Rezidor’s asset light development strategy across EMEA – which focused on growth in emerging markets – started as early as the company’s IPO in 2006. In the past five years, the group has signed around 160 hotels and opened 110, and Radisson Blu has continued to be the largest upper upscale brand in Europe with 186 hotels and almost 45,000 rooms in operation. The group also has the largest pipeline of hotels under construction in Africa, and has opened more hotels on the continent than any other operator. It maintains a leading position in Russia and CIS, having double the size of any other operator in this market.
Fast forward to 2017, though, and the macroeconomic picture and the group’s new ownership is steering towards a new direction. Booming BRICS nations and declining mature markets have been replaced with the reverse, while HNA Tourism Group’s acquisition of 70% of Rezidor, has translated into new governance and a new shareholder profile.
Rezidor’s previous emphasis on only fee-based franchising, management contracts and emerging countries is no longer the only route forward for the company, which is why January 2018, when it hosts its Investors Day, will mark the beginning of renewed development of its ‘asset right’ strategy.
“With Federico J González at the helm, we are focusing on an ambitious new vision and mission for Carlson Rezidor Hotel Group globally, to become one of the top three hotel companies in the world and the company of choice for guests, owners and talent,” says Elie Younes, executive vice-president and chief development officer at Rezidor.
“We have spent the past six months designing a new five-year plan for Carlson and Rezidor that focuses on various critical levers including portfolio management; brand and product; marketing, sales and revenue management; organisation; talent and reputation; best systems; costs advantage; and scale.”
When it comes to development, this means two things: an evolution from asset light to asset right, and a renewed focus on Europe.
From asset light to asset right
“We are shifting gear to accelerate growth for the future of our company,” Younes explains. “In addition to our emerging-market focus, we are returning to signing more agreements in strategic European markets.
“The leases and contracts with commitment will strengthen the group’s current business model to stimulate its growth in the markets where institutional investors are becoming increasingly prominent. The asset right strategy will also mean Rezidor investing in key markets and flagship hotels.
“From a geographical perspective, the focus will shift to Europe, while developing countries will continue to grow organically.
We want to continue building on our leading position in emerging markets, but now need to balance that with growth in primary markets in Europe.”
From 2018, the group will focus on eight key target markets across EMEA: four mature (the UK, Germany, Poland and Italy) and four emerging (Turkey, Russia, South Africa and UAE)
“These are the key markets where we really want to accelerate our growth, and create scale with existing partners and new partners,” Younes says.
“By ‘scale’, we mean adding ten to 20 hotels to each market over the next five years,” he continues, adding that the success of the new strategy will hinge on having the right resources and the right people in place. “We need to change our organisation and adjust its structure, and we’ve done just that. We’ve already secured new team executives in Brussels, the UK and Italy, and more executives will be joining our team soon.
“We have also allocated sufficient funding in the form of lease commitments or investments in order to secure our growth,” he adds.
Two new brands
Alongside the shifts in business model and market focus, Rezidor will also be launching a new brand architecture, the aim of which is to support its new strategy and provide investors and partners with further opportunities to invest in the hotel sector. “We will soon be launching extended stay solutions for our core brands, which we’ve been working on for over a year now,” Younes announces.
Serviced apartments of Radisson Blu and Park Inn by Radisson will be launched in the first quarter of 2018, along with renewed proposition for lifestyle brand Radisson RED.
“The new brand architecture will complement our five brands across EMEA and help capture new segments,” Younes explains.
Until now, Radisson RED’s growth has been rapid – with 15–20 hotels either open or under construction today – although Younes admits that it has been a learning process.
“We developed our first hotel in Brussels in 2016, which took the form of an innovation laboratory for the brand, and we learned a lot from that,” he says.
“As much as the brand has been successful in Brussels, we used that hotel as a lab to learn, improve and figure out how to evolve the brand and make it more relevant to investors.
We’re now at the stage of fine-tuning the brand to keep it relevant for the millennial mindset. The new hotels launching in 2018 will offer an improved experience for guests and better value proposition for hotel owners.”
As Rezidor continues to expand, the group is looking for a certain type of development partner. “They need to have the same mindset and standards as us,” Younes notes. “That means they’re entrepreneurial and they understand the industry in some respect. They respect the promise of a brand, have a good real estate or development background and benefit from an access to funds.”
Most importantly, though, Younes is looking for individuals who believe in the nature of the investment they’ll be entering into – a long-term one.
“Hotel investment has been extremely commoditised over the past few years, but we would rather work with investors and partners who share the same longterm view of the industry as us.
“We believe in long-term relationships based on trust, responsibility and accountability,” he stresses.
A long-term commitment
In return, Rezidor promises to put their investment partners’ interests at the heart of their development strategy from this point on.
“As part of our five-year plan, we have identified two key stakeholders that we need to service in order to secure our success: our guests, and our owners and development partners.”
Younes himself will take the leadership role in driving the company to achieve this promise, and he could not be more excited at the prospect of bringing the group’s new strategy to fruition. “The success of the strategy is in its execution, and we will be going to market in January 2018 with a new organisation, a new plan, the right attitude, a new business model and the necessary resources to execute it, he says.
“We look forward to sharing the details of our five-year plan and growth strategy at on Investors Day on 17 January in Frankfurt.”
“Any challenge can be solved with the right teams in the right places, which is why we have reinforced ours. We’re in a better position than ever to be able to go back to black and further reinforce our position as a main player in the EMEA region. It’s as exciting as it could be – sometimes I have butterflies in my stomach when I think about executing our strategies.”
