Interview: Rezidor Hotel Group's Knut Kleiven

Brussels-based Rezidor Hotel Group, the hotel company that manages and develops Carlson Hotels' brands in Europe, the Middle East and Africa, this month announced a strategy designed to boost revenues and profits through 2015. Rezidor deputy president and CFO Knut Kleiven recently spoke with Business Travel News lodging editor Michael B. Baker about the specifics of the plan and the role business travel will play in it.

What are the components of your growth strategy?

We should be able to lift substantially the margin of the business, and without requiring the market as such to change or improve. It's more our own efforts. Basically, there are four or five different pillars, and our target is to lift the margin by 6 to 8 percentage points. Revenue generation is roughly half of this overall target, and this has come out of a closer cooperation between Carlson and us than we have in the past. Then, we will continue to grow through management contracts, predominantly in emerging markets, [mostly Africa and Russia]. That also will have an important impact on the margins, and we have indicated 2 to 2.5 percent. Then, we have some cost savings, but not really a big savings project. We have a couple of smaller things we could do, and that's something we would have done regardless of Europe heading toward some sort of negative territory. It's related to purchasing and related to energy savings. Then, we will see if it's possible to restructure some of the contracts that we have, which we haven't really factored into the 6 to 8 percent.

How are you cooperating more closely with Carlson?

Even though we have used Carlson's brands in Europe for almost 20 years, there's been rather limited cooperation. If you look at the brands as an example, they are very different today. Carlson in the States uses Country Inns & Suites, and we don't use that at all here. We use Park Inn in Europe, or Park Inn by Radisson as we call it now, and Carlson does not really use that in the States. We have positioned Radisson very differently in Europe from what they position it in the States. Historically, there's been very little cooperation between the companies. That has changed over the last two or three years. We have the exclusivity to Europe, the Middle East and Africa. For Europe, it's also important to get business from the United States and Asia, so it's very important for us and Carlson to have good sales representation in those markets. The other thing is the branding. Carlson's ambition today is to use Park Inn like we do and use Radisson also, which is good for us, because today we do not have our fair share of U.S. travelers. Radisson in the States is positioned much, much lower than Radisson in Europe. A third element is the loyalty program, which they have really beefed up with more than 7 million members now, so that's becoming a meaningful player among hotel loyalty cards.

Is it mostly business travel you will be courting from the United States?

In broad terms, it's more business travelers than leisure travelers. It depends a little bit on each market. If you are in London or Paris or Amsterdam, usually there's a good mix between leisure and business, whereas in Vienna or Brussels or the Nordic capitals, it's more business. In resorts, it's purely leisure. It's a mix, but it's more skewed towards business.

Will your growth be mostly new construction or conversions?

Our growth has always been and will continue to be organic. It's a mix between new-build hotels and conversions, meaning we convert hotels that are branded Hilton today or Marriott today to Radisson. Organic growth, the way we do, is the cheapest way of growth because there's no capital involved, and this is basically the way we've developed the company over the last several years.

Where have some of your more recent openings been?

We open between 30 to 40 hotels per year. We have this year opened in the beginning of the year the big convention hotel in Stockholm, which was very successful. It's 150,000 square feet of conference space. We have opened a very prominent hotel in Dubai. We opened [a property] in South Africa.

You mentioned Country Inns & Suites. Are there any plans to bring that to EMEA?

It's more of a U.S. thing. When we acquired the Park Inn brand from Carlson, there were a few Country Inns in Europe that we rebranded to Park Inn, because we didn't want to have too many brands.