new brand and will, in the jargon, be recycled as soon as possible. It is a pattern the company has
done repeatedly before with a recent European example being the new Courtyard just outside of Paris. This was built and opened by Marriott in 2009 as the prototype for a brand refresh. It was then sold on to investor Algonquin at the end of 2010. The second thing Marriott
is not going to do is transform itself into a style icon. This is the world’s biggest manager of hotels where most of its guests are road warriors jobbing for unglamorous companies. These guests are not part of the cutting edge media set and do not want the surprises that come from being in such a group. Of course, Marriott has to offer something fresh and contemporary but it needs to retain mass appeal. Mind you, it would still be fun to see Andy Warhol style prints of Bill behind the reception desk.
Rezidor and Carlson combine
brands Carlson and Rezidor have announced the formal linking of their businesses under a single banner, Carlson Rezidor Hotel Group. The tie-up launched at the end of January cements a 17 year association, and promises to further accelerate the pair’s aggressive growth campaigns, taking their hotel brands into new regions.
Together, the two claim 1,300 hotels in 80 countries across
brands from Radisson Blu to Park Inn and Country Inns & Suites, Park Plaza to Missoni. “Carlson and Rezidor have a
long, common history and have grown together over the past 17 years,” said Hubert Joly, president and chief executive officer, Carlson. “Going to market as one is a next and natural step. We are leveraging the strengths of two great companies to create value for all our stakeholders.” “The goal of this development
is to generate more attractive financial returns for the owners and greater value for all shareholders, to be perceived by business partners around the world as one global hotel company, to offer more compelling and consistent value propositions to the guests, and to offer global career and development opportunities to the staff,” said Kurt Ritter, president and chief executive officer, Rezidor. The publicly stated targets
for the combined group are USD400m in additional revenue, and an increase of nine points on the revpar index by 2015. Specifically, around 3-4% of this is expected to come from revenue generation; 2-2.5% from fee growth, and 0.5% from cost savings and from better capital utilisation. Helping towards these will be
a global sales team, partnerships with travel intermediaries, including Carlson’s Wagonlit agency, and development of the Club Carlson loyalty scheme. There will also now be an
imperative to align brands globally, and the potential for economies through global sourcing. The combined portfolio is
strong in the mature markets of Europe and North America, where 918 of its 1,070 hotels are located (figures from Q3, 2011), with
a pipeline of 116. Radisson Blu claims the biggest development pipeline in Europe, with 7,100 rooms in development, while Park Inn is the second largest at 5,900 in the mid-scale segment. In Russia, the CIS and Baltics, the group is the leading operator with more than 10,000 rooms. Elsewhere, the group claims the
biggest pipeline in sub-Saharan Africa and claims to be the largest and fastest growing international hotel chain in India but is less strong in China. Outside Europe and North America, the group has 137 hotels open and 109 in development. The association between Carlson
and Rezidor dates back to 1994, when Rezidor signed a master franchise agreement handling the Radission brand in Europe. In 2002, a fresh agreement saw Rezidor responsible for expanding Carlson’s Park Inn, Country Inns and Regent brands across EMEA. In 2005, the franchise agreements were renegotiated as Carlson took a 25% stake in Rezidor. This was raised to 42% in 2006, when Rezidor listed on the Stockholm stock exchange, signifying the end of ownership by the SAS airlines group. Since then Carlson has increased its stake to just over 50%. The two separate corporate
entities will remain in place. The privately owned, Minneapolis- based Carlson will keep its interests in restaurant brand TGI Friday’s, and its Carlson Wagonlit travel agency. Rezidor will remain listed on the Stockholm market, with headquarters in Brussels.
HA Perspective: This deal has something of the having your cake and eating it about it. There is perfect industrial logic in putting together the hotel interests of the two companies. But, equally,
there are very good reasons why, for the sake of the independent shareholders in Rezidor, they ought to be kept separate. The inherent conflicts of
interest in running a company which has one part listed and the other privately held are obvious and yet nothing was mentioned in the official release about the merger. This surely will be a source of tension for the group going forward, even if half of the listed company is owned by the privately held Carlson. For competitors of Carlson Rezidor there is also cause for concern as the US business is stirred from its slumbers by a reinvigorated management team. Some of this team, COO Thorsten Kirschke and brand supremo Gordon McKinnon came across from Rezidor. And with the Radisson brand
being respan as Radisson Blu along lines laid out by Rezidor, there is certainly a case for arguing that there has been a reverse takeover, at least by management if not by Rezidor’s owners. Back in December last year at Rezidor’s investor day there was discussion of “leveraging Carlson synergies”. This deal is probably as leveraged as synergies can get.
Hotel Analyst
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