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Carlson poised to expand 50 per cent in five years
Marilyn Carlson Nelson, chairman of the board of Carlson Hotels and daughter of founder Curt Carlson, models one of the new Radisson uniforms unveiled at the company’s annual conference last month.
ORLANDO, FL—In the latest of a number of moves to refine and define its strategy, Carlson Hotels has unveiled its vision for the Radisson, Country Inns & Suites and Park Inns brands, and set a target of at least 500 more hotels worldwide by 2015. With just over 1,000 in the system, that means a total of 1,500 or more in the next five years.
In a newsworthy and hard hitting keynote speech at the company’s first annual convention in two years, president and CEO Hubert Joly called the five-year strategy “ambitious, comprehensive, complete and compelling,” adding that the company is committing both resources and tools, and that it is a great time to invest.
To illustrate the need to move forward, Joly gave the analogy of a bicycle. If you try to direct a bicycle when it is standing still, it doesn’t work. You fall off. But if you are steering a moving bicycle, even if it is on the wrong course, you can adjust and keep moving.
He noted that Carlson is a privately held, family led company with three components: the hotels group, a restaurant division and Carlson Wagonlit travel. Over the past two years, they divested themselves of Carlson Marketing and Regent Seven Seas Cruises, and are now concentrating on these three core businesses.
Carlson now has 1,059 hotels including more than 400 Radissons, 575 Country Inns & Suites and 159 Park Inns, the ‘new kid on the block’. And in 2009, the company added 92 hotels and signed deals for 68 more.
“It may be that we are one of the most global companies on the planet,” said Joly.
Looking ahead, Joly says the company has a core belief in the hotel business today—that the market is coming back and is poised for long term growth.
“It’s a cyclical business, and this may be the best time to invest in this business.” There are growth opportunities in emerging economies and also North America and Europe.
He also noted that consumer behaviour has changed.
There has been an increased emphasis on leisure travel – in 2004, U.S. leisure room nights surpassed business nights for the first time, and continue to do better than business nights.
Travel has changed from being glamorous to being a hassle, with the hotel the only part of the process where the traveller has a chance of being treated like a human being. Carlson brands will strive to be known for their “travel empathy”.
There has been a generational shift which will mean an evolution in each segment’s offering. The millennials are more connected and value conscious.
There’s a need to develop inter-theatre sales as more travellers start to come from emerging countries. That’s why Carlson is looking to establish its first global sales office in New York City.
Carlson’s ambition is to be known as a vibrant, innovative hotel company with its spirit reflected in brands that lead in their segments. They want to be the No. 1 hotel company to work for, and the No. 1 hotel company to invest with, Joly said.
The company will make this happen by establishing a clear, compelling position for each brand, “operationalizing” the brand promises, accelerating development, winning the revenue battle and having a global team and organization.
Radisson bifurcated
For Radisson, this means making it a powerful, globally consistent, first class brand. Carlson wants to build on the success of the brand in Europe, where it is either No. 1 or No. 2 in terms of growth, and gets the second highest customer service ratings in the upper upscale market, second only to a much smaller chain, Steigenberger Hotel Group. This includes a look that is vibrant, contemporary and engaging, with five new model room designs that use bold colours and lighting.
Carlson plans to make Radisson a “bifurcated” brand, differentiating between Radisson Blu (sporting the word Blu and a blue swoosh), an offering in the upper upscale segment, and Radisson, (sporting the green swoosh), as the upscale offering.
Carlson is introducing a range of service concepts at Radisson to promote travel empathy. Some of these innovations are the business class service concept—owners can increase the price and get a premium for this type of service. They have also developed two restaurant concepts—RBG and Filini.
Carlson plans to invest $1 billion to $1.5 billion over the next several years to establish flagship hotels in key U.S. cities at a cost of up to $700 million. This anchors the brand in the right spots. They also plan to spend $50 million to upgrade existing Carlson-owned properties, and up to $600 million for franchise properties. Key money for management contracts, marketing sales support, technology investments and financial support to owners and developers make up the balance.
To win the revenue battle, Carlson plans to increase inter-theatre sales by a factor of two, increase the contribution of brand website sales from 10 per cent to 30 per cent, double the number of members in the loyalty program, work with travel intermediaries, and boost RevPAR by 2 to 3 points.
Joly added that Carlson has removed three management levels between the hotel and senior management over the past couple of years.
“We will modify the course of the bicycle as appropriate, and it’s a journey we will navigate together,” Joly said.
Country Inns & Suites
Country Inns and Suites are midscale properties without foodservice – though they do serve breakfast. The brand is known as being caring and consistent, with a touch of home.
“It’s welcoming, genuine, friends hosting friends,” said Gordon McKinnon, executive vice president and chief branding officer for Carlson.
“You get an upscale feel for a midscale price,” said Steve Mogck, executive vice president and COO Country Inns & Suites - North America.
Country Inns & Suites will be upgrading their breakfast program.
Carlson plans to grow the brand from 495 locations to at least 750 by 2015. One of the challenges is that some of the Country Inns & Suites properties are more than 20 years old, and the company plans to work with franchisees to manage the renovations and make them as easy as possible, Mogck added. Right now, 146 hotels are at the stage where they need no renovations, 334 are in the process of renovating, and two are “under negotiation”.
“Between 2006 and 2011, we will have invested $300 million in renovations into the system—that’s big money,” said McKinnon. The renovations which included “the burning of bedspreads” has meant improvements in both guest satisfaction and RevPAR.
Park Inns are easy conversion properties
Park Inns are known as bright, bold, fresh uncomplicated and fun. They are hugely popular in Europe, where Carlson has built 100 properties in seven years, with 54 more in the pipeline. “They are about to launch in the Americas and Asia-Pacific and are a good conversion or new build property,” said McKinnon.
“Adding colour to life,” is how Jacques Dubois, COO of The Rezidor Hotel Group, and responsible for hospitality at Carlson Hotels, described the Park Inn concept, adding that it has a “distinct visual voice”.
He compared the brand to the iPod. Like the iPod, it has a striking visual design and logo, and needs no instruction manual. He also compared it to IKEA because it provides style and functionality at a very good price.
“Mid-scale hotels have to get out of the ‘beige’ mode and designs that can best be described as conventional,” Dubois said.
This is another brand that has enjoyed great success in Europe, where its distinctive multicoloured checkerboard has been applied to trains, buses, planes, Segways, and cars. In one promotion in Manchester, the company drove a row of checkered Mini cars through the city.
But the biggest selling feature for hoteliers is the price of converting an existing hotel. “ You can do the essentials, converting the hotel for $1,500 per room in Europe, or $1,000 in North America,” Dubois noted.
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