Kurt Ritter, one of the hotel sector’s longest-serving CEOs, has been at the helm of the Rezidor group since 1989. He talks to ABTN editor Rob Gill about Rezidor’s partnership with Carlson
Rezidor announced the partnership with Carlson in January – what progress have you made since then?
Although we announced the partnership in January, we were talking about it for a lot longer. We’ve had a relationship with Carlson for 17 years – they also own 50 per cent of Rezidor – and we said we should look at how we can do more while still remaining as two different companies.
We decided the main issue was putting the sales and marketing efforts together. We wanted to work on things we can do easily and not lose time looking at things we can’t do. So we have created the Carlson Rezidor Hotel Group where we can do joint sales and marketing, as well as aligning the brands globally.
What do you hope to achieve through this partnership?
Our aim is to increase the group’s global sales by more than $400 million over the next four years, and increase revpar by more than nine percentage points over the same period. Our analysis over the first 100 days is that we are on the way with all the activities we’re doing together, and we’re already starting to see it bear fruit. But we will need a little more time before we come out with any figures. We don’t want the market to think all the benefits will be back-loaded and come in 2015 – it will be gradual and more linear than that.
We have to do everything at arm’s length because we are two companies: Carlson is private and Rezidor is listed. We also have very different business models: Rezidor is a management company, while Carlson is more a franchise company, although it is growing as a management company. We have to explain to our shareholders that we are not helping Carlson with Rezidor money. We have a global steering committee where I meet with Carlson’s CEO Hubert Joly fairly frequently.
It is about growing revenue rather than cutting costs. The brands are still growing – we are much less mature than the big US brands such as Marriott, Sheraton and Hilton. We’re the new kid on the block.
What practical differences will travel buyers and travel management companies notice when dealing with Carlson Rezidor?
There will be a global alignment of the brands that we have in common: Park Inn and Radisson. A hotel brand has to be consistent because a brand is a promise – guests get used to a brand and then they are disappointed if they get something different.
The other major change is that any big corporation will have one contact for Carlson Rezidor – one point of contact makes it much easier.
Carlson’s strength has always been its reservations system, SNAP [stay night automated pricing], and we are now using this. The programme does daily rate calculations and is a wonderful tool that helps planning and pricing. About 80 per cent of our hotels are now equipped with it, which is a higher take-up than we expected, and they are already seeing the benefits. It makes sense that Carlson’s good tools are applied in our company, too.
What are the next steps in the developments of your hotels and brands?
I talked before about aligning the brands. If you look at Park Inn, it is different in the UK than in the US and India. But it’s very important to have common architecture with a three-star brand – to have the same standards.
Carlson has signed up with an Indian company for 50 Park Inns where we will take the basic concept and give it some Indian elements. In Europe, Park Inns have a simple restaurant whereas in India and the Middle East you have to provide more public areas, such as more restaurants and big lobbies. But even with these differences, you can see that it’s one brand.
Which areas of the world does Rezidor have a key focus on?
Rezidor’s area is the Middle East, Europe and Africa, while Carlson has the Far East and the Americas. They are doing well in Asia with growth and our African growth is fantastic. What’s planned in Africa is mind-boggling – 30 per cent of the world’s minerals come from Africa. But it’s not easy doing business there as there are 56 countries and probably as many languages and cultures. There’s an imbalance for hotels as there is too much demand and not enough supply. We have 17 properties open in Africa with 25 hotels under construction. You need patience as it can take seven years to build a hotel in Nigeria – but we think it’s worth waiting.
We don’t see that much growth in western Europe – it’s difficult in the industrialised countries as there is generally more supply than demand, so we have to look to the emerging markets. We see more growth in Russia and eastern Europe. We have 40 hotels open in Russia and another 25 under construction. We still have quite a strong pipeline of new hotels in the UK and Europe, but it just doesn’t compare to what we are doing in Russia and Africa.
How are your hotels performing in the UK for the corporate travel market?
It’s not bad at all. Contrary to my expectations, we have seen quite a growth in government business despite the cutbacks for both Radisson and Park Inn, although it could be that we did not have enough of this business before. We are also doing okay in the private sector and gaining market share, although we have come from a low figure with Park Inn. This is because we now have people running Park Inn who understand that sector of the market.
We have opened Radissons at East Midlands airport and Cardiff, plus Park Inns in Aberdeen and Southend. In the pipeline we have Park Inns at Wembley and Excel in London, another Park Inn in Bournemouth and a Radisson in Newcastle. We’re also still looking in the Greater London area for sites for more Park Inns.
One of your goals of the partnership with Carlson is to put more emphasis on your loyalty programme, Club Carlson – how has this developed?
We didn’t have a very competitive loyalty programme, which is why we introduced Club Carlson last year. As a newcomer, we have had to be more generous – this has allowed members to accumulate the benefits more quickly than other brands. But that has made more people sign up more quickly. We also revived our Look To Book loyalty programme with travel agents last year. This had deteriorated over the years but we saw big growth after revitalising it.