One-On-One: Carlson Hotels In Tech Bet

By Bruce Serlen / June 11, 2000

One-On-One: Carlson Hotels In Tech Bet

Eric Danziger, president and COO of Carlson Hotels Worldwide, recently spoke with BTN hotel editor Bruce Serlen about positioning the Radisson, Regent International and Country Inns & Suites brands to travel buyers.

BTN: How important to you are technological advances like providing electronic full folio expense data and direct links to travel buyers through their companies' intranet?

Eric Danziger: Certainly these things are on our radar screen. As a travel company, we have to be technology focused. If you're not, you're dead because that's the wave of the future. Consequently, we're going to spend on the order of $1 billion in three years on technology improvements. Included is everything from linking to the travel buyer, direct access to our availability database and online booking. Anything that has to do with improving ease of booking, ease of transaction and experience of stay, we're all over it. We don't segregate by saying, "This is hot, this is not." Everything is of interest to us.

BTN: Do Carlson brands negotiate last room availability?

Danziger: We negotiate last room only for preferred accounts. It's important to be clear about what we consider a preferred account and what's not. If you truly have a preferred account, at the end of the day that customer is, in fact, your number-one customer. So that person comes into the hotel, that person gets a room, plain and simple. I don't necessarily mean that literally, like here I am just showing up. But you call within 24 hours, you'll get a room. After all, it's incumbent on the hotel operator to take care of the client. Short of the plaza or concierge level, this applies throughout the hotel. The room you get may not be the exact level of room you negotiated, but we'll find space for you.

BTN: How do you define preferred account and how many of these might be there be?

Danziger: The only way to recognize a company as a preferred account is how you're treated at the hotel, the availability of the hotel room and the price you're paying. But if every company got that treatment, there'd be no preferred accounts. Preferred means you're preferred. Consequently, we're pretty stringent about designating this kind of status.

If you're going to generate sufficient volume, however, you're entitled to all these considerations. But if you're not generating volume, then you're going to be exceedingly well-treated, which is how we want to run our business in the first place, but not necessarily in terms of a special rate or preferred account status. Given how select this group is, there might be about 100 global truly preferred accounts at Radisson, for example. In addition, keep in mind that an individual hotel might have its own preferred account program for whatever it's doing in its own backyard.

BTN: Working with three distinct hotel brands, what kind of coordination, if any, goes on between them?

Danziger: Each brand is different, so there's not likely to be much cross-over from Country Inns to Radisson or Radisson to Regent. In terms of corporate clients, companies today tend to be democratic in their approved hotel programs, meaning that one group of travelers won't get to stay in one level of hotel, while a second group of travelers has to stay in a less prestigious class of hotel. Typically, it's "all of us stay at Radisson," for example. As for preferred accounts, you're generally a preferred account to the brand that you're the biggest user of. At the same time, however, choice of hotels for the approved list is typically location-driven. Country Inns, for instance, is a suburban product. Consequently, there might be instances where travel buyers book Country Inns instead of a Radisson because that's what is available in that market.

BTN: How does Carlson's strategy on branding differ from your competitors?

Danziger: Other hotel companies have competing brands operating within the same umbrella. For our part, we wanted to have three-, four- and five-star brands that are complementary, so that we aren't stepping on each other. Consequently, we can go out to a travel buyer and say, "we can meet all your needs in whatever product segment your travelers go to from five-star on down."

At the same time, there's no single Carlson sales strategy on an individual customer basis. On the biggest level, the philosophy is to make a corporate account a Carlson customer. "How can we best be there for them, to help them with their travel needs, their hotel needs and so on," the thinking goes. After all, it's a lot easier for Carlson to go in with all its products and say, "let us be your travel provider." But specifically in the hotel business, the idea is to get people to come into your door. Individual properties have the responsibility to go out and get business in their own backyard. And the brand has its own responsibility to deliver by building brand awareness and developing corporate contacts. In this business, it's not just one approach. It's the 800 number, it's getting national corporate accounts, regional, consortia and Carlson Co. customers.

BTN: Can you see Carlson expanding into other lodging segments beyond the three it's in right now?

Danziger: Yes, I can. Our job is truly to be customer-focused. Therefore, we should be in all the places and all the complementary positions to our existing brands that can fill our customers' needs. Any acquisitions we would consider making are only those that are either adding to the existing brands we have now because a given hotel company fits into a Radisson, Regent or Country Inns. Or the acquisition might add another segment we weren't in now, such as extended stay or budget at a level below Country Inns. In other words, we will always look to add to our base, but we will not get into things that confuse the travel buyer into saying it's not a brand extension, but a brand duplication.

BTN: In terms of branding, do you foresee getting into sub-branding the way many of your competitors have?

Danziger: Right now, Country Inns carries the "by Carlson" sub-brand. But that's not the case at Radisson or Regent because we're not really trying to make Carlson a brand name. In fact, you might confuse the customer if the Carlson name was associated with too many divergent kinds of products.

BTN: What is Carlson doing to expand the Radisson and Regent presence in the key gateway business cities?

Danziger: Carlson is evolving fairly significantly from a franchise operation, which is what's it's historically been, into an owner, venture partner and manager as well as a franchisor. In fact, we recently put together a substantial real estate fund with outside investors to acquire hotels in key destinations that are presently flagged as other brands and to reflag them as Radissons. Because when you're only a franchise company, you can't ultimately control the hotels' future. An owner sells and the hotel is often gone. Unfortunately, when you're in the brand value business over the long term, you can't succeed that way. As a brand, you need to be in key locations and be able to control that in order to be certain that you're growing value for the company. We're a global company, so this is even more critical for us.

It's also part and parcel of being customer focused. At the end of the day, to be truly customer focused, you have to be where your customers want to go. What do you do if the travel buyer says, "I like using you in three locations, but I can't use you in the six locations I use the most because you aren't there?" Well, it's the brand's job to get there. What do we have to do to make that happen? Odds are, we need to be in the ownership business. In the U.S. market, we've done a strategic chart that shows the top 20 cities we really want to be in. San Francisco is on the list as is the heart of Los Angeles, Denver and Seattle.

This, incidentally, adds greater value to the franchise operation as well. The point is, if you're in San Francisco, Los Angeles and New York with good, brand-defining hotels, you're becoming more valuable as a franchisor to the franchisee market as well. In no way are we getting out of the franchise business.

BTN: Do you foresee further consolidation coming in the hotel industry?

Danziger: Eventually there will be only a few players left in our business. There will always be room for the boutique hotel here and there, but generally speaking to have dominance, you need significant critical mass. With the consolidation, unfortunately, will come a certain sameness. There'll be a reticence to move the bar upward. If only a few companies control the bar, after all, they're not interested in moving it forward. A hotel's long-held tradition and culture can easily be lost in a day.

BTN: What kind of personal service would you say today's frequent business traveler is looking for?

Danziger: Given the stress they live with, frequent travelers want as much personalized attention as we can provide. We're looking to take the spa concept into our urban hotels, so the guest can call up for a massage. Health, exercise, stress management--these are big issues for business travelers today.

And technology is an everyday event. You need to provide high-speed Internet access in guest rooms. To succeed today, a hotel company needs to be out in front providing this sort of service. Indeed, you better be sensitive to the way business travelers travel or else. And this means laptops and cell phones. Soon enough we'll be at the point that when you check in to one of our hotels, you'll be given a mobile phone. So if you receive a call in your guest room, we'll find a way to connect it to your mobile. In line with this, it's been my experience that often travel buyers and travelers themselves are a bit less concerned about rates than they are the service orientation. "Take care of me when I need you to take care of me," they seem to be saying.

As well, the distinction between business hotels and resorts is breaking down in one crucial aspect: Our resorts are being wired for high-speed access. Even on vacation, you bring your laptop today. No one gets disconnected anymore. Therefore, you can't differentiate for a minute people's leisure and business lives. They are totally entwined. As a hotel company, we had better provide the amenities across all lines for everybody to make sure their stays are productive.

BTN: How about technology and the guest history program? Is there a further application there?

Danziger: There certainly is. Like many hotel companies, we track details of frequent guests' preferences in our electronic database. What sets us apart is a program now being tested, where these guests carry cards that have these details encoded on them. Walk in the door, a laser reads the messages encoded on the card and by the time you get to the front desk, we know precisely who you are and what your likes and dislikes are. It's a seamless deal. Take whether you like coffee or tea on arrival. Within 10 minutes of arriving in your room, say, the tea service is being delivered to your door. This card is separate, by the way, from the awards program card that accesses your points and that you show at checkin.

BTN: Do Carlson's brands actively promote a special business room product?

Danziger: Enhanced business rooms aren't a way of separating us from the competition. I'm a business traveler myself and check my e-mail twice a day religiously when I'm out of the office. As a result, I better be given a room that's conducive to my being able to work. In effect, business rooms aren't a point of differentiation anymore. They're standard, "better have that." But what I can't describe is the room of tomorrow because who knew two years ago what the room of today would be like? As experts have pointed out, we know today only 30 percent of what will be known by 2030. Accordingly, the smart hotel company is the one that is listening and responding to its customers, not trying to make a plan saying we got the right room because that room may be different tomorrow.

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