Skift Take
Nordic Choice Hotels has rebranded to Strawberry as it tries to break free of just being a franchisor of Choice Hotels. CEO Torgeir Silseth is striving to find a whitespace for the private company amid the global giants. – Sean O’Neill
Nordic Choice Hotels rebranded in May to Strawberry. It was a bold move for the largest branded hotel company in Scandinavia.
- Wholesale name changes are rare because they toss aside brand equity. (Nordic Choice was born in 1990.)
- Re-brandings are also costly because you have to re-label physical infrastructure and run a blitz of ads to let people know about your new identity. Strawberry owns and runs over 210 hotels in the Nordics, Finland, and the Baltics.
So what’s the strategy?
- CEO Torgeir Silseth told me on Wednesday — when the private company reported its latest results — that his company needed a new brand to reflect its expanded ambition beyond just providing hotel stays.
- The Oslo-based company — fully owned by billionaire Petter Stordalen’s Strawberry Group — is a franchisor of Choice Hotels. But it increasingly wants to be more than that.
I asked the CEO what he wants to see Strawberry become by 2030.
- “By 2030, we’ll be the preferred place to go for booking travel and experiences,” Silseth said.
- “Strawberry will be where you can book your airline ticket, rent a luxury vacation rental or a boat, book experiences like a spa or a concert, or rent a car,” he said. “We want our platform to give you the whole shebang of experiences and exploration.”
- The group already operates 120 restaurants, 20 spas, gyms, meeting places, and arenas.
- To offer air travel booking, Strawberry announced in June that it would establish a joint venture with Norwegian Airlines to provide services to the members of the companies’ respective loyalty programs. The venture will create a common loyalty currency. Members who earn points for hotel stays can redeem them to book flights, or vice versa.
- It also controls a tour operator business, Nordic Leisure Travel Group, offering package and chartered trips.
- In the past few years, it has been adding luxury independent hotels, such as Petter Stordalen’s Sommerro, and his soon-to-open sister property, Villa Inkognito (see Skift’s story).
Why expand beyond the core competency of hotels? Silseth made the case this way:
- “Frequency [of customer interaction]is important. The average Nordic person stays in a regional hotel perhaps only two nights a year, excluding road warriors. So if you only stay a limited number of nights a year, why bother to engage with a loyalty program? By offering more services, we’ll become more relevant.”
- “We also wanted a brand that better captures our values. Yes, there’s a big market that just wants a bed, but more and more people are cautious about the brand they choose, asking if the brand is environmentally conscious, if it treats its people well, etc.”
The company’s core hotel business has changed since a few years ago.
- Nordic Choice Hotels has historically used lease contracts to operate hotels in the Nordics, but the pandemic revealed this was not a viable long-term model. When no revenue was coming in, it still had to pay its landlords. Without government help and some asset sales, it would have sunk. So Strawberry is now shifting to more management contracts and franchise agreements to share risk. “It’s less capital intensive,” Silseth said.
- Strawberry has renegotiated its contract with Choice with a long-term plan of reducing some of Choice’s midmarket brands like Quality and Clarion.
- It will keep and grow the Comfort business.
- In a couple of years, it plans to launch in the Nordics a new mid-market brand under the Strawberry umbrella.
- Strawberry has changed its tech strategy, too. Pre-pandemic, the company ran two tech subsidiaries, Cenium and Berry, stitching together software on its own. Post-pandemic, it has adopted Mews as a property management system, plugging 34 other solutions into it.
- “We’re buckling up for some heavy I.T. investment,” Silseth said.
Strawberry is privately held while its nearest rival, Stockholm-based Scandic Hotels, is public. What are the pros and cons of being private?
- “We were listed between 1997 and 2003 and, of course, as a capital source, it was attractive and had its advantages,” Silseth said. “But I also remember the hunt for good news and the hunt for some extra dollars when each quarter should be reported. That’s the sort of bad thing about it.”
- “We had a record year last year, and we expect to have the same or better in 2023,” Silseth said.
The global brands like Marriott, Hilton, Hyatt, IHG, Accor, Choice, Wyndham, and Premier Inn all tell investors they will sweep up and convert tens of thousands of independent properties in Europe over the next decade. Is that likely?
- “The big birds hope a lot of independent hotels will crawl into their systems, but, you know, the cost of distribution has come down to a level where there are alternatives,” Silseth said. “You really have to have a very, very, very strong brand to defend the fee you take for a franchise. If you don’t have a quite strong platform, I don’t think you are as attractive as they may believe.”
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This article first appeared on skift.com
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