LAS VEGAS—Two years ago, Vantage Hospitality Group held its annual conference here at the Hard Rock Hotel & Casino for the first time, the company’s first major event since acquiring all of America’s Best Franchising Inc.’s (ABF) hotel brands. Not surprisingly, integration was a key theme of the conference. Last month, the company once again held its annual conference here—but this time, a different acquisition loomed large: Red Lion Hotel Corporation’s (RLHC) procurement of Vantage Hotels.
The visual difference was immediate—RLHC logos adorned the walls, staff wore shirts bearing the company’s name and conference collateral identified the company this way: Vantage Hotels, now part of Red Lion Hotels Corporation. CEO/President Greg Mount told attendees the Vantage name would be going away. “We will sunset the Vantage name as it relates to how we refer to the company internally and externally. However, we’re not making any changes as it relates to the signage specifically at the properties,” he explained. “Of course, as we add new hotels to the system, we’ll remove the ‘by Vantage,’ but there are no plans right now to go out and make any wholesale changes on the [existing]signage. It’ll remain on the [existing]hard signs, but in every other way it’ll be sunset.”
One thing won’t be going away—the executive team at Vantage, with Roger Bloss now taking on the role of EVP/president of global development, and Bernie Moyle as EVP/COO. According to Bloss, continuing to be part of the company was a deal breaker for him, and Vantage had rejected deals in the past for just that reason. “This was never for the money. It’s about how we work. What we wanted to do is make sure our years led to the next generation. That’s why we chose RLHC. We knew we’d get to stay engaged. That made the difference,” he said.
Moyle noted that the move has opened up opportunities for the pair. “What I’m seeing, frankly, is Roger is having more fun than he’s had in quite a while because he’s really able to focus on development, this conference and our members,” he said. “For me, I no longer have the CFO title, so having that burden off me and being able to focus on operations is almost relaxing. There’s a fair amount of pressure because we have a lot of work to do, but I’m enjoying it.”
While Vantage Hotels chose to only eliminate one brand when it acquired ABF—America’s Best Inns, which the company felt too closely resembled in name Vantage’s largest brand, Americas Best Value Inn—the executives did not rule out the possibility for more this time around. “The next stratification is to talk to [our members],” said Bloss. For example, “3 Palms Hotels & Resorts was never one of our brands. It came with the acquisition, and it’s just a handful of properties, so we see them having much more opportunity to choose one of the brands we now have. We’re going to have upscale, select-service and how we decide to move forward will be with input from you all… through the spring board meetings.”
Bloss noted a major reason for the acquisition was the hotel brands in the upscale space. “For me, I was not excelling in the upscale space to my satisfaction. [We] did a great job with select-service, but with upscale we just weren’t top of awareness. Our competitors were able to invest in the deals, which was not our culture at Vantage,” he said.
Moyle expanded: “We were working on several projects in South Florida prior to the merger coming together and we’re looking at developing those as either Hotel RLs or Red Lion…As well as we’ve done in the economy sector, the development industry is certainly looking at the higher end and it’s opening a lot of doors for us. Having access to funding, better cash flow, gets us in the game to talk about those projects. Once we go through our internal underwriting process, I think we’re going to see some of those projects coming out.”
Bloss added, “Our members have real interest in the innovative things RLHC has done. As the development officer of the company, my phone rings, quicker, longer, more frequently and our development team is coming to me with emotion. The discussions we’re having are really exciting because people are liking what they’re seeing of this combination company.”
According to Mount, the best barometer of whether a deal is a good one is how the public markets react. “When you look at how they reacted to this transaction, you’ve seen the 20-25% growth subsequent to the acquisition. That’s a great barometer,” he said.
Two brands that will be getting attention from the company are Signature Inn and Settle Inn & Suites. Mount noted that RLHC had asked Vantage to slow down the ramp up of Signature Inn so it could be aligned with the existing brands. “They really haven’t been able to push it all that much, but it’s really a play to go out and reposition existing real estate in a good marketplace that’s under-branded. However, the caveat to this is there has to be more brand specific standards as it relates to the conversion of these assets. It’s not just putting the sign up or having great technology. The physical plant has to mirror what someone in the boutique and independent marketplace wants to see in that segment of the brand. That’s where we’re trying to refine and work,” he said.
Bloss noted that the brand—which has about a dozen signed already—would be in line with Hotel RL—just in a different segment. “We love where Hotel RL is, and if we could make this the affordable boutique we think it would really resonate really well with the two,” he said. The company plans to reintroduce Signature Inn at this year’s AAHOA conference.
For its part, Settle Inn will convert to an extended-stay brand. When RLHC acquired Settle Inn, there were only a few properties, said Mount. “We loved the name. We’ve spent the last year or so retooling and repositioning the nomenclature of the brand, how it will be positioned and what we’ll be focused on for our sales people to go out and sell it. For us, it’s really a conversion brand in that midscale, extended-stay space, particularly focused on secondary and tertiary markets,” he said. For us, it’s going to be similar to what we’ve done with our other brands, which is really be user friendly, conversion friendly, focused on the things important to the guest in that segment vs. what we’d like to see.”
Bill Linehan, EVP/CMO, added, “The other thing we recognized is the change in mindset: This notion of home is a little old. What we’re offering is something a lot brighter, friendlier, fresher and playful. I don’t think that exists in the extended-stay space.”
One question that remained regarding the acquisition is whether RLHC would expand internationally as Vantage has done. “It’s a tricky question,” said Mount. “Those are markets we eventually at some point are going to want to expand into and spend more time with. At this point, we’re going to continue to be hesitant for a number of reasons. With what Vantage has extended into, we’ll continue to support and help prosper, but at some point in time, when the time is right, we’ll make an entry into those markets when we feel that we have the knowledge and ability to be successful. Many hotel companies have gone over there and very few are successful and there’s reasons for that, so we want to be conscious of that.”
However, Canada will be an area of focus. “We’ve never had the wherewithal to go into Canada except with our select-service brand, CBVI [Canadas Best Value Inn],” said Bloss. “But Greg gave me the approval to go ahead and develop the upscale brands in Canada.” Bloss expects that to commence sometime in the first quarter. The select-service development will remain master-license, but upscale development will be part of the RLHC corporate development team.
While the legacy Vantage brands will continue with the “A Voice and A Vote” philosophy, in which members get to vote on changes to brand standards—from amenities to fees to technology—Bloss noted that he hoped the brands would continue to add more mandates. “I hope we do,” he said. “We have a vote this week on breakfast, which is a critical component.” (The vote, which was for select-service branded properties, passed.) “I think it’s important we do and if we stop, we get passed by. It goes back to why we did this relationship. We could not carry forward to the degree of technology and things they have in place. And we knew we would slowly die off if we didn’t do this. But at the end of the day, it’s still their call.” (All technology initiatives that came up for a vote at the conference did pass.)
Mount compared RLHC’s ability to aid the Vantage brands when it comes to technology to GuestHouse and Settle Inn & Suites, which RLHC acquired in 2015. “If you look at just the performance of GuestHouse in just this past year, going from zero to 60 as it relates to being able to connect to the customer, they’ve seen double digit and in some cases triple the industry average increases in RevPAR,” he said, noting that it took about a year to position those brands to really utilize the tools.
“I think you’re going to see us still continue to be pragmatic about Vantage, making sure we take the steps slowly and purposefully to get them to where they should be,” he continued. “Some of this is really based on their own voice and vote. We can only deliver what they agree to allow us to deliver to them. For us, we’re excited but it’s going to be their vote, whether they want the technology to be able to deliver that. But they can call any one of the GuestHouses and I think they’ll get rave reviews based on the performance there.”
This year, the company is planning for 17 in 17—a goal in which it’ll target 17% growth in overall revenue year-over-year in 2017. Bloss noted that the company is currently in the 16% area, and that 17 in 17 had a nice ring to it. “We thought it would give us that extra little momentum because we are so excited about this toolbox that we uncovered with RLHC. We think it’s a goal that we can achieve,” he said. HB
OTAs & loyalty: swimming against the tide
LAS VEGAS—While many hotel companies spent 2016 setting up member-only rates that gave loyalty members discounts on room rates if they booked direct, Red Lion Hotels Corporation (RLHC) went in a different direction. Instead, the company partnered with Expedia Inc. to offer RLHC’s exclusive Hello Rewards member-only rates on Expedia.com and Hotels.com (U.S.), and provide direct member sign-up for Hello Rewards from these sites.
But it may not necessarily be a matter of who is right and who is wrong. “You have to remember, 54% of the rooms in the U.S. are booked at an online travel agency. That’s a pretty big marketplace and for us to ignore it would be silly,” said Greg Mount, president and CEO, likening it to designers who own their own stores but also sell their lines in department stores. “Unless you’re Marriott or Hilton, you didn’t have the ubiquity to say you can ignore that marketplace.”
Acknowledging that RLHC doesn’t have the same scale as those companies, Mount said, “We need to compete in this marketplace, we need to win digitally and the best way to do that is to work with companies like Expedia. One of the things that’s so brilliant about it is for Expedia to sell our loyalty rates online, those eyeballs they’ve spent billions of dollars to get to their website have to go and sign up as a Hello Rewards member. That gives us the ability to market to them one to one. No longer are you just paying a big fee for that reservation. You are now gaining a customer and the ability to market to them one to one. You’re starting to see the industry looking at us and going, ‘That was brilliant. How do we do it?’ We are going to win through innovation and technology, and that’s one way to do it.”
Roger Bloss, EVP/president of global development, added, “One thing I liked about the program is about 75% of those people who originally booked through Expedia have become direct bookers to the brand. If you start thinking about the cost savings, it’s pretty exciting. I like that it changed the playing field.”
Turning to how the RLHC and Vantage legacy brands will integrate when it comes to loyalty, Bernie Moyle, EVP/COO, said, “The end game is there has to be consolidation, but that’s in name not necessarily offer…Over time, they’ll have to evolve and join together. I don’t think we’ve figured out all of the mathematics behind that yet.”
And, Bloss noted, “If we’re going to be competitive in the loyalty programs, we need to have the technology to support that.”