Red Lion Primes for Growth

With its corporate house in order, Red Lion Hotels is ready to grow quickly. The Washington-based chain formerly known as WestCoast Hospitality wants to double the number of markets in which it has properties from about 50 now to more than 100 in the next five years.

According to Executive VP-Operations John Taffin, the chain plans to plant the flag in a number of markets, particularly in the West and Southwest, that it lost when Doubletree bought the brand in the mid-1990s and converted many of the Red Lion properties. The company will then employ a classic spoke-and-hub approach, with franchisees filling in around the market flagship hotels. From there, the chain hopes to move eastward.

“In many locations, Red Lion can be a great alternative where there's saturation among the other three- and four-star brands,” says Taffin. While the company will make selective investments in properties, Taffin says it won't invest in new development. “New construction is expensive and in many markets the barriers to entry make it difficult. Also, conversions allow us to penetrate an area quickly.”

Taffin views likely conversion candidates as properties in the three- to four-star range or have the potential to reach that level. “We're flexible, however, in the architecture and design of properties, as long as they meet our other criteria.”

Red Lion has nearly completed a chainwide guestroom renovation program. Three properties that completed room renovations in late 2005 have seen significant improvements in operating performance: In the first quarter of ‘06, RevPAR at those hotels rose 28 percent on a 19-percent hike in ADR and a five-percentage point lift in occupancy.

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