Red Lion Hotels Corp. president and CEO Greg Mount during
the company’s most recent earnings call described 2017 “a year of strategic
evolution,” marked by better-than-expected growth in franchise agreements, new
executive talent, and the successful integration of newly acquired Vantage
Hospitality.
RLHC is in the process of shifting to an asset-light
business model, which has the company more aggressively pursuing franchise
agreements and selling off owned assets. The company’s development team
executed 144 franchise agreements in 2017, which beat its goal of 90 to 120
agreements for the year. Of that 144, 115 properties sit in the economy segment
and 29 are midscale. RLHC has identified 11 hotels to sell and closed the sale
of five during the first quarter of 2018.
To support the shifting business model, Mount said, the
company has added new members and redeployed existing members of its executive
team “to emphasize those skills and experiences that can maximize the franchise
profit potential of [RLHC].” The changes impact franchise operations and sales,
loyalty, branding and development.
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Following its $27 million acquisition of Vantage and its 10
brands, the company during the second quarter of 2017 announced a new focused
strategy on nine total brands from the combined portfolios: Hotel RL (upscale);
Red Lion Hotels and Red Lion Inn & Suites (midscale); Settle
Inn (midscale extended-stay); Signature
Inn (upper-economy); GuestHouse (upper economy); Americas Best Value
Inn and Canadas Best Value Inn (economy); Country Hearth Inn
& Suites (economy). Mount said in the current year and looking ahead
the development team is focused on growing in the midscale and upscale
segments.
The company is also keeping an eye out for additional
acquisition opportunities. Mount said the RLHC team feels that “the
consolidation that's going on in the industry is really creating an opportunity
for company like ours to acquire.” Particularly, he said, as “the companies
like Marriott and others are really becoming so large and so ubiquities that… their
inability to be flexible is really starting to create issues and opportunities.”
Earlier this month, RLHC relaunched its Hello Rewards App,
which now allows guests at Hotel RL properties to use their mobile devices to
message hotel staff, check-in prior to arrival and access their rooms using
their devices as a key. These same features will be rolled out at Red Lion
Hotels and Red Lion Inn & Suites properties later this spring.
Full-Year & Q4 Results
During the fourth-quarter, systemwide occupancy at midscale
hotels increased 1.1 percentage points year over year to 54.2 percent, while
average daily rate fell 0.1 percent year over year to $87.69. For the full
year, systemwide occupancy at midscale hotels dipped 0.1 percentage point year
over year to 62.2 percent and ADR increased 2.8 percent to $96.19.
The company’s full-year net income totaled
$581,000, up from a loss of $4.7 million in 2016.