Radisson to Get $1.5 Bil. Upmarket Makeover in U.S.

Radisson hotels are getting a $1.5 billion luxury rebranding and facelift in the U.S., owner Carlson Hotels Worldwide announced Wednesday, even as the industry struggles with crushing debt and plummeting revenue.

Radisson, forever underperforming in the U.S., will be remade into a more stylish and contemporary brand here, with distinctive architecture and flair, President and CEO Hubert Joly announced at a conference in Kissimmee, Fla.

And Carlson will increase its 1,000-hotel portfolio by more than 50 percent, including new luxury Regent hotels, mid-scale Country Inns & Suites and Park Inns.

New Radisson amenities will include 3-hour express laundry, turndown service, upgraded bathrooms and free daily newspapers; all the brands already offer free Wi-Fi.

Joly said he intends to split the expansions equally among the brands — except Regent, which will remain small — and roughly one-third will be in the United States, one-third in India and one-third in other parts of Asia.

Radisson has always been more successful outside the U.S., he said, because its properties in many of the world’s capitals are stunning, while its U.S. hotels are much more pedestrian. So Carlson is spending $700 million to open five “halo” properties — signature hotels intended to distinguish the brand — in still-undetermined major U.S. cities.

Joly said Carlson probably will build one or two hotels itself, while the others will be existing properties it renovates or rebrands. As hotel operators continue to unload underperforming properties to cope with the recession and a plunge in business travel, some of those may be properties that other companies are having trouble managing.

Most of the rest of the money for the rebranding will come from franchisees, though Carlson also plans to spend tens of millions of dollars on marketing.

As of February, 15 percent of the 3,300 hotels and resorts tracked by data firm Trepp LLC are delinquent or in the foreclosure process. But Joly sees the industry’s dismal condition as more of an opportunity than a problem.

“We’re buying low, because this is the right time in the cycle, and … we’re going to hold the assets for the long term,” Joly said. “It’s true that there’s still a lot economic uncertainty for the short term. But come on, the world has been going through economic cycles forever, for the last two or three centuries. This is not Armageddon.”

And Carlson doesn’t actually plan to buy much besides a few signature properties the company will own as well as manage.

Most of the existing 159 Radissons in the U.S. are franchised, and the owners will pay for the renovations Carlson is promoting, at a cost of roughly $15,000 per room — more in large cities and at hotels with lots of common space. Those costs will total about $600 million, and the Joly said the company may help some owners having trouble getting financing.

Carlson says 25 percent of its franchisees are already sold on the redesign and 50 percent are in serious negotiations.

Mark Woodworth, president of the firm PKF Hospitality Research, said Carlson’s timing was perfect.

“The good news with the Radisson brand (is) outside the U.S. they have some very high-quality, well-performing assets,” Woodworth said. “I think one of the challenges for them is to show they can do that here as well.”

Woodworth said Radisson may find franchisees in banks that have taken over foreclosed properties because lenders found in past downturns that they must operate a hotel for a year or two before the market recovers enough for them to be able to sell it.

3/3/2010 4:20 PM TRAVIS REED, Associated Press Writer MIAMI