Red Roof Builds an AI-Driven Website: How It Wins Search Next

Glenn: [00:00:00] Everybody at your hospitality friend Glenn. And I’m excited because I got Zach Gharib with me. Of course, he’s the president of Red Roof, and I got to speak to him three months ago at the Hunter Hotel Investment Conference. And now that we’re back at NYU IHIF, a lot of news has been happening. I figured I’d follow up with you. First of all, congratulations getting into Canada. Thank you, thank you. That’s really awesome.

Zack: [00:00:21] I’m excited. It’s very strategic for us. You know, I mean, Canada is our neighbor. You would think we would be there for a long time. I know, but you know, we’re now we’re now there. So but you know, we have a lot of brand recognition. People know Canadians know red roof. They passed by red roofs. They stayed at Red roof. So that’s really helpful. But also when you look at the economics of the Canada hotel industry, right? Last year they broke records. It was the highest record on. It was the highest year on record when it comes to average rate over $200. Average over $128. I mean, average rate 200 compared to 160 in the US. That’s incredible. That’s really incredible.

Glenn: [00:00:58] So so that’s loonie or 200.

Zack: [00:01:01] Yeah. Yeah. 200. But look, I mean, it’s they’re doing great. Canadian’s shifted. A lot of them shifted their travel.

Glenn: [00:01:08] Yeah.

Zack: [00:01:09] He was in Canada South.

Glenn: [00:01:10] They just decided to give the money to their to their own people. And where you are in the Vancouver area with this first one is really that that whole region is kind of exploding.

Zack: [00:01:18] It’s amazing. I mean, that’s when you take you take care of overall is great. Vancouver is amazing. People love to go to Vancouver. Canadians travel there, us travelers travel there, a lot of people from Asia. So it’s a great market. We are in the airport market. And so we partnered with Richmond Airport Enterprise, a local guys I know the Vancouver market, they’ve operated in Canada for a long time. And they bring in in 168 room, fully remodeled inside and out, beautiful finishes. I think every guest that’s going to stay there, I’m confident they’re going to have a great experience. So Canada here we are.

Glenn: [00:01:52] All right. So what was tougher.

Zack: [00:01:53] Can I can I say one thing though. Yeah. This is one of my favorite conferences. You know why. Yeah. Why. Because this is the first time I met you here. Oh, yeah. Two years ago. It was my first interview ever. And that’s when I met you here two years ago. That’s awesome. Two years ago.

Glenn: [00:02:03] And apparently that went okay because he’s still here today.

Zack: [00:02:06] I still come back making moves.

Glenn: [00:02:07] But listen, it’s been it’s been a great two years watching you and watching the development of the company move forward and all of that. But getting this deal in Canada, was it harder getting the deal done or making sure you learned enough about hockey so you could talk to them and get the deal done?

Zack: [00:02:22] You know, believe it or not, I go to hockey games in Columbus, Ohio. Oh that’s good. So so I’ve been I’ve been following hockey overall. But now that we’re there, we’re going to watch Canadian hockey too. But really I think Canada is just a natural, exciting thing for us.

Glenn: [00:02:36] It certainly is. And honestly, when I got when I got the news that they were moving to Canada, I was just like, what? Yeah, just now. So it’s great to see.

Zack: [00:02:43] We were ready. Timing is right. The market is right. And this is right. That’s the right thing.

Glenn: [00:02:47] Yeah. And the great thing is, because you haven’t been there, there’s so much wide open opportunity in a very healthy, vibrant market up there. But you’ve been seeing great gains as well. You’ve been adding new hotels to the portfolio, of course, but you’ve been seeing per property operational gains as well throughout the first quarter. Yeah.

Zack: [00:03:05] Oh, absolutely. I mean, even even until yesterday, right. We’re June 1st. Yeah. So even may we you know, we are better from last year. Q1 was really good. April was amazing. And May is also very good. So the Q1 and the year to date performance has been good. We’ve been gaining market share by Overindexing in occupancy and rapper revenue year over year. Which co-star has forecasted economy segment to be down right?

Glenn: [00:03:32] That was going to be my next question to you because it seems to me that that’s not the case. People are, I think, moving more to your types of properties because things are just starting to cost so darn much in other parts of their life.

Zack: [00:03:45] Well, I mean, we’re up over 1.1% versus the forecast was negative right from costar. So, but but we’re gaining market share at a very strong rate also. So I mean, we’re doing a lot we’ve done a lot of things in the company that’s driving that performance. But I think there’s a shift. But when you look at.

Glenn: [00:04:03] Like part of that, though, is guest satisfaction. And those scores have been going up as well. Was that a shift.

Zack: [00:04:09] No no no. I mean you actually that’s exactly what I was going to refer. So our our our quality scores are up 2% year over year. I mean two points your two full points year over year, which is we haven’t seen that happen in a long time. That’s driven by our MPs going up. Our social scores are going up. So that’s all contributing right.

Glenn: [00:04:29] I’ll say one other thing that’s contributing is that since you took the reins about two years ago, you’ve been putting a lot of systems in place which help your your franchisees find more success. So I think part of that is we’re we’re seeing the fruition of all the hard work you and your team.

Zack: [00:04:46] Without a doubt, the team has done a great job in all of this. There’s been a lot of initiatives. I mean, that’s why like our app, for example, continues to show we release our guest app. We released it last, last Q4 of last year, and we’re still seeing 55% or over in in year over year performance. So that’s really amazing. Our loyalty program enrollments are up 29%. Our app downloads 54,000 downloads just in Q1 and April and May. And so for us, that’s, that’s a great number. So we’re seeing a lot of really great movement. Our KPIs look strong. And hopefully, hopefully that momentum.

Glenn: [00:05:23] And the fact is that is a great that is a great number because they don’t have 10,000 brands like some of those other hotel companies out there. So you’ve really cultivated a very loyal and now expanding audience as well, which I’d love to see.

Zack: [00:05:38] Without a doubt. I mean, we’re all on top of that. I mean, we’re overhauling our entire loyalty program because I think we can even do better from a loyalty by creating more tiers, expand into more excursions and rewards, more levels, more levels. Yeah, because.

Glenn: [00:05:53] It’s going to be a great system.

Zack: [00:05:54] Yes, yes. And then we’re also doing B2B loyalty for the future. So I think I think that’s going to be helpful even more.

Glenn: [00:06:02] That is going to be helpful because I think of myself as a small business operator that I would want some extra love as well, and to feel that me and my team or whomever is earning to get to those rewards that they want. Yes. So you got all this going on, but a lot of it that we haven’t talked about now is how you find more operational success through reinventing your tech stack. That’s another story I’ve been following with you over the last couple of years. Where are you at right now? And as we’re hitting the summer of 26?

Zack: [00:06:31] Yeah. I mean, look, when we look at what’s remaining on the on our agenda here or our list, I talked about loyalty, which is a big thing, but also we’re rolling out our new website that’s AI driven. It’s going to drive more and more revenue to our com. I mean, we have to adapt with it.

Glenn: [00:06:47] So what is AI driven website mean, practically speaking for how your customers are going to use it?

Zack: [00:06:51] Yeah. So, you know, let’s say the guest booking experience is changing. So a lot of a lot of guests, I mean, don’t get me wrong, It’s not where it needs to be yet, but a lot of guests now are starting to go to ChatGPT and Gemini and Copilot and Claude, and.

Glenn: [00:07:05] We’re recording this. Just a couple of days ago, Google changed their search. The most significant change in 25 plus years to AI mode default.

Zack: [00:07:15] That is correct.

Glenn: [00:07:15] That’s what you’re getting at.

Zack: [00:07:16] That’s correct. So so when you had the right website partner. Yeah, that’s very focused on the content, the pictures, the content and how they deliver the website, right? Then you become more findable on all these searches, right? So when someone goes to any of these engines, which are now, now your website pulls up, it’s the one, it’s the first one up there. And then you drive booking more towards the right. And that’s really important because if you don’t have all that complexity in your website, you may not those sites may not even they may not pick you up or you may show really low on the list.

Glenn: [00:07:47] Right. And it’s also a great opportunity. I know I’ve said this before, but it’s a once in a generation opportunity to win back those customers that might have been booking the rooms outside Direct means. And by you acting right now in this particular capacity, you can set it up to scoop them in. Whereas in 2001, we kind of let all of those other companies take control and ceded it to them.

Zack: [00:08:10] That’s absolutely right. I mean, that’s what’s out of control. And everyone is trying to go, you know, have that same vision, but it’s like, this is what’s in our control. Our partnership with milestone, I think they’re advanced in this in this arena and we feel very excited. It’s going to accomplish our needs.

Glenn: [00:08:26] I’ve known for many, many, many years. Anything else you want to add?

Zack: [00:08:30] Well, you know, we have a brand conference coming up this year. So we’re excited about this. October 1st, the third in Hollywood Beach. I think we have a lot of great initiatives, you know, and then the last thing I want to say is, you know, going to the summer, Glen, talking about momentum, we feel like this summer is going to be great for the industry. I mean, even with gas prices being this high now, people are deciding to still get on the road. Maybe, maybe 4 or 5 plane tickets are expensive for a lot of families. But if you get a car and you drive, you stop. And that’s why our interstate markets are seeing hotels, are seeing really good pace and suburban markets are seeing good pace. But there’s a lot of events happening this summer with FIFA, with America. 250 A lot of concerts happening throughout the country. So you can see the pace is definitely up. We’re pacing double digits over last year and that’s exciting for us. It’s exciting for the industry and hopefully for our franchisees as well.

Glenn: [00:09:25] Well, I hope everything that Zach just said is right on. You know me, I’m a little anxious about how things are going to go this summer, so I’d love to hear good news from people that are in the trenches every day, as opposed to me just pretending I know what I’m talking about. Zach. So great to see you, man.

Zack: [00:09:40] You too. Thank you so much.

Glenn: [00:09:41] It’s so great to see you. We’ll be back with this guy in August at Lending Con. I think it’s the fourth and 5th of August over there. And then of course, we’ll be with him in October and an amazing hotel in Florida. All right. See you guys later. Like share subscribe, all that good stuff. Bye, everybody.