To stand apart from competitors, open the door to a wider clientele, and improve travelers’ perception of budget hotels, economy brands are repositioning themselves through new design prototypes and renovations. Red Roof Inn and Motel 6 are among the economy brands that are upgrading their properties and adding touches of boutique flair without sacrificing the low prices budget travelers have come to expect.
The challenge behind updating economy brands is to provide quality guestrooms at affordable rates while maintaining low costs per key for hoteliers. For Red Roof Inn, which has nearly 350 franchised and corporate-owned properties across the United States, the process starts with smart design and value-engineering.
“The fact that a significant portion of our portfolio is owned by us allows us to approach a renovation scenario a bit differently,” says Andrew Alexander, who has led Red Roof Inn since April 2009 and was formally named president of the company in January. “First, we can value-engineer and make sure we get the price point to where it needs to be. The second thing is, we can test it.”
The Red Roof team has taken cues from its downtown Columbus, Ohio, property, which has been completely renovated to the full “NextGen” standard. The company has continued to value-engineer over the last few months not only in terms of price points but also customer response and feedback. “We have the perfect ability with our own stores to go out and test customer feedback, see what they say about the product, and then revise before we roll it out on a brand-wide basis,” Alexander says. “It’s much easier with the franchise community to roll something out once they know the customers have already seen it and we have customer feedback on the product.”
Olivier Poirot, CEO of Accor North America, Motel 6 and Studio 6, agrees that a successful update comes down to design. Motel 6, which has 1,100 company-owned and franchised locations throughout the United States and Canada, spent a lot of time coming up with an attractive product that would bring more value to guests without increasing the cost of renovations, and work for both renovations and new builds. “Every time we update our properties, we have to keep in mind the fact that we are the lowest price of any national chain,” Poirot says. “And, therefore, whatever we bring from a product standpoint has to fit the economic equation. That’s for us, as well as for our franchisees.”
As part of its new prototype, Motel 6 wanted the décor to depart from what most travelers equate with a typical motel room. “We tried to bring some of the elements of design from more upscale properties, and tried to convey some of that boutique feel,” Poirot says. “The whole reason behind that again is to enhance value for the guests while not increasing the cost of renovation and it was very, very important for us when we designed the room to make sure that we would please not only the existing customers of Motel 6.”
TALKIN’ ’BOUT A NEXTGEN RENOVATION
So far, about 10 Red Roof properties have upgraded with NextGen features throughout, and approximately 25 properties will complete the renovation package in the next six months or so, Alexander says. The NextGen rooms include “Love-your-Linens” plush bedding; wireless Internet; flat-screen TVs and auto sensing remote jack packs; bathrooms with granite countertops, vessel sinks, and oversized walk-in showers with rain-flow shower heads; and spacious workspaces. Other upgrade features include natural-lit lobbies, a decorative stone wall, lounge area, and exercise facility.
In March, Red Roof introduced its “superior king” rooms, which will feature NextGen elements as properties renovate. Previously, the brand offered consumers an all-inclusive king room option that came with free WiFi. Once Red Roof rolled out free WiFi and long distance in May 2010 throughout the properties, the brand needed a new way to differentiate the oversized room. The superior king has 30 percent more space and provides amenities such as larger workspace, refrigerator, microwave, and in-room coffee maker.
The majority of franchised and corporate properties have property improvement plans (PIPs) in place to bring them to the NextGen standard in accordance with a schedule. “Current and new franchisees will be asked to convert to the NextGen interior over a period of generally somewhere between zero and four years for a new conversion,” Alexander says. “It really just depends on how current their product is, in particular their case goods.” While consistency is key, Alexander says as long as the product is clean and comfortable and meets the brand’s standards, Red Roof is flexible with franchisees who want to reinvest in their properties over an appropriate period of time. Corporate is proceeding with multiple NextGen conversions on existing properties that will launch in the July timeframe, he says, with more extensive renovations accelerating into the fall and winter.
‘PHOENIX’ SPREADS ITS WINGS
U.K.-based design firm Priestmangoode created the highly functional and durable “Phoenix” room design for Motel 6, which was first unveiled in 2008. It features wood-effect flooring, ambient lighting, a settee area for two, and a 32-inch flat-screen TV. An entertainment unit that houses the TV doubles as a door-less wardrobe. It also has a multimedia panel with A/V plug-ins for MP3 players, video game systems, and laptop computers. The bathroom has double doors, black granite counter top with a raised vessel sink, a walk-in shower, and vanity area. The pedestal bed allows for luggage storage underneath.
Motel 6 has in excess of 100 locations that have been renovated with the new design, Poirot says, and is slated to complete another 50 to 60 properties this year. “Coming out of the recession, more and more franchisees can now afford to do the renovation,” he says. “The goal for us is to have the whole network renovated in some shape or form by the end of 2013.”
Poirot stresses that with renovating a chain like Motel 6, which has nearly 1,000 locations in the United States, it’s a “never-ending job.” He draws a parallel to painting the Golden Gate Bridge—by the time the job is done from one end to the other, it’s time to start all over again. With the Motel 6 renovation, he explains that the company started to “paint the bridge” in 2005. “By 2008 we were about 60 percent done and we started to change the color of the bridge,” he continues. “So we’re now trying to complete that bridge by 2013, and we’ll have to start all over again to complete the next wave of renovation with the new look.”
Although separate from the upgrade, Accor North America has also made a commitment for all Motel 6 and Studio 6 properties to be certified by Green Key, an eco-rating program, by the end of 2011.
GROWTH TARGETS FOR 2011
Red Roof is focusing on growth in both the United States and Canada, and has had some overseas international discussions. Alexander says several groups have expressed interest in the brand in Canada, and the company expects to be able to announce partnerships this summer. “The climate in Canada is a bit different than here in the U.S. in that there’s significant interest in new build,” he says. This prompted Red Roof to select NextGen prototypes it had set forth, such as its property in Beaumont, Texas, and determine their ability to compete in Canada. This caused the brand to slightly revise the design of the NextGen exterior. “We redesigned the prototype for use in Canada but its appeal has turned out to be extremely broad, and it is now going to be rolled out as our primary prototype for all of North America,” he says of the new exterior look. “It’s extremely attractive.”
Red Roof has set a growth target of 40 new franchised properties in 2011. “This year, while we’re still maintaining all those important aspects of being an owner-operator and what that adds to our franchisees, we’re moving to a more franchise-centric model,” Alexander says. This means the company will focus on how to improve franchisee performance and how it can target the franchise community to grow the brand, implement a more robust marketing program and training options, and offer other options for franchisee participation in sales and marketing and revenue management programs.
Motel 6’s growth plans for 2011 are mostly franchised, and the company is counting on 50 to 60 openings this year, on track with what it has been doing for the past three years. “As we come out of the recession, we’re starting to see some new-build projects coming to us as well,” Poirot says, “which is interesting and something that was very, very scarce over the past two or three years where we did a lot of conversions of existing properties.”
DRIVING BRANDS
From an overall strategy approach, Alexander says Red Roof has been focusing on performance, quality and service, and growth. The first quarter, Red Roof out-performed its competitive set and increased its index 2.2. percent, he says, a substantial move in a short period of time. “After coming off an obviously horrible 2009, and seeing some improvement in 2010,” Alexander says, “we really have started the year off on an extremely positive note from a performance standpoint.”
For Motel 6, not only has guest feedback been an indicator of success, the company is seeing RevPAR index increases in every market where it has rolled out the product, Poirot says. The brand carried out surveys to ensure that the new iteration of its product would attract new demographics and capture younger generations, as well as appeal to travelers who don’t typically stay at economy properties, Poirot says. Motel 6 has also seen an increase in business travelers as a result of the new product.
Of utmost importance to Red Roof is protecting its core business, Alexander says, adding that the NextGen upgrades should only make loyal customers more loyal. The company does, however, expect to appeal to and create a loyalty with a younger clientele. “The types of things we’re doing are universal, and have a universal appeal to lodging customers,” he says. “And that’s why I think there will be some new demographics that become interested in the brand, in particular the boutique feel of the NextGen renovation.”
Alexander anticipates that as travelers get priced out of midscale properties, Red Roof’s NextGen product will help drive the brand as a provider of midscale quality at an economy price. “We sit right at the top of that economy segment,” he says. “And why is that good? That’s good because as the economy improves, and the spread between the midscale and the economy segment grows…we’re in a perfect position to lead that ADR growth and be in the middle between the economy segment and the mid-priced product.”