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| (From left) Kurt Ritter, Hubert Joly and Thorsten Kirschke from the Carlson Rezidor Hotel Group discuss the newly aligned entity's expansion plans in the U.S. |
PARADISE ISLAND, Bahamas—With all the talk about globalization and international expansion, it’s clear the Carlson Rezidor Hotel Group still sees the United States as a key market for its iconic brands.
The Radisson Blu flag will be available for conversion opportunities in the U.S. this year and there is a possibility of Rezidor’s lifestyle brand, Hotel Missoni, making a U.S. debut, company executives said Thursday during the Carlson Global Hotel Business Conference in the Bahamas.
After the alignment of Carlson Hotels and Rezidor in January, Carlson Rezidor now boasts 1,319 hotels in its global portfolio, and executives hope to grow that number to 1,500 by 2015.
“We’re well-positioned to achieve that target despite some of the economic challenges,” said Hubert Joly, president and CEO of Carlson. “Growth is a key theme.”
“The size of the pipeline indicates the momentum we have,” Joly continued. “The pipeline represents 26% of the number of rooms in operation, which is four times the market average.”
Launched in 2009 with the opening of Hotel Missoni Edinburgh, Rezidor’s Hotel Missoni brand was slow to get off the ground. Initial goals were to have 30 properties in development by 2012, but today there are only five Hotel Missoni properties. However, Rezidor President and CEO Kurt Ritter said he sees an opportunity to bring Missoni to the U.S., with plans on opening one or a maximum of two Missoni properties per year.
Radisson Blu, which made its North American debut in November with the Radisson Blu Aqua Hotel in Chicago, has much more aggressive growth goals. The second new-build U.S. property is scheduled to open early next year at the Mall of America in Minneapolis, and Carlson’s executive VP and COO Thorsten Kirschke said Carlson would be open to converting Radissons and other flags to the more upscale Radisson Blu.
In fact, Joly said the Carlson Rezidor Hotel Group has equity in some Radisson properties in the U.S. and, as the company evaluates renovation strategies, “don’t be surprised if some of them could become Radisson Blu.”
However, the criteria for converting to Radisson Blu will be strict, Kirschke said. Carlson will evaluate opportunities only in high visibility markets and will most likely want to operate the first few.
“We prefer to keep management over the first Blus in North America,” he said. “But that’s not to exclude a very respected management company; we would consider that if the market can carry it and provide the returns.”
Balancing the balance sheet
Carlson Rezidor also might be willing to kick in some sliver equity to help get new properties out of the ground in key markets, Joly said. Carlson owns 10 hotels in the U.S. and there are 72 leased hotels in the Rezidor portfolio. While Joly described Carlson Rezidor as an “asset-light or asset-right” company, he said the company has shown “we’re willing and able to use equity.”
The company owns 50% of the Radisson Blu in Chicago and will own 60% of the Mall of America property, just 25 minutes from the company’s headquarters.
“We are ready to use our balance sheet in the U.S. as well as key markets in Asia,” he said. “We want to establish flagship properties in key gateway cities, and we’re willing and able to use a variety of structures to make progress there.”
Ritter agreed, saying Rezidor will use sliver equity to secure contracts in emerging markets where the company does not lease properties.
However, one growth area that has taken a backseat for Carlson Rezidor is the economy segment. Carlson last year announced that it was evaluating the launch an economy brand but this year said that has fallen off the company’s priority list.
“We’ve done some work in this area, and we’ve decided to put this on the backburner at this time,” Joly said. “As a management company, at this time, we’re very focused on delivering great results. We feel that with the opportunities we have around our other brands we want to prioritize.”
