Radisson Hotel Group is laying the groundwork for rapid growth in the Americas of its seven brands serving distinct guest segments.
MIAMI BEACH, Florida—Ken Greene, president of the Americas at Radisson Hotel Group, considers the company’s one-brand-per-segment philosophy “the roots of hospitality,” and said its seven brands are enough to drive the kind of scale Radisson needs while not forcing its owners to “cannibalize” each other.
“An owner coming in and developing a Radisson Blu, for instance, in a major marketplace for us, they’re going to get the whole slice of the pie for that demographic. They’re not competing with four, five, six other brands within the same segment in the same family,” Greene said, adding that’s resonating with owners.
During Radisson’s Americas Business Conference, Kristen Richter, SVP and chief commercial officer, Americas, illustrated that point by asking the audience of owners, GMs and franchisees to twice close their eyes, then open them and quickly make a choice between options presented on a screen. The first time, the choice was between three ice cream cones (chocolate, vanilla and strawberry); next, the choices multiplied to include ice cream in variations of flavors, colors and mix-ins.
“More is not necessarily better,” she said. “Simple is better.”
That’s why Radisson has no plans to acquire or launch any new brands, and is focused instead on organic growth of its current brand portfolio, Greene said.
“Do we want to go out and acquire another brand? I’d never say never, but that’s not our strategy,” he said.
Radisson Hospitality CEO and COO John Kidd said the company’s China-based owner Jin Jiang International is on board with that strategy.
“If we cannot effectively grow organically, why are we here?” he said. “Jin Jiang is not looking for acquisitions. If a project came along that was really worthwhile, had a real business case and could be justified, they would entertain discussion on it. But organic is the way we’re going. We have a lot of work to do. With our seven tightly-focused brands, we have an answer for every segment, and we’re sticking to our knitting and focusing on that. ”
Radisson’s brand portfolio is made up of its core Radisson brand in the full-service upscale segment; upper-midscale, limited-service Country Inn & Suites; Park Inn by Radisson in upper-midscale, select-service; Radisson Red in upscale, select-service; Park Plaza in upscale to upper-upscale, full-service; upper-upscale, full-service Radisson Blu; and its luxury lifestyle/boutique Radisson Collection.
Radisson and Country Inn & Suites properties are heavily concentrated in the Americas (as of December 2018, 132 of 167 hotels in operation; and 468 of 491 hotels in operation, respectively). Radisson Blu’s portfolio of operating hotels includes 258 in the Europe, Middle East, Africa region, 54 in Asia/Pacific and only seven in the Americas as of December 2018. Radisson Red’s six open hotels are split evenly between EMEA and the Americas, while Park Inn by Radisson has 24 hotels currently operating in the Americas, compared to 117 in EMEA and 10 in APAC. Park Plaza (24 hotels open in EMEA, 11 in APAC) and Radisson Collection (nine hotels open in EMEA) currently have no presence in the Americas.
Radisson’s five-year growth strategy calls for expanding those brands in regions and key markets where the footprint is small, and introducing them in places they don’t yet exist, Greene said.
The first priority will be to establish Radisson Blu in the Americas, with a focus on 21 key gateway cities, he said.
“In this part of the world, we don’t quite have a footprint of Radisson Blu, but we’re going to have that very quickly,” he said during a town hall session with Radisson owners, franchisees and GMs.
“We don’t necessarily need to have them all open, but we need to get the contracts signed, to know they will be opening.”
That includes a deal to convert the Toronto Radisson Admiral Harbourfront to the Radisson Blu flag, the first of the brand in Canada.
Much of the development underway with the Radisson Blu brand is also new construction, which Greene noted is somewhat surprising.
“When we did our strategic plan, I’ll readily admit that we thought most of them would be conversion,” he said. “We thought, we’ll get some of these boxes that were Marriotts or Hiltons or others. To our delight, they’re new construction in eight locations.”
Once Radisson Blu is established, Greene said, “we can start to introduce Radisson Collection. We probably will sign our first Collection (property in the Americas) sometime later this year, with the opening in 2020 or 2021.”
New prototype guestrooms for Radisson Red and Park Inn by Radisson are sparking interest among developers in the Americas, Greene said.
“Red needs to be in every downtown, university marketplace,” he said. “It is cool, it has that vibe, and I’m telling you, it is coming. We’re getting so much interest in that new room; it’s getting so much play right now.”
Miami is a great example, with development starting on the Radisson Red Miami Airport, and another Radisson Red just signed in Miami’s Brickell neighborhood, which he said “is perfect for that brand.”
Another exciting project is a new flagship Radisson property being built in Times Square, “the first new construction Radisson has ever seen in New York City,” Greene said.
Park Inn, which has been “fabulous in Europe and Latin America,” is at a price point that is attractive in just about any market, Greene said.
The same can be said for Country Inn & Suites, he said, adding he believes that brand could have “three to four times” the footprint it has now in the Americas.
Other markets in the Americas that are focal points for brand expansion include Buenos Aires and Brazil, “a big market, growing very fast,” Greene said.
Quality and consistency
As Radisson grows its brand footprints, the company is also focused on quality of product, which sometimes means deflagging properties that do not meet brand standards, Greene said.
That effort in the past year has resulted in 18% of rooms in the core Radisson brand exiting the system, he said.
“From a strategic perspective, it’s an easy decision. If you don’t meet the standards, you’re not willing to meet the standards, you have no business being part of the brand,” Greene said.
But, “from a financial perspective, it’s a very difficult decision,” he said.
“To lose revenue today because you think that’s the right long-term financial strategy is a hard thing to do. … If you don’t make the decision to do it, then you live in this constant cycle of never really getting to achieve the financial goals that you want to. At some point, you’ve got to do it the right way. … The returns over the long run are so fabulous, as you’ve got the right properties in the right marketplace, in the right place, doing the right things with the right owners.”
Kidd added that the decision to remove a property from a brand is not made lightly, and includes several attempts to first bring the hotel into compliance.
“It’s also difficult from the point of view that we do value and treasure all of our owners,” he said. “We approach the owners and say this is your project, this is where it is, this is where it has to get to. Can you get there? Can we help you? Can it be done? In 18% of the cases, it just wasn’t going to work out … so we had to part company.”
Kidd equated this strategy to “pruning the rose bush so the next season is going to really, really bloom beautifully.”
Radisson owners have expressed that consistency across the portfolio is important to them, Greene said, noting that “we’re only as good as our worst property.”
“The decision really becomes do I want to keep somebody who is not doing everything at the expense of losing one of the owners who are doing all those things, because if I keep that person who is not doing the right things, the folks doing the right things will leave,” he said.
The best way to drive that brand consistency and elevate standards is to have owners advocate to other owners the value and return on investment from such initiatives, Greene said. It helps that Radisson owners are as involved and as vocal as ever, he said.
“They’re not big complainers; they’re trying to help us grow as a company and as a brand,” he said.
“Peer pressure and the helpfulness of owners to owners … is part of being a brand, part of a bigger culture. They help those worse properties become better. And if you keep on doing that and the worse becomes better and better and better, your worst becomes maybe not that bad. And that’s what we’re heading for.”