Radisson Blu Plans Slow But Steady Americas Expansion

The upper upscale Radisson Blu brand is about eight months into its North America debut, and while brand leaders are pleased with its performance, they said it would still be a while before Blu has a solid presence in the region.

The Radisson Blu Aqua Hotel Chicago opened this past November and since has posted what Carlson Rezidor COO and Americas president Thorsten Kirschke called one of the strongest performances he has seen among the more than 50 hotels he has opened globally in his career. The brand plans to open its next U.S. property in March 2013 near Minnesota’s Mall of America. Beyond that, many projects still are several years out, he said.

"Dare I say, the [success of the Chicago property] is a little bit too much, because all of a sudden people think they can make a Blu out of the blue," Kirschke said. "You have to carefully plan these, as you always have to be sure there is a demand market that is strong enough to carry out this investment."

Carlson Rezidor has about 10 such projects under discussion with various owners, and all but two of those would be new builds, which Kirschke said "is good and not so good at the same time. It takes longer, but you get what you want."

South of the border, Carlson Rezidor also is nearing deals on properties in Panama City and Costa Rica. Kirschke this month plans to travel to large metro areas in South America, including Buenos Aires and Santiago, to scope out potential projects there.

Economic conditions also are a roadblock to rapid expansion.

"It takes time to build a brand like that and export it, and lending is still very scarce," he said. "We see pockets here and there, but it's very, very slow, still."

Part of Carlson Rezidor's challenge is the persistent confusion among many North American travel buyers and travelers about the Radisson Blu brand. Most current Radisson Blu properties are former Radisson SAS properties, already widely known as upper upscale properties in Europe, but North American Radissons largely are known as a lower-tier brand.

"In the European region, obviously Blu is a very big brand, and the perception of that brand in the EMEA region is one that is very upscale," said Linda Plant, director of marketing for the Radisson Blu Edwardian in London, one of 13 Radisson Edwardian hotels that this year rebranded to Radisson Blu. "Here in the United States, the Carlson family is looking to up the perception of that brand, and they've obviously committed a lot of money into that."

Owners are keenly aware of that perception gap. Revere Hotel Boston is a former Radisson that recently underwent significant renovations, but its owners opted to operate as an independent hotel rather than continue its contract with Radisson under a new Blu designation.

"We didn't see that the Blu had legs yet," said Simon Mais, the hotel's general manager and partner. "We thought the North American stigma would hold us back, and we were looking at a $50 rate uplift year-over year, so we wanted to be very cautious about that."

Having the Radisson Blu Aqua Hotel in Chicago as a showcase is helping to change that perception, Kirschke said, noting interest from the corporate and group travel markets. "They get the message, and that's one reason why Chicago is such a success story," he said. "We still have to get more distribution, but everyone who has been there, seen it and stayed said they will return."

In the meantime, Carlson Rezidor is not neglecting the standard Radisson brand; about half the portfolio expected to complete renovations by the end of this year, Kirschke said. Those renovations focus on guest-facing areas, including sleeping rooms, public spaces and restaurants, he said.

With negotiations for 2013 corporate hotel programs underway, Kirschke also expects Carlson Rezidor to benefit from its newly united status. This year Carlson and Rezidor, which had long been its European development partner, decided to combine commercial activities. This is the first request-for-proposal season in which the two companies are acting jointly.

"We have developed a whole new preferred corporate rate program with Rezidor, and our global revenue council has regular, close cooperation, which is very fruitful," Kirschke said. "Early indications are that we have reasons to be very encouraged about what the outcome will be."