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October 27, 2010

Roland Mouly
Vice President Development V Seminario Internacional de Hoteleria USMP Lima Peru

How the largest hotel company in the world is completely re-positioning its portfolio and targeting a 50% expansion in the next 5 years

th 9

An aggressive global branding strategy & A targeted growth and development tactic

Global Management Team
Hubert Joly James Porter Trudy Rautio William Van Brunt Gordon McKinnon Fredrik Korallus

Kurt Ritter

Thorsten Kirschke

Jean-Marc Busato

Carlson Today: a Privately-held, Global, Hospitality and Travel Company

>1,000 hotels >77 countries

>1,000 restaurants >60 countries

Global leader specializing in business travel management

1962 to 2010: the main events
1909
First Radisson Hotel Opens In Minneapolis

1962
Curt Carlson Purchases Radisson Hotel in Minneapolis

1986
Pierre Reservation System

1988
Yes I Can! Launches

1989

1991

1992

1994
Partnership Agreement with Radisson and SAS International Hotels

1999
Radisson Gold Rewards Program Launched

2000
New Logo Introduced

2003
Combined Goldpoints Plus Program Launched

2004
Sleep Number Bed Introduced

2005
Express Yourself Introduced

2007
Revenue Optimization Performance Enhancement Services

2008
Carlson’s 1000th Hotel Radisson St Martin Goldpoints Plus Global Integration

2009
Radisson SAS Becomes Radisson BLU

GDS Seamless1st Radisson Launch hotel in Canada, Look To Book Radisson Hotel Admiral TorontoHarbourfront
1st

American Brand In U.S.S.R.

The Last 5 Years
STRATEGIC REFOCUS

Sale at peak of the market Sale after turnaround Sale of Regent brand
Freed up resources to support growth in hospitality and travel

The Last 5 Years
GROWTH
Number of hotels Number of restaurants
2004

1,059 847 336 1
1962 1973

6

38
1983 1993 2003 2009

1
1,023

1,059

760

760
2009

1,023

28

Sales (USD billion)
2004

8
2008

8

28

Carlson Hotels’ Global Portfolio Has Grown to More than 1,000 Hotels in Operation
HOTELS IN OPERATION
847 1,059

• 92 hotels added in 2009

336

• 68 new hotels signed in 2009

1

6

38

1962

1973

1983

1993

2003

2009

Carlson Hotels Has a Strong Brand Portfolio
Hotels in Operation
422 495 100 35 711 0 14 54

Contracted Pipeline
90

512
80

575

154

49

18
100 200 300 400 500 600

1,059 Hotels in Operation + 249 Contracted Pipeline = 1,308

Carlson Hotels Has a Contracted Pipeline of 249 Properties That Reflects its Rapid International Expansion
Hotels in Operation
North America

Contracted Pipeline
71

649

720

Europe, Middle East and Africa

317

99

416
61% in North America 71% outside of North America

Asia Pacific

53

73

126

Latin America

40 6 0

4 6
100 200 300 400 500 600 700 800

1,059 Hotels in Operation + 249 Contracted Pipeline = 1,308

Carlson Hotels Has Become a Global Player
HOTELS IN OPERATION AND CONTRACTED PIPELINE

720

302 43 28 46

43

17 84
25

Carlson Hotels is Experienced in Both Managing and Franchising Hotels
*

2 58 276 941 41 15 176 268 1 60 7 1 2 9 28 99 564 68

Franchised Managed Owned/leased

Regent

Radisson

Park Plaza

Country Inn Park Inn & Suites

Total

*The above numbers include hotels that are owned, managed, leased and franchised by Carlson or by Rezidor.

Carlson Hotels Has Achieved Record Openings in 2008 and 2009
89
2 2 16

92
1 16

38 40

29

37

2008

2009

Why re-position the brand now?

Belief #1: The Market is Coming Back and is Poised for Long-term Growth
REVPAR YEAR OVER YEAR GROWTH RATE 2008-2009
Percent
20 10 0 -10 -20 -30 2008 Europe U.S. Asia 2009

Belief #2: Growth Opportunities Exist in Emerging Economies, in North America and in Europe
GDP BY REGION (USD TRILLION)
74.7 57.2
10.6 14.6 14.5 5.8 19.1 16.2 20.7

Increase 2009-2014

17.5
4.0

5.8
0.7

Rest of the World Brazil, Russia, India, China Japan North America European Union

31.2
4.7 2.3 4.4 9.2 10.7

8.7 5.0

2.9

16.7

4.0

Source: IMF

1999 1999

2009 2009

2014 2014

Belief #3: Consumer Behaviors Are Evolving Around the World
CONSUMER BEHAVIOR – KEY TRENDS
Become known for travel empathy
Increase emphasis on leisure Evolve/segment offer Develop inter-theater sales

Belief #4: Strong Brands Will Win – Key is the Quality of the Product, the Service, the People
Strong brand performance for guests Investments in brand and assets Strong RevPAR penetration

Strong economic performance for owners
Strong marketing, sales and distribution income

New properties join the system

Belief #5: Business Model Must Be Differentiated by Segment
Owned/Leased Luxury Upper Upscale Upscale Midscale Managed Franchised

   

   

  

Carlson Hotels’ Ambition is to Grow its Portfolio by More than 50% by 2015
TARGET PORTFOLIO – NUMBER OF PROPERTIES
1,500 - 2,000 2,000

1,600 1,059
1,200 800 400 0 1997 2003 2009 438 847

1,500

2015

Our Strategy Has Five Main Themes
1. Establish clear, compelling positioning for each brand 2. Operationalize the brand promises 3. Accelerate development 4. Win the revenue battle 5. Build a global team and organization

Growing a global, vibrant hotel business

It Entails Four Priority Growth Initiatives
Expand Radisson as a powerful, globally consistent, first-class brand
Accelerate the growth of Country Inns & Suites in key markets

Grow Park Inn as a winning mid-scale brand across theaters in key countries
Continue the push in key emerging economies, with added emphasis on mid-scale

Each Brand clearly defined and positioned for growth

Current Brands Brand Width Currently Compounds the Issue By Market Position and Volume: Relative Positions
Luxury
Upper Upscale Upscale Midscale With Midscale Without Economy The Americas Europe, Middle East, Asia Asia Pacific

Key
Market Position and Volume by Theatre Per Brand Brand Width by Theatre

Carlson Hotels Future State
Brand Positions by Width and Share of Portfolio
Luxury Upper Upscale Upscale Midscale With Midscale Without Economy
Key
Number of Hotels Per 100 Brand Widths

Future Opportunities Luxury Lifestyle

Upscale Select

Economy Brand Increased Levels of Service Consistent Across All Theatres

1. Establish clear, compelling positioning for each brand 4. Win the revenue battle

2. Operationalize the brand promises

3. Accelerate development

5. Build a global team and organization

A GLOBALLY CONSISTENT RADISSON
ONE BIFURCATED BRAND

STANDARD OPERATING PROCEDURE GLOBAL ALIGNMENT

Level

Standard Operating Procedures

RADISSON BIFURCATION
THEATRE BY THEATRE
Theatre Asia Pacific Current Properties Rebrand upper upscale properties Blu Development

Europe, Middle East, Africa
South America North America

Grandfather current Rezidor portfolio

Consider rebranding upper upscale properties Blu Launch Blu after critical mass of flagship properties has been achieved

WE HAVE A PROVEN SUCCESS RECIPE IN CLOSE TO 300 RADISSON HOTELS WORLDWIDE
• RevPAR Index  105 • #2 in J.D. Power • Radisson in upper upscale • Growing talent from within • Newest room inventory – 40% “new breed” • Operational excellence

1.

• Opportunities ahead

1.

INCONSISTENCY IS A GREAT CHALLENGE…
LUXURY
Ritz Carlton W Regent Four Seasons InterContinental JW Marriott Hyatt Westin Marriott Hilton Sheraton Radisson Crowne Plaza Residence Inn Hilton Garden Inn Wyndham Best Western Holiday Inn Hampton, Drury Wingate Country Inn Holiday Inn Express

EXCEPTIONAL

UPPER UPSCALE

EXCELLENT

UPSCALE

VERY GOOD

Brand Width

MIDSCALE WITH F&B

GOOD

MIDSCALE WITHOUT F&B

GOOD

1.

…BUT THE OPPORTUNITY IS EQUALLY GREAT

The Americas RevPAR Index 86

Europe, Middle East, Africa RevPAR Index 105

Asia Pacific RevPAR Index 103

Revenue USD 300 million

Revenue USD 50 million

Revenue USD 5 million

*Annually based on RevPAR

WHAT DOES “OPERATIONALIZE” THE BRAND PROMISE MEAN?
Product
 Room styles  Technical standards  Design style guide  Preferred designers  Uniforms  Flat organization

Service

People

 Operational supplies & equipment
 Bar and restaurant  Radisson  Radisson Blu
STANDARDS OF OPERATION

 People empowerment
 People development  People commitment  People hospitality

Quality performance review by independent, 3rd party

OPERATIONALIZE THE BRAND PROMISE

Product
 Room styles  Technical standards  Design style guide  Preferred designers  Operational supplies & equipment  Radisson  Radisson Blu

Radisson Hotel Orlando-Lake Buena Vista, Florida Radisson Decapolis Hotel, Panama City, Panama

2.

2.

RADISSON PRODUCT EVOLUTION
4. Add accretive properties Signed

25%
3. Upgrade properties to new standard 1. Wean out non-compliant properties X 2. Rebrand certain properties to Park Inn and lose a few assets where owner is unwilling to invest

Verbally 13% committed 12%

50%
Advanced dialogue

PRODUCT IMPROVEMENT
RADISSON PHILADELPHIA
Renovation Investment – USD 7.5 million
Property Performance Actual 2006 2008

2.

2.

RevPAR

USD 90.07

USD 116.79

RevPAR Index

88.8% Incremental Pre-Tax IRR

108.1%

15.6%

PRODUCT IMPROVEMENT
ST MARTIN
Brand
Le Meridien Hotel
Independent

Year
2000
2005

RevPAR Index
85
65

Carlson invests USD 35.7 million in 2007
Radisson January 2010 115.3

“The accommodations, overall experience and staff/service was outstanding…” “The hotel is absolutely gorgeous, and the staff were wonderful. We truly loved the hotel and will look forward to going back.”

HOW ARE WE ACCELERATING GROWTH?
• Adding more resources • Bifurcation leads to new opportunities • Emerging markets • Key cities development (U.S.) • More properties with existing partners • Asset light development with strategic investment The Americas Europe, Middle East, Africa Asia Pacific

In Operation

Pipeline

Global Radisson hotels in operation = 422 Global Radisson hotels in pipeline = 90

GROWTH DEVELOPMENT – OUTLOOK 2015
Properties 800

3. Accelerate development Accelerate development

800

700 600 500 400 300 200 100 0 1989 1999 2009 2015 180 399 422 512 600

Hotels in operation Pipeline

ACCELERATE DEVELOPMENT
ZOOM IN ON NORTH AMERICA
• Encourage franchise growth to continue • Steer the Radisson destination • Manage the flagship properties in key cities • Accelerate growth with more resources • Invest USD 1.5 billion between 2010 and 2015 • Evolve business model • Enhance brand equity

3.3.
Managed/Owned Franchised

7%
93%

15% 85%

2010

2015

STRONG BRANDS HAVE STRONG FLAGSHIPS…

STRONG BRANDS HAVE STRONG FLAGSHIPS…

… AND SO DO WE IN CAPITAL CITIES AROUND THE GLOBE

The Mayfair, London, United Kingdom

Radisson Blu Strand Hotel, Stockholm, Sweden

Radisson Blu Plaza Hotel, Oslo, Norway

Radisson Blu Royal Hotel, Copenhagen

Radisson Blu Hotel, Berlin, Germany

Radisson Blu Hotel, Amsterdam, The Netherlands

Radisson Blu Dokhan Hotel, Paris, France

Radisson Blu Hotel, Rome, Italy

Radisson Blu Hotel, Madrid Prado, Spain

Radisson Blu Conference & Airport Hotel, Istanbul, Turkey

Radisson Blu Hotel, Dubai Media City, United Arab Emirates

Radisson Blu Al Mahary Hotel,Tripoli, Libya

Radisson Blu Hotel, Dakar, Senegal

Radisson Blu Hotel Sandton, Johannesburg, South Africa

Radisson Hotel Waterfront, Cape Town, South AfricaRadisson

Radisson Royal Hotel, Moscow, Russia

Radisson Hotel Bangkok Sathorn, Thailand

Radisson Plaza Hotel, Sydney, Australia

Radisson Plaza Santiago Hotel, Chile

Radisson Hotel Sao Paulo Faria Lima, Brazil

Radisson Hotel Decapolis, Miraflores, Peru

Radisson Decapolis Hotel, Panama City, Panama

Where Does Park Inn Fit in the Carlson Hotels Portfolio?
Luxury Upper / Upper Upscale Midscale with F&B Midscale without F&B Economy

Grow Park Inn as a Winning Mid-Scale Brand in Key Countries Across All Theatres

• Nearly 150 properties in seven years • #1 Mid-Scale brand with J.D. Powers • BDRC Most Promising Emerging Player 2009 • European success • Good investment model, fantastic conversion model • All the systems, all the tools: Essentials, Brand Port, Design, Standard Operating Procedures, Adding Color to Life

Park Inn
• Unknown in Europe six years ago • Brand values based on ease of use and functional style

• Striking new identity in the branded world
• Record growth • Part of a great family of brands

• Despite a short lifetime, internationally recognised
• Replaces an existing conventional solution

Our Brand – A Unique Label
• One of the most distinctive and striking identities of the branded world • Sets us apart from the competition • Represents the unique personality of the brand • Visual voice

Bright, Bold and Fresh, Uncomplicated, Friendly and Fun
Brand ID Card      Energetic mid-market hotels Mastering the essentials Providing the best sleep in town in its class Sleep well, live well Unexpected touches of iconic contemporary design  Strong conversion brand  Located off centre in major cities, regional capitals, airports and transport hubs  Ambition: To reach 300 hotels by 2015 100 Properties Worldwide

Adding color to life!

Brand Positioning
Four Seasons

Luxury

Morgan W

Our luxury brand
Ritz Carlton Bvlgari InterContinental

Brand Management
First Class

Our lifestyle brand Our up-market core brand

Hilton Marriott Sheraton Sofitel

Mid-market

Holiday Inn Novotel Scandic

Our mid-market with F&B growth brand

Culture of Service

Economy

Ibis

Budget

Formule 1

Increased Level of Service

Source: HVS International

“Highest in Guest Satisfaction Among Midscale Full Service Hotel Chains”

Our Values

Friendly

Fun

Vibrant

Un complicated

Brand Visuals

Advertising
• Simple • Effective • Impactful • Flexible • Adaptable

RBG – Restaurants That Work
 End to End solution  World Cuisine  Compact mise-enplace  Quality, consistency, creativity  Designed for profit

RBG – Great Spaces for Food

Great Food

Gross Floor Area Per Guest – January 2010
Net Room Area (m2) (As per work in progress 27 January 2010) 30 29 Radisson Blu 28 27 26 Ramada 25 Garden HI Courtyard 24 Inn Novotel 23 Park Inn Jurys Inn 22 Express HI Hampton 21 20 Ramada Encore 19 18 17 Ibis 16 15 25 30 35 40 45 50 55 60 65 Gross Internal Area per Room (m2)

Room Area versus Total Area

Room Area as % Total Area Ibis Express HI Courtyard 62% 60% 60%

Hampton
Park Inn Ramada Encore Garden Inn Ramada Holiday Inn Novotel

58%
54% 54% 54% 52% 52% 50%

Jurys Inn
Radisson

49%
46%

Source: Rezidor BD Research

Guest Room Layout – Prototype

Park Inn Bruxelles-Midi

The Park Inn Mandatory Items Listing
The Park Inn Essentials are a collection of iconic elements that, when implemented fully in a hotel, provide a coherent branding experience throughout the physical environment of the property

Park Inn Growth* – Europe, Middle East, Africa
140 120 100 80 60 40 20 0 2003 2004 2005 2006 2007 2008 2009
Franchised Managed Leased Owned

Note: * Number of hotels in operation and under development dated December 2009 *The above numbers include hotels that are owned, managed, leased and franchised by Carlson or by Rezidor

We are already here

Krakow

Klosterneuburg

PARK INN KLOSTERNEUBURG – AUSTRIA

Djerba

PARK INN ULYSSE RESORT & THALASSO, DJERBA – TUNISIA

Liege Airport

Yas Island

Baku

PARK INN AZERBAIJAN – BAKU

…adding colour to life

Where Does Country Inns & Suites Fit in the Carlson Hotels Portfolio?
Luxury

Upper / Upper Upscale

Midscale with F&B

Midscale without F&B

Key 2010 Programs

Enhanced Friends Hosting Friends Recognition Program

New Employee Uniforms

Key 2010 Programs

Guestroom Operating Supply Refresh

New Breakfast Program

Our Culture is Our Foundation

Our Product Must Be Excellent and Convey Our Brand Essence

Generation 1 Generation 3 Generation 2
• Perpetual product design solutions • Proactive Product Improvement Plan cycles • Managed renovations / design review and approvals • Solution supply chains managed • Outliers identified and managed

Generation 4

Generation 5

How are Renovations Going?
2 334

In negotiation Engaged in renovation process (planning, ordering, installing) New (2006-2009) and recently fully renovated hotels

Between 2006-2011 Country Inns & Suites hotel owners will reinvest approximately USD 300 million in the brand in product improvements.

146

Hotels
Product Evolution Status as of December 2009

Legacy Exterior Design

Today’s Exterior Design

Country Inn & Suites By Carlson, San Marcos, TX

Country Inn & Suites By Carlson, Summerville, SC

Legacy Interior Design

Today’s Interior Design

Legacy Interior Design

Today’s Interior Design

Have Customers Noticed Our Emphasis on Product and Service?
8.52
10

8.55

8.61

8.72 8.60

7.5

8.44

8.46

8.51

5

2.5

0 2006 2007 2008 2009 Guest Satisfaction Index
*A .02 change in Brand Guest Satisfaction Index is statistically significant

Product Performance Index

In 2010, Celebrating Our 500th Hotel

Development Ambition – 2015
• Additional development resources • Ambition to achieve a portfolio of 750 to 1,000 properties globally

*Aspirational strategy and not a Franchisor performance claim

Future Targeted Development Focus
Country / Region United States India Canada Mexico

Implementing the development process in Latin America

Our Development Strategy:
1. Continue Growing the Radisson brand with Franchising: RHILA and other partners
Growing a vibrant hotel company in the region

2. Grow Radisson Blu in Selected Markets: capital cities with Key Money, management and leases. 3. Grow the Park Inn brand in selected international cities initially, then expand. 4. Grow all brands in Mexico (potential for over 100 properties) 5. Establish regional offices for the support of managed and franchised properties

The Process: People, Product, Service
Strong owner or developer with resources Signing the agreements, building the hotel, opening Site or project location

Negotiating a Franchise and/or Management
How is the brand assisting the owner during this process

Scope and design of the project and/or PIP

Growing Carlson’s brand in the LatAm region: Model will Be Differentiated by Segment
Owned/Leased Radisson Blu Radisson Park Inn Country Inn Managed Franchised

   

  

A number of solutions
Lease

Carlson will take the financial risk by guarantying a fixed return to owner, offering key money, etc..
Owner will leverage Carlson’s expertise with a contract, performance clauses and possible minimum guarantees

Type of Contract
Franchise

Manage

Owner uses his or her resources to operate and will leverage the Carlson’s system: distribution, marketing, advertising, etc..
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Carlson’s technical support:
The New Process
 Room styles  Restaurant design  Architectural design  Interior Design style guide  Preferred designers  Radisson Blu  Radisson  Park Inn  Country Inn & Suites

The Old Process
 Technical standards  Operational supplies & equipment  Radisson  Country Inn & Suites

Radisson Hotel Orlando-Lake Buena Vista, Florida

A contemporary design style:
The Guestrooms The Public Spaces

Radisson Hotel Orlando-Lake Buena Vista, Florida

A solution for the owner/developer: The Room Style Program
What is included?
Case goods: Lighting: Full length mirror Floorlamp Night table Writing desk lamp TV-Console Headboard lamps Writing desk with mirrorwith shade Headboard Miscellaneous: Loose furniture: Artwork End table Accessories: Desk chair Desk blotter Lounge chair Vase Footstool Flower pot Bench Textiles: Bedskirt Bedthrow Combined decor blackout curtain Sheer curtain Throw pillow on bed Throw pillow on lounge chair Carpet/wallcovering: Guestroom carpet Guestroom carpet base Main Wallcovering

The Cost?
Pricing base program
Urban: $6,640 Ocean: $6,595 Naturally Cool: $10,720 NY Mansion House: $8,670 And Relax: $8,035

Radisson Hotel Orlando-Lake Buena Vista, Florida

The Goal: A self sufficient region accretive to Carlson
1. Grow Radisson to 80 hotels by 2015 2. Grow Park Inn to 25 hotels, including 10 in Brazil 3. Expand CIS to 20 hotels in Mexico

4. Establish Regional offices: Mex, Chile, Brazil

5. Integrate LatAm within a global vision

October 27, 2010

Roland Mouly
Vice President Development V Seminario Internacional de Hoteleria USMP Lima Peru