Thorsten Kirschke, president of Carlson Hotels, Americas and COO of Carlson Hotels

Thorsten Kirschke, president of Carlson Hotels, Americas and COO of Carlson Hotels, is the man behind the transformation of Radisson. He plans to bring the company’s global brand standards to Radisson hotels in the United States through a radical transformation plan launched to great fanfare in 2010. We chatted with Kirschke recently to get a progress report on the strategy.

Why is the Radisson brand undergoing a renaissance in the U.S.?
We feel a need for Radisson to become more globally consistent than it is in the present. In Europe, the Radisson brand is positioned, probably, best. We have fantastic new hotels in Asia Pacific and many more coming in the development pipeline. It’s in North America, in the United States, where the brand originated that we see the challenge. Our home grounds have lost a little bit of their cache and the inventory is, by definition, the oldest and some properties are in need of upgrading. We need to fulfill our responsibility as brand owners to bring our home field back into shape.

What’s the financial commitment, and where will the money come from?
We put together a plan to lift the North American portfolio over the next few years and committed up to $1.5 billion in the U.S. to do that. That number seems high, but it includes commitments from our partners as well as Carlson. About one-third of the money is expected to be contributed by our partners, the rest from Carlson. A year into that plan we have a commitment of more than $500 million dollars to be deployed against the transformation plan for Radisson in the U.S.

What’s the big picture?
We’re terminating the bottom performing properties, improving the core through product improvement plans (PIPs) and lifting the brand by developing Radisson Blu upper upscale flagship properties in at least five key cities by 2015. Because of [these moves] Radisson’s overall RevPAR will improve.

What do you mean “terminating?”
We’ve taken the bottom feeders out of the brand and terminated those hotels because they were dragging down the overall perception more than we could tolerate. They had an unwillingness or inability to reach our standards. We made hard decisions and separated or parted ways with 12% [of the system] last year. The forecast for this year about the same ratio. Then, we’ll have reached a healthy level of pruning and the numbers won’t go down much more.

What do you mean “improving the core?”
While we have a few poor performing hotels in our portfolio, we have others that need upgrading. We’ve sent operations and design technicians to each of the hotels to help determine what upgrades are needed to come up to par with our new brand standards so we can drive a globally consistent product. We have a lot of product improvement plans in place.

And, how will you “lift the brand?”
We’re adding premium hotels to the top of the brand. Our flagship brand tier will be Radisson Blu, which we adapted from Europe where the brand has a premium perception and recognition. To benefit from the global recognition the European portfolio has we’re giving that designation to our flagship properties in the U.S. They’ll be representing the upper upscale.

The U.S. flagship Radisson Blu opens in Chicago in October.

The first will go live at the end of October—the Radisson Blu Aqua Hotel, Chicago. It’s part of a multi-use development near Millennium Park. We have 334 guestrooms on 18 floors of an 81-story tower. The next Radisson Blu is scheduled for the Mall of America [near Minneapolis] and will open in March 2013. We’re in discussions for about six or so more, none of yet to be spoken about in detail.

Radisson Blu won’t be franchised in the foreseeable future in North America because we have a lot of investment going into the brand, and we want to be sure we can control the return on that investment.

Are Radisson hotels typically franchised?
In North America the majority of Radisson hotels are franchised, about 90%, with 10% owned and managed by Carlson. Within our strategy of transformation, we see a greater need to have a broader number managed by us; only then can we own and control the destiny of the brand.

How will Radisson go about improving ownership/management of the chain?
We have approached some of our partners and suggested that they give us the property to manage on their behalf where we feel we can improve their bottom line profits.