Executives at Radisson Hotel Group’s Americas Business Conference said the company has been growing its geographic footprint and seeing stronger performance at its hotels now that it’s well into its strategic plan.
LAS VEGAS—Radisson Hotel Group is in the third year of what they described as a five-year plan, and in several ways is ahead of schedule, executives said.
Speaking during Radisson’s Americas Business Conference, Radisson Hospitality President and CEO Federico González said 2019 has been a transformative year for the company. The company expanded its global footprint, entering new destinations that it has looked at for some time.
As of December 2019, Radisson had more than 1,180 hotels with more than 180,000 rooms in operation around the globe. It has another 270-plus hotels representing more than 46,000 rooms under development.
The company opened and signed 72 hotels representing 15,194 rooms in the Americas last year, the majority of which were its Radisson and Country Inn & Suites brands. In Europe, the Middle East and Africa, the company opened and signed 78 hotels with 15,477 rooms, comprising mostly Radisson and Radisson Blu properties. In the Asia-Pacific region, the company opened and signed 39 hotels with 6,785 rooms, led by the Radisson and Park Inn by Radisson brand.
“We remain committed to grow this footprint,” González said.
While the five-year plan started in 2017, González said the company’s strategic goals extend beyond 2022. The company’s leadership team is working on goals and plans for 2024 and 2025.
“The five-year plan is a culture, is a concrete plan, concrete commitments, concrete investments, but it will keep running,” he said.
The company’s main stakeholder, Jin Jiang, has been on the same page as Radisson as it has moved forward with its plans, he said. Jin Jiang has approved every initiative that Radisson has brought forward, including the five-year plan, new capital to invest in IT as well as annual budgets.
The plan has included repositioning properties, which is already paying off for owners, said Aly El-Bassuni, Radisson’s COO for the Americas. The impact improved quality has had on owners’ business operations can’t be overstated, he said.
“Quality is one of my passions, and I firmly believe it is the foundation for performance,” he said. “There’s absolutely no chicken-or-egg debate to be had here. Quality absolutely comes first.”
Since 2018, the Americas operations team has been working in phases to deliver lifecycle product improvement plans to hotels in need of renovation, with its efforts culminating at the end of 2019. Two years in, this program has yielded 450 lifecycle projects in the pipeline, representing more than 70% of the Americas portfolio. All hotels are on track for repositioning by 2022, he said.
Guests are responding to the changes, El-Bassuni said, noting there was a “significant” performance gap between repositioned hotels and those that haven’t been yet in 2019.
Hotels that fit within the company’s top two tiers recorded demonstrably higher revenue per available room than those in the lower two tiers, he said. Repositioned Country inn & Suites by Radisson properties saw a 20% RevPAR premium, equating to about $11 more, over those in the bottom two tiers. For the Radisson brand, the company is similarly tracking a 12% premium of about $8 for properties in its top two tiers.
The company estimates hotel owners in the Americas have invested more than $700 million into their properties as part of the repositioning plan. That means they are on target to reach as high as $1.5 billion by 2022, El-Bassuni said.
Sales and marketing
In 2019, Radisson’s sales team worked hard to place $411 million into owners’ hotels, Radisson Chief Commercial Officer for the Americas Kristen Richter said.
The team secured new revenue-driving partnerships, such as with AARP, that has generated more than $2 million in new business and a global corporate booking portal that brought in more than $1 million, she said. Many owners and operators embraced Radisson’s second annual sales blitz last fall, during which on-property sales teams worked with Radisson’s to generate $16.4 million in local new business.
Radisson launched its new website last summer, transitioning from a complex suite of individual sites to a single hub, she said. The company also launched a new app that makes it easier for Radisson Rewards members and non-members to book and improves loading times.
“In this world of technological complexity, we know that consumers respond to simplicity and ease, so with one website housing our family of brands under one umbrella brands, consumers are connecting the dots and understanding that we have a global portfolio of over 1,100 hotels, where they can redeem Radisson Rewards points,” she said.
Radisson has also introduced a project addressing rate parity issues with online travel agencies, Richter said. The company has a team focused on OTA optimization, ensuring the brand website is positioned to drive the best value to guests using the right tool. The team is looking into solving parity problems created by wholesalers, third parties or hotel-level business practices that are inadvertently favoring the OTAs.
“This ensures that our guests see the best value on our brand site all the time,” she said.
Since launching the project, parity issues have decrease by 29%, she said.
The company launched a revenue optimization consulting service last year, Richter said. Throughout the year, 242 hotels, or 41% of eligible hotels joined the program. Properties that participated for six months or longer outgrew market share by 40 basis points compared to hotels not in the program, she said.