Fresh off a failed M&A play, the hotel company is using a previous
acquisition to fuel an expanded push into the upscale category and beyond.
ROCKVILLE,
Maryland — Following its acquisition of Radisson Hotels America in 2022, Choice
Hotels International is making a big push into the upscale and upper upscale
categories with some of the brands it acquired.
“Our ambition is to challenge and to make an impact in
this category,” said Indy Adenaw, senior vice president and general manager, upscale for Choice
Hotels International. “It’s not to qualify. It’s not to gain a foothold. We
think we can be compelling challengers for both owners and customers in upscale
and upper upscale.”
A few months after Wyndham Hotels & Resorts
successfully fought off a hostile takeover from Choice Hotels, the Rockville,
Maryland-based hotelier previewed activations this week from two of the signature
brands it is rolling out in the U.S. from its previous M&A—Radisson Blu and
Radisson. (Choice does not own The Radisson brand outside of the Americas.)
“Choice has such a large portfolio of hotels and has
demonstrated its ability to grow over and over,” Adenaw said. “We think with
these new brands and the company’s inherent obsession with growing and
expanding brands, we will be a compelling chain to watch in this space.”
Adenaw spoke with Hotel Investment Today about the
company’s development plans for upscale and upper upscale, nostalgia for the
Radisson brand and how to get creative with F&B.
Exploring upscale brands
Radisson Blu currently has three hotels in the U.S.:
Chicago, Minneapolis and Fargo, North Dakota, and seven in Latin America and
Canada. Five more are in the active pipeline right now (one in the U.S. and
four more in Canada and Latin America).
Adenaw says Choice uses the brand as an
entrée to expand into the upper upscale space. “It’s safe to say that we see plenty of opportunity for
Radisson Blu to be a real cornerstone for our portfolio moving forward and to
push us into the upper upscale category,” he said.
Choice is also relaunching the core Radisson brand, primarily
for upscale conversions. There are currently 54 hotels in the U.S., 48 in North
and South America, and around 30 more under development.
This is what Choice does. We grow brands and get them to perform. So there is a bit of a marriage in what they’ve historically needed and what we do as a company.
Indy Adenaw
“We have tried to position Radisson as the modern-day
competitor for conversion brands,” Adenaw said.
The strategy includes simplifying everything, from
architectural details to guest room design and food and beverage. “We’ve tried to make sure we have a more simplified and
labor-efficient model and approach,” Adenaw said.
Adenaw added that with Radisson, Choice is leveraging the
nostalgia guests feel about the brand. “We’ve tried to bring Radisson back to its former glory
for this brand that people remember growing up with,” he said. “It’s had this
rich legacy, and this rich heritage and the new visual identity tries to go
back into history with a more nostalgic but modern look.”
Adenaw said he understands that Radisson’s history in the
U.S. hasn’t always created the best reputation but thinks there’s more to build
around than there is necessarily to shed. “Some of
these brands ended up where they were because they were fighting their journey
on their own,” he said. “We want to be clear that we are fighting now as one
portfolio of brands. These are no longer a brand of X units but a portfolio for
which we are trying to build an audience.”
Choice is bullish on these brands because it
thinks its strengths significantly outweigh any deficits. “Radisson is a century old” Adenaw said. “If you talk to people about
Radisson, most people I talk to will say, ‘Well, I remember vacations as a
kid,’ or ‘I remember this market had one.’ There’s very few brands that have
that history in the minds of consumers.”
The goal is to bring back the joy, memories
and sense of adventure to the revamped brand. “This is what Choice does. We grow brands and get them to
perform,” Adenaw said. “So, there is a bit of a marriage in what
they’ve historically needed and what we do as a company.”
Radisson Blu's revised room design.
F&B costs
Adenaw said a big part of success in the upscale and upper upscale categories requires getting creative with F&B
“It feels like everybody’s been trying to outrun a problem versus figuring out how to become creative and innovative in food and beverage,” he said. “When I look outside of hospitality, the brands I see that are super successful or growing… generally offer a sophisticated product without a super labor-intensive model.”
Adenaw said he sees success in models where the experience doesn’t require a ton of people, and that’s exactly the vision Choice is trying to bring to its hotels. “We are looking at food and beverage as an opportunity to be creative versus an opportunity to be fearful of the costs that come with it,” he said.
When asked where he would like these brands to grow, Adenaw said he doesn’t see a reason why Radisson Blu can’t be in any of the top 25 markets. He thinks core Radisson’s flexibility means it could work in any of the top 100 markets.
New customers
Adenaw said Choice has successfully introduced these
upscale brands to its legacy customers and new ones. “Externally, we
have generally found that there is a growing number of people who are just
looking for something new,” he said.
Adenaw said the typical Radisson Blu customer tends to be
higher paying and looking for a stay with strong food and beverage and
design-forward experiences with a strong local touch.
It feels like everybody’s been trying to outrun a problem versus figuring out how to become creative and innovative in food and beverage.
Indy Adenaw
He said Radisson customers are inherently gravitating
toward a sense of comfort. “Comfort is a basic human need. But often, people feel
like to get comfort, but they have to sacrifice and stay in the kind of hotel
they don’t want to,” Adenaw said. “When you look at our room design, for
example, it feels residential… It’s a little soothing, calming, and how you
would want your home to look.”
Other upscale brands
Choice has been expanding its upscale offerings in the
past few years, notably with its Cambria brand with 73 open hotels in the U.S.
through the end of the first quarter and another 81 in the pipeline. Adenaw
said Cambria tends to be more family-friendly and leisure-oriented and plays in
a different part of the market than Radisson.
Adenaw said the company also had great success with its Ascend Hotel
Collection soft brand, which had 202 hotels in the U.S. and 167 internationally
through the first quarter. Adenaw said Ascend hotels could be in more suburban
or rural areas and historic districts, much smaller in size and more flexible
in standards.
Choice now also offers another soft brand in upscale,
Radisson Individuals (one open in the U.S. and 14 open in the Americas), which
tends to be a larger box (100-plus rooms) and in higher RevPAR markets in urban
locations.
“These two products allow us to go after soft brands in a
way that we haven’t before,” Adenaw said.
He said Choice has other upscale options that are less of
a development priority at this moment (Radisson Red — two open in the U.S. and
two others open in the Americas; Park Plaza by Radisson — one open in the U.S.
and one open in the Americas and Radisson Collection — which currently doesn’t
have any hotels).