Carlson Hotels Worldwide last month began a new marketing strategy, for the first time bundling its different brands to travel buyers and other customers. With the change, Carlson now has the same business model as many of its larger multi-brand competitors, including Marriott International and Hilton Hotels Corp. In announcing the new approach, Jay Witzel, president of Carlson's core full-service brand, Radisson Hotels & Resorts, was given the added title of executive vice president of the newly unified hotel group.
"We're going to bundle our brands together and go to market in a selling process for all the Carlson brands," Witzel said. "Up to this point, sales teams for the different brands have been selling on an individual basis. Now we have a centralized team that sells on behalf of all the brands, including Regent International, Country Inns & Suites, Park Inns and Park Plazas, in addition to Radisson."
The move comes as the U.S. lodging industry slowly recovers from steep drops in occupancy rates and room revenues that resulted from 2001's declines in business travel. The economic climate and subsequent cuts in business travel made Carlson rethink its approach to the market, travel buyers included. "What really drove the decision was wanting to be more responsive to the customer base," Witzel said. "And this certainly means travel managers, because we believe the unified sales structure will provide easier access and, thereby, make their lives easier. Clearly, for big companies like General Electric, 3M and IBM—the real global companies that have all levels of travelers traveling at different price points—it's much easier to have one sales person knocking on the door than three or four."
By negotiating across brands, buyers theoretically benefit.
"By buying this way, travel managers should be able to leverage their buying power and negotiate a better rate," Witzel said. "But we need to make pricing consistent and that's the other objective this new approach should accomplish, because we can't have a limited service product, for example, having a higher price than a full-service product in the same market."
Business travel always has been a dominant market for Carlson's hotels and the Radisson brand in particular. As of year-end 2001, the Carlson hotel portfolio consisted of 788 properties, including 428 Radissons. This focus will not change. "Transient business travel and the small meetings market are probably 70 percent of Radisson's business, so it's critically important to us," Witzel said.
As the new sales effort is implemented, Witzel said the hotel group will benefit from its relationship with Carlson Wagonlit Travel. "Having CWT as a sister company is helpful when it comes to expansion decisions," he said. "We know, for example, where they're sending corporate travelers they work with, where they see their demand shifting. So as we look at where we should either franchise, buy or build a hotel, this information factors into that decision."
In fact, Witzel sees Carlson Hotels Worldwide's long-term success tied to its ability to expand internationally. "As we've gotten more and more distribution in Europe, for example, the number of global accounts has gone up because we were in more and more places business travelers needed to be," he said.
The unified sales approach to travel buyers will face its first major test in the bidding season for 2003 rates that gets underway this summer. Witzel said Carlson's team will be ready and was candid in his assessment of the lessons learned in the 2002 negotiations that were difficult industrywide.
"For the first time in a long time, we were asked to look at reducing rates, though not totally across the board," Carlson's Witzel said. "With the economy slowing down, many corporations needed to retrench because of their own circumstances. We were willing to work with buyers in this regard. After all, the health of their business determined the health of our business. We could arbitrarily set our pricing and get nothing, or we could be flexible. The impact on rates was anywhere between 5 percent and 10 percent, though it wasn't across the board, but on a case-by-case basis."
In the 2002 negotiations, the ability to move market share in a given destination as opposed to absolute volume numbers became more of a driver for hotel companies than ever before. Experts expected this to remain the case in 2003.
Witzel said Carlson tried to approach the matter of market share gains in a rational way. "Because in the end, if we get 100 percent of an account's business in a market and the competitors get zero," he said, "they're going to turn around and try to do the same thing to us on another account."