REZIDOR, one of Europe’s largest hotel companies is expanding its portfolio in the region with the opening of two new brands – the much-anticipated Missoni in Kuwait and Regent in Abu Dhabi and Doha.
With 170 hotels and a total of 38,079 rooms across Europe, Radisson recently took the crown as Europe’s largest upscale hotel brand. Today, Rezidor has 25 hotels operating in the Middle East under the Radisson Blu and Park Inn brands and 15 new properties under development.
Carlson, a privately-held, global hospitality and travel company, and publicly-held Rezidor Hotel Group announced a new agreement with Formosa International Hotels Corporation (FIHC) under which FIHC will acquire the Regent luxury hotel business.
The Regent brand is owned by Carlson and its subsidiaries, which globally operates and licenses the Regent brand. In 2003, Carlson expanded its relationship with Rezidor under a separate master franchise agreement to include the development rights for Regent in Europe, the Middle East and Africa. Transitional agreements are in place whereby Carlson will continue to provide reservations and other services to the existing Regent network and Rezidor will continue to provide management services for Regent Hotels in EMEA.
“For Regent, this is an exciting partnership because there is definitely an easier tomorrow than before. Formosa is committed to the growth of Regent internationally,” said Ritter.
At Rezidor, the core business continues to be the development and growth of The Radisson Blu and Park Inn brands. “Both the Regent and Missoni will never become our core brands but they compliment our other brands very well. Our brand-scape is well spread with a conservative luxury brand (The Regent), a lifestyle brand (The Missoni), The Radisson Blu (four-star) and the Park Inn (mid-scale) and hopefully one day we will add a two-star brand to this pyramid,” he added.
While Radisson Blu and Park Inn continue to be the company’s core brands, Ritter is confident that the opening of the Missoni Kuwait will usher in a new demand for lifestyle hotels. “The Missoni brand has received a lot of interest because it is unique and very timely and will attract a creative clientele. We are creating a demand for a product like the Missoni and are quite confident it will be a success in the region. The second Missoni will open in Sifah, Oman in 2012,” he said.
The company, which celebrates its 50th anniversary this year, was not severely affected by the economic crisis though 2008 was a chaotic year for Rezidor when the first and second quarters saw a revpar growth of 2.8 per cent, followed by a flat third quarter and revpar dropping to -5 per cent in quarter four.
“That was when we pulled the alarm bell and decided we needed to start our savings programme, a project called Hedging for Turbulence,” said Ritter. “We were on a mission to save roughly €30 million on annual costs and eventually achieved a reduction of €36 million.
“This was a major feat for the company and a cost structure that is now here to stay. In the process, we have had to let people go, people had to work harder, be more flexible and work smarter. It has certainly been a learning curve for the entire Rezidor family.”
The following year witnessed a slight drop in revpar, which flattened out in October/November 2009 and since January/February 2010 there has been some improvement in occupancies.
“This is typical of a downturn, where we will see occupancies improving before rates raise. We have also continued to maintain our growth pattern and will continue our aggressive growth into 2010 and 2011,” he said. “We have a pipeline of more than 100 hotels as well as gathering more conversions as we go ahead. The Middle East currently has 15 new hotels under development, which is more than 4,225 rooms.”
At present Rezidor has a signed pipeline of more than 23,000 rooms, of which 90 per cent are fee-based. Ritter added: “Management contracts will continue to be our focus for the next couple of years with limited or no financial exposure. We decided to stop any lease contracts because it can get very costly and can be risky.
“This might mean slower growth in numbers but we don’t want to jeopardise the company with too many commitments.” Coming out of a downturn, he believes this probably is the best decision the company has made.