Carlson Expands Despite Tough Economies

Undaunted by floundering economies around the world, Carlson Hotels Worldwide, after adding 89 new properties to its portfolio in 2008, is continuing its expansion across the globe, with plans to debut 300 new properties between this year and 2013. Last year was a lucrative one for Carlson Hotels. The company saw record revenues of $7.5 billion across its five brands, marking an 8 percent increase from 2007. Carlson managed to come out on top during a time when the hospitality industry, as a whole, experienced–and continues to soldier through–one of its most difficult cycles. According to a report released yesterday by PKF Hospitality Research, in the U.S., the downtrodden economy and the increase in supply have resulted in one of the “deepest and longest recessions in the history of the domestic lodging industry.” Looking ahead, PKF estimates that the U.S. hotel industry will suffer a 9.8 percent drop in RevPAR in 2009. “You have to keep in mind that it takes two years from conception to the opening of a hotel, so what we’re seeing in 2008 and 2009 are above average openings, but the projects were conceived in 2006 and 2007 when the industry was in its most prosperous period,” Robert Mandelbaum, PKF director of research and information services, told CPN. “There was virtually no construction through 2005, but then in 2006 and 2007 you saw record high occupancy. The numbers were so good, so development became financially feasible.” Flying in the face of grim numbers, Carlson is moving forward with plans for new hotels, including 36 new Country Inns & Suites By Carlson that will swing open their doors in the Americas this year. The mid-scale Country Inns brand has been particularly successful. “The product has really caught on, primarily in the U.S. and Canada, where we’ve seen the majority of our growth,” Steve Mogck, executive vice president & COO for Country Inns & Suites By Carlson, told CPN. “We’ve worked amazingly hard on the quality of the brand and its perception keeps getting better and better, and we’ve worked on various manners of revenue generation, so we’ve begun to get more and more of a following among developers.” And the mid-scale product type appears to be more attractive to lenders these days. “In the current economy, for financing full-service hotel developments, you have to access Wall Street or private money, but Country Inns is still within reach of smaller banks,” Mogck said. “Without the food and beverage component, the operations are simpler and the brand is seen as a safer bet in the current market.” The brand is successful beyond North American borders, too. “We’ve bucked the trend of being edgy. We’re not stodgy, but more residential, and we’ve found that’s really resonated in places like India. It works well from the leisure standpoint and for the business traveler, and the Indian market has really picked up on that.” On both the international and domestic fronts, Carlson signed 151 new agreements last year for projects involving its five brands. The timing for many of those projects could be just right. Mandelbaum noted that, “now, with the recession, you can’t finance anything, so in 2010 and 2011, you won’t see that many openings.” Headquartered in Minneapolis, Carlson’s portfolio presently spans 74 countries and encompasses 1,013 hotels carrying the Country Inns & Suites by Carlson, Park Inn, Park Plaza Hotels & Resorts, Radisson Hotels & Resorts and Regent Hotels & Resorts flags.