Radisson looking at small-town cities for growth as expansion slows

Radisson Hotel Group, a Belgium-based hotel chain, hasn’t expanded its presence as it had earlier planned but has seen growth happen on the back of its hotels in tier-2 and tier-3 markets, which, going ahead, will account for as much as half its number of hotels, officials say.

Zubin Saxena, managing director and vice-president (operations), South Asia, said the company currently ran 94 operating hotels in around 60 locations in India. Of those, increasing growth was coming from tier 2 and tier 3 properties, where both occupancies and average daily rates have increased in recent times. 

Specifically, Radisson has seen average daily rates (ADRs) jump from Rs 3,500 in the last three years to around Rs 4,500 now, with occupancies up by 10 per cent to around 65 per cent, on average, he said. The company opened two hotels last year (Radisson Gurugram and Radisson Agra) and has eight more lined up in the next two years.

The company is targeting tier 2 and 3 cities, state capitals, pilgrimages, and industrial and tourist destinations for expansion.

Also the company has announced it has signed around 17 new hotels for development.

The group had earlier stated it would be growing its properties to between 150 and 200 hotels by 2022 but it’s likely that the target is going to be missed because of a number of factors, including a general economic slowdown worldwide as well as increased competition in India, said one analyst who declined to be named.

According to Saxena, currently their unification has embarked and all 94 hotels are under the same project management and procurement systems, which allows for better economies of scale.

“Earlier we ran as a collection of independent hotels and that’s now changed, with the company being able to get better rates for products like mineral water when it is being bought for 11,000 rooms as against 110 rooms,” he says. 

In Delhi, for example, Radisson has 24 hotels, but all of them used to operate in isolation. 

Under the new arrangement, the hotels come under a cluster, and will have synergies within the portfolio that impact talent, procurement, revenue and operations strategy, said Saxena.

The unification is not limited to materials and food and beverages. Radisson also has a sales team of around 500 people, who cross-sell properties, broken down by clusters, which include Bengaluru (six hotels), New Delhi (eight hotels), and the Northeast (around six hotels).

The global hospitality major, which is owned by Jin Jiang International Holdings Company, has been rebranded Radisson Hotel Group. It was called the Carlson Rezidor Hotel Group earlier. The company has seven brands in India of the eight in its portfolio globally. 

The company’s mid- and up-scale brands include Country Inn and Suites by Radisson, Park Inn by Radisson, Radisson, and recently launched Radisson Collection. Other brands operated by the group are Radisson Blu, Radisson RED and Park Plaza.