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HB ON THE SCENE: At brand conference, Red Roof execs signal growth

NASHVILLE—Sticking with tradition, Red Roof executives, to get their points across to franchisees, performed in several skits, including a political talk show featuring “Dr. Phil” and a slightly different take on NBC’s The Voice. The hospitality company’s overall message was simple: This is Red Roof country.

“Every generation lives in a time of change—it’s inevitable,” said Andy Alexander, president of Red Roof, to a room of 900 attendees at the company’s conference, held here at the Gaylord Opryland Resort & Convention Center. “The only difference is the speed at which that change occurs. The rate of change has accelerated tremendously in recent years; our knowledge base is enormous and that drives change.” 

Today, the company, which opened a new headquarters in Columbus, OH, has more than 59,000 rooms across all four brands—Red Roof Inn, Red Roof Plus, The Red Collection and HomeTowne Studios by Red Roof. Red Roof signed 64 property deals in 2018.

“It’s a good time to be in the hotel business,” Alexander said.

In the 12 months ending in June 2019, total revenue in Red Roof’s system grew to more than $700 million. That equates to more than 11 million room nights at an ADR of $64.

Red Roof properties that started at a RevPAR comp set index of 75% in 2015 have seen growth. By the end of 2018, those properties jumped 21 points to 96%. Looking at the average property revenue of $900,000 per year, a 21% increase equates to $1,089,000 (another $189,000 in revenue).

Phil Hugh gave an update on Red Roof’s development pipeline

“The brand has seen some significant growth through the Midwest and the East Coast, so our target is really the West Coast, Mountain states, California, Washington and Oregon,” said Phil Hugh, chief development officer, Red Roof. “We saw great distribution added when we launched HomeTowne Studios. We have several properties throughout that area of the country, so that gave us a nice foothold, but still a lot of our energy is focused on the west of the Mississippi for Red Roof.”

For The Red Collection, the company wants to expand into Houston, Dallas, Denver, Los Angeles and San Francisco.

“We’re busy,” he said. “The backlog of signed franchise agreements is more than 60 strong, so we will easily surpass that 700 open number in the near future. The activity is phenomenal. Because of events like the brand conference, we expect to see quite a few more signings over the next 90 days.”

Red Roof’s approach to international expansion is straightforward. “We expand where we find the right partners,” he said. “We’re not interested in expanding simply for the sake of racking up numbers. That’s not smart growth.”

The company has properties in Japan, Brazil and Canada. Red Roof recently expanded its presence in the Canadian market with its first property in Calgary, Alberta.

There’s a “strong opportunity” for Red Roof’s franchisees in the extended-stay segment, Alexander said, noting the success of Red Roof’s extended-stay brand, HomeTowne Studios, which now has 54 properties across the country, and the segment’s overall growth.

“Travelers know they can rely on Red Roof for a consistent experience, no matter where they travel,” he said.

Red Roof’s top executive attributed this success to the company’s “all-in” strategy. “Being all in means meeting and exceeding guest expectations,” he said. “We want franchisees to be best in performance, quality and satisfaction.”

The franchisees are following through with their commitment to Red Roof’s guiding principle. “Our franchises and GMs are second to none,” he said. “They are small-business owners and operators who care about their guests.”

As a way to give back to its employees, the company is “investing in Red Roof employees across the system with free education,” he said. Some of Red Roof’s employees are getting their GEDs, while others are taking college courses.

“These employees are investing in their future,” Alexander said. “Many companies do this for employees, but at Red Roof, we extend it to the employees of our entire franchisee family.”

Red Roof executives performed in a series of television-based skits to inform and entertain conference attendees.

Even though the company has offered franchisees this program for about two years now, this is the first time Red Roof has really been able to get in front of franchisees to talk about it.

“It’s just such a fantastic program,” he said. “It combines all sorts of grants and opportunities that are out there.”

The company also discussed a number of new initiatives at the conference. To combat human trafficking at its hotels, Red Roof has partnered with ECPAT and committed to the American Hotel & Lodging Association’s (AHLA) 5-Star Promise of safety.

“At Red Roof, we take our safety and security responsibilities very seriously, and we’re grateful to AHLA for launching this initiative across our industry—to make these policies universal,” said George Limbert, general counsel, Red Roof.

On the technology side, the company has migrated RediStay to Microsoft Azure to increase the process speed of its data management and storage systems, which it needed to accommodate growth. Red Roof is also working on a guest self-service platform. Also, RediStay mobile app is available on both Apple and Android devices.

Reporting on the results of RediCall, a call transfer service to ensure every call is answered, the company noted that more than 300,000 calls have been answered; $15 million in revenue booked; and 200,000 room nights were booked. 

There were nine-million visitors in 2018 to RedRoof.com. “Digital is always first,” said Marina MacDonald, CMO, Red Roof.

The company has been refreshing and redesigning webpages. There are plans to improve guest experience and increase speed, both of which will reduce exit rate, according to Red Roof. The goal is to increase search engine optimization (SEO). 

“We’re always looking at whether we’re getting the right return,” MacDonald said. 

Red Roof also brokered a partnership with DoorDash. Through the deal, RediRewards members receive free delivery and discounts if they’re staying at a property. This is slated to roll out in Q1 2020. HB

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