In 2014, Red Lion Hotels Corporation (RLHC) transitioned its loyalty program from a points-based model (R&R Club) to a recognition-based model (Hello Rewards), which recognizes and rewards members for doing things they already love to do and offers a competitive differentiation in the marketplace.
Since then, RLHC has been on an upward trend reflective of that critical loyalty program change.
During the company’s Feb. 27 fiscal fourth-quarter/full-year conference call, RLHC CEO Greg Mount talked about 2015 being a transformational year.
“Our efforts are paying off for our franchisees, our customers, associates, and shareholders,” he said, according to Seeking Alpha. “We are proud of the progress we made in 2015 and are highly encouraged by the enthusiastic response to our brands, our franchise, our loyalty programs, and our strategy.”
By collecting information from guests, the Hello Rewards program looks to fuel guest passions and provides a customized experience. Hello Rewards includes a member profile that asks guests to indicate their preferences on a variety of subjects. Instead of standard questions regarding room arrangements, however, the company asks questions that seek to form a more personal connection. These questions include things like favorite music genres and preferred vacation spots. This information is then fed back to the guest through marketing materials and personalized rewards, underlining Red Lion’s desire to provide customers with a 1:1 guest experience.
Comparable revenue from company-operated hotels was $107.0 million, compared to $97.4 million for the same period a year ago, reflecting a 9.9% increase.
Consolidated net income in 2015 grew 18.1%, to $2.7 million, compared to $2.3 million in 2014.
Mount discussed current disruption in the industry.
“Starting with the third quarter, the markets became hyper-focused on several potential headwinds facing the industry, including the marginal increases in the supply and gateway markets, the incremental impact of a strong dollar on foreign travel despite positive trends in forward group bookings, the prospect of a slowing economy, pockets of decelerating rate of RevPAR (Revenue Per Available Room) and EBITDA growth, the pressure from the OTAs, and the talk of the disruption caused by Airbnb,” he explained. “While all of these forces that are putting pressure on our industry overall, they’re subdued with RLHC.”
During the last 180 days, the industry has experienced more than 50 lodging or peer specific-related downgrades for the industry, Mount noted.
“And our industry is now trading at EBITDA multiples that imply lodging is in a trough in the business cycle,” he said. “These valuation declines have prompted a number of management teams to explore strategic alternatives. And we’re now witnessing an accelerating pace of consolidation and strategic shifts, many of which are actually compelling to RLHC, as we continue to execute on our long-term business plan. Specifically, this disruption provides RLHC the market runway and opportunity to accelerate our growth curve, as we continue to provide owners with a new and prolific guest management platform that essentially doubled the RevPAR (Revenue per Available Room) growth of our competitors in 2015. Despite all the extraneous noise, the foundation we built in 2015 gives us confidence about our prospects, both for top line growth and improved profitability, in the coming year and beyond.”
Mount added: “The positive momentum we are experiencing in both organic RevPAR improvement and from our growth initiatives validates our strategy and provides RLHC with a tailwind to continue to execute on our national expansion. While we cannot control the industry’s sentiment and its performance, our approach is proving successful. And we expect to continue to gain national market share while generating improved revenue, EBITDA, cash flow, and earnings per share growth.”
In the beginning of 2014, shortly after Mount joined the company, RLHC began the transformation of its business.
“Since then, we have expanded from two brands to five, penetrated multiple key MSAs to advance our national expansion strategy, moved from a capital-intensive owned asset strategy to a franchise asset-light model, deploying industry-leading technology and marketing, all while strengthening our balance sheet,” he said. “A measure of our success thus far is embodied in the progress of Hotel RL brand, which was launched in late 2014. Today, I’d like to announce the ninth addition to the Hotel RL family. We recently signed a franchise license agreement with an accomplished and experienced developer who will be opening a new build Hotel RL in the heart of Brooklyn, New York.”