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Carlson Hotels Worldwide strives for greatness

What exactly does it take to survive for 60 years? It takes flexibility and the ability to change - and not just changing to survive, but thriving because of change. There's probably no better example of this than Minneapolis-based Carlson Cos., which celebrated its 60th year of operation in March at its CC60 Summit in Las Vegas.

"One of the things that is most important to understand about our organization is that we have had the ability to adapt and to change as market conditions have changed and, clearly, the environments that we compete in - hotels, resturaunts and even the cruising industry - have seen dramatic change," says Curtis Nelson, president and CEO of Carlson Hospitality Worldwide. "Change creates opportunity, and it is clearly creating opportunity for us."

Although Carlson Hospitality and Carlson Hotels have not been around the entire time - the first hotel, a Radisson, was purchased in the '60s - they too have changed with the times. Part of the change has taken place within Carlson Hotels' organizational structure.

"A lot of things that we have done over the past 24 to 36 months were sort of getting ready to get ready," Nelson says. "We had to put the right organization structure in place, then we had to enhance some of our talent. Eric Danziger is a good example of somebody that we wanted to bring into the equation."

Danziger joined Starwood Lodging as president and CEO in 1996, but he made the switch to president of Carlson Hotels Worldwide in February. "Obviously what I set out to do at Starwood was certainly accomplished in terms of growth and creating a culture. Who in the world knew that it would be done that fast?" asks Danziger, adding that after he accomplished what he had set out to do, he began searching for what he wanted to do next.

Then on Dec. 16, Danziger was asked to join Nelson, Marilyn Carlson Nelson and Curtis Carlson for dinner. "It was almost one of those fate stories that occurs," Danziger continues. "I immediately had a great kinship with Curtis, Marilyn and Curt Carlson and said, "My God, this is how I want to end my career. These are fabulous brands, fabulous people, great family and what I do is exactly what this company needs, which is to take it to its next level of success.'"

Later on, after Nelson read reports about Starwood buying Westin and ITT, he asked Danziger if he was ready to try something new, says Danziger, whose plans for the hotel group is "to double its size in the next four years or so."

By year-end 2000, Danziger plans to have around 400 new hotels across the three groups, and "I believe I will further help the presidents of the brands to maximize their teams' performance within their brands, because my belief is the best way I know how to grow a company is to do a really sterling job on every hotel. That causes growth as opposed to running out and writing checks to buy hotels."

Carlson Hotels will further add to its hotels by using other products within Carlson Cos. The primary product the hotels are working with now is the Carlson restaurants - TGI Friday's, AquaKnox and Star Canyon.

"We have not only the crossover of synergistic benefits, but we really can totally maximize the equation, not only for ourselves as business people, but also for our customers because we can greatly advantage our value proposition if we can take steps of the process out or if we can bundle various products and services that come from across our enterprise," Nelson says.

Each of Carlson Hotels' brands - Radisson, Country Inns & Suites and Regent International Hotels and Resorts - have its own strategy for growing its own product. But generally speaking, Danziger says of the 400 hotels he expects to have by year-end 2000, 50% will be Radissons, 45% Country Inns & Suites and 5% Regents. "If you just take a rough guess, I'm going to assume along the lines of 85% acquisitions and 15% new development opportunities, and that changes by brand," he adds.

For Carlson's full-service brand of hotels, Brian Stage, president and CEO of Radisson Hotels Worldwide, says that the biggest area of opportunity is to place Radissons in the center city markets with the highest cost of entry, "where franchising has not taken us," he adds. "The way that we are approaching that is to bring our money with us. We have been reluctant to do a significant amount of investment on our own because in its modern configuration, we are not a real estate company. Having said that, we recognize that the brand's best interest will be served if we are able to put our brand into those critical markets."

Growth is also expected to increase in international markets, says Stage. "In Europe, there is tremendous opportunity because only about 30% of the hotels in Europe are affiliated with brands - 75% in the United States," he adds. "That 70% of unaffiliated hotels increasingly recognizes the need to be affiliated with a major international brand."

Country Inns & Suites, Carlson's limited-service brand, started about eight years ago but was underdeveloped for many years, says Paul Kirwin, president of Country Inns & Suites by Carlson, but this too is changing. "It was essentially a new concept idea that was developed by a team of people, and initially we developed it exclusively by franchising," he says. "That in some ways has influenced the pace of the development. What was learned is that if you go out and build some of your own company-owned ones, then more franchisees respond because of the brand presence, so we're doing that now."

Like Radisson, Country Inns intends to grow its presence internationally. "We're just on the brink of establishing a European office that would be in Germany," Kirwin adds. "We have three hotels today in Germany under the flag that we manage, and our company in Europe will largely pursue joint ventures, management contracts and lease contracts."

Kirwin expects Country Inns to have somewhere between 160 and 175 hotels by the end of the year, and it is in pursuit of a 300-hotel goal by 2000. "Our strategies for growth are: No. 1, we're doing three company-owned units in the Northeast and Northwest, and that will spur more growth in those regions. No. 2, we've significantly expanded our development staff so we now have national coverage. Thirdly, we are investigating a plan whereby we would actually provide finance incentive money to developers of large Country Inns in certain strategic locations," he adds.

Last fall, Carlson purchased a luxury brand, Regent International, from the Four Seasons Co. It had a total of nine hotels in its portfolio, but the Carlson acquisition has had a positive effect on that, says Paul Hanley, president of Regent.

"Since acquiring Regent last fall, we have announced two new Regents that are currently under construction," he says. "In the next few weeks, we will announce another one. So within 100 days of concluding our acquisition, we have announced three, and perhaps four, new Regent hotels."

Regent intends to grow in North, Central and South America as well as in Europe and Asia, says Hanley, adding that "the great majority of our new hotels will probably be new construction, although we are looking at the acquisition and repositioning of some hotels."

Although all the talk is about future quantitative growth, Carlson is focused more on quality, says Danziger. "If your goal is to be a really big company, you may not be a great company," he adds. "We're focused on being a really great company; then whatever size that takes us to be, it takes us to be."

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