What are Radisson’s growth plans for 2023?
Everyone is trying to be big in China, but we want to be big out of China.
In 2022, we doubled our signings (outside of China) when compared to 2021. We aim to double this existing Asia-Pacific portfolio by 2026.
China alone is a huge market for us. We are the leading hotel group in the market, through our affiliation with Jin Jiang International which has a global portfolio of over 11,000 hotels. We are planning to ramp up our signings to 200 hotels a year in China.
Meanwhile in India, we are one of the largest international hotel operators, with a portfolio of 150 – and growing – hotels. We sign around 15 to 20 hotels a year in India alone.
For 2023, we are targeting Indonesia, Vietnam, Thailand, Australia and New Zealand, and islands in the Pacific, like Fiji. We haven’t been proactively present in Vietnam and Thailand before, but we’ve seen a lot of traction in recent months with the launch of our new business units in Ho Chi Minh City and Bangkok.
One of our biggest markets is Thailand, where we doubled the size of our portfolio in one year. Initially, there were four operating hotels, and we signed another five in 2022, some of which are new brands. The idea is to do the same for the next three to four years.
To cater for this, we created several Radisson Hotel Group offices in certain markets like Vietnam and Thailand – as opposed to having our development teams based out of the corporate office in Singapore – and these offices are hubs for us to help grow the brand. We want to be quick and fast in responding to requests from owners while ensuring guest satisfaction from an operational perspective.
These offices were also an opportunity for our people to take on new challenges. Instead of retrenchments, we provided an opportunity for existing talents to move and work in the new business units located in Thailand and Vietnam.
Additionally, with South Korea and Japan set to be the first few destinations the Chinese outbound will visit, we will be directing some attention to develop our properties in these countries.
In Japan, the business model may be slightly different, and could be through a merger and acquisition. This will be something in the middle, where an existing owner with a number of assets will engage us to operate the hotel, and in some cases through the lease of the building.
Why does the franchise model work best for Radisson?
We’re asset light, and don’t own any properties. But even in franchising, there are two different business models. One where we take care of everything and rent the building from the owner, while on the other hand, we manage the hotel operations only. Approximately 60 per cent of our portfolio in Asia-Pacific is managed, while 40 per cent is franchised.
In Asia-Pacific, some owners may not have the expertise to run hotels, as they come from different backgrounds. When compared to the US, more than 90 per cent of hotels are franchised.
Moreover, a majority of the hotels in Asia-Pacific are unbranded and could be owner-operated and family-owned. This represents a huge opportunity for Radisson.
We also do soft branding, that’s how we came up with Radisson Individuals, an affiliation brand that provides existing owners with assets and the opportunity to access our global distribution system. As a brand, Radisson Individuals has been quite successful, and it’s growing.
During the pandemic, owners have realised that being a standalone property is tough. The idea behind Radisson Individuals is to sign them for three to five years, and show owners what we can offer as an international hospitality company.
Eventually, we hope to transition them into one of our core brands, depending on the positioning of the property. Coming out of the pandemic, some owners might have cashflow issues, so Radisson Individuals also helps some hotels to transit from existing assets without the initial heavy renovation cost. But of course, the renovation has to come in at a later stage when they transit to a core brand.
There are cases where owners also decline to transition, because it already has a name in the market, such as a heritage property. We don’t want it to change it to a Radisson Blu, and lose the essence of the property. It’s really up to the owner to decide.
What helps you stand out from your competitors?
Our loyalty programme Radisson Rewards. I’m confident to say that our loyalty programme is the fastest in the hospitality industry where you can arrive at top tier status – from club to VIP – in just 30 nights or 20 stays.
We’ve also invested heavily in technology. Currently, we are in the process of introducing tools from booking to checkout, such as offering guests the option to take a look at their room on a virtual map, and pinpoint exactly where in the hotel they would like their room to be. When they check-in, we will already know what their preferences are, and can personalise it even further for them.
This is also related to artificial intelligence (AI). How do we maximise the availability of our rooms? When is the guest arriving and leaving? Why does check-out have to be at noon, and check-in be at 15.00? Some rooms are left empty for hours before the next guest checks in.
As a business traveller, I appreciate checking in at 10.00, and having the hotel room for 24 hours, as opposed to 11.00 the next day. I don’t want to wait until 15.00 for a room because sometimes I have meetings to get to almost immediately upon landing.
That is why we need AI and technology to better predict, monitor, and forecast travelling trends.
How about paying a pro-rated rate for an extra six hours that you need the room? There is no international hotel chain currently offering this – I think it’s because the technology is not there, so these are some of the things we are working on.
The investments we are making are not about the hotel wanting to increase profits, but it’s also how we can get more travellers to choose Radisson because of what we can offer. This is why we have invested a lot of money in innovation and technology.
From an owner’s perspective, what sets us apart is our accessibility and reachability. During the pandemic, because of the lack of guests, we focused on the owners and looked at how we can minimise losses, such as resizing rooms, and the removal of speciality restaurants if the hotel is located in a great location with many surrounding offerings. Especially in Asia, food is so accessible, so there isn’t a need for too many restaurants on-site for example.
What are some trends you currently see in the hospitality industry?
In Asia, multi-generational travel is very popular, and we have answered this trend by reconfiguring some of our rooms, such as ensuring more connecting rooms, as well as more facilities in resorts that can respond to the leisure market.
Although corporate travellers are a significant part of our business mix, most companies during the pandemic have completely cut down on travel expenses. Leisure is where the pent-up demand is right now.
These days we see more people working from anywhere, and we also see more bleisure travellers, as well as bleisure travellers where their families join them. As such, we’ve sat down with owners of business hotels to think about reconfiguring some assets – for example, the inclusion of spas and yoga classes – to also appeal to other segments like leisure travellers and staycationers.
Travellers are also expecting a good hotel experience within their budgets – be it a three-, four-, five-star, or luxury – so we have spent the past three years ensuring our brands can respond to local demand.
How about the China outbound market?
Radisson is the best-positioned company to capture the Chinese outbound; in 2019, there were 162 million outbound travellers. In China alone, we have a combined database of over 180 million members through Jin Jiang International. These guests know our brands, and when they travel, they tend to choose us as Chinese outbound travellers are very loyal to brands.
When we pitch for a hotel, the China market and its possible market capture is a big selling point for us. The Chinese market is coming back, and it will be exponential.
But when the pandemic happened, the Chinese outbound disappeared. As a result of this, we targeted other markets, like India. In India, we’re now the top two hotel companies in the market.
That is why we reshuffled our marketing plans – in partnership with tourism boards – to try and get the European market moving, say, from Brussels to Sydney. This strategy worked, and helped us establish a better foothold in the European market.
What are your thoughts about the tourism industry for 2023, and what does this mean for Radisson?
Even if there is a looming recession and inflation is going up, at the end of the day what we have learnt from the pandemic is that people want to live and travel. Coupled with the returning China market, we are positive that business will continue to grow for the next couple of years.
Therefore, we feel very optimistic about travel on a global level, not just in Asia-Pacific.
