Red Roof Joins the Soft Brand Hotel Movement

Like many other hotel companies before it, including Hilton, Marriott, Hyatt, and Wyndham, Red Roof is launching its own soft brand collection. Called The Red Collection, this grouping of independent hotels already has its first member: The St. Clair Hotel in downtown Chicago, which is set to open next year.

Traditionally, soft brands have been created to welcome independent hotels that operate within the upscale space, but increasingly, more hotel companies have launched collections that appeal more to midscale and upper midscale hotels instead. Examples include Hilton’s new Tapestry Collection and Wyndham’s new Trademark Collection.

With The Red Collection, Red Roof is also looking to attract “upscale economy to midscale” hotels that are “hyper-local.” Hotels that join the collection, such as The St. Clair, do so primarily to gain access to Red Roof’s marketing and distribution channels.

But Red Roof, unlike a Wyndham or a Hilton, is much smaller with only 500 hotels in the U.S. The company is also in the process of expanding its portfolio globally to Brazil, Canada, Thailand and Japan.

“There is already core equity in Red Roof,” Red Rood president Andrew Alexander said in a statement. “Building on our strong brand base, this is a perfect time to grow our portfolio with our first soft brand, The Red Collection. In today’s environment, soft brands allow companies to enter new channels, expand business models and meet specific demands of the new traveler. The Red Collection will give our existing guests unique, more upscale value options while enticing new guests to experience our brand in a new way in the hearts of cities they love.”

Red Roof also said it hopes to attract existing and new franchisees to its new soft brand. “The Red Collection gives existing and new franchisees an opportunity to diversify and invest in unique city hotels with the support of a strong, respected brand and management team,” chief development officer Phil Hugh said in a statement.

The Prospects for This New Soft Brand

In July, Alexander hinted at the possibility of Red Roof launching a soft brand, telling Skift, “I do think it will be something of interest because it is coming from an economy brand.”

He also said that Red Roof is a true economy and midscale brand expert in comparison to its peers, giving the company an advantage. “What’s interesting to me is that all the major brands have launched what they are saying are economy-level products. There was Moxy [by Marriott], then Tru [by Hilton], and they are acting as if they are economy-level products but putting an ADR [average daily rate] of $100 to $120.

‘That’s a different economy segment from the one we work in and what millions of customers look to with regard to true value as opposed to a $120 hotel room. The average ADR is in the mid-60s for us.”

Alexander added, “People are wanting to be in the segment. People are pushing brands that are down segment and not up-segment. That’s been building up for a long time, this push into the midscale space.”

Alexander is right: In addition to launching new soft brands, the major hotel companies have demonstrated their increased interest in launching midscale brands as well, including IHG’s Avid Hotels and even Trump Hotels’ new American Idea hotel brand.

In September, Red Roof also revamped its loyalty program, Redicard, to include the ability for members to use their points to purchase gift cards or consumer products.

It’s clear that with the Red Collection, Alexander believes he can further compete with the bigger brands in the midscale space by bringing more independent hotels into Red Roof’s fold. But the bigger question remains: Is it worth it for these independents to be a part of the Red Collection?

Given Red Roof’s smaller network of existing hotels and smaller loyalty membership numbers — 2 million, Alexander noted in July — it’s not entirely clear whether independent hotels will benefit from that kind of scale or reach. What is clear is that no matter how large or small they are, hotel companies aren’t going to stop launching soft brand collections anytime soon.