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International growth, expansion west key for Red Roof

SAN ANTONIO—Red Roof Inn hit several growth milestones in 2016, and the company is focused on continuing to grow and refine the amenities that differentiate it from competitors.

During the Asian American Hotel Owners Association convention in San Antonio, Texas, last week, Red Roof Inn?President Andrew Alexander and Chief Development Officer Phil Hugh spoke with Hotel News Now and shared details about the company’s domestic growth and international expansion moves.

500 and growing

In January, the company’s 500th Red Roof Inn hotel opened in Biloxi, Mississippi; and its 50th Red Roof Plus opened in Irondale, Alabama. As of press time, the company’s global portfolio includes 504 hotels open, including 51 of the “upscale economy” Red Roof Plus locations.

Growth milestones like this are important to the company, Alexander said, because they represent the company’s overall growth since reorganizing its franchise sales organization three years ago.

“We’ve seen more than 40% brand growth since 2014 … and nearly 100% franchise growth in that time,” he said.

Hugh said that at the end of 2013, the company’s portfolio was 25% franchised, and at the end of 2016 that had grown to 75% franchised.

That’s an upward trajectory that Alexander said will continue, alongside more “opportunistic” growth of corporate-owned properties, he said.

International expansion

But while Alexander said that for the foreseeable future, Red Roof’s growth will be “predominantly in the U.S. and predominantly franchise,” the company has achieved several international growth milestones recently as well.

Red Roof opened its first international hotel in 2015 in Curitiba, Brazil, as part of a partnership with Brazil-based Nobile Hotels. Per that agreement, the partnership signed on to develop between 35 and 40 new-build and conversion hotels across Brazil over 25 years.

Hugh said the fourth Brazilian hotel developed as part of this partnership will open this month.

Asian expansion is also a priority for Red Roof Inn. In 2015, the company signed a partnership deal with Thailand-based Paragon Hotels Limited to develop new-build hotels across Thailand. Paragon has several new-build hotel developments underway in Thailand. Red Roof Inn also recently opened two branded hotels in Japan.

“The level of partner we work with (internationally) isn’t interested in doing just one hotel,” Alexander said. “When we find a high-quality partner, they have goals that match our goals.”

Hugh said it’s all about having strategic plans that lead to relatively high-volume growth outside the U.S. He referred to Red Roof’s approach to Canada, which includes developing through normal franchise growth and through partnerships, such as the deal Red Roof struck in 2015 with Glenn Squires, CEO of Pacrim Hospitality Services to build and brand 40 hotels across Canada.

Brand strengthening

Red Roof launched a major prototype redesign at the end of 2011, called NextGen, and at this point, Hugh said the majority of franchises have either completed the renovation or have started renovations.

“This is what allows us to see the (revenue-per-available-room growth) and quality growth we’re going for,” he said of the design, which includes wood-like flooring, updated fixtures, bedding and TVs, and increased tech amenities.

To build on NextGen’s success, Alexander said the company now is in the process of verifying third-party Wi-Fi at all hotels.

“We did several months of surveys and found that Wi-Fi far surpassed both breakfast and location when it came to people’s reasons for choosing a hotel,” Alexander said. “We recently heard a statistic that of all internet traffic, about 40% of bandwidth goes to Netflix, and in hotels that’s probably closer to 60%. Guests are telling us by their habits exactly what they want, and they want to stream content.”

Through this verification process, individual hotels can apply to receive third-party verification that the Wi-Fi at their properties is up to streaming levels.

“Consumers won’t have to guess anymore which hotels have super-fast Wi-Fi,” he explained. “Hotels will be allowed to market their third-party Wi-Fi verification.”

When it comes to growth domestically, Hugh said the company continues to focus growth on the West Coast.

“We launched in the Midwest, and now it’s time to continue our growth out west,” he said. “That’s where we see the most opportunity.”

With Red Roof Plus hotels taking a 10% footprint of the company’s total portfolio, Alexander said the company’s portfolio is in a nice “sweet spot.”

“We’ll grow Plus selectively, with the right assets in the higher ADR markets,” he said. “Franchise growth will continue on its upward trajectory.”



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