Thorsten Kirschke
Carlson Hotels is in the
midst of a program to grow by 50 percent within the next three years its hotel
portfolio to at least 1,500 hotels globally. Thorsten Kirschke, COO for Carlson
Hotels in the Americas, recently updated Business
Travel News lodging editor Michael B. Baker on the company's progress,
recent sales growth and distribution strategy.
What has Carlson been doing with its sales force?
Over the last two years we've increased our global sales force by 31 percent. That's gigantic. We really have made huge progress in the inter-theater sales, i.e. the global travel that goes out of Asia/Pacific into Europe or Europe into the United States, or vice versa. We've dedicated 18 global sales offices, and we have first and foremost strengthened our representations in India and China.
What is the impact of combining commercial activities with longtime European development partner Rezidor?
We've always said if there's one overarching ambition behind the Ambition 2015 [expansion program], it would be a better global alignment that leads to harmonization in communication, in revenue management, in marketing and in how we present ourselves to the various customers and stakeholders. Being able to do that under one name now is huge in our industry. Carlson Rezidor Hotel Group combined is actually taking the ninth-largest global position of any global hospitality company, which prior to coming to market as one has not been the case.
What is Carlson's development outlook?
We are growing four times as fast as any industry pipeline measured by STR. Of course, that has to do a lot with the successful execution of our strategy, particularly in emerging markets, where we have leading positions in India, Russia and the sub-Saharan African continent, but also in Central Europe at large. In 2009, we had about 1.6 percent growth rate globally. We climbed to 2.8 percent in 2010. We made it to 3 percent in 2011. For 2012, we're mounting to 6.7 percent of growth in the contracted pipeline. Again, you see the momentum and the acceleration of all our work in so many different factors played out. The entry of [upper-upscale Radisson brand] Blu into North America continues to be a hot item for us. We're topping off [the Blu hotel at Minneapolis'] Mall of America next month, and we're looking at some exciting new projects that are in advanced discussions but have not entered the pipeline because we haven't found the deal yet. Then, we have a lot of renovation work and projects in our own existing portfolio.
What's happening with your midprice brands?
We have our new generation of Country Inns and Suites, which we will be launching later in the year. We are planning to take that brand much more international and into markets where we currently have no presence, be it major urban markets or even resorts. We are evolving the Country Inns and Suites brand to something more global, international and adaptable to various market situations. Park Inn is getting an overhaul right now, appealing to the younger generations of Gen Y and the Millennials around the themes of choice, independence and connectivity. We've selected modular furniture, going away form the traditional desk and chair and so forth. We're also looking at providing choices, such as automated check-in/check-out versus attended processes.
How is your new loyalty program faring?
Our loyalty program has taken off like a rocket. We've surpassed 8 million members coming from 5 million just 18 months ago, and have had a growth rate of 24 percent year over year, which is accelerating as we speak. There's a unique spot in the world of hotels with loyalty programs that we're able to take, and due to our relative size we can do things differently than anyone else. We have found an agreement with U.S. Bank to co-launch a joint credit card. That credit card agreement is for any insider in the loyalty program; this has been the missing piece for us. It's going to be a Visa card, and we're able to launch it probably in Q4.
What is your strategy for channel management?
We are actually finalizing our channel management strategy as we continue to evolve with it. Our web-based business has increased by 22 percent in 2011, which is a gigantic growth factor, after we invested some $30 million in web applications and technology alone. That's running very strong. Of course, all the chains have invested massive monies into their web presence. We're in a very good spot, very competitive, looking at not just how we present the product on the web and drive that channel but also how we improve the underlying technology around it. The OTAs and the opaque sites have a much harder stand with all of the chains, taking more and more control over their distribution and not leaving it to the chance of individual franchisees who get eaten up by the Expedias of the world or someone else who charges outrageous commission. The latest and greatest flavor of the month is Room Key, another event of very cash-rich companies investing in independence. I don't know how powerful Room Key will be over time. They're entering the arena where Google plays, where Expedia plays and where Apple has a standing patent. I don't know if Room Key is going to be big enough or have deep enough pockets to stand up against those boys, but it is characteristic for our industry actually forming alliances to strengthen independence on channel management and pricing.
Do you plan to participate with Room Key?
We're not a founding member. We've been at the table. At the time, they came to us and we entertained it, but we believe that we need to more strategically deploy our financial resources in different places with a greater security of return. That doesn’t exclude that we could become an ordinary customer of Room Key. We are at present evaluating that. We had a good dialogue, but after the initial excitement, we see already a little cooling off when you see reality kicking in and what Google does with Hotel Finder and all the rest of things we’ve mentioned. It’s a good step as a characteristic of the industry. How much return of investment there might be is a different question.