The economy lodging leader celebrates 40 years by building on its successful NextGen renovation program By Jonathan Springston, AAHOA Lodging Business

Red Roof Inn celebrated its 40th anniversary in Orlando this week where more than 200 owners and general managers gathered for the 2013 brand conference.

Building on the success of the $150 million NextGen renovation program, Red Roof executives unveiled Red Roof PLUS+, an upgraded offering promising guests the brand is “Adding More Wow To Your Stay.”

In addition to the their 100 percent NextGen renovation requirement, which includes modern furniture, flat-screen TVs, 36 HD channels, vessel sinks, wood-like floors, additional electrical outlets, a 100 percent smoke-free designation, Rest Suite beds by Serta, high-end bedding, in-room red accent wall, and renovated lobby featuring a stone accent wall, Red Roof PLUS+ properties go even further.

PLUS+ properties will feature a premium room type, red canopies, enhanced LED lighting, attractive landscaping, and new signage.

Red Roof President Andrew Alexander said the company will roll out PLUS+ enhancements at approximately 30 properties in 15 states in early 2014.

“PLUS+ isn't for everyone or every property,” he noted, promising that no PLUS+ properties will be placed within the protected territory of other Red Roof Inns. “When you give guests what they want, they are willing to pay more for it.”

NextGen Driving Serious Growth

In 2011, Red Roof recapitalized the ownership of its assets, which provided the company with $150 million to make significant renovations to its portfolio of corporate-owned and franchised properties. Soon after the recapitalization, the NextGen renovation program came to life.

Rob Wallace, executive vice president, brand operations and franchise, said that to date, franchised properties are all in various stages of three- to four-year property improvement plans (PIPs). Meanwhile, more than 120 corporate-owned properties are in some stage of the NextGen program, with 29 corporate-owned properties completed.

Executives noted that Red Roof implemented the NextGen changes at their corporate-owned properties before introducing the program to franchisees. Along the way, Red Roof tested concepts, received feedback from consumers and the brand's franchise advisory council and re-tested ideas in order to get the program right.

“We know it's expensive...but it's an investment in your property,” Wallace said, encouraging franchisees to implement the NextGen changes all at once rather than piecemeal in order to achieve the highest return on investment. “You're saying, 'I want the business to be the best it can be.' We have to be all in on this effort.”

“A large part of our responsibility to every franchisee is to maintain standards the brand is proud of. We can't have properties representing the brand if they don't keep up with brand standards,” Alexander said. “The properties that don't meet brand standards negatively affect everyone's bottom line.”

It appears both franchisees and guests are happy with the changes at Red Roof. Alexander noted that 97 percent of franchisees have remained in the system since the introduction of the NextGen program, while 71 percent of franchisees said the quality of the franchise operations directors (FODs) “is superior to the competition.”

“Our FODs make sure the lines of communication are open between franchisees and corporate and make sure the conversation is ongoing,” Alexander said. “Happy franchisees equal happy guests.”

Since 2011, Red Roof has added 52 new franchised properties.

In the 2013 North American Hotel Guest Satisfaction Index, J.D. Power ranked Red Roof number two in the economy hotel segment. For three straight years, ReviewMetrix has ranked Red Roof number one in guest satisfaction in the economy segment.

Red Roof CFO Brendan Foley noted RevPAR system-wide is up 7 percent year-to-date as of August, with ADR up 6 percent, occupancy up 10.5 percent and RevPAR up 17.6 percent for properties that have completed the NextGen program.

Aggressive Social Media Strategy

Red Roof executives take very seriously social media and the feedback, both positive and negative, guests deliver. Alexander said 15,000 reviews from social media go straight to his personal smart phone every year.

“It's our job to answer all of them. Managers who answer see an increase in guest satisfaction scores,” he said. “We love reviews, even those that are negative, because they help us improve. They give us the opportunity to do better.”

During an afternoon panel on the conference's first full day on Tuesday, David Atkins, founder of Digital DNA Infusion, and Megan Danielson of Google Travel, debated the key technology trends in the industry, including best social media practices.

“You can never have too much guest feedback,” Atkins said, noting that when it comes to negative reviews, “Don't argue with someone. Apologize and be gracious.”

“It's future marketing,” he added. “This stuff doesn't go away.”

While Danielson encouraged hoteliers to flag fake reviews, Atkins advised hoteliers not to bother, instead focusing on “stimulating positive reviews from your guests” with superior service and a quality property.

Danielson noted that Millennial travelers prefer booking through online travel agencies (OTAs), a thorn in the side of hoteliers who prefer guests book through branded websites.

“It's up to you to let consumers know the value of booking direct,” she said.

“You're not going to out-OTA an OTA. OTAs are here to stay. They can be difficult, especially in the economy segment,” Atkins said. “Learn how to live with them.”

Encouraging Loyalty

Executives are encouraging franchisees to sign up more guests for RediCard, the company's long-time customer loyalty program. Brenda Eddy, loyalty marketing consultant, said 22 percent of all Red Roof reservations come from RediCard members, accounting for $86 million per year in business.

Red Roof asked franchisees to sign up 15 new RediCard members per month per property with the goal to grow the loyalty base from 960,000 to 1 million members. As an incentive, Red Roof will send $15 to each property that hits the 15 member mark. The general managers with the highest enrollment will receive $100, plus a party for the property.

If you need help in the Western US, please contact Ed LaCivita or Craig Sullivan at Parkwest General Contractors.