Business travel has picked up in the first quarter of 2013, but travelers and their employers are still looking for a bargain prompting budget chains to redesign in an attempt to offer modern rooms at a low cost.
When Red Roof Inn wanted to upgrade its rooms, the easy part was designing them: faux-wood floors; granite countertops and vessel sinks in the bathrooms; flat-screen televisions; and lots of outlets for laptops and smartphones.
The hard part “was getting our guests to experience our NextGen rooms,” said Andrew Alexander, president of the Columbus-based chain celebrating its 40th anniversary this year. It has 345 inns in 38 states, did better than other economy-class hotels during the recession, and is poised to expand.
“We can and did offer special deals at our properties, and then we said, ‘Why not take the room to them?”” Alexander said.
So Red Roof installed a model of a NextGen room in a truck trailer that will tour the country. It made a stop at the Ohio State University spring football game in Cincinnati on Saturday. It also is scheduled to appear at the Toyota Grand Prix in Long Beach, Calif., this weekend, and the Memorial Tournament in Dublin from May 27 to June 2.
Alexander joked that a Red Roof room gets more miles to the gallon than the competition.
The competition is always fierce among the economy-class hotel chains, a market segment that has been slower to recover from the recession than other hotel sectors.
“The lower end of the spectrum has not rebounded as dramatically as the upper end,” said Rick Swig, president of RSBA & Associates, a San Francisco hotel consulting firm.
“And that’s because corporate business travel has rebounded, but when people are spending their own money, for vacations, they’re still not spending like they used to.”
The occupancy rate at economy hotels was 57 percent in 2007 and dropped to 49.1 percent in 2009, according to Smith Travel Research.
It has slowly been on the rise since and reached 54.3 percent in 2012.
Red Roof’s occupancy rate was a little better, around 60 percent in 2012, Alexander said. The average room rate was $55, which is higher than the segment average of $52.50.
“Our recovery has been at least as fast as the mid-market hotels,” Alexander said.
That is because his hotels attract more business travelers than other economy hotels, he said. ” Our mix is about 50-50.” He said competitors generally attract 80 percent leisure travelers.
The goal of Red Roof’s NextGen room is to build on its appeal to business travelers by offering them the amenities they need at prices lower than what the mid-market hotels charge.
“They’re really going to benefit if they can cross-pollinate between segments and reach even more into the mid-market segment and draw guests from the Holiday Inn Express and Fairfield Inn,” said Eric Belfrage, a hotel specialist with commercial real-estate firm CB Richard Ellis in Columbus.
“And Red Roof certainly has a history of doing this.”
The Red Roof Inn near the Greater Columbus Convention Center was the first to undergo the NextGen conversion, in 2010. About 150 others have been upgraded, and the remaining hotels in the chain are expected to be renovated in the next three years, Alexander said.
The most-visible change is the floor, which is made of wood-look vinyl.
“Guests love that wood look,” Alexander said. “And it’s cleaner. You can see dirt and clean it, and it doesn’t retain the smells and stains you see in carpets.”
Flat-screen televisions are now standard in the rooms.
“That’s a first in our market segment,” Alexander said.
The electrical outlets on nightstands resulted from customer comments during renovation of the Downtown Columbus Red Roof.
“You have to listen to your customers,” Alexander said. “It’s a simple thing but turned out to be one of the most important for our guests.”
Swig believes the upgrades will strengthen Red Roof’s brand.
“Whenever a product is better, that’s when the magic happens,” he said. “As long as they can get the word out, they’ll do better.”
Red Roof plans to add about 150 new hotels in the next three years, all of which will be built to the NextGen standards. About half the chain’s hotels are owned by franchisees.
The NextGen truck tour will cost Red Roof about $180,000, money that Alexander believes is well spent if it helps get the word out.
“We need customers, especially the midscale customers who dismissed Red Roof before as an option, to say ‘Why not … it’s better-priced and a better value?”” he said.
(c)2013 The Columbus Dispatch (Columbus, Ohio). Distributed by MCT Information Services.
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Photo credit: A rendering of the NextGen rooms that Red Roof Inn is hoping will attract business travelers. Red Roof Inn