ANDREW MCLACHLAN is the group senior vice president, development, Sub-Saharan Africa, Radisson Hotels Group. In this interview with OBINNA EMELIKE at the 4th West Africa Property Investment Summit in Lagos, McLachlan unveils Radisson’s new African strategy, why the hotel is wooing more African partners, guarantee for quality offerings, among others.
Can you describe the brand in a nutshell?
The Radisson Hotel Group is a global hotel company. We have presence in 115 countries with 15,000 hotels across eight brands. We are positioned from economy all the way to luxury. Each brand is specifically designed and positioned in different segments of the market. So, we do not have any cannibalization between on e brand and the other. As a company, our DNA and roots come from the Scandinavia. We started in Denmark and today we are a public listed company on the Stockholm Stock Exchange.
We see ourselves as a late starter to the African continent. We only came to Africa 18 years ago unlike some of our competitors who have been in Africa for 50 or 60 years now. Over the 18 years, we have been very successful in growing quickly. We were the first hotel group to open a dedicated African development office in 2007 run by Africans, which gave us the acceleration into the African market. We were able to take global brand but develop it with local African know-how. I think that was one of the first successes we had in Africa.
What is Radisson’s new African Strategy all about?
When we opened the Africa office, we had eight hotels in five countries, today we have grown to 90 hotels in 31 countries. Over the last four years, we have doubled our portfolio in Africa. We just launched a new 5-year African strategy. We want to add another 50 hotels to Africa over the next five years. Within the five years strategy, we are not going to take all the eight global brands, we are only focusing on five of the eight brands; Park Inn by Radisson (three-star), The Radisson (four-star), Radisson Red (four-star targeting trendy lifestyle segment), Radisson Blu, which is upper scale and also our most known brand. About 70 percent of our African portfolio is Radisson Blu. Then, we have a new brand called Radisson Collection; it is positioned above Radisson Blu and entry level luxury brand.
Our strategy has evolved overtime, where we now have what we call City Scale Growth. What we want to do is to have multiple hotels in same city under different brands. We have seen that we can drive more business in the same city with more than one hotel in the same city, and can market that city as a destination. When we have more than one hotel in a city, the hotels do better because they can feed off each other. With our new five years strategy, we looked at 60 cities in Africa that have more than a million people, out of these 60 we have identified 23 where we can have real growth. We determine that by the population of the city, the air traffic into the city, the economic demand generators in the city and we categorise them to tier one cities and proactive cities.
A tier one city is a city where we think we can have up to 10 hotels by the end of 2022, and Lagos, Cape Town and Johannesburg are three tier one cities where we can have more than 10 hotels in the cities.
Today, we have six hotels in Cape Town, but we need another four over the next five years. In Johannesburg we have three hotel s and got a bit of work to do. In Lagos we have four hotels today, it is still a little bit of work, but we think it is good opportunities to get another six.
Then we look at the proactive cities. These are cities where we can have between three to five hotels and Abuja is a proactive city for us in Nigeria. We have other 19 proactive cities like; Addis Ababa, Nairobi, Durban, Abidjan, Accra among others. Looking at Nigeria specifically, Abuja has not had a new hotel of 100-150 rooms may be in 30 years, the last hotels of that magnitude to open were the Hiltons, Sheraton and Nicon. Otherwise, everything has relatively been small.
There is a demand for quality hotels in Abuja, we have a number of different opportunities happening in Abuja right now. It is a city where we can have four of our five brands. The only brand we think is not good for Abuja is Radisson Red because Abuja is the capital; a very traditional city, and we think Radisson Red is a little bit quirky or stylish for Abuja.
Lagos is completely different. It is a city that is ready for Red because it has a young hip population that can absorb the Red. So, we think Lagos is a city that can have all of our brands. We are in Victoria Island, Ikoyi and Ikeja, but we can have a Park Inn in Apapa because it is a business community with seaports. We plan to take our brands outside of the big cities to some larger towns.
We have a Park Inn that is doing very well in Abeokuta, we have one under construction in Onitsha. We believe there is space for us to go into places like Enugu, Kano, Port Harcourt among others. We may not go into the 36 states, but we will push the brands far in 10 out of the 36 states. We need to have good three-star hotel and Park Inn By Radisson stands out here. We make it a domestic brand, which has an international infrastructure behind it. But it must really behave like a local brand because a local Nigerian sees Park Inn By Radisson as his local brand.
Why the focus on Africa and what is driving your growth in Nigeria?
I think, from the Nigerian point of view, we believe there is huge opportunity in Nigeria. About 18 months ago, we decided to focus a lot of time and attention on Nigeria because the economy was starting to recover, Naira was becoming stable and we committed to coming in and out of Nigeria once a month to look at opportunities. In 12 months we have added three new hotels to Lagos. We also look at the ECOWAS region, and how to create a business route across the countries and further facilitate inter-travel. We looked at airlift, air routes to see if we can find partners to work in those countries that we can develop hotels. So, as business people start getting familiar with the brand, they recognise in every city they traveled to that there is a Radisson Blu or a Radisson hotel.
Our first hotels in West Africa are Radisson Blu Victoria Island Lagos and Radisson Blu Dakar, Senegal. They are very nice and fresh designer hotels and the West Africans relate to the brands and they enjoy the style of the hotels. They were not too traditional and we also have brand equity. A lot of people who stay in the hotel call us to tell us how they enjoyed the hotels and ask how to get a Radisson Blu in their cities.
How is Radisson Hotel Group going to fund the 50 hotels?
When we developed our new strategy, we want to develop 50 hotels in five years. It was very careful, a lot of thoughts of how we are going to achieve this. With all our hotels in Africa, we are working with 90 percent of the time with local partners. As a hotel group, we do not own hotels. It is owned by a hotel owner and in most cases the hotel owner is someone from that country or that city and they want to diversify in a different real estate. If a hotel is designed and management properly, it is a very profitable business to be in. I think people have noticed the success of the hotels we manage and want their hotels to be Radisson Blu or any of our brands.
As a company, we are very down to earth. We are a very approachable to owners and investors, we are very sensitive to different cultures and different ways of doing business and we have adapted our business model to the country we are working in.
We do not have rigid structure; we try to understand how business is done in the country we operate in and try to adapt. We try to understand the local skills set and what needs to be supported, train and which areas do we need to focus because each country is a little different.
2018 is the first year of our five years plan and our target for 2018 was meant to be eight new hotels we signed. By September we signed 10. So, we are already two hotels above our target. We are quite confident and next year, we need to sign nine hotels, and I think we will do more than that because we have good partners, and a good team of people that are focused on certain cities to find opportunities.
What are the criteria for choosing partners?
We need to make sure that the person we are doing business with has a long term vision. He wants to own a hotel for a long period of time because in some new investments decisions are different. If you want to build a hotel and sell it, you might not be able to create quality. It might look good on the surface but will not last. The owner should have a long term vision and ambition to build more hotels. In our company, 60 percent of our owners are multiple hotel owners. We form relations, form trust, then you can do a second hotel.
Most important, is the location. Is the location of the hotel good? What are the owner’s aspirations and what does the market want? Sometimes the owner will tell you that he wants a five-star hotel, but the location is three star, and the market will only pay a certain price. Then, there is no point building a five star hotel. There is a need for us to show the owner that the best return on that location is a Park Inn and not a Radisson Collection because the market is not going to pay for example more N20,000 per night. We really want to make sure that we put the right brand in the right location.
Then, we help the owner pick the right professional team, good architect, experience interior designer and a very good builder so that when we start construction there is not going to be delays. The cost is going to be the same. If we thought that the cost of a hotel was going to be $30 million, we make sure that it cost 30 million and not 40 million. In the past, some people have made mistakes by starting the building without having all the plans in place. We have learnt over the years that it is better to plan before you start building.
How do you reflect the culture of the city you operate in your design and service offerings?
The reason a guest will pick on a Radisson Blu is because he wants reliability of the brand, certain level of quality and accountability. We make sure that the Radisson experiences in different locations are same in terms of quality. What we do not want to do is make the hotels to look same, if I wake up in Conakry, Cape Town or Lagos, I need to know that I am in that city. So, I need to design the hotel according to what is required in those cities. In Cape Town, there is lot of entertainment you can do outside the hotel, so the hotel does not necessarily need to have too much activities so that people can eat and sleep in the hotel and go out to explore.
In a place like Conakry, I need to make sure we have multiple restaurants and bars, multiple leisure activities because we are not just a hotel for the in-house guests but also the city residents who want to come and enjoy the hotel. We need to make sure we factor that into the design. We also need to have facilities that the locals want to come and use, they want to come to the restaurant, the bar, the pool, and when a guest is staying here he wants a peaceful atmosphere, a place that has energy, and vibe.
Radisson Blu Victoria Island, Lagos stands out in this category. It is not just patronised by in-house guests but also by local guess that come in to enjoy the facilities. So, if I stay there as a guest, I will get the energy and feeling of what is happening in Lagos.
What number of rooms do you have in Africa?
Today we have 18,500 rooms in Africa and our target is 23000 rooms by the end of 2022 (about 6,500 additional rooms).
Can you explain your brand segmentations?
Park Inn By Radisson is mid scale, Radisson is up scale, Radisson Blu is upper scale and Radisson Collection is luxury.
Radisson Red is also an upscale. It is like Radisson, it is our lifestyle upscale and is going to compete directly with Radisson but it is targeted at a younger generation. What we also see as a big opportunity Africa is to do what we called brand extension, which is adding the serviced apartment concept to hotels. We see a lot of opportunities for that in emerging markets in Africa and people are requiring to stay in hotels for a long time and they want something more than a hotel room. We can offer branded serviced apartments and we can have a hotel and an apartment. It could be a hotel with 150 keys,120 bedrooms and 30 apartments. If someone arrives and needs to stay in the hotel for two or three months, he has option of one bedroom or studio apartment where he can feel at home and have all the services of the hotel.
The other extreme is we do the entire building of apartments and we call it the Radisson Blu Serviced Apartments or the Radisson Serviced Apartments. The reason is that for people to understand that in that apartments building they will get all the services of the hotel.
It is the benefit of not just staying in the normal apartment building because the place is run by a hotel group, there is restaurant on the ground floor, there will be some services, and your can have your room cleaned every day. If a guest is moving into Lagos, there is no need to worry about electricity or water because the hotel is taking care of that. So, we see an opportunity to grow the serviced apartments within certain countries in Africa.
How many rooms do you have in Nigeria including those in the pipeline?
The next hotel we will be opening in Nigeria will be in Lagos in Ikoyi and it will be a Radisson Collection, the highest of our brand in Nigeria. I have learnt overtime that hotel breeds hotels. So, every new hotel that opens is a catalyst for more to come. People will see that there is another Radisson brand that opened in Nigeria and will approach us to have another hotel in another location because people want to work with brands to offer results.
We are not just signing hotels, but we are opening hotels. It is very easy to sign a deal or contract but it is difficult to open a hotel. We have proven in Africa that we can sign and open hotels, we don’t just sign hotels. This ability to sign and open hotels is one of biggest strengths.
Do you think there is high return on investment in Nigeria?
I will not say that it is higher than anywhere in the world. What happened over the years before the Naira crashed, the returns here were much higher. Now, if you look at the rates achieved, it is on par with other cities. If you take Lagos, the rates you achieve here is the same in Accra, Nairobi. But five years ago, they were crazy because Naira was much stronger. The good thing is that construction prices have also come down. So, developing a hotel is becoming a little bit more affordable. But the long term fundamentals of Nigeria are positive; the economy is looking more stable, the Naira has stabilized, Nigeria goes into election next year, the outcome of the election should be peaceful again and with good leadership, there will be a new surge of opportunities in the country.
Why should guests stay in a Radisson brand?
What we try to do is to give a different experience in our hotels to our competitors. We have a philosophy that we all live by. If you are the chairman or the CEO of the company, and if you start as one of the gardeners in one of our hotels, we all go through the same training called Yes I Can and it is the answer to the question every stakeholder ask us. When a guest ask question, we have the Yes I Can attitude, when a colleague ask for help we say Yes I Can, when the owner needs something it is still the Yes I Can attitude that we exhibit. We are giving a different energy and different feelings in hotels to our competitors. I think our product is of high standard and always in good locations, you will not find a Radisson hotel in a bad location; you are guaranteed to have good quality products with high level of service. We also have a brand promise, if you are not satisfied and you bring it to our attention, if we cannot fix it before you check out, we will return your money to you and that is a strong promise.