RLHC’s growth focus shifts to midscale, upper midscale
 
RLHC’s growth focus shifts to midscale, upper midscale
12 APRIL 2019 8:37 AM

RLH Corporation leader Greg Mount says the company is eager to add more hotels to its portfolio to fill a technology platform that can handle more than 10,000 properties.

ATLANTA—Following its rapid expansion in the economy segment during the past three years, RLH Corporation is looking to establish a significant presence in the midscale and upper-midscale segments.

Greg Mount, RLHC’s president and CEO, said during a break at the recent Hunter Hotel Conference that the company is prepared to forge ahead as quickly as possible to add significantly more hotels to its portfolio.

“We’ll do that both through our organic growth, which this last year (when) we hit 167 new executed franchise agreements,” Mount said. “And, it’s an exciting time for us and then we’re going to continue to leverage our public platform and look to acquire midscale and upscale opportunities that we see out there.”

RLHC is looking to maintain its 20% to 25% annual growth rate as well as add to its market capitalization rate, according to the CEO.

“We’ve built our platform to allow us to add upwards of 10,000 hotels,” he said. “The sky’s the limit for us and, we feel that we’ve built a better mousetrap and we’re excited to get out and deploy it.”

The company, which had 1,327 hotels comprising more than 86,000 rooms in its portfolio at the end of 2018, has learned from its recent acquisitions, according to Mount. The buys include GuestHouse International in 2015, Vantage Hospitality in 2016 and Knights Inn in 2018.

“We’ve gotten fairly good and adept at transitioning (brands),” Mount said. “We’ve got (Knights Inn) on our platform fairly quickly, we’ve been working hard to educate (owners) on how to pull the levers and how to succeed, and we’re starting to see some results that are exciting for us and exciting for them.”

Mount said the goal for RLHC is to step up the franchise sales goals to grow Knights Inn, which RLHC bought from Wyndham Hotels & Resorts.

“We really felt it was an iconic brand and it’s one that’d really become not relevant in the space, and that’s kind of where we started,” Mount said. “We felt that we could do some of the things we’ve done with some of our other brands to really reposition it. And so we focused on the keys—let’s make sure they have good Wi-Fi, let’s make sure they have a good bed, good shower, good TV … in a hotel that’s well-maintained.”

Meanwhile, RLHC’s asset-light program is going according to plan as it has sold nine of the assets that it put up for sale in 2017, Mount said.

“We’ll probably go ahead and hold those (two unsold assets) for a bit and (refinance) them and wait for the market to be a little better-positioned to sell them here in the future,” he said. “We have another couple assets out right now that we think are attractive and people are interested in, so there is equity on the sidelines that’s interested in acquisitions, I think it’s just taking a little longer than it did maybe a year ago.”

The company’s plan is to sell assets and retain the franchise rights for them, according to the CEO.

“We’ve been very successful with that over the last five years—I think we’ve only lost one during a sale that we didn’t maintain the franchise on out of probably 20 to 25 hotels,” Mount said.

Technology plays a big role
RLHC continued its emphasis on technology with its 5 March launch of RLabs, a wholly owned subsidiary that will act as a lodging technology innovator.

The company built a platform to leverage technology and innovation to look at how room demand is created a little bit differently—more in line with what consumers see with Google, Amazon and other big online retailers, according to Mount.

The company placed RevPak, its core customer acquisition, guest management and business intelligence platform, as the foundation of RLabs. That created a new company called Canvas Integrated Systems, which will sell a white-label version of it to independent hotels around the world, Mount said.

“From our pricing on OTAs to our (revenue-management system) … to all aspects, our mobile app, website … we’re putting it in a package and we’re charging them based on a consumed transaction,” Mount said. “We’re not charging these owners numerous and multiple fees based on calculations like you see now, we’re charging them one fee based on consumed reservations.”

Because it’s entirely based in the cloud, it can be delivered anywhere in the world, Mount said.

“Also in RLabs we’ve put in our joint venture with Peanut Robotics, where we have a robot that is able to completely clean a room—everything except make a bed,” Mount said. “RLabs is (going to be) our skunkworks for the lack of a better term and really house all aspects of our tech.”

The sum of all these parts should add up to a successful 2019 for RLHC, he said, adding that the year is unfolding as expected in these “interesting times.”

“If we can continue with what we did in ’18 I think that the industry will continue to do well,” Mount said. “Unemployment is still hovering … just below 4%, which is always a good indicator for us.”

Mount said there is some concern over the rising costs of wages and benefits and their impact on owners.

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