Radisson Hotel Group, one of the world’s leading and most active hotel chains, has had an exceptionally strong decade of expansion, and the Covid-19 pandemic has not stood in the way.
“Despite lower demand in most markets, we continue our hotel expansions based on the five-year, $250m transformation plan we initiated in 2018,” says Chema Basterrechea, president for Europe, the Middle East and Africa (EMEA) at Radisson Hotel Group. “Since the start of the pandemic, we have signed some 250 new hotels across the world. In 2021 alone, we signed more than 50 hotels in EMEA and oversaw 30 openings.”
By 2025, Radisson Hotel Group aims to have 115,000 rooms, up from its current portfolio of 98,000. In EMEA region alone, it operates across almost 80 countries.
“We are growing quite heavily in Italy, moving from three hotels to almost 20 in less than three years,” says Basterrechea. “We are also growing fast in the UK, Germany, Austria and Switzerland.”
Impressive growth beyond western Europe
Naturally, the first wave of Covid-19 hampered Radisson Hotel Group’s expansions since, across most countries, it was illegal to undertake any construction activity. After this minor delay, however, building work picked up again fast.
It is noteworthy that Radisson Hotel Group did not tone down its expansion in emerging markets, many of which are fragile economies that are very dependent on tourism. “In Africa we are one of the fastest-growing companies, as well as in Asia-Pacific, where we have an ambitious plan across different geographies,” explains Basterrechea. Besides that, in growth markets like China, Radisson Hotel Group together with its strategic development partners has a particularly ambitious agenda to operate around 1,000 hotels over the next four years (or by end of 2025).
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In recent years, the group has significantly expanded across the Middle East and North Africa region. “We have been especially active in Saudi Arabia, where we have launched dozens of hotels as we position ourselves around the country’s 2030 Vision to [open up and diversify its economy],” says Basterrechea.
Over the next three years, the group plans to open another 20 hotels across Saudi Arabia, and by 2026 it hopes to boost its investment portfolio in the country to about 50% of its total investments in the Middle East.
Covid’s impact on Radisson Hotel Group
The aforementioned investments are all the more impressive considering Covid’s ongoing impact on tourism demand. For Radisson Hotel Group, 2021 was only slightly better than 2020, which, of course, fell short of pre-Covid levels.
More specifically, the first half of 2021 was “generally quite low-performing across all EMEA geographies, maybe with the exception of the United Arab Emirates and Russia,” says Basterrechea. However, thanks to the fast-moving vaccination process, the second half of the year saw marked acceleration.
Unfortunately, the Omicron variant reimposed a slowdown in some markets, especially the UK, Germany, the Czech Republic, the Netherlands and much of eastern Europe. This is bringing a lot of uncertainty to the tourism market for the first quarter of 2022. While Basterrechea remains “quite optimistic about 2022”, he does not expect the figures to jump back to 2019 levels.
“We have been lucky not to have any of our existing hotels fail or go bankrupt during this Covid time,” he adds. “Our EMEA hotels were able to access financial support. Tourism will always be a winning sector, so we fully believe in the recovery. In the meantime, it has created opportunities: new technologies and a higher degree of professionalism to manage crisis situations.”
Positive side-effects of Covid-19
The Covid-19 pandemic has provided a paradigm shift in how global hoteliers operate their business.
“Something that will remain at least for many, many years are all the health and safety standards and requirements, the expectations we put in place to protect guests and our employees,” says Basterrechea. He also thinks that increased flexibility surrounding bookings is here to stay.
Today, the group continues to monitor the ever-changing landscape of travel regulation, while also introducing a slew of new technologies.
“Tech wise, Covid made us look for ways to reduce some of the physical interaction between our employees and clients, but not the emotional contact,” says Basterrechea. “So we accelerated a lot of investments in artificial intelligence [AI], not least due to labour shortages.” Radisson Hotel Group is using AI to eliminate low-value-added activities, such as administrative tasks, so it can concentrate its human capital on higher-value-added activities.
How can governments better support the industry?
Basterrechea would like governments across the EMEA region to work more closely with the private sector, thereby creating more concrete plans for their tourism sectors and avoiding heavy-handed policies.
“Across the EU and elsewhere they need to generate more transparency and standardisation around travel rules,” he says. “I still need to fill in a totally different traveller locator form everywhere I go, despite the info required being the same. Would it be so hard to make things more uniform – maybe even through an app?”
Governments also need to communicate better, not least by being more careful when it comes to generating unnecessary fear. “I am not saying they should hide info, but give precise info,” says Basterrechea. “One day they are saying something and then the next day they modify it. This has an impact not only in the stock market but also on the willingness of people to travel.”
He also bemoans insufficient financial support for small and medium-sized companies across the tourism sector. In particular, he thinks they would benefit from more investment in tech and AI solutions that would help them cut costs. Last but not least, Basterrechea implores governments not to forget just how important tourism is for education, let alone the economy, when they are ‘building back better’ from the impact of the pandemic.