Six years ago, Red Roof was made up of one brand—Red Roof Inn. But since then, the company has transformed itself into a four-brand company, with the introduction of its upscale-economy offering, Red Roof Plus, in 2013; the launch of soft brand The Red Collection, which opened its first two properties this year; and its most recent brand, extended-stay HomeTowne Studios by Red Roof.
At the helm of the company during this evolution has been its president, Andrew Alexander. Acknowledging that this move is a part of the overall market trend toward brand introductions and gaining scale, Alexander also noted, “Before we jumped in, we did the research and made sure we were entering the space at the right time, at the right price point, with the right customer base, because the key is just that—to expand the Red Roof customer base to now include those looking for extended-stay and an upper-midscale, boutique-like experience.
“As that occurs and the customer base builds out, we not only have different customers exposed to all aspects of the brand, we also are starting to expose individuals to our brand over their lifetime,” he continued. “As people grow and their needs change, we now have opportunities for them.”
Looking toward the future, Alexander didn’t rule out more brands for Red Roof—but he said that’s unlikely to happen anytime soon. “We’re good where we are, and working to build out the platform we have today is our focus,” he said. “Launching two brands in one summer was quite a [lot]of activity and one we’ll take some time to absorb, but we’re certainly always looking forward to other opportunities.”
And so far, the market is responding well to the newest offerings. “With respect to HomeTowne and The Red Collection, we certainly expected some interest, but the response has been extraordinary and well beyond our original expectations,” Alexander said, noting that a lot of interest for The Red Collection is coming from owners familiar with the brand who hadn’t felt their properties were right for Red Roof in the past because, as city-center hotels, they were looking for higher ADR. “Now, we’re exactly right,” he said.
With regard to HomeTowne, much of the interest is coming from the existing ownership community, both in terms of new-builds and conversions. “The other hot area is dual-branded,” Alexander said. “We’re getting a lot of requests; we want to make sure we do it right. Whenever you launch a brand, you want the first ones out to be home runs.”
The company knew it had to be in extended-stay. “Extended-stay has high occupancy and low costs, which ultimately means an owner has a very good income market they can build their business off of,” he said.
It was also a natural fit for Red Roof. “An excess of 20% of our business is already what we would consider a longer-term stay—not 30 days, but five-plus days or more,” he said. “So we already had a customer base looking for that type of lodging, and it just becomes a perfect union between the two where we can transfer our guest back and forth depending on their needs.
“This particular portfolio was of great interest to us given where some of the properties are located—Denver, Colorado Springs, Eugene, OR, and we’ll be adding HomeTownes in Fresno and Sacramento, CA, so some really good markets where the Red Roof distribution system hasn’t been as strong as we’d like it to be,” he said. “We’re working hard to grow the system out west, but this will boost that growth for sure.”
This year, Red Roof reached 600 open properties, a result of its organic growth. “We’d like to see that 100 again. Hitting 700 properties would mean that over a six-year period, we’ve doubled the size of the company,” he said. “And we’ve done that without a major acquisition, which is a testament to Phil Hugh and the development team. We’ve seen very strong results, and doing it one or two at a time is difficult, but we’ve been able to sustain that, and we expect it to continue next year. Longer term, we’ve built this four-brand platform and expanding that in terms of distribution is something that is our focus. We are continuing to look out of the United States, and expect to have some announcements very shortly.”
Regardless of how Red Roof grows in the future, Alexander said one thing would remain the same: its culture. “We have genuine relationships with all of the constituents: employees, franchisees and, certainly, our guests,” he said. “Our Midwest culture has carried us forward in really good stead. That’s what has kept us going forward through all of these changes and why the staff members accept change so easily—they know the core foundation, that culture, will stay the same.”
And that goes back to Alexander’s leadership. “I think of myself as primarily trying to lead through consensus,” he said. “That’s a broad statement, and it’s not always possible to accomplish, but…to lead in the most effective way, you need to lead everyone in the style that works best for them. Understanding the people you’re working with is really what defines my leadership style.” HB