Clear Vision
Thorsten Kirschke of Carlson Hotels talks about relevancy, why private jets are a good idea, and a serendipitous deal.
Thorsten Kirschke is all about controlled growth. Since taking over as president of Carlson Hotels, Americas, two years ago, he has led the re-launch of the Radisson brand, part of the company’s Ambition 2015 growth plan. And it’s no easy feat. It’s a $1.5 billion investment for its 422 hotels in operation and 90 in the pipeline. And now he’s bringing the design-forward Radisson Blu brand to the U.S. this fall. Here, he talks about relevancy, why private jets are a good idea, and a serendipitous deal.
HD: What is this Ambition 2015 plan?
TK: We started that exactly two years ago and crafted the strategy for the hotels, knowing that the business needed a long-term vision, and knowing that the hotels, specifically in North America, needed some kind of a turnaround.
I think the main goal is growth. But in a nutshell, it is about creating a relevant global hotel portfolio that leads in their respective segments. It is about growth and its global dimensional flow, but it’s equally about creating relevant brands, not necessarily more brands. I don’t think that our foreseeable future is looking at expanding our portfolio to 17 or 23 brands. It’s first and foremost about taking the five brands we have and making them relevant to the global market.
I would throw in the notion here that we believe more and more about something we call the new global, because I think globalization has almost taken on a course of its own and become a self-fulfilling prophecy. We need to take control over that globalization and make our products more relevant than ever.
HD: How would you define this new global?
TK: It starts with the simple question of how does a hotel look when you place a hotel in India? How does that brand unfold if you take it to India, China, into Western Europe, or Russia? Is there a place at all for a Country Inn in Africa? How does that look from an architectural point of view through to the interior design and the services provided? So rather than uncontrolled global expansion, we are much more interested in a controlled global growth. I think that’s an exciting challenge for the industry at large. Everybody talks about China and India, the emerging markets. It’s good to see how our industry is taking more time and more care to see how that can be done.
HD: You are putting a lot of money into renovating the Radisson brand. Why now?
TK: It’s not an easy time-capital is not available. It’s not like investors sit with piles of money in their accounts, ready to be deployed against renovation plans. But there is a fundamental need for product improvement, which is true for North America as a whole, as the majority of the global brands are U.S.-born and-based. The U.S. is really the cradle of the branded hotel and the hospitality industry. While there’s much younger inventory in Europe, and lately, of course, in Asia, we see that North America’s product has dated over the decades where globalization took place. It’s fair to say that everybody has some homework to do.
But like Sheraton, like Holiday Inn, like everyone, we are doing what we had hoped to do and we’re having a very open dialogue with our partners. We have more than 90 percent of them committed to property improvement plans within the Radisson brands, and Radisson more than others, because it’s the legacy brand of Carlson. It’s the oldest brand with the biggest heritage, and we want to preserve that value and legacy within that brand.
It’s not a two-week execution here. Our industry is a long, cyclical business, so a bit of patience is required as well as energy and perseverance.
HD: Design-wise, when you say capital improvements, is it just touch-ups or something more extensive?
TK: The reality lies in the middle. Needless to say, many of these issues are related to financing. But we do consult with our partners about design guidelines along our brand-specific outlines of contemporary, more globally relevant designs with a fresh view, a vibrant palette of colors, and the efficient use of lighting and so forth. We have every property improvement plan (PIP) for each property coming towards us at corporate for final approval. No one goes out and just replaces old ugly carpet for new ugly carpet.
HD: And let’s talk about Radisson Blu. You are opening the first in the U.S. in Chicago in October. Why was it time to bring the brand to the U.S.? And why Chicago?
TK: We’re bringing it to the U.S. because the upper upscale segment has been extremely successful in Europe. Now we’re rolling it out in Asia, as well, with great feedback. If we want a platform that provides credible halo effect in the U.S., nothing else would have been closer than using what has been successful in over 200 hotels.
Why Chicago? Chicago came to us opportunistically. It was a deal that fell through because of financing collapses for another investment vehicle. And so we came to the table at a time where we could actually take over the acquisition with other venture partners at a discount. But it’s one thing to have an opportunity in front of you, another to see it and to pursue it. At the end of the day, this is an investment of almost $130 million, which somebody told me was the biggest deal post-recession in the North American hotel business. Plus, it’s a super iconic architectural building [the Aqua Tower]. The location is absolutely right—in Millennium Park, near the pier.
HD: And it is serendipitous that the building name is Aqua.
TK: How many signs do you have to see before you pursue an opportunity like that? I think this was just meant to be for us. I think it will define the new Blu, the true Blu, if you will. It has been developed and born in Europe. It’s gone to other continents and countries. It’s now coming back to the U.S. where Radisson was born, and it fulfills the opportunity of taking Blu to another level.
HD: And design-wise?
TK: It will have the best ballroom that North America has ever seen. It will be the only ballroom that has floor-to-ceiling glass front facing Millennium Park on two sides of the ballroom. There is a completeness of offerings with a pool deck and barbecue outside, and an Italian restaurant that will fit right into the food scene of Chicago. Perception or experience rests with details much more than only bold statements. Our restaurant has a full visible glass front to the outside, completely open. You have flying staircases, a 50-foot firewall in the lobby. And you have very distinct room styles with balconies overlooking various parts of Chicago. It will redefine upper upscale
HD: What other cities are you eyeing?
TK: You can pretty much go by size and population. Boston, Washington, DC, San Francisco, LA. We have a very strong lead in Dallas, and we’re still pursuing a very hot lead in New York. We have signed Mall of America—it’s the only hotel truly attached to it. We are also in the process of converting two of our old properties here in Minneapolis and Philadelphia.
HD: Let’s talk about what you are doing for today’s traveler.
TK: I think Carlson plays a key role in making travel fun again. Because right now, it’s just an absolute pain unless you have a private jet. But if you travel commercial today it becomes a hassle. And it starts with the harassment at airport security. The fact that your seat assignment isn’t right. The stewardess steps on your toes and spills a drink over you. It continues with a taxi driver that rips you off. And, and, and. So Carlson tries to find a place in this chain of travel events where finally, the traveler feels relief and has a sense of arrival.
There’s no end in sight for tourism, with three billion Chinese and another three billion Indians starting to travel. We’re far from the times where hotels provided the basic needs of food and shelter. I think there’s a greater desire of an image transfer that the customer expects the hotel to deliver. There’s a greater need for identification with the product that they’re choosing to stay at and the facilities it needs to provide. While we spoke lots of times about design, and the impact of that, you can overdo that as well, as many brands do, if you lose sight of the functionality that a hotel room has to provide. If you are looking for a power outlet, you shouldn’t be crawling underneath the bed only to find out that there isn’t one there either. Did you provide enough storage and at the right location? What is light going to do to the functionality of a room? How big should the bathroom space be? All of these considerations need to fall into place, as well. I think it all sums up the complexity of our industry, which is trying to do three things at the same time: service, production, and distribution. There’s no other industry that’s crazy enough to do that.
