The growth of Rezidor SAS since its formation in 1994 has been phenomenal. The main thrust thus far has been the Radisson SAS brand, which has quintupled its number of hotels in five years. Now other brands such as Park Inn and Missoni are set to follow suit, as Catherine Chetwynd finds out...
The extraordinary growth of what is now the Rezidor SAS group started at the end of 1994, when SAS Hotels signed an agreement with Carlson Hotels Worldwide and Radisson SAS Hotels & Resorts was born. SAS had 19 hotels and Carlson seven. "We thought we were extravagant in promising Carlson seven new hotels a year but we accumulated 25 in the first year. It was a huge surprise for us," says Kurt Ritter, chairman and CEO of Rezidor SAS Hospitality and champion of this growth.
The rest is history. In 2002 Rezidor signed an agreement with Carlson to become master franchisor in EMEA for three additional Carlson brands, Regent, Country Inn and Park Inn. Radisson SAS more than quintupled the number of hotels in the five years to 2005 and now mid-market brand Park Inn is showing signs of following suit, with plans for 100 in operation or under construction by the end of this year.
In addition, Kurt Ritter has been awarded numerous accolades, including being made an honorary member of the Clefs d'Or International, the International Union of Hotel Conci¸rges, and Associate Member of Cornell School of Hotel Administration's Hotel Society, an honour reserved for top executives and exceptional supporters of the society.
Ritter's enthusiasm and energy are boundless and that is mirrored throughout the company. "We have a lot of goodwill and that is because the people who work for the company are engaged with it and committed," he says. "We have had more or less the same people since we started." This attitude is embodied in Yes I Can, the programme that drives the company philosophy from top to bottom.
"We need the right people and it is up to the company to generate the enthusiasm. It is not a matter of arriving at work in the morning and shouting: "Get enthusiastic!" I am very enthusiastic and that filters down." After 30 years in the company and 16 as chairman and CEO, this is impressive. "The growth inspires me," he says.
Kurt Ritter admits that in the past, he may have overdone the commitment to work at some cost to his personal life. "I don't want to cry on your shoulder and say, Catherine, life has passed me by," he says. "But maybe I should have had a little more balance towards my private life because no woman would stick with me. But I have corrected that and it is not a cliche to say that I am a very happy man."
Evidence of this is that his wife, Laura, travels with him on business trips. "It is much easier like that. Otherwise, I might as well be single," he says. "I don't believe in being alone, that is what tears most relationships apart. Then you get lonely, you meet someone and you tell yourself it is only a flirtation...
"It is true that it is lonely at the top and there are certain things I cannot discuss with my team," he says. "I am happy to be able to bounce things off Laura and get an uncoloured answer. I am very thankful she has that knowledge of the company."
Ritter is clearly not the only one to appreciate her and at a Carlson conference in Las Vegas this year, Laura was presented with a gold Yes I Can pin with five diamonds, one for every five years.
Last year, Rezidor SAS announced its intention to launch a lifestyle brand, Missoni. This follows two unsuccessful attempts in the form of Malmaison (2000) and Cerruti (2003). The Malmaison project was in conjunction with Marylebone Warwick Balfour, which owned the real estate and bought the brand jointly with Rezidor. Says Ritter: "We have a very good relationship with MWB but with Malmaison, we did not seem to have the same interests. We wanted to grow internationally and rather fast and they wanted to remain British. So we decided our partnership was too good in other areas to spoil it for this project." As a result, MWB bought Rezidor's share of the brand.
The second project was to be with Cerruti but the man who introduced Kurt Ritter and Cerruti fell out with the head of the Cerruti family. "No one had thought to register the Cerruti name as hotels but old Cerruti was angry, so he registered the brand. It was tough for us," says Ritter.
Ritter's introduction to the Missoni family came through Matteo Thun, who designed the Radisson SAS in Frankfurt. "There is already a household line and all sorts of products we can use in the hotels," says Ritter. And three cities have been singled out for Missoni - Edinburgh, Kuwait and Dubai. "People have asked, why not start in Paris, Milan, Rome?" he says. "The answer is simple - if I wait for the right location in those cities, I could wait for two or three years. It is important to get the brand established and once you have a few and they are looking sexy and successful, someone in Paris or Milan will show an interest." Those properties have generated a lot of interest since they were announced, so Ritter's wisdom has already paid off.
Often, companies that attempt to grow at such a pace end up compromising their standards in order to do so. Not Rezidor. "Staff are an essential part of our delivering quality and although people move around a lot in the hotel industry, we hardly let anybody go," says Ritter. "We have 22,000 employees and if I need a new general manager and there are not 15 among the 22,000, then we have a Mentor Menti system, where someone in the company guides individuals to make sure they can become a general manager. We are somewhere between 95% and 100% self-sufficient and 85% of our GMs are home grown."
Ritter is also fierce about who joins the organisation. "There are only two ways to enter the company," he says. "One is as a young employee from hotel school or similar; the other is through takeovers. We always offer 100% of the staff the opportunity to stay, so it gets known in the market that when Rezidor takes over, you do not have to fear for your job."
He takes a dim view of organisations that take over a company and then lay off the top people. "I think this is quite arrogant. They argue that you cannot make change quickly with the old people at the top but we usually offer them a position in the group, doubling up with our department heads, so that our standards are introduced quickly."
Rezidor also spends a lot of money on training and runs courses at all levels, which are "like a washing machine programme", as Ritter puts it - well defined. "And we are more daring than other companies," he says. "We throw people in at the deep end, sink or swim - 99% of them swim. Young people know they do not have to wait for ever to get promoted."
The company also has a senior vice president of brands, Gordon McKinnon, to maintain consistency. "Every new project goes through him to ensure that it is the right property, place and brand," says Ritter. "He sees the architect's drawings and the reference hotel. That is how we secure consistency."
The final link in the quality chain is guest satisfaction forms. "We have a mystery shopper, a German company, that sends people to our hotels to push out the boundaries," he says. This system is overseen by the COO and regional directors but Kurt Ritter also gets involved and confesses he is uncompromising about those that fall below standard. "We use the Jack Welch system and the last 5% has to go, although that is not as brutal as it sounds. We measure staff satisfaction as well and have built up norms for that. If a GM is underperforming in all areas, we don't just ring up and say, you're fired, but they have to face the music."
Just as Ritter is not afraid to admit to mistakes in his personal life, he is equally honest and self-critical in business. "If you say, I think this is the right way to go and then you see you are wrong, you should change it immediately and say, I went wrong, rather than worrying about losing face. Losing money is bad, losing face does not harm you if you are a strong character."
Ritter is a strong character with sense of adventure and Rezidor has 17 projects in Russia and the CIS countries, with nine open and eight under construction, plus another 16 signed up. "Russia has 50 cities of a half-million inhabitants and 47 have no global brand - only St. Petersburg, Moscow and now Ekaterinburg has a Park Inn," he says. "If you compare that with Europe, in a city of 500,000 people, there is a Sheraton, a Marriott, they are all there. The first step towards industry is a hotel, it is part of the infrastructure of doing business. A brand is a promise."
The idea to expand across the CIS came from the group's experience in Kiev. "It took us seven years to build the Radisson there but we opened in September last year and it has been full since then and at very high rates," says Kurt Ritter, who puts his money where his mouth is. "Until now, funding has been a problem and we have co-funded all these projects with a stake of up to 20%," he says. "We need to show we have the guts to go in but once the hotel has a track record, it is very easy to sell our stake."
While developing the Park Inn brand, Ritter put Country Inns on hold. "Park Inn took off and within one month we had a 1,000-room property in Berlin and 17 in the same month in Sweden and I decided it was better to have critical mass in Park Inns first and then go for Country Inns," says Ritter. "It will probably be time to start developing them soon."
But Regent is a double-edged sword. "I did not want Regent because it is hard to make money there," he says. "But Carlson said - and rightly so - that it did not make sense for us to take four of its brands and not the fifth. So we swallowed that pill. We had a lot of problems with the first two. In Berlin, we took over the Four Seasons but we could not take over the guests. It was a nightmare and we had lousy results in the first six months. But one year later, the stars are starting to come back and we have a Michelin starred restaurant. And Zagreb did not need a Regent, there was already a Sheraton and a Westin, and the market was small but that has changed and there are more flights and more tourists coming into the city," he says. "Both hotels are coming on nicely."
Kurt Ritter may be an astute businessman but he also takes a broader view and was one of the founding members of the International Business Leadership Forum, set up some 12 years ago. "It is the leading group in the industry for environmental issues and has drawn up a code of conduct," he says. "In the beginning, it was strange because members wanted to be elitist and I said I thought their thinking was wrong. If you want a better world and Fairmont, Dorint, Accor join, it gives a better world."
Kurt Ritter is 60 next year. He is not talking about retirement but he is planning ahead and has bought a cottage in Burgundy. He was nursing evidence of DIY activity when we spoke: "A friend of mine, Brian Langton from Holiday Inn, told me: it is important to buy something now because on D-Day, people who have jobs like ours do not know where to go. You have a big job and big responsibility and then suddenly, you don't come into the office. So I bought the house in France. "I have asked the Board to tell me in good time when they want me to go and they said to stay on as long as I can," he said, preparing to leave his office in Brussels for Singapore the next day; Dubai two days later; and to Shanghai and twice to the US in May - with Laura, of course. No signs of retirement yet then.
www.rezidorsas.com
