Radisson exec on company’s future with or without HNA
 
Radisson exec on company’s future with or without HNA
11 JULY 2018 8:46 AM

Since its inception, Radisson Hotel Group was intended to combine the quality, offerings, brands and promises of Carlson Hotels and Carlson Rezidor, even as ownership issues surrounding HNA Group refuse to go away.

LONDON—Consistency and quality—and to some extent the threat or opportunity surrounding consolidation—are foremost in the mind of Eric De Neef, Radisson Hotel Group’s EVP and global chief commercial officer.

“There are gaps in the market. You will see more consolidation,” De Neef said. “There also is a gap of quality and consistency between some of our branded assets in Europe and those in the U.S., in some cases enormous.”

De Neef said it is because of these concerns that the newly formed Radisson Hotel Group is laying out a five-year plan to consolidate its own positioning and offerings to both guests and investors.

Radisson Hotel Group’s investment structure has made headlines with principal owner HNA Group as a target of scrutiny from the Chinese government, speculation that it has to sell its assets and the sudden death of HNA founder and chair Wang Jian on 3 July.

“The hotel industry is not a consolidated market,” De Neef said. “Yes, in the U.S., there is integration in around 80% of the market, but that is not the case in Europe.”

De Neef, who added he is convinced the hotel industry has not seen its last consolidation in this cycle, explained how his company has been repositioned. Radisson Hospitality AB, formerly known as Rezidor Hotel Group AB,* is operating in Europe, the Middle East, Asia/Pacific and Africa, with 51.3% of the company owned by HNA. Radisson Hospitality, Inc., formerly Carlson Hotels, is running the show in the Americas, with HNA owning all of it.

The future of Radisson Hotel Group’s ownership under HNA has been widely speculated, but De Neef said the company is in a good state.

“We have the key money for our 2022 plans,” he said. “We do not necessarily need HNA, but we do need owners. Will HNA stay? This is the question that might be asked in the market.”

De Neef said HNA has given no indication it will part with Radisson Hotel Group.

“All the interaction I have had with them, I do not see any flags that say they want to sell us,” he said.

De Neef added Chinese conglomerates such as HNA operate in silos.

“The death of (Wang) Jian will shake (HNA), but there has been no pushback by the owners to our long-term plans,” he said. “It does not make sense for HNA to sell 1.2 million shares in the Radisson Hospitality AB side of things when it already owns the entirety of the other side that owns the distribution and reservation services.

“We hope not to go through a company reorganization again as from a management perspective it is exhausting.”

Growth
De Neef said Radisson Hotel Group has a pipeline of more than 270 hotels with 45,000 rooms to add to its portfolio of 1,150 hotels and 179,000 rooms.

“Our pipeline is 25% of the current number, by 2022,” De Neef said.

The need to grow and be a more consistent entity companywide might fend off the consolidators, De Neef said, but with Marriott International being 10 times Radisson’s size, he admitted the challenges all hotel firms face.

Radisson’s goal is to rank in the top three "top-of-mind" hotel companies.** De Neef pointed to Four Seasons Hotels & Resorts, which he said in the luxury market is a clear sector leader and innovator even though its portfolio numbers approximately 120 hotels.

“Across Radisson, we need a new mindset, and the selling lines we have devised for each brand are not just slogans but part of this new culture,” De Neef said. “We are ending our culture of silos.”

As a result, the company will operate only one website and roll out its refreshed Radisson Meetings platform that De Neef said is now in 1,000 hotels in 96 countries that comprise 6,500 meeting rooms.

The current Radisson five-year plan aims to target operating rooms by 2022, to obtain concrete figures in terms of earnings before interest, tax, depreciation and amortization and to secure concrete net profit by 2022. Additional capital has been raised, De Neef said.

“The €250-million ($293.2 million) bond was completed (on 6 July). It’s done,” he said.

Brands
The differences in the image, consistency and quality of its brands across its markets often can be stark, De Neef said, but that will not merely be answered by volume and development.

“We do not want all our brands to be global,” he said. “Our value proposition is to be focused very much on the markets (brands) are in. Radisson Collection, Blu and Red, we do wish to make truly global—and feeder markets are critical to their success and to boost other brands—but we are also to push some cities and countries that perhaps are not so recognized.”

What is not in the plans, at least for the current five-year period, is a standalone luxury product, De Neef said.

At the top of the Radisson pyramid is its soft brand Radisson Collection, which is being marketed in two distinct lines—“collection-led” and “hotel-led” hotels—De Neef said.

Radisson Collection, with an urban and resorts focus, has a target of 30 hotels by 2020, with hotel-led assets being those it makes no sense for Radisson to usurp the original and well-known identity of the property.

An excellent example, De Neef said, is The May Fair in London, now officially named The May Fair, a Radisson Collection Hotel.

Currently the brand has 15 hotels in operation and under development across the two parts.***

De Neef gave some color to the repositioning of some of the other Radisson Hotel Group brands.

As for Radisson, De Neef said this is one brand where exists that huge gap between the U.S. and Europe. The company aims to grow the brand in urban and airport markets.

De Neef said the company hopes its Radisson Red brand will continue to gain exposure.

“The dream is that at some time people will say ‘we’re going to Red,’ and we can drop the Radisson logo,” he said. “Red hotels are about the buzz, interaction and the social scene.”

After the success of branding around Radisson Blu, De Neef added the company knew it was taking a risk using the word “Red” for another brand—which he said can have negative connotation—whereas the word “Blu,” or blue, has a more positive one.

“We now have work to do (on Red),” he said. “We know we have to be sure we have the right markets for this type of hotel. Africa is, we feel, right, but it is too complicated at the moment. Some markets are too early.”

Radisson Hotel Group might have 220 Radisson Blu hotels in operation, but De Neef said the brand is missing some big spots, notably the West Coast and the East Coast in the U.S. Fourteen cities have been identified in the East Coast, and 21 in all the Americas, including São Paolo Buenos Aires, Argentina. Approximately 30 Blu hotels are targeted for Asia/Pacific.

With 95% of the 140 hotels of the Park Inn brand being in Europe, Middle East and Africa, De Neef said there is no appetite in the U.S., “where it is a volume game and Country Inn already exists.”

The design-led Prizeotel brand has four assets in Germany, the market it intends to concentrate on.

“In the United Kingdom the market is pretty much closed to Premier Inn, the same to some extent in France with Louvre (Hotels Group),” De Neef said. “Asian investors are very excited by Prizeotel.”

Radisson Hotel Group owns 49% of Prizeotel, with the majority owner being German firm Prize Holding GmbH. The other Radisson brand not to have “Radisson” in its title is Park Plaza, operated by PPHE Hotel Group.

*Correction, 16 July 2018: This story has been updated to give the correct former name of Radisson Hospitality.

**Correction, 16 July 2018: This story has been updated to clarify Radisson Hospitality executives' goals for the company.

***Correction, 16 July 2018: This story has been updated to clarify the size of Radisson Hospitality's portfolio and pipeline.

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