HB ON THE SCENE: Red Roof Inn Expands to Thailand

HOLLYWOOD, FL—Red Roof Inn plans to continue its international expansion by entering Thailand, according to executives at the 2015 Red Roof Brand Conference, held here at Diplomat Resort & Spa Hollywood, Curio Collection by Hilton.

This expansion follows the opening of the brand’s first international property in Brazil earlier this month, the result of a partnership with Brazil-based Nobile Hoteis. The partnership plans 35 to 40 properties across the country over the next 25 years. Red Roof has also signed a 20-year deal with developer Glenn Squires to build and brand 40 hotels across Canada with Pacrim Hospitality Services Inc. The first four will be open by 2016.

Similarly, Red Roof has opted to partner with Thailand-based Paragon Hotels Limited, a part of Paragon Partners. Paragon Hotels will break ground on the first property in 2016, and plans to open a series of new-build hotels across Thailand between 2017 and 2020, all in major tourist locations.

“Canada, Brazil and Thailand are all huge tourism growth markets, but for us, it’s about great partnerships,” said Phil Hugh, chief development officer, Red Roof. “Pacrim, Nobile and Paragon are really wonderful owners that understand what the hospitality business is about and they are strategic in their thought.”

Andrew Alexander, president, Red Roof, pointed to the untapped potential in these markets—specifically Thailand and Brazil. “There are a lot of upscale economy players in the United States. We’re going to be standing alone in this segment in countries where the middle class is growing at an astounding rate. It’s just the perfect opportunity,” he told Hotel Business. “Everyone is focused on China and India. There’s huge opportunity there, but everyone is focused there. These are two opportunities for us to grow in a very uncrowded marketplace.”

According to the brand, tourism contributes 9% to the country’s GDP and there are over 148 million domestic travel-related trips forecasted for Thailand travelers in 2015. Red Roof and Paragon Hotels plan to target both leisure and business international and domestic travelers.

Paragon Hotels will deploy Red Roofs’ NexGen concept to ensure that exterior and interior features are immediately recognizable and distinguishable from other hotels in the country. This first set of hotels will have standard Red Roof signage, roofing and room topography. However, Hugh noted, the brand is open to being flexible to accommodate cultural needs. “Our design and construction team and operations team are meeting with Paragon to review all of our brand standards to make sure they make sense,” he said. “That’s what’s great about this brand—we won’t work in a bubble. We’ll still protect the brand, but be user-friendly in this part of the world.”

Paragon Hotels hopes to eventually expand to other Asian markets, including Myanmar, Laos, Cambodia and Bagladesh. Hugh noted that in foreign markets, owners can expect the same level of services as U.S. owners. “Operationally, we’ll support these franchisees in Thailand the same way we do in Columbus, OH. It’s high touch,” he said.

Alexander added, “It’s a strategy very few can take, and here’s why: If you’re public, our strategy is not the most profitable right off the bat.” He noted that once the brand scales up to around 30, servicing these far off locations becomes more efficient. “But when you’re private and have an owner committed to the long-term strategy, you don’t just give away the farm for the immediate profit. Just like we grew in the U.S., we’re going to grow with an eye toward quality and consistency of product and service,” he said.