In November, Greg Mount resigned from his position as CEO of RLH Corporation. In December, the company named industry veteran John Russell interim CEO, noting that the Board would continue to search for a permanent CEO appointment during Russell’s tenure. Since taking the interim CEO position, Russell and the RLH Corporation team have been working to refocus the company on its franchisees. LODGING connected with Russell, along with RLH Corporation EVP of Development, Harry Sladich, to discuss what’s in the future for the hospitality company.
What is RLH Corporation’s main focus in 2020?
John Russell (JR): We are positioning the company as a true franchise company, because that’s what we are. Our focus is on selling franchises, opening them as quickly as possible, adding value to our marketing, operations, and vendor programs, and retaining franchisees. That’s what we’re all about. We went from an owned and managed company and transformed it over several years. Now we’ve got eight hotel brands, 61,000 rooms, and just shy of 1,000 hotels. And everyone—the Board, company executives, and franchisees—is in sync with this mission. This is good, because we want to keep people in the RLH Corporation family. We don’t want them to leave and go to another brand. We’ve got a lot of good programs in place for retention. We also have a new chairman of the Board in Carter Pate, who is just fantastic. And Harry [Sladich] is now heading franchise development. We’re in a great place.
How is the new leadership affecting these goals?
Harry Sladich (HS): Change can always be uncomfortable, but our goals aren’t necessarily new. I’ve been here for 10 years now, and the concentration has been on building up our franchising capabilities. When we bought Knights Inn and America’s Best Value Inns, we greatly expanded our reach. Prior to these acquisitions, we mostly just had brands in the Pacific Northwest. Now, we’re trying to leverage that reach. We’re focusing on developing in cities like Los Angeles, Dallas, and Philadelphia. There’s land in Chicago and Florida we’re looking at.
I also want to mention that one thing that Red Lion does really well is relationships. There’s been a lot of talk about folks leaving our brands. There are a variety of reasons that people leave a brand, and every brand has attrition. We consider it rightsizing the house, especially because our numbers are good. Our guest reputation scores in 2019 for America’s Best Value Inns rose almost 5 percent. That’s unheard of. Also, guest satisfaction scores for America’s Best Value Inn are at 70 percent. We don’t want to walk back from all the success we’ve had. So we’re really working on expanding our footprint and continuing to offer a unique value proposition for owners and guests.
What else are you looking to accomplish in 2020?
JR: One of our other goals is to almost double what we sold last year. We’ve brought on some new franchise sales and development folks, and they have been out there aggressively marketing our eight brands. We’re bullish about where we’re going to be at the end of the year. We’re also doubling our 2019 marketing spend in 2020, primarily in digital channels, so we can drive more contribution to our franchise community.
HS: I certainly understand sales, but you can’t get a new customer unless the current one is happy. I have the unique opportunity to mirror owner satisfaction with the owner development team, and that’s critical.
One way we’re looking to strengthen our owner relationships is to reexamine our brand standards. We need to be sure our brands are making decisions that are in the best interest of the owner. We want our property improvement plans to be implemented with common sense. That’s something we’re very focused on looking forward.
Over the past few years, RLH Corporation has also been very focused on technology. Is that going to change?
JR: Right now, we want to focus on using technology as a tool to enhance all our digital marketing channels to drive more business. We also want to be sure that any technology we introduce is user-friendly, not just for our owners, but also for the guests staying at our hotels. That means that from the time a guest books their hotel to when they check out, it must work seamlessly. So yes, we’re still invested in technology, but we want to give our franchisees what they want and what the guests want.
You had your annual franchisee convention in December, in the midst of a lot of change. How did that go?
JR: It was a good conference. The nice thing was that due to my past roles at HFS, Cendant, and Carlson, I already know a lot of our franchisees. We have an established trust, and they know that we have their backs. We all need to be working together to create successful properties. If they’re not happy and they can’t get their properties where they need to be, neither of us win.
HS: I’ve been to a lot of these conferences. This one, I was a little nervous about because it was really critical that we get in front of franchisees and we let them know that we hear them. The owners, particularly the Brand Advisory Boards, were very happy to see that we had our board of directors there to speak with them one-on-one. Not only could they speak to the new CEO, but they could speak to the board and let them know what they were thinking.
In fact, we had one owner who was with his family and was considering removing 11 properties from the brand. He told me that after the conference and after the meetings, he felt more optimistic about the brand than ever, that he wasn’t going to leave, and that he was going to renew his agreements. To get feedback like that is a really big accomplishment. The folks left there on a high, and now it’s critical that we continue to deliver that feeling. The Brand Advisory Boards asked John to give an update in 30 days, 60 days, and 90 days. They just want to be kept in the loop as it relates to how we’re progressing into 2020. We were thrilled to have that level of engagement.