THE LEADERSHIP OF Radisson Hotel Group were upbeat during its 2020 Americas Business Conference in Las Vegas this week. The company is entering 2020 moving ahead on the five-year plan it began two years ago and may have news in March regarding new leadership for the company’s Americas division.
At the same time, concerns about the spread of the novel coronavirus COVID-19 out of China, home to RHG’s parent company Jin Jiang International Holdings. The company also launched a new sustainability campaign and announced signings for developments of its upscale RED hotels brand.
Ahead of schedule
During the last ABC meeting in April, it was a year into the five-year plan. In the first month of 2020, the company saw its best market share performance ever, said Kristen Richter, RHG’s senior vice president and chief commercial officer for the Americas during the conference.
“To start a year of with the January that we’ve had in an environment that we’re functioning in where things are kind of slowing, it’s just amazing,” Richter said.
The company’s recent sales blitz generated $16.4 million in new business. It also is ahead of schedule in finishing a repositioning of properties across all brands, with 45 percent of the mass renovation project being complete, said Aly El-Bassuni, RHG’s chief operating officer for the Americas.
“We’re making investments in hotels that we also own and operate across our portfolio and we’ve spent the last two years really mobilizing that effort with our franchise base as well,” El-Bassuni said.
The repositioning has not come without cost.
“We have had exits associated with it. We’ve had properties unwilling or unable and we’ve had to make some tough decisions with those and as a result have exited some hotels,” he said. “Suffice it to say that we’re taking a stance where we mean what we say and we will do what we say we’re going to do.”
At the same time, the company has provided assistance to owners during the process, including its renovation loan program that offers about $10,000 a key toward renovations.
“We ask owners that they obviously buy within our program, design and renovate to our specifications and standards,” El-Bassuni said.
Rolled out two years ago, the program was revised and enhanced this year by increasing the payback period and lowering interest. RHG also offer design and construction services, and Richter added that the company has worked with owners on maintaining sales during the process.
“From a commercial standpoint, as hotels are going through the reposition process, they have lots of questions about what to do if inventory’s out of order, how to sell, how to make sure that their business isn’t coming to a stop,” she said. “The commercial teams work very closely with the franchise properties and provide tools to coach them along the way on what to do.”
The repositioning has its own benefit in RevPAR increases when a property moves up from the company’s at-risk and unacceptable quality ratings to commendable and exceptional levels, El-Bassuni said.
For Country Inn and Suites by Radisson, for example, there is a 20 percent RevPAR premium as of 2019. There is about a 12 percent premium for Radisson Hotels.
“It is a very strong correlation,” he said.
Taking prudent steps to handle COVID-19
As news that COVID-19 was close to being considered a pandemic by groups like the World Health Organization and the Centers for Disease Control and Prevention, it was an unavoidable subject at the ABC.
Federico González, chairman of RHG’s global steering committee, said during a press conference the effects of the outbreak on the company’s business vary by geography.
“The effects in China are important because many of the hotels in China, the level of occupancy is very low. Nobody is traveling. But it’s also fair to say that our China business is very small in terms of fees so it doesn’t have a significant company hit,” he said. “In the U.S. we have not seen any effect of any major cancellation or any trend.”
González also said Jin Jiang is a different company and is primarily a shareholder in Radisson so the impact it feels from the outbreak won’t necessarily roll over to RHG.
“We need to be responsible for what happens in our hotels, with our partners, with our owners, and they need to do the same with theirs,” Gonzalez said. “They’re a serious company, a responsible company.”
During the townhall meeting session of the conference the coronavirus topic also came up and El-Bassuni addressed it.
“We’re a global company,” El-Bassuni said. “Here in the Americas we have taken commercial steps to first of all accommodate what we’re seeing on the global stage. We realize we have inbound traffic and outbound traffic, so the first thing we’ve done is to make sure that we understand that dynamic and are reacting to it from a customer perspective.”
More from the townhall meeting
El-Bassuni also answered a question on RHG’s search for a replacement to replace Ken Greene, who stepped down as the company’s president for the Americas in December.
“I can tell you it’s not going to be me,” he joked. “This month, in March, we will announce the new CEO of the Americas, so stay tuned.”
Another question during the conference townhall was whether RHG would consider moving into the extended stay space. The company has seven brands ranging from upper midscale up, but extended-stay has been “conspicuously absent,” El-Bassuni said.
That may change within this year with a new “tier offering” within the Park Inn by Radisson brand
“We’re working on this as we speak,” he said. “We will bring the product to life operationally and commercially, because you have to be able to support it. It’s a different offering, it’s a different segment, it requires a different set of skills and the ability to operationalize it. If it’s not operated within that model, if it becomes transient, it really doesn’t work.”
Also during the conference, RHG announced it’s a plan to reduce its use of plastics company wide, including the introduction of bulk dispensers for bathroom amenities to replace single use bottles. It also announced the signing of agreements to develop five new hotels in the Americas, including three Radisson RED hotels in Los Angeles, San Francisco and Nashville.
Radisson RED San Francisco Market Street will be part of a historic building that will undergo a $14 million renovation. The 120-room hotel will be near Oracle Park, Moscone Center and Union Square and is expected to open in the third quarter of 2021.
Radisson RED Nashville will be part of an existing commercial building that was renovated to include six additional floors to hold the 120-room hotel. It also is expected to open late next year.
The 380-room new build Radisson Hotel Long Island City is scheduled to open in the third quarter of this year.