LAS VEGAS—Many additional details emerged this week about what Red Lion Hotels Corporation’s acquisition of Vantage Hospitality will mean for Vantage members, brands and travelers in coming months and years.
“We at Red Lion have a multifaceted growth strategy to build national scale; Vantage excels at growth and development, and that will be an advantage,” RLHC President and CEO Greg Mount told attendees at Vantage’s annual conference this week in Las Vegas. “Our goal is to be the franchisor of choice for hotel owners by offering innovative brands, technology and franchise models designed to exceed guest and owner expectations.”
“Scale” is a word that popped up a lot during Tuesday’s conference sessions, as executives from both RLHC and Vantage’s brands emphasized the expanded scope and potential for growth all brands now will have, the greater leverage the combined company will have with online travel agencies and other suppliers, and the expanded set of tools Vantage members will be able to use from the RLHC toolbox.
Here are a few of the latest details to emerge about RLHC’s acquisition of Vantage, which closed on 30 September.
Names and brands are changing
With the deal, RLHC acquired Vantage’s eight brands—Americas Best Value Inn, Canadas Best Value Inn, Lexington by Vantage, America’s Best Inns and Suites, Country Hearth Inns, Jameson Inns, Signature Inn and 3 Palms Hotels & Resorts. The company already operated the Red Lion Hotels, Red Lion Inn & Suites, Hotel RL, GuestHouse and Settle Inn brands, bringing its total portfolio up to 13 brands.
Those may not all stick around, according to Mount and Roger Bloss, former president and CEO of Vantage and now president of global development for RLHC.
Bloss referenced Vantage’s 2014 acquisition of America’s Best Franchising’s core brands and subsequent “sunsetting” of the America’s Best Inn brand, which he said “will continue.” In addition, he mentioned the company’s 3 Palms Hotels & Resorts brand (also acquired through the ABF deal) and suggested that owners of those “may have more opportunities to choose one of the other brands the company has.”
As far as the Vantage corporate name and identity, that too will be sunsetted, Mount said. What that means is that the name will go away, externally and internally as a corporate reference. Hotels that have “by Vantage” as part of their signage can continue to use those without replacing them, but “as we add new hotels to the system, we’ll remove the ‘by Vantage’ wording,” Mount said.
Vantage’s brands will now fall under public reporting
Since RLHC is a public hotel company, the Vantage brand performance will now fall under public company regulations for financial reporting.
Bloss said that will create advantages for development, since growth will be a bigger priority with more resources behind it.
“I wasn’t excelling in the upscale space to my satisfaction,” he said. “Our competitors were able to invest in deals, and that wasn’t our culture at Vantage. Now we’re able to be more competitive in upper-scale properties, and it opens a lot of new doors for me that I didn’t have before.”
Mount said that while adding Vantage’s brands to its public reporting structure won’t have much if any effect on current members, “public companies do have some advantages in liquidity and being able to create growth.”
As both executives have said from the deal’s inception, Vantage brand members will still retain the company’s “one voice, one vote” strategy of members voting whether to adopt major strategies within the brand’s standards, though Red Lion’s brands and franchisees will not adopt that strategy.
Growth is key
All executives stressed the importance of growth in units, franchises and markets.
The company has a goal for 17% revenue growth in 2017—a strategy it’s dubbed “17 in 17.”
“We thought a growth goal of 17% would give us that little extra momentum to our team and development team to give us a little push,” Bloss said. “We’re so excited about this toolbox we’ve uncovered with RLHC, and we’re confident we’re all going to be on the same page.”
RLHC has been on its own growth trajectory for its brands—a strategy called “100 hotels in 100 weeks,” which is on track to wrap up soon, executives said.
Beyond U.S. borders, Bloss and Mount said Canada will be a major area of focus moving forward. Vantage works with a master license partner to develop the Canadas Best Value Inn brand in that country, and beginning in the first quarter of 2017, Bloss will head up the development of RLHC’s upscale brands in Canada, through the RLHC corporate development team.
Marketing, distribution strategy and tech take center stage
RLHC has spent the past few years developing its marketing, distribution and technology strategies, and executives said those will all be new tools for Vantage brand members to take advantage of.
“The evolution of the travel process is changing rapidly,” said Bernie Moyle, former Vantage COO and CFO and now EVP and COO of RLHC. “Tech is evolving at a rapid pace, and we’re looking at what guests want. To ensure our promises to you to continue to rise to the next level, we found the ideal partner in RLHC.”
Most notably, executives mentioned RLHC’s RevPak guest management system, which allows hotel owners and operators to manage everything from field marketing and CRM to pricing and revenue.
Executives also mentioned RLHC’s deal earlier this year that allowed Expedia to list the company’s loyalty-member-only pricing tier on the OTA. Whether that will be an option for Vantage’s brands remains to be seen, said RLHC EVP and CMO Bill Linehan.
“There are a number of things that have to come first,” he said. “We’re putting all the Vantage websites into a singular environment with all the RLHC brands. Then we can start to serve up availability and rates across the entire portfolio. Then we’ll be working on (more discussions with OTAs). We are involved in conversations for that.”
Direct bookings have continued to grow for Vantage’s brands—the direct channel increased by 35% year over year in 2016, and mobile booking revenue increased 32% this year.
Titles and responsibilities shift for major players
Bloss and Mount were both clear in communicating to Vantage’s membership that leadership played a big role in why RLHC chose to acquire Vantage.
Throughout the exploratory period, the executives all said mutual respect was paramount.
“First and foremost, it starts with these two guys,” Mount said, indicating Bloss and Moyle. “They’ve set the tone in the industry, particularly in the economy and midscale space. We’re very excited to bring on that talent, bring on those hotels, to add them to the brands we have. It’ll be a great marriage. … and it gave us the scale to really leverage the technology, platforms and innovations we’ve developed and bring them across the U.S. in a meaningful way.”
RLHC corporate headquarters will remain in Spokane, Washington. The company will expand its current design center space in Denver with the goal of that eventually becoming the main office for all corporate activity, Mount said. Spokane, along with Vantage’s Coral Springs, Florida; and Cleveland offices will remain as satellite offices.
Bloss, Moyle and other key Vantage executives will stay on, in roles that allow them to take advantage of their strengths, Bloss said.