Q&A: Radisson CEO John Kidd
John Kidd came to Radisson after the Carlson family sold it to HNA Holdings of China in 2017. Kidd is a New Zealander who has spent most of his career in Asia, with Hilton and HNA. He sees the hotel industry in a world context and is of the mold of other globally minded CEOs in Minnesota, such as Hubert Joly and Inge Thulin. When overleveraged HNA sold Radisson to a consortium led by Jin Jiang International, another Chinese company, for a reported $2 billion in 2018, his mandate was changed little: Bring the Radisson from also-ran status to up-and-comer.
The hotel industry in America has changed substantially in the last 25 years. Hotel companies operate very few of their hotels, and own even fewer. They are basically brand service companies marketing to hotel owners and guests. Minnesotans tend to view Radisson as a premier global hotelier, but outside our region, it’s a brand past its heyday. We spoke to Kidd from Radisson’s new offices at Carlson Center about his rejuvenation plans for Radisson, the crazily consolidating industry, and the odds that Radisson will remain based in Minnesota.
Q | Can you explain a bit about how Radisson has changed with the two successive changes in ownership?
A | The structure hasn’t changed. We’re a wholly owned entity of Jin Jiang International. We are Radisson Hospitality Inc. Jin Jiang owns 70 percent of Radisson Hospitality AB, our cousin, [which] is based in Brussels [Editor’s note: Radisson Hospitality is the former Rezidor Hospitality.] We own all the brands, we are the master franchisor. They are the master franchisee. In Europe, the Middle East, they do all the operations. We operate exclusively in the Americas and Asia/Pacific. I am president/CEO/COO of Inc.; I have a counterpart, Federico Gonzales, who is the president/CEO of AB. We work in tandem for things of mutual benefit, such as [information technology]. We also need to talk to the customers in the same way because we are a global brand.
Q | Tell us about Jin Jiang.
A | They are almost exclusively a hotel company, 85 percent. That is their passion. They belong to the Shanghai government. The deal to purchase Radisson and AB was a joint venture between Jin Jiang and the Sino CEEF, which is a [self-labeled private equity] fund.
Q | How do the government entities controlling these companies and funds interact with you?
A | In the past, state-owned enterprises tended to be industrial. This is more of a commercial endeavor. The government does not get involved unless there’s a reputational incident, unless there was something of major concern. Is there communication between them? Yes. They are not sitting on committees, not involved in day-to-day decisions. It’s super arm’s length.
Q | While HNA owned Radisson, what were major milestones or achievements?
A | When HNA purchased the company, it gave us an opportunity to really look inside and see what makes this engine tick. There were market opportunities, cleaning up the brands, making them more relevant to customers, combining all our brands under one website.
Our diagnostic analysis used companies that are best in class like Hilton and Marriott and saying what do they do well, why are they so good in EBITDA, RevPAR [revenue per available room], and what do we have to do to get there. We drilled it down to 23 initiatives across the spectrum of brands. If we want to be a world-class competitor, this is the minimum we have to do in the next three years, but beyond that, how do we overtake the competition?
Q | At the time, what were Radisson’s strengths and deficiencies?
A | I will say to you straight up, we were lagging in just about everything. I don’t mean it as a denigration of Carlson. You can imagine a company that’s owned for 60 years, in the final years before a sale there’s not going to be a lot of investment. We had multiple websites. No mobile capability. Couldn’t process online payments.
One of the first things we did was update the brand standards; we told the owners you have to do these things. We provided some assistance in cases. It also allowed us to remove some hotels from the system that were not good for the brand.
Q | I always had a sense the local media did not understand Radisson. The Twin Cities properties were showpieces, but outside of Minnesota it was a pretty dowdy hotelier. Yet Radisson has been articulating these same reinvention themes with each successive CEO and it just kept falling further behind. What’s different now?
A | We’re doing it. The core Radisson product, of which there are 126 in the U.S., were really kind of rubbish. Overseas we have Radisson Blu, which is a very nice product. We only have three in the U.S. We are now expanding those across the U.S. Core Radisson standards are upgraded, and the owners know they have to get on board or leave the brand. Country Inns and Suites is our big brand in the U.S., with 460 properties. We’re at generation four in product lifecycles (the local example is at Mall of America); it’s just a really good family brand, good quality. It must be as polished as a five-star hotel, but just without the amenities of that level. All is in progress now.
Q | What is the equivalent to Country Inns? Who is the competitor?
A | Brands like Holiday Inn Express. The niche is called upper-midscale.
Q | What’s your top-of-line product?
A | It’s called Radisson Collection. They were super Radisson Blus that were above and beyond the standard. We’ve got some fabulous properties overseas [in] Asia Pacific [and] India.
Q | Describe the market segments and brands, if you will.
A | Sure. We’re not Hilton or Marriott, with 32 brands. We have eight brands, across the spectrum of scale and service. We can find a brand that suits [an owner’s] capital budget and we can offer an assurance we’re not going to create a new brand a block away and cannibalize your business. Would we like to, one day, have 15 to 20 brands and 2,000 hotels in the U.S. and have that same problem? Yeah, maybe. But, at the moment, we are honestly able to say to an owner that we won’t park another couple hotels down the street. [Editor’s note: This is common practice at Marriott and Hilton.]
Q | So your North American brands are Country Inns, Radisson, Radisson Red, and Radisson Blu. Is that right?
A | Plus Park Inn by Radisson.
Q | What is the growth focus, specific brands or markets?
A | We’re trying to expand generally, but in North America we’re putting a lot of emphasis on Radisson Blu. As you pointed out, our quality was falling behind. So we wanted to [emphasize] our better quality, which is Blu. We’re also going to owners and saying we want to operate with a hub-and-spoke principle. So, if you’re an owner in New York, [and] you’ve got a Hilton, a Marriott, or a St. Regis, give us that hotel, we’ll brand it as a Blu, perhaps with preferential terms, but then owners in that market will see it and develop hotels in the area because they know this is the quality. [Radisson] means business. Up to now, we don’t have those key, city center, polished products that we can show [an owner] so they can have confidence we’re going to meet their expectations.
Q | So you’re looking to create showpieces to market the brand to other hotel owners in a region?
A | Yes, exactly.
Q | Does Radisson own any hotels?
A | It’s very much an asset-light situation. We only own three of our hotels.
Q | Has that model, which has taken over the industry, had any downsides, being at arm’s length from all your properties?
A | [Hotel] companies are now spending all their time focused on the customer: What do they want? What is the experience? It allows owners to say, “I want an innovative company to manage my hotels, or allow me to utilize their expertise and manage my own properties.” That’s a best of both worlds. The owner gets intense research and innovation delivered to their doorstep. If hotel companies were mired in real estate, then whenever markets took a turn, I think you would find an element of conservatism influence the business.
The managed approach is more profitable and we’re able to maintain more control over the product, but in a mature market like the U.S., we’re not uncomfortable with owners just using the brands. But where we manage our hotels, every crack and crevice is tended to, whereas that might not happen in any franchise hotel.
Q | How many of the North American hotels are Radisson-managed?
A | About 3 percent.
Q | Does the sun still rise and set on the business traveler? Or with the huge rise in leisure travel, have they become a bit of an afterthought for hotels?
A | If you look at the space our brands operate in, Country Inn is aimed at family travelers. Radissons are geared to the business traveler. One of the reasons we’re polishing the brands is to attract a traveler that will get us a better rate, and that is in the business space. The brand has to also be able to accommodate that person, meaning efficiencies and amenities that resonate with a businessperson.
Q | How so?
A | Business travelers need a desk in the room. They look for fast wi-fi and technology that makes their stay efficient. But families scream just as loud if the pool is closed or a ceiling is falling in.
Q | Has all the growth been on the leisure side in the past couple decades?
A | In the economy sector, yes. In the upper scale [sector], no.
Q | There is always pressure on corporate travelers to cut back on travel. But in the leisure sector it’s become so much cheaper to travel frequently.
A | What companies also do, though, is say, “Instead of staying at a Waldorf-Astoria, you’re going to stay at a Hilton”; $200 a night is the limit, not $400. The frequency is there, but the spend[ing] is different.
Q | The hotel industry has been through this massive consolidation, but there are more brands than ever, because it’s the only way they can keep adding hotels yet adhere to their contracts with existing hotel owners. Are there more mergers to come?
A | The  deal Marriott did with Starwood was huge, but there’s not a lot of opportunity left. There’s not a lot of companies left that can afford such massive purchases.
Q | Explain the calculus in it.
A | The brands become so big that you cannot avoid them. They offer every range of product in every place you want to be.
Q | Is Radisson likely to have so little scale in North America that it is acquired by one of the behemoths again?
A | Absolutely not. Jin Jiang is incredibly pleased and proud of our brands. Our upper scale differentiates them. They want to be in the Americas. They are fascinated by the Americas markets. They need our brands to augment what they have. I don’t see them selling us or our brands. They want us to bring our brands to Asia-Pacific.
Q | Let’s talk about frequent-stay programs. Do they still matter?
A | It’s a necessary evil. If you’re not in the game, you’re going to lose out. At times I’ve wished we could scrap the loyalty thing and win customers by virtue of our products.
Q | Like Four Seasons?
A | Right. But that’s not the world we live in. But just giving more points or redemptions are not going to make for loyal customers. If the quality of our hotels and people are not high, no one is going to stay with us anyway.
Q | So you’re saying the hotel sector is not as commodified as the airline sector? People still go out of their way for a specific hotel or brand experience?
A | Yes. I know other companies say the same thing and it becomes trite, but it’s true. The other important thing to us is we allow guests to rack points up, but where do you redeem them? We don’t have a lot of resorts where people can redeem. We’ve been looking for some good resort development projects so our loyalty program has that important option. Mexico, the Caribbean.
Q | Are those plans profit centers like they are for the airlines?
A | They should not be. We’re in the hotel business. If we wanted to make it a profit center, it would make it prohibitively expensive for our owners, meaning higher room rates.
Q | Now that the company is no longer tethered to the Carlson family, it’s no longer obligatory that it be headquartered in Minnesota. What are the odds you will relocate to a market closer to your owners or merely in a larger business center?
A | I am totally pro-Minneapolis. I’ve lived here a year and a half now. We love the state and the city. I had a group of Accenture people here this morning and we were talking about how many Fortune 500 companies are headquartered here. We’re in good company. I’m also saying to Jin Jiang that being in the middle of everything makes it easy to get anywhere in North America. And everything in this city works. It’s big enough, but it’s also small enough that I can get from the outskirts to downtown in 15 to 20 minutes. You can’t do that in L.A. or New York. I’m a strong proponent of keeping the headquarters here in Minneapolis. And the people are so damned nice.
Adam Platt is TCB’s executive editor.