With the completion of its corporate recapitalization in August, Red Roof Inn is moving forward with an extensive renovation program that will allow its NextGen II design to enter the system and hopefully improve perception of Red Roof Inns, said President Andrew Alexander, who was in Orlando for the brand’s 2011 conference Sept. 25-27.
“We’ve been able to have very good performance this year even without that, so this will be the bonus and allow us to really push rate in particular,” Alexander said. “And that rate comes right to the bottom line for our franchisees.”
Alexander took over interim presidency of Red Roof Inns in May 2009, when the company defaulted on its loans. “It’s been a long time coming,” Alexander said of the recent resolution, which has positioned Red Roof for profitable growth, development, and expansion.
Five Mile Capital Partners and Westmont Hospitality Group completed the acquisition of 143 Inns—nearly 17,000 rooms—on Aug. 22, 2011, and have committed more than $70 million for renovating and upgrading the portfolio with the new design. Dune Real Estate Partners and Westmont formed a partnership in March of this year, completing the acquisition of 51 Red Roof Inns in the spring of 2011. Dune has already commenced a $20 million-plus renovation plan in Boston, New York, Chicago, and Miami, with other markets coming soon.
Glavan Feher Architects Inc., based in Columbus, Ohio, is responsible for designing the NextGen II product. For the overall design, the company departed from the bold colors and patterns seen in previous generations in order to give the properties a more residential feel. The new look also integrates natural materials and colors, and pops of red color.
The changes in the guestrooms are subtle, Alexander said, and include red accent walls, higher quality linens, vinyl wood plank flooring, and carpeting around the beds. “It’s more been a learning experience on how the product has evolved,” he said.
What’s significantly different about the NextGen II design from a new-build standpoint is the exterior, which Alexander said takes Red Roof back to its roots and has a more rustic, boutique lodge feel.
Two Phoenix properties were renovated in August (using a lighter color scheme room package), but most of the renovations will have begun this fall, he said. Alexander estimates that approximately 15 properties will be under renovation in the next 30 days. “It will be a fourth quarter, first quarter push because that’s where we have the lowest displacement in terms of occupancy,” he said.
The brand intends to have a rollout celebration in December in Miami, where it has two properties. Alexander said franchisees will have the opportunity to see a completely renovated property and a work-in-progress property to better visualize the process. “We’re really able to do these pretty quickly and without a lot of lost revenue from rooms being down for extensive periods of time,” he said.
Red Roof is nearing close to 2007 occupancy numbers, Alexander said, but the brand has room to grow in respect to ADR. “Our results have continued to be strong, so we expect, especially as we head into next summer with the renovations complete, to push the ADR to get a good return on investment.”