Rezidor’s momentum for growth

24 September 2013



Applied in 2011, The Rezidor Hotel Group’s Route 2015 plan represents a set of tenets to bolster its portfolio in the EMEA. Elie Younes, senior vice-president and head of group development, talks about how the ability to embrace change is helping the group attain this goal.


When Wolfgang M Neumann took the helm as Rezidor Hotel Group's president and CEO on 1 January 2013, he would have been the first to admit that he was filling some fairly large shoes, given the great success enjoyed by his predecessor and self-proclaimed 'Rezidorian' Kurt Ritter.Neumann, however, has enjoyed an auspicious start to his new tenure, no doubt assuaging any initial concerns of group stakeholders in the process.

In Rezidor's second quarter report for 2013, it announced that like-for-like revPAR was up by 6%, its EBITDA margin had increased by 4.5% percentage points, and that 1,800 rooms had been added during the period. In short, this represents Rezidor's best Q2 performance since 2009.

Growth in emerging markets

Commenting on the report, Neumann attributed the success to the group's Route 2015 turnaround plan. Introduced in December 2011, it represents a multitiered strategy geared towards bolstering the group's EBITDA margin by 6-8% by 2015.

A conspicuous contributing factor to Rezidor's success has been its activity in emerging markets, particularly in the Middle East and Africa, which has witnessed a double-digit revPAR growth so far in 2013.

"In addition to home markets in Europe, the Middle East and Africa have both reported strong revPAR growth in the second quarter of 2013," says Elie Younes, senior vice-president and head of group development. "As in previous quarters, most of this increase was as a result of higher occupancy. Our fee revenue was up by 17%, mainly due to strong revPAR growth in the Middle East and Africa."

Younes took on his current role in January 2013, having previously been based in Dubai as vice-president of business development in the Middle East and Africa. Charged with "continuing Rezidor's growth momentum and aligning it with the overall strategy of the organisation", he is clearly delighted to be part of the current set-up.

"A conspicuous contributing factor to Rezidor's success has been its activity in emerging markets, particularly in the Middle East and Africa."

"I had a great five years in Dubai, but I am really excited to be back in Europe," he says. "I am blessed to have such a fantastic team, which is committed and eager to grow Rezidor to become one of the most dynamic hotel companies in the EMEA."

"The recent signings reflect our focus on growing in the emerging markets, while maintaining our leading positions in home markets," he explains. "We recently announced the Radisson Blu Sheremetyevo Airport Hotel, Moscow - the only internationally branded and terminal-linked hotel at the airport - as well as properties in St Petersburg, Istanbul and Dubai."

Over the last nine months, Rezidor has opened the Radisson Resort & Congress Centre in Sochi, Russia, to coincide with the 2014 Winter Olympics; the Radisson Blu in Maputo, Mozambique, which represents a red letter day in terms of the group's development in Africa; and, closer to home, several new properties in Germany and the Netherlands.

Optimisation and brand alignment

Speaking to Hotel Management International last year, Neumann emphasised the group's efforts to create a decentralised operating model, explaining "you cannot manage 70-odd countries out of Brussels [Rezidor's headquarters]".

Route 2015 enhances the need to get in touch with the sensitivities of the local markets where Rezidor is present, and foster greater collaboration with general managers and regional vice-presidents.

"Through our new leadership, we have been very busy optimising our organisational processes and decentralising the business, which contributed to the recent positive results," says Younes. "We will continue to persist down this route by deploying seasoned executives and necessary ancillary resources to those emerging markets."

Yet, in spite of its tangible success thus far, and the fact that international tourism traffic reached the one billion mark last year, Rezidor's philosophy still appears to be characterised by a sense of cautious optimism. This has allowed it to "weather the storm of economic vulnerability", as Younes explains.

"The economic downturn has clearly highlighted the need for operators and owners to align their long-term interests, while also understanding one another's short-term expectations."

"In today's world, change is the only constant," he says. "Market cycles are steeper and shorter, which means it's important for a business to be knowledgeable and agile. So, despite the fragile trading environment and limited visibility, we still believe the current environment offers good business and investment opportunities."

Another means of Rezidor achieving its Route 2015 target continues to be underpinned by the alignment of its two core brands - Radisson Blu and Park Inn by Radisson, which compete respectively in the mid-scale and upper-upscale spectrums of the market.

"Brand alignment is a crucial factor in the achievement of business success," says Younes. "The creation of Carlson Rezidor Hotel Group last year was our signal to the market to present a collection of truly world-class, distinctive hotel brands. The objective was to geographically align global brands that did not have similar backgrounds and were not at the same stage of maturity. This has involved a remarkable amount of effort and discipline in terms of new developments, portfolio management, capex, and sales and marketing."

The long game

But, as Younes states, Rezidor has no intention of resting on its laurels. Returning to the theme of decentralisation, in addition to its asset-light model, the group will continue to harness and build partnerships with local management in its home and emerging markets.

"We will further nurture our relationships with our owners and developers, and provide them with all the necessary support on both development and operational matters," he says. "Conversion of existing real estate assets is also a target - the necessary platforms and business tools are being designed to stimulate this type of business."

It is perhaps this farsightedness that has set Rezidor apart from its peers in infiltrating emerging markets. Another good example of this is the group's joint venture with the Nordic Development Funds, which, through mezzanine funding, has enabled Rezidor projects to materialise across Africa - a market currently in bloom.

The economic downturn has clearly highlighted the need for operators and owners to align their long-term interests, while also understanding one another's short-term expectations. It is sometimes a difficult balancing act, but Younes believes it will prove to be indispensible as the group moves forward.

"Today's financial turmoil only emphasises the importance of portfolio management and the need for the constant monitoring of our hotels' performance," he says. "This relates to both operating cash flows and debt service obligations.

"Although our goal as an operator is to protect the value of our contract without diluting that of our partners, we work permanently alongside owners and lenders to ensure the long-term sustainability of the real estate assets. This is nothing new, but an active practice in our team."

As Younes infers, such a policy may not be novel, but it constitutes the type of judiciousness that has become synonymous with Rezidor, and which should see the group stay on course to meet its goals for 2015 - and beyond.

Over the last nine months, Rezidor has opened a raft of new properties.
The stunning Radisson Blu Resort & Thalasso, Hammamet, Tunisia.
Elie Younes, senior VP and head of group development, is optimistic about Rezidor’s future.


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