Red Roof’s NextGen to drive US$10 ADR premium
 
Red Roof’s NextGen to drive US$10 ADR premium
13 DECEMBER 2011 8:42 AM

The economy brand’s recently announced NextGen prototype used years of consumer testing and feedback to yield an economy take on boutique.

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COLUMBUS, Ohio—Red Roof’s guest-centric approach to creating its new NextGen prototype is expected to yield a minimum US$10 average-daily-rate premium, according to the company’s president.

The redesign, announced last week and expected to be phased in completely in two to three years, includes an “economy boutique” feel incorporating years of guest feedback and testing. 

“Economy lodging in particular has become more of a commodity,” said Andy Alexander, president of Columbus, Ohio-based Red Roof. “We’re facing the same problems that our competitors are: How do we differentiate Red Roof as a brand and a brand that’s moving in the right direction? One really substantive way to do that is to take a look at what we provide to our guests in terms of the interior design and in the in-room amenities.”

Red Roof management started the process at its downtown Columbus property, where renovations began more than two years ago. The company started with an updated, boutique-inspired prototype, and then measured customer reaction and responded with tweaks and changes.

 

An artist’s rendering of the new NextGen lobby.

 

“Columbus really ended up being the test kitchen,” Alexander said. “… As we did it floor by floor we were able to create the different version and input different levels of guest and franchisee input.”

The initial prototype called for faux-wood vinyl floors throughout the guestroom, for example. But after collecting guest feedback, the property implemented a square of carpet around the bed so a guest’s first step out of bed was onto a softer, warmer surface.

 

Andrew Alexander, Red Roof President

Another change took place in the shower. The initial NextGen design called for rain-style showers with a faucet mounted from the ceiling.

 

“We had assumed everyone would love it. It fit the boutique trends, the popular trends. … but as time went on, it became less and less appealing, particularly to female travelers because they found it difficult to shower without getting their hair wet,” Alexander said, adding Red Roof reverted to a standard wall shower.

 Other features of the NextGen prototype underscore that value-conscious, common-sense approach of the economy brand’s customers. Each room features more outlets, the ability to plug portable devices such as laptops directly into TVs, and brighter lighting at the desk and bed.

“Our customers, as Red Roof customers are, are pretty practical and value-oriented,” Alexander said. “They really did not ask for significant new or additional amenities. Their goal is to get that quality room at a value price.”

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Engineered for owners
Value was also top of mind for the chain’s independent owners, managers and franchisees, who comprise approximately 150 of Red Roof’s 350 hotels in the U.S. and Canada. Company management sought the input of a franchisee advisory board throughout the prototype design. The result was a functional room that’s easier to maintain with an initial renovation cost of approximately US$7,000 per key. The price does not include the cost of flat-screen TVs, which Red Roof is mandating by the end of 2012.

In addition to the corporately managed downtown Columbus property, other owners that already have signed on for the NextGen renovation include those of the Red Roof Miami Airport and properties in Sacramento and San Diego, Alexander said.

The company will concentrate the initial roll out in major metropolitan markets, with a targeted completion date within the next two or three years, said Rob Wallace, executive VP of brand operations and franchising.

 

Robert Wallace, Executive VP of Brand Operations and Franchising

“It’s going to be an ongoing process, particularly when you take a look at franchise hotels that joined our brand. … They come in with varying degrees of quality,” he said, adding some will be required to do upgrades immediately, while others of higher quality might be phased in two to three years down the road.

 

“We do take them on a case-by-case basis,” Wallace said.

Every property-improvement plan will incorporate the NextGen design, he added.

The end result should yield, at minimum, a US$10 ADR premium, Alexander said. “We’ve been experiencing those types of responses at the Columbus property.”

“We think there’s a sweet spot that we can operate in that’s at the top end of the economy segment, but not quite (midscale),” Wallace said. “This gives us the opportunity, particularly in high demand nights, to cozy up in our pricing close to the midscale hotels but still keeping somewhat of a differential.”

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