If the ultimate responsibility of a chief executive is to chart a road map and then guide the company along its path, perhaps the ultimate challenge comes upon arrival at one’s destination. By necessity, strategy is underpinned by key performance indicators, targets and timelines. Immediacy and urgency demand a clear finish line. Maintaining momentum upon crossing that line is no easy feat.

A lot of miles have been added to the clock since Rezidor announced its ‘Route 2015’ strategy in December 2011 and much has changed, not least the man in the driving seat. Among a number of initiatives to improve underlying margins, the headline target was a 6-8% uplift in the EBITDA margin through greater emphasis on revenue generation, growing the group’s fee-based hotel portfolio and unearthing cost savings. Cruise control was never going to be an option.

"Our main focus is improving profitability in absolute terms and relative to the industry," said then president and CEO Kurt Ritter upon unveiling the strategy. "In the current macroeconomic situation, we have to focus on what we can control ourselves, and I feel confident we will be able to improve our underlying margins over the next few years while continuing to pursue our asset-light growth strategy."

But while Ritter may have remained on board in the unofficial capacity of ‘satnav’, the Rezidor stalwart was already aware that it would not be his hands on the wheel. In May of that year, Wolfgang Neumann had joined the company as COO and as part of one of the most intrinsically structured, clandestine succession plans in hospitality history. His appointment as president and CEO would be announced less than nine months after Route 2015’s unveiling.

"I was always the fundamental driver behind the strategy," Neumann says, reflecting on his early days at Rezidor. "The company has something very different to other international operators we’re hoteliers at work – and that’s a culture I knew we had to retain. At the same time, it was clear we needed to have traction in turning Rezidor around financially; remaining one of the most dynamic growth companies around, while also creating shareholder value.

"Optimising the cost base and organisational structure while retaining our culture was always going to be a challenge, but we’ve succeeded. That’s something of which I’m immensely proud."

A very good year

2015 was Rezidor’s best year since the 2007 cycle peak. It witnessed a 5.1% year-on-year growth in RevPAR. Overall revenue was up 6.4% – and by 5.3% when one compares hotels in operation across both periods. EBITDA margin was 10.1%.

New signings also continued apace, up 30% on 2014 levels and, in line with the company’s strategy, exclusively asset-light and 80% in emerging markets. Neumann is keen to highlight that 30% were conversions, meaning a number of properties came online quickly and contributed to the bottom line.

"What we look for are areas where there’s an under-supply of international branded hotel stock, infrastructure developments are taking place, there’s significant and growing demand for quality hotels, and opportunities are high because of a general absence of competition," Neumann says of the group’s target markets.

Such an environment amounts to nirvana for any ambitious hotel executive, but, with Rezidor being one of the first international operators to fully recognise its potential, the CEO and his team hold significant advantages in the region that arguably most meets these criteria: Africa.

"We have the largest pipeline on the continent but we are also the operator that converts the highest number of those signings into actual openings," the CEO explains. "That’s the part that’s not always so easy, but we have the traction because of our experience in the region, our operating model, our focus on building and maintaining relationships, and our existing presence."

Neumann also points to the group’s success in Russia CIS as a further example of the value that comes from building strong foundations at ground level – Rezidor was the first international operator to establish a Moscow office, which now numbers 30 people driving development and performance in the region. However, Russia CIS is also a prime example of how sudden, unforeseen events can impact upon one’s long-term strategy, particularly in fast-growing economies.

Emerging markets carry inherent risks, Neumann acknowledges, but geographical diversity helps to minimise the damage of upheaval or downturn in specific markets. "You have to be willing to take risks and make mistakes," he continues. "People talk about ’emerging markets’ as a single entity, but it’s about adapting your way of operating, understanding and learning about the specific dynamics of each market, literally in the geography. Africa is 54 countries, for example, and each is different. You have to adapt accordingly."

Deal with the unexpected

The potential for unexpected, seismic events in specific markets was brought into sharp, tragic focus in November of last year, when gunmen seized 170 hostages at the Radisson Blu in the Malian capital, Bamako, resulting in 22 deaths, including three hotel employees and two terrorists.

"Two days later I was on a plane out there and that was an incredibly important statement to make," says Neumann, who estimates that he spends two thirds of the year on the road. "You have to be present and, in that particular instance, it was about demonstrating to the owner of the property and everyone else that we are in this together. It’s not enough to talk about these things; you have to demonstrate them, especially at the most challenging of times."

Incredibly, the hotel reopened 20 days later, in what President Ibrahim Boubacar Keita described as "a victory of life over the jihadists". Furthermore, just a week prior to our conversation, Neumann was back in Mali, opening a new training and development centre, in what he cites as a further demonstration of long-term commitment to the country.

Partnership is a theme that the CEO returns to time and again. A focus on less-mature markets is inevitably accompanied by the forging of relationships with less-experienced partners, often making for slower development. Across Rezidor’s footprint, 55% of owners boast multiproperty portfolios but that figure is likely to fall as the proportion of emerging market stock grows. Neumann cites development partners in Saudi Arabia and South Africa, currently opening Rezidor hotels in their own countries and their surrounding regions, as evidence that such parties do exist in certain target markets, but concedes that single-asset developers will account for the majority of African deals, at least for now.

"You do find there’s less experience, less of a legacy, and that means we have an obligation to be there, helping where we can, providing expertise and driving the education process," he says. "That takes time, but it’s something you have to embrace."

Education and partnership will also underpin perhaps Rezidor’s most high-profile undertaking in 2016, the debut of Radisson Red. The day after our conversation, Neumann will announce that a deal for the "select-lifestyle" brand has been signed in Dubai, joining other properties under development in Glasgow, Jeddah, Cape Town and the debut hotel in Brussels, scheduled to open this April. With the brand first unveiled in February 2014, it’s been a long time coming and, during that period, a number of Rezidor’s rivals have stolen a march, gaining a foothold in the lucrative millennial market through targeted brands of their own.

The CEO is adamant that Radisson Red will bring something entirely new to the market, placing particular emphasis on a "unique, experience-driven" service culture and the heavily localised feel of the properties as key differentiators. Neumann also insists that the brand will bring as yet untapped demographics into the group’s client base.

"It’s very much adapted to the younger generation and what they’re demanding is something quite different," he begins. "And age isn’t necessarily dictated by what’s in your passport; we’re talking millennial in mindset. Yes, some of those elements are inherent in Radisson Blu, which is quite dynamic in terms of design and content, but we genuinely feel that this is a key opportunity for capturing additional guests and, research suggests, the bleed from our existing brands will be relatively limited."

And Rezidor is putting its money where its mouth is, with the operator that has long been the ultimate acolyte for asset-light development even willing to dip into its own pocket in order to demonstrate confidence in the brand and establish properties in target locations.

"At the beginning, you have to take a slightly adapted approach and that might mean some capital participation," Neumann reveals. "Brussels is a good example: a lease where we’ve invested €9.5 million. The fact that we’re willing to do that sends a very clear signal but, at the same time, our deal in Dubai is 100% asset-light. Everybody is extremely excited."

More on the horizon

Neumann also foresees "enormous opportunities" for Radisson Blu in key and capital cities, particularly in Africa, and cites the economy segment as a source of further growth in the year ahead. This latter belief is underscored by Rezidor’s March acquisition of a 49% share in Prizeotel for €14.9 million, with an option to secure the remaining shares four years from now. The brand currently only has three operating hotels, all in Germany, with one more under development, but the Karim Rashid-designed properties certainly appear to complement Rezidor’s efforts to meet emerging demographic demands.

"The acquisition allows us a fast-paced entry to the economy segment – an increasingly attractive sector due to its rapid development opportunities and resilience to the economic cycles," Neumann explained upon announcing the deal at IHIF. "Prizeotel is a commercial success story and has differentiated itself through innovative urban design, tech-savvy focus, personal touch and unique team culture – a total fit to Rezidor."

The CEO is more tight-lipped when it comes to the persistent rumours of a potential acquisition deal for the group as
a whole. In early March, AccorHotels went on record, denying reports that it was in talks to acquire Carlson Rezidor, but the chatter persists following a year defined by major M&A activity elsewhere in the industry. Whatever happens down the line, Neumann is bullish about forecasts for 2016, while acknowledging that not everyone shares his enthusiasm.

"I think the financial markets currently want to talk us into a recession," he says with a weary chuckle. "Frankly, I don’t see it. Yes, there are different momentums in different markets, but the underlying fundamentals remain extremely positive. 2016 will be another growth year for the international travel and tourism industry. International arrival numbers are still rising. Demand outstrips supply growth. What’s more, hotel assets have become a much more appealing and recognised asset class, and interest in the sector continues to grow. There are many reasons to feel positive."

And as the strategic turnaround of Rezidor enters a new phase, with Neumann sat firmly in the driving seat, they are conditions Rezidor intends to fully exploit.

"We’re not the largest company out there, and we don’t necessarily have the biggest brands or strongest system contributions," he concedes. "So we need to work harder, be more creative and dynamic, empower and reward our talent, and ensure we’re closer to our owners, partners and guests. We’ll maintain, consolidate and build traction."

Wherever Neumann takes Rezidor next, it appears that he’s at least headed in the right direction.