Carlson To Franchise Regent

<FONT SIZE="+3"><B>Carlson To Franchise Regent</B>

By Linda Humphrey

<I>Minneapolis</I> - Marking the luxury tier's first foray into franchising, Carlson Hospitality Worldwide has announced plans to expand the Regent International brand by partnering with Four Seasons.

The venture adds Carlson to the escalating list of multi-segment hotel companies-following Sheraton's acquisition of Ciga and Marriott's stake in The Ritz-Carlton Hotel Co.-that offer more leverage to travel managers slotting a hierarchy of travelers into different classes of hotels.

Minneapolis-based Carlson will acquire the rights to the Regent name and establish a luxury division, acting as a master franchisee to grow the brand through a mix of franchise and management contracts. Toronto-based Four Seasons, which bought the Regent brand in 1992, will share in the franchise fees and manage the nine existing Regents as well as some of the new ones, sharing its revenues with Carlson.

The move is part of a logical progression for Carlson, said Carlson executive vice president and chief operating officer Curtis Nelson. "In the '60s we owned and operated hotels," he said. "In the '70s we started managing hotels for others. In the '80s we started to franchise, and in the '90s we're partnering."

Nelson estimated that about 80 percent of the new Regents will be franchised. Carlson will take over Regent's reservations within 12 months and plans to double the size of the brand over the next two to three years, Nelson said. Rooted in Asia-with properties in Bangkok, Chiang Mai, Hong Kong, Jakarta, Kuala Lumpur, Los Angeles, Singapore, Sydney and Taipei-the brand will expand "equilaterally across the globe," Nelson said.

The Carlson enterprise already has a vast luxury customer base within its travel company, incentive travel and event marketing divisions, Nelson said. Adding Regent as the missing piece to the upscale Radissons and midpriced Country Inns & Suites will enable Carlson to grant corporate clients "the opportunity to leverage their total volume across all of our brands," Nelson said.

Launching the first five-star franchising venture meshes well with the '90s climate. Securing the financing needed for luxury hotel development has become much trickier over the past 10 years, requiring more resources, said Bjorn Hanson, hospitality industry chairman for Coopers & Lybrand. Scarce construction also has translated into a stock of aging luxury hotels, so new builds will gain an advantage, he said.

Hanson also suspects that Minneapolis-based Carlson was spurred by the high-profile achievements of former Carlson Hospitality president Juergen Bartels, who left Radisson for Westin last year.

The branding explosion has spurred this franchising venture as well, Nelson said. "Hotels really need the global marketing power of a brand," he said. In addition, the latest distribution systems and other high-tech enhancements require huge investments, he added. "It's a lot easier for us to step up to the plate and make a $50 million investment in technology, whereas an individual hotel might not even be worth $50 million," he said. "It's nearly impossible for the independent hotelier to participate in some of the technology that will deliver a competitive advantage without being part of a system." Advanced technology also will tackle the quality and consistency obstacles of franchising through interactive computerized training sessions, Nelson said.

"The technology applied to running hotels has advanced 50 years over the last 10 years," Hanson said.

Franchising in the five-star arena differs from budget franchising in that "the people who will franchise a Regent want to have the finest hotel in a given city," Hanson said. "So instead of having to fight these hotels to maintain minimum standards, Carlson will have to make sure they don't go overboard on the cost.