Eric de Neef leads global branding and commercial organisation for Radisson Hotel Group (previously Carlson Rezidor). He’s been tasked with driving the company’s international ambition to become the hotel group of choice for guests, owners, investors and employees worldwide. His role covers the full commercial scope of the business, with a focus on guest engagement and loyalty.
We caught up this month to get his take on competition with private accommodation, Radisson’s plans for growth in North America and the key capabilities for future success in hospitality.
PACE Dimensions: Given the rise of private accommodation, with the growth of Airbnb and listings on the major OTAs, how do you think that hotel brands can best compete?
Eric De Neef: What we have done with the sharing economy, Airbnb included, is to analyse the success behind it. When you look at it, it’s all about connection, integrated into the local community. A lot of localism and trust. That was, morally, the foundation of Airbnb.
So, the way we have addressed this is to strengthen the guest experience and guest engagement, because that’s where we lost some ground in the past. When you look at the sharing economy and private accommodation, it’s not such a big competitor (for Radisson Hotel Group at least). 80% of our business is based on stays less than two nights; 80% of the Airbnb business is for more than two nights. So we are not directly competing with these guys except in one segment, being leisure, where you have a five to seven days stay; there they are competing with us.
We are very strongly investing in safety and security, and I know by talking with Airbnb executives that this is something they are struggling with; the hotel industry is an inspiration for them because all of the major hotel groups have very good safety and security policies and regulations in place.
“Private accommodation is offering something different, but what they have done well is connect their guests with local communities. This is where we needed to understand what people are looking for.”
Private accommodation is offering something different, but what they have done well is connect their guests with local communities. This is where we needed to understand what people are looking for. The local influence is something that we’ve included now in art, design, our food and drink offering and packages. It’s a contrast to the big copy-paste approach the major brands had in the past where you had one menu across the board, a kind of process-driven hotel value proposition.
We don’t want to compete on product as such with them because they (private accommodation, Airbnb) have another value proposition. But you need to strengthen your value proposition based on an analysis on the success of the other. And that’s the way we have adjusted.
PACE Dimensions: That reflects the change in the market for greater sense of connection through travel….
Eric De Neef: Absolutely! Guest engagement starts before they arrive at the property. When the customer is looking for accommodation, when he’s booking with us, you can already engage with him: “Thank you for your reservation”. In pre-arrival emailing, you can ask: “Do you need transportation from the airport? Do you want us to book dinner for you when you arrive?”. You engage with your customer before he arrives. That’s why the technology is very important for us in order to leverage the guest experience. That’s key.
PACE Dimensions: Which brands and hotel segments do you think will drive growth in North America, particularly for Radisson?
Eric De Neef: We are focusing mainly on growing four brands in North America: Radisson Blu, Radisson RED, Radisson and Country Inns & Suites. We just launched Radisson RED, our new lifestyle brand, and see huge investors’ momentum related to this brand.
For Radisson Blu, we only have three today in the US. We have targeted 14 gateway cities in North America where we really want to be present.
For Radisson, it’s a matter of refreshing the brand targeting customers who appreciate design with attention to detail, and who have a no-nonsense approach to life!
For Country Inns & Suites, it’s much more a volume game. There is a huge potential in the mid tier select service in the US; we’ve seen this trend coming for two or three years, so the plan is to double the number of Country Inns and Suites in the US, based on this mid scale select service positioning.
PACE Dimensions: What will be biggest growth drivers to help Radisson to become a top three hotel group?
Eric De Neef: It’s all about top-of-mind. If you take the luxury segment, Four Seasons has amazing brand awareness, brand equity, brand affinity, but they’re not the biggest. They have only 120 properties, but they’re top-of-mind. This top-of-mind is something we want to achieve with the Radisson hotel group. Every time an owner wants to develop or create a new property, we want him to think about us.
Over the next five years we will be working to position Radisson Hotel Group differently, to be in the top three top-of-mind hotel brands.
With our majority owner HNA, growth will also come from China. There is a lot of potential out of China and they (HNA) are Chinese so they have the connection, they have the network and the knowledge of the market.
“The consolidation of the hotel industry is quite interesting to see. There are people who say we have too many brands. But it’s not a volume game; your brand needs to be relevant to the market and customers you want to attract.”
The consolidation of the hotel industry is quite interesting to see. There are people who say we have too many brands. (Accor told the media last week, when they announced the takeover of Mövenpick, that they could reach 40 brands within five years). But it’s not a volume game; your brand needs to be relevant to the market and customers you want to attract. If tomorrow you have the option to acquire a brand that doesn’t compliment from a market perspective or network perspective, and doesn’t offer more to your customers, it doesn’t make any sense. You need to ensure you are not diluting your commercial effort, as the ultimate focus is to drive incremental revenue for owners.
PACE Dimensions: In terms of growth, which digital media channels do you think have the greatest potential?
Eric De Neef: Online channels are becoming somewhat blurred. OTAs are the biggest driver from a distribution standpoint. It’s interesting to see their development in terms of growth (5-10 years ago they were in double-digit growth, close to 20-25%). Today, they are coming to a high plateau, where they cannot go any further because they bought all the generic keywords they could. They will continue to impact our business because they are our partners; we need to ensure a win-win strategy using them to drive incremental revenue.
For example, do I need the OTAs in Norway? No, I don’t; I’m not ok to pay 20% commission on the business in a market I’m driving myself. But we’re happy to build partnerships with them where they can add the value of complementary markets that we don’t have. If I’m looking at business from Latin America where they are stronger than we are, why not leverage the South American market with them?
PACE Dimensions: What are the greatest challenges that you see for brands driving business and profitability for hotel owners at the moment?
Eric De Neef: What we need to bring to the table is to convince the owners that we will drive more direct business, driving more customers that will spend more in their property, but at a lower acquisition cost.
Our loyalty members spend, more or less, 25 – 30% higher than a non-member. With a strong loyalty program, from a revenue perspective, you bring more to the table, alongside knowing your customer. So we’re investing a lot in loyalty.
The cost of acquisition is a key one, because if you don’t put this in equation, then why partner with a brand? They can go directly to an OTA, they pay 25% and that’s it. We need to prove that we can bring much more profitable business to owners than others are doing. That’s really the biggest focus for me.
PACE Dimensions: Finally, which skills and expertise will brand and commercial functions need to dial up or down for future success?
Eric De Neef: We need to focus on creating demand. Right now there are so many moving pieces and you have so many new markets developing. If I take India or China, we need to understand these markets, which is why I’m pushing the team big time on this. It’s going beyond the domestic business for the operators and the sales team.
“Data analysis is something that we need to dial up. This is where major stakeholders in the industry – distributors, OTAs, travel management companies – do very well.”
The other area is guest engagement and customer behaviour analysis. Data analysis is something that we need to dial up. This is where major stakeholders in the industry – distributors, OTAs, TMCs (travel management companies) – do very well. We have a real opportunity, challenge and focus on leveraging the data, on transforming it into a management tool. This is where we are investing a lot in business intelligence today, in surfing and searching behaviour and on-property behaviour to understand the customer journey. It pushes the team to take this inside-out perspective and to understand the customer flow. The customer behaviour analysis will help us step-change the way we engage with our customers and the marketing initiatives we choose.
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