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Kurt Ritter, long standing president and ceo of Rezidor Hotels, updates ABTN on faint hopes of recovery and the new Radisson Green brand...
How are things for Rezidor?
Compared to last year it is a different picture. I think that's true generally in the industry. If you look at the recent Hotel Investment Forum in Berlin I think first of all the amount of attendees was much higher, and that in itself speaks for better times. And the mood there was I'd say cautiously positive, and that's exactly how we at Rezidor feel our business is going. We saw an improvement, or at least a stopping of the deterioration in November and December of last year as it flattened out and now I would say it is even around the curve and a little bit up again.
When you look at the industry forecasts on rev par they look quite positive. When I hear people saying the prices are not so good, I say we have to get used to these prices for a while, you see it in all these downturns. At first you have occupancy that goes down, and if you look at 2008 in the deepest recession and everyone was thinking they would lose the shirt we still had good rates and a rev par growth but occupancies were going down. And as we have always seen in downturns it's occupancy down and then rates and then on the way out with the upturn, occupancy improves but prices are the same as last year. So will we do a fantastic 2010? I don't think so, we will not get back to the 2007 prices or rev par in 2010, but hopefully it will not go down and we are now going in the right direction.
Despite the downturn, you have a lot of hotel in the pipeline.
Yes, in all of this we have said we are not slowing down the growth. 2009 was a record year for openings for us; we had 36 properties which we opened, which is over 7000 rooms. And we have a pipeline of just over 100 hotels, where the financing is in place. Now if you say, "Will all these 100 happen?" I probably don't think so, there are always a few which for one reason or another don't. But when I look at the growth it is phenomenal and that's our strategy for two years now is to go after emerging markets.
Marriott made news recently talking about a huge expansion in Europe, most notably through using its Autograph Collection. Have you ever considered a new brand allowing independents to keep their brand but join you?
No. We have by far the biggest pipeline in Europe, more than double of the number two which is Hilton. We have our hands full with that and I don't think it time right now to think how or what are we going to go to do to grow faster. We are growing as fast as we can take. We have so many projects on the go and with the head office we have - and I don't want to increase it because part of the 2009 exercise was saving Euro 36 million in costs and I don't want to increase that cost level - I want to work with what we have I think it's a big task to grow by 30 or 40 hotels each year and the way we have done it I would like to go on with it.
Carlson which owns the Radisson brand outside Europe recently announced a Radisson Green to go along with Radisson Blu. Will you introduce this new brand in Europe
For a long time we have seen that there are two levels of Radisson. In Europe Radisson's competitive set is Marriott, Sheraton and Le Meriden, whereas the competitive set in the States for Radisson properties there is Ramada and Holiday Inn. So that has of course created not only confusion but an imbalance to the point where many American travellers wouldn't consider Radisson in Europe. And when you look at the statistics we are not number one for incoming US visitors, probably it is Marriott. So with the new CEO at Carlson we are working towards the globalisation of the Radisson brand. So by the mere fact that we introduce Blu to the U.S means we can improve properties that can carry the Blu brand in the important centres, the gateway cities.
What we have to do is talk to the owners, and a presentation was given to the franchisees. It said that if you are a Radisson Green this is the average rate you will get in a particular city, but if you are a Radisson Blu you will get this rate, and it's up to you when you look at the investment you will have to make to get there. It's not as if you just put the sign on the property - there will be standards, of course. So some Radisson properties will have the investment and become Radisson Blu.
That said, today it would be absurd to go to an owner who is not in London or Frankfurt but is in a small city and maybe he has the best hotel in town and say spend this money to become a Blu.
So will the Green brand come to Europe?
No, we are in a different position here. If 12 years ago someone had compared us here in Europe to Ramada we would have been proud, but we didn't want to stay in the bracket and no one gave it us for free - we had to open hotels like the ones in Berlin, Birmingham and London Stansted which moved us up. The hotels here are of a high standard - I don't mean there aren't a few. When we started we had to grow grow grow when we started from nothing and of course we took in a few mistakes when you are growing, but everyone has a few skeletons in the closet.
So your weak properties won't become Radisson Green?
No, I think the way we are instead of saying you can be something else we say you better leave, you are a bad owner. There are some chains with 15 brands, and if you ask the people who work there to explain what the difference between all these brands, they will say "That's quite difficult, but there are differences". I once learned from an old American marketer, "If you can't describe it you can't sell it." We have Regent, Radisson, Park Inn and they are all easy to describe. If we do a Radisson Green in-between, it's a little of this and a little bit of that. These other hotel companies they are very good and do a good job, but I want to say we are different - we can't have 15 brands.
Isn't calling a hotel brand Green confusing?
Well it's certainly confusing to journalists since they keep asking me. I say all our hotels are green. We are all responsible hoteliers, but in Europe we have been doing this for a long time. We have hundreds of hotels and every country has its own label and certifications, and it's difficult because we want so much to comply. But you can't get a German label in a property in a different country.
Is Carlson as aggressive in expanding the hotel brands worldwide as you have been in Europe?
In India they have been very aggressive - they have had Carlson hotels in India for many years. We are not so happy with distribution in China but it's not bad. We have properties in Beijing and other cities, but it could be better. If you are a global brand you have to be in both India and China as much for the potential incoming visitors as for the hotels.
Last question - how do you think the luxury sector will perform?
Luxury doesn't sound good right now. People think that all they need is a good bed, a good internet connection and good service. You don't need a huge room if you are working all day outside the hotel, and that's something that makes it difficult for luxury hotels at the moment. We have some Regent hotels, but our core brands are Radisson Blu and Park Inn, and we don't overdo it with the room sizes there. Even when we take the brands to the Middle East we keep the room sizes even as we adapt. If you apply a typical Park Inn from Europe to the Middle East that wouldn't work, so we kept the room size at 22-24m2 but the rest of the hotel got a swimming pool, maybe a ballroom and two restaurants. You just can't make do with a coffee shop. But branding for me in the Middle East is the room size, and of course the service. I don't think the Middle East is ready for a typical European Park Inn.