Carlson Rezidor has spent the last year defining its new lifestyle select brand, Radisson Red, which the company first unveiled in early 2014. From building and testing model rooms to conducting focus groups, the company really wants to get things right with Red, says Javier Rosenberg, COO of the Americas. In early October, Carlson Rezidor announced signings for the first four Radisson Red hotels in the Americas, in Bogota and Cali, Colombia; Campinas, Brazil; and Minneapolis Downtown. There are also Reds currently under development in Brussels, Belgium; Capetown, South Africa; Glasgow, U.K., and Shenyang Hunnan, China. Carlson Rezidor has set a target of opening 60 Radisson Red hotels globally by 2020, and Rosenberg says the company is well on track to achieve its goal. He recently sat down with LODGING to discuss what sets Red apart in the lifestyle segment, the brand’s growth strategy, and who’s investing in Red.
What’s the growth strategy for Radisson Red? The growth of Radisson Red is strategic. Part of our development strategy is to participate in the rollout of the brand by investing and partnering in the first few Reds as we develop them in North America. With Minneapolis, we obviously know the location very well because it’s in our backyard. And there’s an interesting redevelopment happening in that whole area, not least of which the new stadium, which will house the 2018 Super Bowl. It’s a great opportunity for Radisson Red, which is a product that thrives on an urban setting with entertainment, social atmosphere, and foot traffic, so it made a lot of sense for us. We have 12 other letters of intent signed for key destinations where we’re working in a very similar setup, either on a management basis or on a JV basis. We’re very excited about how well received the brand has been and the amount of interest and activity that it’s garnered in North America.
Three of the four recently announced deals are in Latin America. Why is the appeal for the brand strong there? We have a strong presence in Latin America through our different brands. We have a leading position in many of the markets, including Colombia and Brazil, so it make sense that we found great opportunities in that part of the continent and that we are pushing forward with Radisson Red in that part of the world. Those three will open in Q1 next year.
Do you expect developer interest to increase once the first Red opens? That helps, but I anticipate before then you’ll probably see us announce a number of additional properties. We’ve worked diligently with the launch of the brand in making sure we defined the right product, and that we satisfied the needs of not only the customer and the end user, but also the developer and the owner. As a company, we look at things long term, so we’re very cautious in the way we approach development. We’ve gone through a lot of testing, we’ve developed model rooms, and we’ve worked with a lot with focus groups, so we are very confident that the product we have right now is going to be successful and that it’s the right combination of defined product with enough flexibility for local application. We’re able to adapt to the needs of each market, and we’re able to work with owners and developers in finding solutions to specific markets and specific projects. So we won’t have to wait until the opening of these hotels in Q1 next year to see more announcements.
What makes an ideal market for a Radisson Red versus Radisson Blu? Blu is an upper upscale product, so it targets a higher average rate. For the most part—and there are exceptions—when you look at Radisson Blu, you have full-service hotels with a meetings component. Most of our hotels will target 200-plus rooms and have north of 10,000 square feet of meeting space, but it varies. They are in prime locations within gateway cities. Radisson Red is very different. It’s an upscale product, so it has a different threshold of average rate. It tends to be a smaller footprint and a smaller inventory, so you’re looking at sweet spot of 120 to 180 rooms. While it looks for an urban setting, it doesn’t have to be a gateway destination. We see perfectly valid urban settings in smaller destinations—call it Nashville, Houston, Dallas, San Diego, Seattle, or Portland. We’re looking for that foot traffic, so you’re not going to look at a roadside, highway side product. But would we consider Radisson Red in Fort Lauderdale? Absolutely.
Is your existing owner base investing in Red? In the Americas, we’re seeing a lot of interest from owners of existing Country Inns & Suites. So owners who have traditionally played in the midscale segment are trading upward and are going into upscale segments. They are very interested about this brand and segment, so we’re seeing a lot of interest there.
Is there a significant jump in cost-per-key to build a Red compared to a Country Inn & Suites? It’s a little bit of a jump, but I think you see many of these developers become a lot more sophisticated and experienced, and understand that you want to go into the market the right way. So it’s less about the cost per key, it’s more about the market we’re coming in. Our target for Red is cost per key of $120,000 to $150,000, and that is certainly in the ballpark of where they’re looking.
Is the brand adaptable to both new builds and conversions? Right now in the pipeline we’re entertaining both new builds and conversions, and we have flexibility with the conversions. It makes a very interesting conversion brand, whether it’s an existing hotel or an asset that is being repurposed, particularly if you look at some historic buildings and the ability to convert those. That’s where there is a lot of opportunity.
What are the brand hallmarks that are consistent across all properties? Some of the DNA of the brand is certainly around technology, art, and social settings that really bring the community into the hotel and allow for interaction. We’re looking at no front desk, mobile check-in, and keyless entry so that staff are multifunctional and have the ability to interact with our guests and customers in a very free-flowing setting. We’re talking about technology from an app that allows you to not only make requests, whether it’s a wakeup call, more pillows, or room service, but also gives you the ability to interact with the brand on social media and the ability to interact with other guests in the hotel. You’d also have the ability to stream your music and content onto the television in an easy and seamless way. There will be free Wi-Fi. The properties will have a restaurant and bar with local flavor, but it will adapt. We’re not prescribing the menu or the look and feel, but we do want to make sure it has the ability to attract the local community and bring that in. We’re talking about bringing local art into the rooms and the public spaces. We want to make sure our guests perceive the experience of being in Cali, Bogota, Minneapolis, Shenyang, or Cape Town. Those are some of the hallmarks. Outside of that, there is a lot of flexibility in how you set it up. In Cali, Colombia, for example, the hotel will have a salsa nightclub, which is very appropriate for that market. The owner understands the local scene, and it really is about bringing the social scene into the hotel, so it makes sense.
With all the new lifestyle brands popping up, do you worry the consumer has too many choices? Choice is good, so I look at it from a positive standpoint. Ultimately it’s the consumer who has evolved. Our guests are saying, ‘I don’t want to satisfy the need of accommodation and nourishment, I want an experience and I want that through my hotel.’ It’s a positive sign for our industry in that our customer is saying, ‘Give me more than just a bland stay and something more than safe and clean.’ And it’s forced everyone to ask, how do I deliver that? But if you can get rid of a few of my competitors, that’s OK. I wouldn’t mind.