media members present.

Rautio, who has been with Carlson for 15 years, declined to sit down for an official interview but agreed to answer a series of questions via email. Following is an excerpt of that exchange:

HotelNewsNow.com: Carlson has undergone a dramatic change during the past 10 years in terms of becoming a true global company with the influx of executives from Europe. How does that enhance Carlson Rezidor’s position?

Rautio: “Carlson Rezidor Hotel Group is one of the world’s largest and most dynamic hotel groups. The portfolio of the Carlson Rezidor Hotel Group includes more than 1,300 hotels in operation and under development. With that kind of global footprint, which spans 100 countries and territories, it allows us to develop deeper relationships in other parts of the world, which is essential to growing our business. We have leaders from around the world. They understand their markets as well as the international traveler’s needs and preferences. It strengthens us as an international hospitality company.”

HotelNewsNow.com: Hubert Joly spearheaded the Ambition 2015 program for Carlson Rezidor in 2010. Can you please give a brief description of what that program entails, and where it stands with two more years left before the clock strikes 2015?

Rautio: “Ambition 2015 really helped to create discipline in the company and instill better business processes around three easy-to-define objectives: to be the No. 1 company to work for, the No. 1 company to invest with and to create segment leading brands. We planned to grow the company's hotel portfolio by 50%, reaching 1,500 hotels in operation or under development by 2015. As I said earlier, we have made great progress against these objectives to date.

Specific growth objectives for each of our brands include:

Expanding Radisson Blu and Radisson as strong, globally consistent, first-class brands

  • A little over a year-ago, we opened the Radisson Blu Aqua Hotel Chicago, the first Radisson Blu in the U.S. In 2012. We added 33 Radisson Blu hotels globally, growing the portfolio from 239 at the end of 2011 to 272 in 2012. We expect to add 21 Radisson Blu hotels in 2013, including the highly anticipated Radisson Blu Mall of America in mid-March.

Accelerating the growth of Country Inns & Suites By Carlson in key markets

  • Our homegrown Country Inns & Suites brand celebrated its 25th anniversary this past year and has grown to more than 470 hotels worldwide. In 2013, the brand will embark on an evolution that will update the brand’s identity, hotel architecture and interiors into what we are calling “G4” (generation four). We plan to continue expanding this brand primarily in the U.S., Canada, India and Mexico.

Growing Park Inn by Radisson as a winning midscale brand across theaters in key countries

  • We continue to expand Park Inn. In 2012, we opened nine Park Inn by Radisson hotels adding 1,425 rooms globally, and growing the portfolio to 194 hotels and more than 36,000 rooms in operation and under development.

Continuing the push in key emerging economies, with added emphasis on midscale
 

  • In rapidly developing economies, such as China, India and Brazil, economic growth continues, even though it’s slower than in prior years. Those markets present ripe, long-term opportunities for us. The growing middle classes in many of these countries will be traveling more for both business and leisure. We’ve capitalized on opportunities with major development agreements, including a strategic partnership with Bestech Hospitalities to develop 49 Park Inn by Radisson hotels in India over the next 12 years.

As we look ahead beyond 2015, we are now beginning to frame up Vision 20/20. Vision 20/20 builds upon Ambition 201— but goes beyond the fundamentals of how we run our businesses and go to market—to more specifically focus on the customer. We need to think differently and work differently to remain competitive. Innovation and collaboration are at the core of that. But just as important, our customers need to get the sense that they are at the center of what we do, so we will be focused very intently on the customer experience and how we can create bright spots along their travel journeys.”

HotelNewsNow.com: What’s the plan to grow the Radisson Blu brand in the U.S.? Will Carlson have an ownership stake in future Blu properties? If so, what’s the hold plan for the properties you may already have a financial stake in or have one in the future?

Rautio: “We are thrilled with the success of Radisson Blu Aqua Hotel Chicago, and growth is already well underway for the brand in the U.S. as part of our Ambition 2015 strategy. The hotel introduced our upper-upscale concept and is a key element in the revitalization of our brands. In less than a month, we will celebrate the opening of our second Blu hotel in the U.S. with the opening of another flagship property: the Radisson Blu Mall of America. Our Radisson Blu hotel in St. Martin is off and running again after completion of a recent $10-million renovation. We also just announced the conversion of the Radisson Plaza-Warwick Hotel Philadelphia to Radisson Blu this year. In 2014, we’ll convert the Radisson Plaza Hotel Minneapolis to the brand. It’s very exciting.

“Carlson does not have a strategy to own real estate. However, Carlson would be interested in ownership stakes in key markets, similarly to Chicago, in order to grow the brand as well as maintain the standards of the brand as it expands in the U.S. market.”

HotelNewsNow.com: How would you describe the current state of the hotel industry, and what’s your outlook for 2013 and 2014?

Rautio: “We are progressing through 2013 with controlled optimism and a watchful eye on global economic conditions. We will continue to grow and invest in regions where we have the right partners and opportunities, particularly in emerging markets. We are more cautious about the outlook in Europe—where the economic headwinds continue to challenge our businesses.

“The global economic growth projections are mixed. Asia/Pacific is expected to grow at a 7% to 8% rate, while U.S. growth expectations are a modest 2% to 3%, and Europe is still uncertain. Despite these challenges, we’re still projecting overall revenue growth of 3% to 5%. We’re remaining judicious, with a continued focus on performance. Our ability to maintain liquidity and a strong balance sheet remains an important consideration for us.”

HotelNewsNow.com: Guest loyalty programs are a big part of the hotel industry, but there are a number of experts who say they are losing some of their impact. How do you respond to that, and do you see any major changes coming for loyalty programs?

Rautio: “Club Carlson is in a unique position as one of the fastest growing loyalty programs, doubling its membership in three years. We’re nimble and can react quickly to what our members are looking for. When we launched Club Carlson at our business conference two years ago, the goal was to offer one of the most rewarding programs in travel. We have the benefit of being able to quickly implement offers and partnerships for our members.

“That being said, it is our belief that loyalty programs will continue to evolve, customizing the offerings to unique customer attributes, thereby further enhancing the loyalty to our brands.”

HotelNewsNow.com: You are one of a small group of female top executives in the hotel industry. What does it mean to you to hold that distinction?

Rautio: “First, I have to say that Carlson has a long history of promoting diversity. I’m the company’s second female CEO (Marilyn Carlson Nelson was the first). The hotel industry does not have many women in executive positions, however, and therefore I was really sorry to hear that (Kathleen) Taylor was leaving Four Seasons after a long and successful career there. We simply need more representation, and I need to be one of those that paves the way for the women that come after me. I don’t treat that lightly and will try to find ways to improve the odds of success and the representation of women in top leadership in our industry.”

HotelNewsNow.com: Carlson traditionally has been at the forefront of having female executives in key positions. What should the industry be doing to encourage a more diverse corporate structure?

Rautio: “Carlson had the great fortune to have Marilyn Carlson Nelson as a role model, promoter and sponsor. She knew what it meant to pave the way. She established a culture of inclusion where everyone can grow, develop and succeed.

“If you look at hotels or restaurants or travel, women are underrepresented in the executive ranks, so figuring out a way to unlock that potential—and working in hotels with Nancy Johnson (executive VP of development for Carlson Rezidor), who headed up (the American Hotel & Lodging Association) on that initiative—is really important to me. We need to figure out ways to structure jobs so that women with young families do not have to leave the workforce. We need to figure out the factors that best determine success, and we need to encourage more mentoring and sponsorship at all levels.”

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