2013 Annual Report Carlson 2013 Annual Report
From the Chair I was honored to be elected Chair of the Carlson Board of Directors in 2013 and to have begun work with the Carlson Board of Directors and management team to increase shareholder value through robust corporate governance and support for management’s focus on operational excellence. 2013 marked the 75th anniversary of CarlsonSM, an occasion that was commemorated by Carlsonians around the globe. This milestone of corporate longevity underscores the tremendous legacy of our founder and subsequent leaders of Carlson. It is also a tribute to our governance model that engages independent directors working in cooperation with family directors to support sustained success. Above all, our 75th year was characterized as looking forward. The Carlson Board and management launched a collaborative process to build a strong foundation for the Company’s future success. Of primary importance for the Board of Directors was effecting closer alignment of business performance with shareholder expectations. This objective was expressed in a stronger focus on the return on invested capital deployed within our existing businesses and also in a strategic review process that evaluated each of Carlson’s underlying businesses to determine their long-term fit with shareholder targets for return and risk. As a result of this undertaking, in the third quarter, the Board articulated a vision to explore strategic options for the restaurant business including a possible sale of the business and to pursue full ownership of Carlson Wagonlit Travel (CWT), given partner J.P. Morgan’s desire to exit its minority stake. In addition, the Board requested that management work to further delineate an ongoing strategy for the hotel business to enhance profitability and value creation. These board conclusions provided a clear road map for management execution for the remainder of 2013 and into 2014. On May 20, 2014, Carlson announced that the company had entered into a definitive agreement for the sale of TGI FridaysSM restaurants to Sentinel Capital Partners and TriArtisan Capital Partners. The transaction closed on July 15, 2014. On June 23, 2014, Carlson announced that the company had signed a
definitive agreement to acquire from JPMorgan Chase & Co. (JPMC) the 45 percent equity interest JPMC indirectly held in CWT. The transaction is also expected to close in July 2014. Management work on the hotel strategy is ongoing, but significant operating improvement has already been achieved with the business returning to profitability for the first time since 2008. Collectively, and through our Finance, Audit, Human Resources & Compensation and Governance committees, the Board continued its vigilance in the areas of monitoring business performance, risk management, appropriate controls, effective capital investment and oversight of key decisions. The Board is proud of the company’s efforts in its Responsible Business activities, including support of the World Childhood Foundation, and philanthropic initiatives to combat human trafficking and support job creation. In 2013, key additions to the Carlson leadership team included: Wolfgang M. Neumann, named president and CEO of The Rezidor Hotel Group. Since assuming his new role in January, Mr. Neumann has restructured the organization and positioned the company for further growth by adding a few new key employees. He has successfully fostered strong owner relations and, importantly, maintained the cultural elements of the business. These include the company’s legendary Yes I Can! SM service philosophy, acclaimed ethics and integrity standards, and fighting Z-spirit. Bradley Hall, appointed CFO and treasurer. Hall has been with Carlson for 15 years and prior to assuming the interim CFO duties was responsible for the Company’s treasury, strategic planning and investment analysis and risk management activities. He has consistently demonstrated his ability to lead and manage the finances for Carlson’s global hospitality and travel businesses. He has been instrumental to the CWT acquisition during his brief tenure in this role. The Board also welcomed a new member in May: Michael Sweeney, president and CEO of Steinway Musical Instruments, Inc. and CEO, Steinway & Sons. Mr. Sweeney brings both strong management experience and broad investment experience to the Carlson Board. Mr. Sweeney has already made meaningful contributions to Board deliberations. Looking ahead, the Board will continue its focus on creating shareholder value and the implementation of Carlson’s new long-term strategy. The newly focused portfolio provides a significant opportunity to enhance profitability and to reduce cost and complexity. The Board and management team have already begun initiatives to align governance, corporate structure and compensation in support of these outcomes. While challenges will inevitably arise as we move forward in this ambitious undertaking, we will meet them with the Carlson spirit of never, ever give up. I am truly optimistic that we are entering our fourth quarter-century positioned for great success.
Diana L. Nelson Chair, Carlson
2013 Contents
04 10 16 22 CarlsonSM Overview
2013 Highlights
Carlson Wagonlit Travel
Carlson Rezidor Hotel Group
A timeline of the major events in Carlson’s businesses and a look at the company’s global reach.
The key achievements for Carlson during 2013 and the transformative path ahead with Vision 20/20.
The long-term growth in the travel market is favorable as Carlson Wagonlit Travel builds on a strong 2013.
New signings and program introductions distinguished a year of momentum and revenue gains.
2 | Carlson Annual Report 2013
40 46 52 58 TGI FridaysSM
Responsible Business
Glossary and 2014 Events
Company Leadership
A re-imaging campaign and global growth keeps the casual dining brand relevant for guests.
Carlson’s 2013 initiatives continue the company’s leadership and commitment to operating responsibly.
A glossary of industry-specific terminology and subsequent event highlights for 2014.
Learn more about Carlson’s management team and Carlson’s Board of Directors.
On the Cover: Carlson’s Vision 20/20 core values are Caring Spirit, Service Heart and a commitment to creating a Lasting Legacy.
Table of Contents | 3
Carlson History
1938
Curtis L. Carlson founded the Gold Bond Stamp Company. By 1953, Gold Bond Stamps had become a household name in the United States.
2004
Carlson was the first North American company to sign the Code of Conduct for the protection of children from sexual exploitation in travel and tourism.
2008
Hubert Joly was named president and chief executive officer, becoming the first non-family chief executive officer.
4 | Carlson Annual Report 2013
1962
Carlson acquired its first RadissonÂŽ hotel located in Minneapolis, Minnesota. Today, there are more than 550 Radisson BluÂŽ and Radisson hotels globally.
1998
The 100th international TGI Fridays debuted in Edinburgh, Scotland, and the 500th opened in Plymouth, Minnesota.
2012
Carlson Hotels and The Rezidor Hotel Group join forces as a strategic partnership and go to market as The Carlson Rezidor Hotel Group.
1975
Carlson acquired TGI Fridays Inc. with 12 restaurants in nine states, marking the company’s entrance into the restaurant business. Today, there are more than 930 TGI FridaysSM restaurants operating in more than 60 countries and territories.
1998
Marilyn Carlson Nelson, daughter of founder Curtis L. Carlson, is named president and chief executive officer.
2012
Trudy Rautio is elected president and chief executive officer of Carlson.
1979
1983
1986
Carlson acquired Ask Mr. Foster Travel, a travel agency chain that would be rebranded as Carlson Travel Group.
TGI Fridays undertook an initial public offering on December 8, 1983, and sold out its first day.
Carlson and the Radisson brand entered into an international partnership agreement with SAS International Hotels. SAS International Hotels would later become The Rezidor Hotel Group.
1994
1989
1989
Carlson and the Accor Group combined business travel interests to form Carlson Wagonlit Travel (CWT), which has become a global leader in business travel management.
2013
Carlson celebrated its 75th anniversary. With hotels and restaurants around the world and the premier business travel management company, Carlson is a global leader in the hospitality and travel industries.
Carlson opened its world headquarters in Minnetonka, Minnesota—home to the offices of more than 1,000 employees.
2013
Diana Nelson became chairman of the board, the third in the company’s history, preceded by her grandfather, Curtis L. Carlson, and her mother, Marilyn Carlson Nelson.
Edwin C. Gage is named chief executive officer.
2014
Nearing achievement of the goals set forth by Ambition 2015, Trudy Rautio unveiled Vision 20/20, a strategy that renews the company’s focus on the guest experience.
Carlson History | 5
Carlson History 1938
Armed with a $55 loan, Curtis L. Carlson founded the Gold Bond Stamp Company. By 1953, Gold Bond Stamps had become a household name in the United States.
1953
Gold Bond trading stamps are introduced into SUPERVALU®—one of the largest supermarket chains in the United States and the first large supermarket chain in the nation to use trading stamps. Other supermarket chains like Safeway, Colonial, Acme and First National, along with hundreds of additional retail units, quickly followed and began using Gold Bond trading stamps.
1955
Gold Bond trading stamps are introduced into Canada and eventually became the largest trading stamp company in the country. The company moved into its own building at 1629 Hennepin in downtown Minneapolis.
1960
CarlsonSM acquired 50 percent interest in the Radisson Downtown Hotel in Minneapolis, Minnesota, marking the company’s entrance into the hospitality business.
1961
The Minnesuing Acres Training Facility is opened on Lake Minnesuing in Wisconsin.
1962
Gold Bond Stamp Company headquarters opened in Plymouth, Minnesota. Contract Service Associates was officially formed and started business. Carlson acquired the remaining interest in the Radisson in Minneapolis, Minnesota. Today, there are more than 550 Radisson Blu® and Radisson® hotels globally.
1968
Gold Bond Stamp Company, in joint venture with Mitsubishi, the Japanese industrial giant, introduced Gold Star and Gift Bond trading stamps throughout Japan.
1975
Carlson acquired TGI Fridays Inc. with 12 restaurants in 9 states, marking the company’s entrance into the restaurant business. Today, there are more than 930 TGI FridaysSM restaurants in more than 60 countries and territories.
1977
Carlson acquired Country Kitchen International Inc., a chain of family style restaurants.
6 | Carlson Annual Report 2013
1979
1989
Formed the North American Financial Corporation (NAFCO) leasing company.
Carlson opened its world headquarters in Minnetonka, Minnesota—home to the offices of more than 1,000 employees.
The company established the Hotel and Resort Group to include Radisson Hotels, Inns and Resorts as well as Colony Resorts.
1980
Carlson opened its Worldwide Reservations Center in Omaha, Nebraska, where today, more than 350 reservations and hotel specialists are employed.
1981
1991
Carlson acquired Ask Mr. Foster Travel, a travel agency chain that would be rebranded as Carlson Travel Group.
Carlson acquired E.F. MacDonald Motivation company that would become Carlson Marketing.
1983
TGI Fridays undertook an initial public offering on December 8, 1983, and sold out its first day.
1985
The Carlson Real Estate Company is founded.
Carlson signed an international partnership agreement with Hotels Paraiso in Mexico and an agreement where the 1,000-room Hotel Concorde La Fayette, Paris, France, became a Radisson affiliated hotel. TGI Fridays signed its first international development agreement with Whitbread & Co. PLC of London.
1986
Carlson and the Radisson brand entered into an international partnership agreement with SAS International Hotels. SAS International Hotels would later become The Rezidor Hotel Group.
1987
Carlson founded the Country Inns & Suites By CarlsonSM brand with the opening of its first hotel in Burnsville, Minnesota. The brand now operates more than 470 hotels throughout the world, primarily in the United States, Canada, India and Mexico.
Edwin C. Gage is named chief executive officer.
Carlson opened Slavyanskaya Hotel Moscow, the first American-managed hotel in the former Soviet Union. Carlson announced an agreement with Edwardian Hotels of London to add its nine upscale fivestar and four-star hotels to the Radisson chain.
1992
Carlson launched Look To BookSM, an innovative, patented online reward program for travel agents. The SSC Radisson Diamond Cruise Ship is launched on its maiden voyage.
1994
Carlson and the Accor Group combined business travel interests to form Carlson Wagonlit Travel (CWT), which has become a global leader in business travel management. Carlson opens its first hotel in South America, the Radisson Plaza Hotel La Paz in La Paz, Bolivia. Radisson Diamond Cruise and Seven Seas Cruise Line merged to become Radisson Seven Seas Cruises. SAS International Hotels signed a master franchise agreement with Carlson to manage the Radisson brand in Europe, the Middle East and Africa and formed the pioneering co-branded partnership, Radisson SAS, which would eventually become the Radisson Blu brand.
TGI Fridays entered into its first joint venture to begin operations in Asia.
1996
Carlson acquired Regent Hotels & Resorts.
Carlson signed an international partnership agreement with Commonwealth Hospitality Inc. of Canada.
1997
The Country Kitchen brand is sold.
1988
Carlson celebrated its 50th anniversary.
Carlson entered Europe with the opening of the Radisson Hotel Beke, Budapest.
TGI Fridays became the first casual dining chain to operate a restaurant in Moscow.
1998
Carlson celebrated its 60th anniversary.
Marilyn Carlson Nelson, daughter of founder Curtis L. Carlson, is named president and chief executive officer. The Curtis L. Carlson School of Management is established at the University of Minnesota. TGI Fridays signed a development agreement with Watami Food Service Co, Ltd., which resulted in the development of the brand in Japan. The 100th international TGI Fridays debuted in Edinburgh, Scotland, and the 500th opened in Plymouth, Minnesota.
1999
Carlson co-founded the World Childhood Foundation with Her Majesty Queen Silvia of Sweden to preserve the rights of abused and sexually exploited children around the world. Childhood supports more than 100 projects in 17 countries, working with children who are victims of abuse, families at risk, children in alternative housing and street children. Carlson founder and chairman of the board, Curtis L. Carlson, passed away on February 19, 1999. Carlson launched the guest loyalty program, Gold Points RewardsSM. The program would later evolve into Club CarlsonSM, the global rewards program of Carlson Rezidor Hotel Group.
2000
Carlson acquired the Park Plaza® and Park Inn® by Radisson brands.
2002
Carlson expanded hotel operations in Asia Pacific with the opening of a regional office in Singapore.
The Rezidor Hotel Group completed an initial public offering on the Stockholm Stock Exchange, with the Radisson SAS brand as a key asset. Carlson purchased additional shares and increased its ownership to 35 percent. Carlson Wagonlit Travel (CWT) acquired Navigant International, doubling its size in North America and reinforcing its presence in Asia Pacific.
Carlson announced the signing of a landmark agreement to develop the first Radisson Blu hotel in the United States in Chicago’s iconic Aqua Tower. The hotel opened in November 2011.
Carlson and One Equity Partners (OEP) acquired Accor’s 50 percent share of Carlson Wagonlit Travel (CWT). Carlson became CWT’s majority shareholder with 55 percent and OEP owning 45 percent.
Carlson acquired a majority stake in RHW Hotel Management Services, a key Indian partner, and announced plans to triple the size of its hotel portfolio in India by 2012.
Carlson unveiled a new logo symbolizing the company’s heart, heritage and future.
2007
Carlson sold Regent Seven Seas Cruise Line to Apollo Management L.P. Carlson Wagonlit Travel (CWT) U.K. unveiled a carbon calculator tool to advise environmentally aware travelers of the level of carbon dioxide emission on a trip by air or rail. Carlson increased ownership in The Rezidor Hotel Group to 41.7 percent.
2008
Carlson celebrated the opening of its 1,000th hotel.
2009
2004
2010
2005
Carlson acquired 25 percent ownership of The Rezidor Hotel Group, solidifying the company’s commitment to global growth.
2006
Carlson rebranded Radisson Seven Seas Cruises to Regent Seven Seas Cruise Line.
Carlson celebrated its 70th anniversary.
Hubert Joly was named president and chief executive officer, becoming the first non-family chief executive officer. Marilyn Carlson Nelson remained chairman of the board.
SAS International Hotels became The Rezidor Hotel Group and acquired additional franchise rights to Regent Hotels & Resorts, Park Inn by Radisson and Country Inns & Suites By Carlson.
In line with its commitment to World Childhood Foundation, Carlson was the first North American company to sign the Code of Conduct for the protection of children from sexual exploitation in travel and tourism.
and positioning of Radisson in North America as a globally consistent first-class brand. The growth strategy set forth the goal of 1,500 hotels in operation and under development by 2015.
The Radisson SAS brand name is updated to Radisson Blu.
Carlson Marketing is sold to Groupe Aeroplan.
Carlson sold the Regent luxury hotel brand to Formosa International Hotels Corporation. Carlson signed the United Nations Global Compact encouraging businesses to adopt sustainable and socially responsible practices. Carlson achieved a perfect score on the Human Rights Campaign’s Corporate Equality Index.
Carlson was named to Working Mother magazine’s list of 100 Best Companies. Carlson announced Ambition 2015, a global growth strategy for its hotels, fueled by a $1.5 billion investment and focused on the improvement
2011
Club Carlson is launched as the global hotel rewards program for Carlson Rezidor Hotel Group, and it becomes known as one of the richest hotel loyalty programs in the industry.
2012
Longstanding Carlson partner Edwardian Hotels rebranded 12 Radisson properties in London to Radisson Blu. Carlson Hotels and The Rezidor Hotel Group join forces as a strategic partnership and go to market as The Carlson Rezidor Hotel Group. Trudy Rautio is elected president and chief executive officer of Carlson. Club Carlson launched the Club Carlson Premier Rewards Visa® Signature Card in partnership with US Bank.
2013
Carlson celebrated its 75th anniversary. With more than 1,340 hotels in operation and under development, more than 930 restaurants, and the world’s premier business travel management company, Carlson is a global leader in the hospitality and travel industries. Diana Nelson became chair of the board, the third in the company’s history, preceded by her grandfather, Curtis L. Carlson, and her mother, Marilyn Carlson Nelson. Club Carlson was the first hotel loyalty program to commit to a global carbon offsetting program.
2014
Carlson Rezidor Hotel Group announced two new brands, Quorvus Collection and Radisson Red. Nearing achievement of the goals set forth by Ambition 2015, Trudy Rautio unveiled Vision 20/20, a strategy that renews the company’s focus on the guest experience and the delivery of the brands’ promises by developing talent, creating a service culture that is unrivaled in the industry and fostering a culture of innovation and collaboration.
Carlson History | 7
At-A-Glance With some of the world’s most recognizable hotel, restaurant and travel management brands, CarlsonSM is a global leader in the hospitality and travel industry. Family-owned Carlson is one of the largest private companies in the U.S.
Global Locations
+150
Countries
+178,000 Employees
EMEA Hotels: 493 Fridays: 189 CWT: 133
AMERICAS Hotels: 668 Fridays: 608 CWT: 57
ASIAPAC Hotels: 184 Fridays: 136 CWT: 19
+37 Billion
Global Sales, USD
+1,340
Hotels in Operation & Under Development Employees by Business Unit
System-wide Sales
Restaurants
Carlson Rezidor Hotel Group
20,000
Restaurants
$7.5 Billion
70,000 Travel
+930
2013
TGI FridaysSM
$2.7 Billion
Hotels
CWT
as of Q4 2013
as of Q4 2013
88,000
$26.9 Billion
2013
#1 Ranked
Business Travel Management Company
Notes I All figures are based on 2013 data. System-wide revenue is total sales figure for all transactions occurring under one of Carlson’s brands whether owned, managed or franchised, as well as all CWT traffic. Carlson Rezidor Hotel Group hotel counts include hotels in operation and under development.
8 | Carlson Annual Report 2013
Company Structure
Carlson’s three business units are among the world leaders in their respective industries.
Carlson Wagonlit Travel is the world’s leading business travel management company. The company has been innovating travel management since the 19th century. CARLSON WAGONLIT CWL_07_0774_Logo_Carlson_Print 22/02/2007
ÉQUIVALENCE PANTONES
ÉQUIVALENCES QUADRI
PANTONE 320 C
CYAN 100% JAUNE 40%
PANTONE 485 C
MAGENTA 100% JAUNE 100%
Ce fichier est un document d’exécution créé sur Illustrator version 10 ou ultérieure).
Radisson Blu® is an iconic, stylish, sophisticated contemporary hotel brand with leading-edge style where the delight is in the detail.
Radisson® is modern in outlook, socially responsible and service-driven with true hoteliers committed to building meaningful relationships with a passion for Yes I Can! SM hospitality.
Carlson Rezidor Hotel Group is one of the world’s largest and most dynamic hotel companies with a fantastic portfolio of extraordinary brands.
With smart, engaging service, Park Plaza® hotels’ trend-setting designs capture the energy and style of each individual location.
Park Inn® by Radisson is bright, bold, fresh, uncomplicated and friendly with unexpected touches of iconic, contemporary design.
As the original casual dining bar and grill, TGI FridaysSM offers authentic American food and legendary drinks, served with genuine personal service.
Country Inns & Suites By CarlsonSM is a caring and consistent hotel brand that offers a comfortable hospitality experience, all delivered with a touch of home.
Hotel Missoni® is a stylish, intimate, contemporary, eclectic brand combined with the best bars and restaurants, making this a truly unique luxury hotel experience.
At-A-Glance and Company Structure | 9
Carlson Highlights
2013 Overview
Global Growth With the achievement of a number of milestones and key leadership appointments, CarlsonSM continued its momentum in its 75th year as the company’s businesses shifted to the transformative objectives of Carlson’s Vision 20/20 strategy.
Carlson Lexicon
System-wide Revenues
Revenues representing the total sales figure for all transactions occurring under one of Carlson’s brands, whether owned, managed or franchised, as well as all Carlson Wagonlit Travel traffic.
12 | Carlson Annual Report 2013
For 2013, Carlson saw development and sales growth in key regions around the globe, critical acclaim for its business units and employees, and significant contributions to the communities in which it does business. Overall, Carlson’s 2013 sales performance of $37.1 billion was stable, down slightly from 2012’s sales of $37.6 billion. Managed revenues ticked up slightly, increasing 0.4 percent for 2013. Carlson also continued strengthening its leadership team in 2013 to solidify the company’s overall direction, guide strategic growth and accelerate the organization toward its Vision 20/20 goals. “Last year we celebrated Carlson’s 75th anniversary, and we have many highlights to recognize,” says Trudy Rautio, president and chief executive officer, Carlson. “As we near the end of our foundational Ambition 2015 strategy, we begin to look ahead toward our new transformational strategy, Vision 20/20.” BREAKDOWN BY BUSINESS Carlson Wagonlit Travel (CWT), the world’s largest business travel management company, reported strong performance for its business travel activities in 2013. The company recorded key growth of $1.9 billion in new business sales and the company’s specialist business divisions. Overall sales volume decreased by 2.7 percent to $26.9 billion—compared with $27.7 billion1 in 2012; the decrease reflected the continuing variable global economic climate and sequestration efforts in the U.S. that have led to a reduced demand for military and government travel. CWT grew most in Asia Pacific, where transactions increased by 4.5 percent year over year2, enhanced by operations in China and Japan. (See page 16.) Carlson Rezidor Hotel Group reported system-wide sales of $7.5 billion, a 4 percent
increase over 2012. The hotel group drove a strong increase in new hotel signings versus the previous year, and 2013 was the group’s most successful year for development globally since 2008. Overall signings increased by 43 percent from 2012, with 66 percent of new hotel signings and 44 percent of all new hotel openings in rapidly growing and emerging markets, including Brazil, China, India, Indonesia and Russia. (See page 22.) TGI FridaysSM, with 933 restaurants in operation globally, reported system-wide sales of $2.7 billion, which was flat in comparison with 2012. Worldwide, Fridays opened 39 new restaurants, with continued momentum internationally, specifically in Shanghai and the U.K. The company saw 9.4 percent revenue growth versus 2012 in the U.K. as well as local comparable sales growth of 3.6 percent, improved guest counts and five store openings. The brand also completed 38 restaurant re-images in the U.S. (See page 40.) A NEW VISION In another 75th Anniversary milestone, Carlson began deploying Vision 20/20, an evolution of the company’s Ambition 2015 growth strategy. Under Ambition 2015, Carlson concentrated on business fundamentals and building core competencies, creating a strong foundation for new, dynamic growth. Carlson’s leadership created Vision 20/20 to take the company to the next level. “Our success securely positioned us to achieve our Ambition 2015 goals,” Rautio explains. “Having just completed 75 years in operation, Carlson is looking back to its heritage of innovation as Notes: 1 Actual sales volume at current exchange rates; includes air, hotel and ground transportation for wholly-owned operations and joint ventures. 2 Includes air, hotel and ground transportation for wholly-owned operations and joint ventures.
we forge a strategy dedicated to the delivery of exceptional customer experiences. The strategy will drive development, deliver value to owners and operators, and better align our resources.” Under Vision 20/20, Carlson’s core values remain the same: a caring spirit, a service heart and a dedication to creating a lasting legacy with a business that stands the test of time. Carlson’s long-term goals also remain the same: to create sustainable businesses, build shareholder wealth and drive business growth. Vision 20/20, however, imagines a new, transformational way forward by putting Carlson’s people at the center of its success and four strategic objectives: developing talent, fostering a culture of innovation and collaboration, being the bright spot for customers and delivering great results. (See page 15.) LEGACY OF LEADERSHIP In 2013, Carlson also made a number of key appointments to the company’s leadership teams. On Dec. 18, 2012, Carlson’s board of directors elected Diana Nelson as incoming chair, and she officially assumed the position in May 2013. Diana, who has served on the board for nearly 10 years, became only the third chair of the board, preceded by Marilyn Carlson Nelson and the company’s founder, Curt Carlson. “As leadership of the company passes to the third generation, I’m honored to continue the legacy started by Above: Trudy Rautio, president and chief executive officer, Carlson, provides an overview of the company’s 2013 highlights at the 2014 Radisson and Radisson Blu Americas Conference in Minneapolis.
my grandfather,” says Diana Nelson. “Carlson continues to be a very strong company. We have the best leadership team we’ve ever had, and there’s an incredible amount of momentum in all of our businesses. It’s an exciting time to work with our board and management team to realize our ambitions for growth and performance.” In addition to her role on the Carlson board, Diana serves on the board of Governors of Carlson Holdings Inc. and the board of directors for the Carlson Family Foundation and The World Childhood Foundation. She is also a member of the Harvard University Board of Overseers where she sits on the Executive Committee. Marilyn Carlson Nelson, who continues to serve on the Carlson board, says that her daughter’s significant governance experience made her the ideal fit to continue providing the steady leadership that has guided Carlson’s success for the past two generations. NEW FINANCE APPOINTMENT In September, the board of directors announced that they elected Brad Hall to Carlson’s management team as chief financial officer and treasurer, reporting to Rautio. Hall had been serving as interim chief financial officer since August 2012. “Brad has consistently demonstrated his ability to lead and manage the finances for Carlson’s global hospitality and travel businesses,” says Rautio. “His long tenure with Carlson and keen understanding of the financial complexities of our businesses uniquely qualify him for this key leadership position.” Hall has been with Carlson since 1998. Prior to assuming the interim chief financial officer duties, he was responsible for the company’s treasury, strategic planning and investment analysis and risk management activities. In this capacity, he directly led and advised on loan transactions totaling more than $2.5 billion, including securing the debt financing for Carlson’s first two Radisson Blu® hotels in the U.S. Hall also oversaw the share purchases that secured Carlson’s majority interest in The Rezidor Hotel Group.
Carlson Wagonlit Travel
1.9
Billion in New Sales
+4%
Asia Pacific Transactions Carlson Rezidor Hotel Group
43%
Increase in Overall Signings
c
66%
Signings in Emerging Markets TGI Fridays
39
New Restaurants
38
Restaurant Re-images
Carlson Highlights | 13
Awards & Recognitions Best Adoption Friendly Workplace Dave Thomas Foundation for Adoption: Carlson received the number one ranking in the hospitality and travel industry category
Leader in AntiHuman Trafficking Inaugural Presidential Award for Extraordinary Efforts to Combat Trafficking in Persons
Equality in Workplace Women’s Foundation of Minnesota Champion for Equality Award
CORPORATE DEVELOPMENT In December, Carlson appointed Tony Pellegrin as senior vice president of Corporate Development. Pellegrin reports to Rautio and is tasked with leading corporate development efforts as well as leading the strategic planning process. Pellegrin joined Carlson from Supervalu Inc., where he served as vice president of Corporate Development. “Tony brings us broad experience in strategic, financial, operational and legal matters and experience driving a broad range of strategic transactions and other high-impact initiatives,” says Rautio. Pellegrin will source and analyze potential acquisitions, partnerships and joint ventures that align with Carlson’s strategies and seek investment opportunities that support shareholder objectives. He also will be instrumental in formulating long-range strategic plans for the company. STRATEGIC GROWTH Carlson also tapped David P. Berg as chief operating officer for the company in December. Most recently, Berg served as chief executive officer and chief customer service officer for Z Wireless, the fastest-growing reseller of Verizon services. Previously, he worked as executive vice president and president of Outback Steakhouse International, with full profit and loss responsibility for more than 200 restaurants, generating international system-wide revenues of more than $700 million. In addition, Berg served as chief operating officer of GNC with 7,200 retail locations around the world and revenues of $1.8 billion. Prior to that, he was executive vice president and chief operating officer of Best Buy International, leading the company’s $13 billion international division. “David brings to Carlson an impressive set of leadership capabilities, including growing businesses and leading organizations through strategic change to deliver results and build long-term shareholder value,” says Rautio.
Reporting to Rautio, Berg is responsible for leading and managing the global hotel business. He also participates in other strategic initiatives for the company, including working with key leaders to develop and implement their initiatives for growth. FORCE FOR GOOD Carlson also made further strides as a leader through its commitment to social responsibility. In 2013, Carlson became the first company to receive the Presidential Award for Extraordinary Efforts to Combat Trafficking in Persons, recognized at a ceremony at the White House in April. Carlson received the award for combating modern slavery through the adoption of business practices that seek to protect victims of human trafficking and for encouraging the broader business community to take a stand against human trafficking. “Carlson’s consistent and long-standing efforts to combat human trafficking have made our company a pioneer in this area,” says Marilyn Carlson Nelson. In March, Carlson received the Champion for Equality Award from the Women’s Foundation of Minnesota, a community foundation that invests in social change to achieve equality for all women and girls in the state. Carlson was the unanimous choice for the award, based on its significant number of women in upper management, its actions to ensure that women and girls have the chance to lead, and its dedication to building women’s leadership in the workplace. In September, for the seventh year in a row, Carlson was named one of America’s top 100 adoption-friendly companies, winning a spot on the 2013 Best Adoption-Friendly Workplaces list by the Dave Thomas Foundation for Adoption. Carlson again earned the number one ranking in the hospitality and travel industry category— another example of Carlson demonstrating its leadership in combining a powerful business sense and a strong social responsibility.
Snapshot: Carlson 2013 Performance SYSTEM-WIDE SALES (in USD billions) Business Unit
2012
2013
Carlson Wagonlit Travel
27.7
26.9
-2.7%
Carlson Rezidor Hotel Group
7.2
7.5
4%
TGI Fridays
2.7
2.7
-1.2%
37.6
37.1
-1.3%
TOTAL
% Change
Notes: Sales as of Q4 2013. System-wide revenue represents total sales figure for all transactions occurring under one of Carlson’s brands whether owned, managed or franchised, as well as all CWT traffic.
14 | Carlson Annual Report 2013
Dynamic New Direction Vision 20/20 builds on the company’s foundational success with a new way forward. The four strategic pillars of Vision 20/20 are developing talent, fostering a culture of innovation and collaboration, being the bright spot for customers and delivering great results.
Pillar I
Pillar II
In a competitive market for the best talent, Carlson is finding, keeping and growing the people who have the potential to make exceptional achievements. This includes fostering the growth of internal talent by taking full advantage of Carlson’s strong culture of mentoring and robust educational opportunities.
Carlson is building a culture that is open to new ideas and systematically identifies and capitalizes on the best emerging concepts. In addition, with effective collaboration a recognized accelerator of the innovation process, the company is enhancing collaboration among employees and teams.
Fostering a Culture of Innovation and Collaboration
r IV Achieving its other Vision 20/20 objectives allows Carlson to deliver a unique, positive customer experience that differentiates the company from competitors. This will enable the organization to deliver strong financial results—meeting or exceeding return on equity targets—with strong earnings and revenue growth.
Pill a
Delivering Great Results
Pil l
Pillar IV
Pil l
III ar
rI
II ar
Pil la
Developing Talent
Pillar III
Being the Bright Spot for Customers Carlson is positioning itself to compete differently by deploying its talent and its culture of innovation and collaboration to be the bright spot for customers. The company defines a bright spot as an overwhelmingly positive experience with one of its brands that stands out in customers’ minds.
Carlson Highlights | 15
Carlson Wagonlit Trave
el
Carlson Wagonlit Travel
Carlson Wagonlit Travel
At-A-Glance
Best in Class New tools and initiatives highlight Carlson Wagonlit Travel’s 2013 successes as the company leverages its leadership in a growing global travel market.
Carlson Lexicon
Travel Gamification
This consulting and technology solution helps organizations incentivize travelers to stay compliant and increase cost savings. Travel gamification promotes improved traveler behavior by introducing motivating, game-like elements to the managed travel program. Virtual rewards like badges and points motivate employees to make the most desirable choice for the organization when faced with multiple options all in compliance with the travel program.
18 | Carlson Annual Report 2013
Carlson Wagonlit Travel (CWT) reported a strong performance in 2013. Key growth of $1.9 billion was recorded in new business sales and the company’s specialist business divisions, including CWT Energy, Resources & Marine. The company’s consulting arm CWT Solutions Group also reported significant growth. Among the highlights for the year, CWT’s client satisfaction scores were particularly strong, with a 98 percent retention rate combined with 91 percent satisfaction rate from travel managers, as well as an 88 percent satisfaction rating from travelers themselves. As the global business travel management leader, CWT is poised to capitalize on improving markets for business travel, and it’s maintaining that leadership pace through a series of innovations and forward-thinking initiatives. PRIME POSITION CWT’s overall sales volume decreased in 2013 by 2.7 percent due to soft spots in the global economic climate and reduced U.S. military and government travel spending. Longer term, however, the global business travel market outlook is favorable. In late 2013, the Global Business Travel Association (GBTA) estimated that the size of the global business travel market was projected to reach $1.12 trillion for the year and would increase by approximately 8.2 percent in 2014 and 7 percent annually in the period from 2015 to 2017. Growth is predicted to continue apace in the rapidly advancing economies of Brazil, Russia, India and China. In addition, GBTA expects growth in Western Europe of 5.1 percent in 2014 and 6.5 percent in 2015 with spend increasing in all five critical European markets—the U.K., France, Italy, Germany and Spain—for the first time since 2010. U.S. business travel spend is estimated to grow 7.1 percent through 2014.
CWT is the world’s largest travel management company, with several specialty divisions.
+150
Countries
+19,500
Employees
1
60 Million Transactions
2
$26.9 Billion Traffic
3
#1 Ranked
Travel Management Company
Notes: 1 Employees in CWT’s wholly owned operations. 2 Including JVs. 3 Year-end results for 2013.
The CWT Solutions Group also announced it BIG DATA TOOLS was building a platform to engage and recognize To position itself for further growth in this business travelers for making decisions that climate, CWT continued in 2013 to build on support their corporate travel programs. CWT its core strengths: Traveler Gamification uses customized, • Market leadership competitive, game-style elements to influence • A global presence with geographic desired traveler behaviors. diversity EMPLOYEE ENGAGEMENT • A high-quality and diverse client base There was also a number of successful with high retention rates initiatives in 2013 aimed at employees. Nearly • Online and mobile booking Milestones for 2013 included the April launch of 90 percent of employees took the CWT Employee Engagement Survey. Against an overall the CWT Travel Stress Index, which uses big engagement score goal of 80 percent, scores data to measure the financial impact of lost decreased slightly by 1 percentage point to productivity incurred through trip-related stress. 79 percent, but ‘commitment to customers’ was The tool shows that traveler-focused travel rated very highly, as was employee sense of policies, instead of ‘one size fits all’ policies, accomplishment. Areas for improvement primarily can drive down trip-related stress and improve involved performance management and career productivity by up to 32 percent. The CWT development. CWT is creating robust action plans Travel Stress Index is still receiving steady to improve key engagement drivers. press coverage—recently appearing in CWT has also established robust proactive Harvard Business Review and TIME magazine. and reactive compliance controls and protocols, INNOVATION IN ACTION which are constantly monitored to ensure In May 2013, CWT To Go, CWT’s award-winning ongoing compliance. In 2013, the company app, transitioned to the WorldMate platform. enhanced its employee training and communicaSince then, the company has added new tions with extensive training and education functionalities, including an enhanced mobile available for all employees. CWT also has a check-in wizard that allows the user to drag and proactive global compliance team and special drop information into the airline’s mobile check-in helpline that offer 24/7 support to address any site and an improved share trip functionality that questions or concerns that staff may have. allows users to share as much or as little of their To support CWT’s efforts in driving an ethical trip via email as they like—from the whole trip to culture, the company created a number of tools individual components or developments related for CWT staff, including Web-based training for to a specific trip. In 2013, the CWT To Go app employees and Compliance Minis—short, reached its goal of 158,000 downloads. In August, CWT announced it had strengthened focused training programs provided to managers to help to them continue to drive the ethical tone its reseller agreement with KDS—a leading and compliance culture at CWT. international provider for business travel and expenses claims management software—offering the ability to resell KDS Neo Service First Culture globally. This door-to-door booking solution delivers complete, bookable itineraries and predicts related expenses. In addition to KDS Neo, CWT now provides KDS Expense Management around the world. Building on CWT and KDS’ successful relationship in Europe, the Middle East and Africa, CWT will work with KDS to help strengthen its capabilities in the North American and Asia Pacific markets and will explore integration opportunities with other CWT products and services like CWT To Go.
CWT
Awards & Recognitions CWT To Go Best mobile strategy at the EyeforTravel Mobile Innovation Awards 2013 CWT Subsidiary WorldMate Best mobile app at the EyeforTravel Mobile Innovation Awards 2013 for the second consecutive year CWT Travel Stress Index GBTA project ICARUS Europe travel supplier outstanding achievement award 2013
98%
Client Retention Rate
Carlson Wagonlit Travel | 19
Delivering Travel Solutions Organizations use CWT’s professional services to manage corporate travel programs, design programs and policies to meet client needs, reduce spending, negotiate with preferred partners and enhance safety and security.
Business Travel Industry Value Chain 1
3
Clients pay TMCs fees
GDSs pay net fees to TMCs
Clients Corporations, governmental and non-governmental organizations
Part of supplier revenue
Travel Management Companies (TMCs)
Global Distribution Systems (GDSs)
Suppliers pay fees to GDSs
Suppliers Airlines, hotels, car rental companies, etc.
Amadeus, Sabre, Travelport, etc.
CWT, AMEX, Business Travel, etc.
Marketing-related payments and commissions to TMCs
2 CWT Revenue Generation Model Clients
Suppliers
58%
33%
2013 Revenues Stable relationships
Management fee contracts: include both reimbursement of certain direct costs as well as an additional charge covering indirect costs and margin
Transaction fee contracts: per transaction basis
20 | Carlson Annual Report 2013
GDSs
9%
2013 Revenues Value-added contracts (fees for certain marketing-related services)
Commissions
2013 Revenues Revenues primarily based on booking transactions on GDS platform
CWT has ability to move booking between GDSs
CWT Executive Team
Carlson Wagonlit Travel’s experienced leadership is guiding the company’s strategic growth.
Douglas Anderson
President and Chief Executive Officer
Jerry Hogan
Jean-Luc Duchemin
Executive Vice President and General Counsel
Cathy Voss
Executive Vice President, Global Program Solutions and Meetings and Events
Berthold Trenkel
Executive Vice President, Traveler Services
Executive Vice President, Global Human Resources
Andrew Waller
President, EMEA and Global Partners Network
Kevin O’Connor
Executive Vice President and Chief Information Officer
Patrick Andersen President, Americas
David Moran
Executive Vice President, Marketing and Enterprise Strategy
Kelly Kuhn President, Asia Pacific
Martine Gerow1
Executive Vice President and Chief Financial Officer
Notes: 1 Appointment as of July 8, 2014.
Carlson Wagonlit Travel | 21
Carlson Rezidor Hotel
Group
Global Hotel Overview
Carlson Rezidor Hotel Group
At-A-Glance
Coming on Strong Carlson Rezidor continues its momentum, with gains in revenue, development and global initiatives designed to enhance the guest experience.
Carlson Lexicon
Global Distribution System (GDS)
A network used as a global point of access to reserve hotel rooms, airline tickets, rental cars and other travel-related items by travel agents, online travel agents (OTAs) and other organizations. GDSs allow users to purchase tickets from multiple providers. Examples of major GDSs include Sabre and Amadeus.
24 | Carlson Annual Report 2013
Fueled by investments in its brands and programs to increase guest satisfaction, 2013 was a banner year for Carlson Rezidor Hotel Group. The hotels business drove a strong increase in new hotel signings in 2013, making the year the most successful for development globally since 2008. Additionally, the hotel group’s system-wide revenue increased 4 percent to $7.5 billion in 2013. The company also launched significant program introductions and saw significant investments across all of its award-winning brands, making progress in multiple key performance indicators. (See following pages for 2013 region-specific milestones.) YEAR OF GROWTH Overall Carlson Rezidor’s signings increased by 43 percent from 2012, with 66 percent of new hotel signings and 44 percent of all new hotel openings in emerging and rapidly growing markets in countries that included Brazil, China, India, Indonesia and Russia. The Americas and Asia Pacific in particular saw dramatic signings growth, with increases of 111 percent and 71 percent, respectively. In Europe, the Middle East and Africa, the group signed 33 new hotels, adding more than 6,900 rooms; 35 percent of those rooms will open by the end of 2015. Bolstering revenue totals, Carlson Rezidor also made a number of strides forward with progressive revenue-generation initiatives. In one such effort, Carlson Rezidor led the hotel industry’s efforts to enhance the guest experience while boosting productivity through e-commerce innovation. In December, Carlson Rezidor partnered with Google to launch pilot programs for its full portfolio of travel applications, including Google Hotel Finder, Google Business Photos, Google Wallet, Google Indoor Maps and Google Mobile Click-to-Call.
With its leading brands and extensive portfolio, Carlson Rezidor is one of the world’s largest hotel groups.
+105
Countries
+1,340
Hotels in operation and under development
$1.6 Billion
Managed Revenue
+88,000 Employees as of Q4 2013
66%
Signings in Emerging Markets
12 Million
Members of Club CarlsonSM
10th Largest
Global Hotel Company
In doing so, Carlson Rezidor became the first hotel group to offer or to pilot test all of the Google technologies at once. Since the launch of the company’s online strategy four years ago, Carlson Rezidor has driven global Web revenue increases of 26 percent—in 2013, Web revenue increased 4 percent. Mobile revenue continued its strong trajectory with 68 percent growth in 2013 year over year. In 2013, the award-winning Club CarlsonSM loyalty program grew to nearly 12 million members, more than doubling in size in the last four years. The Club Carlson mobile app saw a 171 percent increase in traffic and a 62 percent growth in revenue year over year. Overall, Carlson Rezidor drove 65 percent of room revenue to its brands via direct booking, digital channels and the Global Distribution System (GDS); this represents an increase of 4 percent over 2012. In addition, 2013 saw the launch of one of Carlson Rezidor’s most exciting initiatives in the Customer Experience Project. As part of the project, Carlson Rezidor partnered with leading consumer research firm GfK to better understand the overall guest experience by conducting extensive qualitative and quantitative research and analysis. The objective is to gain insights on the rapidly changing preferences of guests and define crucial touch points along the guest journey where properties can enhance guest stays and create unique, memorable experiences.
RADISSON BLU® In 2013, Radisson Blu added another chapter to its phenomenal growth story, maintaining its position as Europe’s largest upper-upscale hotel brand and opening another round of properties in key global markets, including the Radisson Blu Resort & Congress Centre Sochi, a host hotel of the 2014 Winter Olympics. In other key openings, Carlson Rezidor also unveiled the Radisson Blu Hotel, Kuwait, the Radisson Blu Hotel, Maputo/Mozambique and the Radisson Blu Chongqing Shapingba, China. In March 2013, the brand established a presence near its world headquarters with the Radisson Blu Mall of America in Bloomington, Minnesota. Later in the year, the $20 million renovation and conversion of the Radisson Blu Warwick Hotel, Philadelphia in November marked the third Radisson Blu hotel in the United States, continuing the expansion of the brand’s footprint in the Americas. Radisson Blu also revealed its new global Experience Meetings concept at the 2013 IMEX show, one of the largest global conferences for meetings and events professionals. Developed as a means to improve the effectiveness of meetings, Experience Meetings places a strong emphasis on innovations in food and beverage and changes to the spatial environment as well as advancements in meeting technology. Brain Food, the culinary component of the program, offers an elevated catering menu that increases concentration and reduces fatigue through food. Brain Box, the environmental
Carlson Rezidor Awards & Recognitions
Club CarlsonSM Loyalty Campaign of the Year at the 2013 Mega Awards Radisson Royal Hotel, Moscow World’s Leading Luxury Business Hotel 2013 at the World Travel Awards The Rezidor Hotel Group One of the World’s Most Ethical Companies, awarded by U.S. think tank Ethisphere to Rezidor for the fourth consecutive year
Snapshot: Surge in Signings Compared with the previous year, Carlson Rezidor drove a strong increase in new hotel signings, making 2013 the most successful year for development globally since 2008.
+43% Overall Signings
AMERICAS
+111%
ASIAPAC
+71%
Carlson Rezidor Hotel Group: Overview | 25
component, boosts creativity and inspires active engagement based on different learning styles. The program has been recognized and certified by the Green Meetings Industry Council (GMIC) and features the Meetings Minus Carbon program, which provides automatic CO2 offset benefits to event planners. RADISSON® Additionally in 2013, the Radisson brand’s major property improvement, renovation and investment strategy, as well as its overall brand repositioning for hotels in the U.S. and Canada, continued apace with a majority of its hotels renovated and the remaining properties on track for completion by the end of 2014. The brand also undertook a significant pilot project to explore opportunities to innovate many touch points of the guest experience. Called Radisson Re-Imagined, the national pilot evaluated new ways to enhance the guest experience, highlighted by establishing a new mobile and online check-in option; launching the Radisson iConcierge, an on-property concierge smartphone application; and the launch of an in-hotel charity program and new bath amenities, among additional enhancements. Radisson began rolling out the new program elements in October. Significant openings for the brand included the new Radisson Hotel & Conference Centre Calgary Airport East with 120 spacious, urban chic-styled guest rooms and views of the
26 | Carlson Annual Report 2013
Canadian Rockies. The new Radisson Hotel JFK Airport provided the brand with a key location near New York City. PARK PLAZA® Carlson Rezidor Hotel Group’s upscale full-service brand, Park Plaza, continued its development plans in China, Germany, India and the U.K. More than $22 million has been allocated to improve and renovate hotels in the U.K. and the Netherlands. The brand is growing its footprint significantly in Asia with 10 hotels under development. Five of those hotels are in India and five are in China. Three are slated to open in 2014. PARK INN® BY RADISSON Carlson Rezidor’s fresh and energetic upper midscale hotel brand created for fast and flexible growth, Park Inn by Radisson, opened its first hotel in the Philippines; the Park Inn by Radisson Davao was the first to feature the brand’s “next generation” design in Asia Pacific. In Europe, the Middle East and Africa, 41 percent of the 6,900 rooms signed in 2013 were under the Park Inn by Radisson brand. The brand also launched Smart Meetings & Events, a concept designed to deliver smart food, drinks, event spaces and technology to support guests’ life and work styles and ensure meeting planners a successful event. COUNTRY INNS & SUITES BY CARLSONSM Country Inns & Suites By Carlson unveiled an entirely new look in 2013 when it launched a new brand identity and a new generation hotel prototype. This was the first time in the brand’s 25-year history that it has been completely redesigned to include new architecture, interior aesthetics and visual identity. The brand implemented its new logo at the 2013 Country Inns & Suites Business Conference and began rolling out new elements of the brand identity across the entire portfolio. In November, the updated hotel architecture and interiors made their debut in a new Gen4 opening in Springfield, Illinois. The new prototypes feature a clean, contemporary look combined with the iconic design elements of Country Inns & Suites. The new architectural design will allow the brand to expand in a greater variety of areas and locations, including more urban markets, and it’s intended to resonate with loyal guests as well as today’s younger, technology-focused business travelers.
Above, Country Inn & Suites By Carlson, Springfield, Illinois Opposite, clockwise from top left, Radisson Blu Hotel, Istanbul Pera; Radisson Blu Warwick Hotel Philadelphia; Park Inn by Radisson Davao, Philippines; Park Plaza Sukhumvit Hotel, Bangkok
Americas
On the Upswing In the Americas, Carlson Rezidor is primed for continued momentum following a successful year.
“We must always keep the guest at the center of our decisions.” –David P. Berg, Chief Operating Officer, Carlson
28 | Carlson Annual Report 2013
For 2013, the story of Carlson Rezidor Hotel Group, Americas, was one of strong turnaround growth. At the same time, the theater made significant progress with several initiatives to increase guest satisfaction metrics and establish a compelling positioning for each brand. ACCELERATING DEVELOPMENT After clawing back from the economy’s extended recovery from the 2008/2009 recession, the Americas theater saw strong growth for the year with 4,200 rooms opened, 5,400 rooms signed and 6,400 under development. The signings represented a 111 percent increase from 2012. The group continued to expand into new markets with openings in new and exciting destinations, including Barbados and Grenada. In October, Carlson Rezidor became Brazil’s largest international upscale operator with the addition of the Radisson Hotel Rio de Janeiro and the Radisson Hotel São Paulo Vila Olimpia. The hotels brought the group to 10 hotels and more than 1,800 rooms in operation in this rapidly growing market. In March 2013, the brand made a big impact in its own backyard with the Radisson Blu Mall of America in Bloomington, Minnesota. The 500-room upper-upscale hotel houses the FireLake Grill House & Cocktail Bar, which features regional cuisine. The hotel offers the only accommodations directly connected to Mall of America®, the U.S.’s largest indoor entertainment center and shopping mall. Later in the year, the $20 million renovation and conversion of the Radisson Blu Warwick Hotel, Philadelphia in November marked the opening of the fourth Radisson Blu® hotel in the Americas, joining the Radisson Blu Mall of America, the Radisson Blu Aqua Hotel, Chicago, and the Radisson Blu Resort Marina & Spa, St. Martin.
The company also announced a conversion of the Radisson Plaza Hotel Minneapolis to its upper-upscale brand. Carlson Real Estate solidified an arrangement with Chartres Lodging Group LLC to acquire the hotel, with Carlson Rezidor entering into a long-term management contract. The renovation was completed in 2014, continuing the brand’s significant momentum. RENOVATION PROGRESS The Radisson® revitalization strategy, aimed primarily at Radisson hotels in North America to reposition the brand for growth and global alignment, continued on track in 2013, nearing completion with 75 percent of hotels renovated since 2010 and the remaining 25 percent on track for completion by the end of 2014. Reflecting this progress, Radisson received the most improved J.D. Power ranking in the upscale hotel segment, gaining 34 points in overall guest satisfaction. In addition, in the 2013 Business Travel News Hotel Chain Survey, Radisson saw the biggest increase in the upscale tier and led in the Meetings Facility category. MIDSCALE SUCCESS For Country Inns & Suites By CarlsonSM, the unveiling of a dramatic new brand identity and the launch of a new Gen4 hotel prototype designed to appeal to modern travelers was a key highlight of 2013. The first new prototype opened in Springfield, Illinois, later in the year, and a number of new hotels are under development. More than 75 hotels are either actively renovating or in the planning stage for Gen4 renovations. In addition, the brand continued its progress toward revenue objectives. Boosting midweek Revenue Generation Index (RGI) was a 2012 goal, and the metric sharply increased for 2013. Carlson Rezidor’s sales teams also drove impressive revenue growth for Country Inns & Suites. In addition, email revenue grew 533 percent between 2009 and 2013, while the brand website’s revenue delivery grew 60 percent. The progress has not gone unnoticed: In the 2013 Business Travel News Hotel Chain Survey, Country Inns & Suites moved from the number eight ranking up to fourth in the competitive midprice category.
Opposite Page, The $20 million renovation and conversion of the Radisson Blu Warwick Hotel, Philadelphia in November 2013 marked the fourth Radisson Blu® hotel in the Americas. The stylish, historic hotel is located in Rittenhouse Square in the heart of downtown Philadelphia.
At-A-Glance Carlson Rezidor, Americas is positioned to build on a successful 2013 as hotel demand is forecasted to continue outpacing available supply. The favorable economics set the stage for continued strong growth in 2014 and beyond. 1
U.S. lodging industry 20-year change in supply and demand
2
$2.3 Billion
8.0%
System-wide Revenue
6.0% 4.0%
615
2.0%
Hotels in Operation
0.0% -2.0%
53
-4.0%
Hotels under Development
-6.0%
Supply
Demand
75% Radisson速 Hotels Renovated Since 2010
2015F/C
2014F/C
2013
2011
2012
2010
2009
2007
2008
2006
2005
2004
2003
2002
2001
1999
2000
1998
1997
1996
-8.0%
38
Hotel Signings 2013
+4
Rankings, Country Inns & Suites By CarlsonSM, 2013 Business Travel News
Notes: 1 Americas excludes Asia Pacific and Europe, the Middle East and Africa; all snapshot figures based on 2013 data and dollar amounts in USD. 2 U.S. lodging industry 20-year change in supply and demand chart data sourced from Smith Travel Research; recessions indicated in gray shading are March 2001 through June 2002 and December 2007 to June 2009.
30 | Carlson Annual Report 2013
Executive Team
Carlson Rezidor Hotel Group is led by a proven management team.
David P. Berg
Chief Operating Officer, Carlson
Thorsten Kirschke
President, Asia Pacific
Javier Rosenberg
Gordon McKinnon
Chief Operating Officer, Radisson, Americas, and Executive Vice President, Managed Hotels
Cindy Rodahl
Executive Vice President, Human Resources and Communications
Chief Branding Officer
Mike Andrew
Executive Vice President, General Counsel
Bob Kleinschmidt
Executive Vice President, Strategic Initiatives and Investments
Suzy Riesterer
Chief Commercial and Financial Officer
Carlson Rezidor Hotel Group: Americas | 31
Asia Pacific
On the Rise In rapidly growing Asia Pacific, Carlson Rezidor continued its strong momentum.
Leadership
Thorsten Kirschke President, Asia Pacific, Carlson Rezidor Hotel Group On March 17, 2014, Carlson Rezidor Hotel Group appointed Thorsten Kirschke to the role of president of the group’s Asia Pacific region. He reports to David P. Berg, chief operating officer, Carlson. For the four years prior to his Asia Pacific appointment, Kirschke led Carlson Rezidor as president of the Americas. Kirschke’s achievements included the articulation and successful execution of the long-term turnaround strategy under Ambition 2015. Kirschke, born in Hannover, Germany, is a hospitality veteran with more than 25 years of experience in various positions around the world. Prior to joining CarlsonSM in 2009, Kirschke was executive vice president and chief operating officer for The Rezidor Hotel Group based in Brussels, Belgium.
32 | Carlson Annual Report 2013
Carlson Rezidor Hotel Group, Asia Pacific, celebrated a number of 2013 milestones under Carlson’s Ambition 2015 strategy. The company’s strategy in Asia Pacific concentrated on three pillars: accelerated and profitable development, winning the revenue battle and building organizational capabilities. DRIVING DEVELOPMENT Capitalizing on rapidly growing market opportunities in the theater, Carlson Rezidor opened seven new Asia Pacific hotels in 2013, including the Radisson Blu Chongqing Shapingba in China and the Park Inn by Radisson Davao in the Philippines. By the end of the year, Carlson Rezidor had expanded its total to more than 90 hotels in Asia Pacific, including 40 Radisson Blu® hotels. The group also continued its strong development momentum with 29 signings— including 15 in India and five in China. Carlson Rezidor formed new strategic partnerships in 2013 and continues to build strong platforms for multiple hotel growth. These relationships are accelerating the company’s development plan and putting it on track to double its portfolio in the next seven years. In March, the company signed a joint venture agreement with Panorama Group to develop 20 Radisson® and Park Inn® by Radisson hotels in Indonesia over the next seven years. In October, Asia Pacific announced a new development agreement with SM Hotels and Conventions Corporation for the Park Inn by Radisson Clark in Pampanga, Philippines, and an additional five locations in the future. Building on its strength across India, Carlson Rezidor has established a presence in most capital cities across the country. In 2013, the company continued to cement its leadership position in this important market.
Carlson Rezidor opened five hotels in India in 2013, and the company expects further additions of new hotels as a result of its partnership with Bestech Hospitalities. As part of this partnership to develop 49 Park Inn by Radisson hotels, six management agreements were executed in 2013. REVENUE GENERATION Carlson Rezidor was also successful in driving more business into existing hotels despite an economic slowdown in India and China. The company saw revenue gains, increases in room nights and strong Revenue Generation Index (RGI) performance of 103.4 in 2013. Throughout the year, various platforms were developed for hotels to optimize their revenue-generation activities. These included new partnerships, the execution of tactical and cross-regional promotions, digital media and e-commerce campaigns and the continuous drive to grow the loyalty program in Asia Pacific. Highlights from the theater also included the celebration of Radisson Blu Day in September; the launch of Radisson Re-Imagined, Park Inn by Radisson NexGen and the Country Inns & Suites By CarlsonSM brand’s new visual identity; and driving in-market localization for Park Plaza. In Market Matrix’s ranking of the top 10 Asia Pacific hotel brands, Radisson won the number one spot for satisfaction. PEOPLE DEVELOPMENT As part of the focus to develop the capability of its people, Carlson Rezidor Asia Pacific equipped its hotel commercial and finance leads with the right tools and skills to succeed through the launch of the Revenue Generation Academy and Finance Academy in India and China in 2013. The theater also made strides with its HiPotential Program for future general managers. The HiPotential program creates an infrastructure to grow the company’s leadership talent base and develop succession plans at the hotel executive level, ensuring that our leadership talent base grows in tandem as the company continues its growth in Asia Pacific. At the same time, it fulfills the company’s commitment to employees to develop and retain talent.
Opposite, Radisson Blu Hotel Pudong Century Park, is located in the heart of Pudong, in Shanghai, China, and features easy access to the Shanghai New International Expo Center, Pudong Airport and the Pudong Lu Jia Zui Finance and Trade Zone.
At-A-Glance Carlson Rezidor, Asia Pacific is driving steady development in high-growth markets such as China, India, Indonesia and Thailand. In India, Carlson Rezidor is the leading international hotel group in the country. 1
Planned Development Carlson Rezidor in Asia Pacific has been achieving strong growth momentum through strategic alliances. In 2013, the company created partnerships with Bestech Hospitalities in India, Panorama Group in Indonesia and SM Group in the Philippines to develop nearly 100 hotels in these three markets. These partnerships resulted in 13 signed deals in 2013.
91
Hotels in Operation INDIA Park Inn速 by Radisson: 49
INDONESIA Radisson速 & Park Inn by Radisson: 20
93 PHILIPPINES Park Inn by Radisson: 27
Hotels under Development
29
Hotel Signings 2013
Signings by Region
Rest of Asia
9
China
5
2013
India
15
as of Q4 2013
Notes: 1 Asia Pacific excludes the Americas and Europe, the Middle East and Africa; all snapshot figures based on 2013 data and dollar amounts in USD.
34 | Carlson Annual Report 2013
Executive Team
A seasoned international team leads Carlson Rezidor’s growth in Asia Pacific.
David Berg
Chief Operating Officer, Carlson
Thorsten Kirschke
President, Asia Pacific
Franck Courmont General Counsel
Peter Tudehope
Regional Manager, Australia/Pacific/Japan
Winston Chien
Vice President, China
Joanna Ong
Director, Public Relations and Communications
K.B. Kachru
Chairman, South Asia
Scott Bryce
Andreas Flaig
Vice President, Corporate and Hotel Finance
Raj Rana
Executive Vice President, Development
Chief Executive Officer, South Asia
Andre de Jong
Vice President, Operations, South East Asia
Thomas Hagemann Vice President, Future Openings and Special Projects
Carlson Rezidor Hotel Group: Asia Pacific | 35
Europe, Middle East, Africa
Global Leader Building on a strong legacy, The Rezidor Hotel Group is set to further drive its business and deliver on targets.
Leadership
Wolfgang M. Neumann President and Chief Executive Officer, The Rezidor Hotel Group Wolfgang M. Neumann was appointed to lead The Rezidor Hotel Group as president and chief executive officer in 2013. Prior to his work at Carlson Rezidor Hotel Group, Neumann spent more than 20 years with Hilton International, building his career from general manager positions at Hilton hotels in Brussels, London, Paris and Frankfurt to serving as vice president Western and Northern Europe. He also served as senior vice president Scandic/Nordic Region, president U.K. and Ireland, and president, Hilton Europe and Africa. Before joining Rezidor in May 2011 as chief operating officer, he served as chief executive officer for Arabella Hospitality and was a member of the supervisory board of Schoerghuber Holding Group in Munich, Germany.
36 | Carlson Annual Report 2013
CarlsonSM is the owner of The Rezidor Hotel Group’s core brands and is also its majority shareholder with 51.3 percent of ownership. Rezidor, which trades on the Swedish stock exchange, is recognized throughout Europe, the Middle East and Africa (EMEA) for its unique Yes I Can! SM guest service philosophy. Building on this strong legacy, the company is now focusing on improved profitability. Through asset-light, fee-based and sustainable growth, Rezidor aims to increase earnings before interest, taxes, depreciation and amortization (EBITDA) margin by 6 to 8 percent by 2015. The company is well on track with progress under its Route 2015 turnaround program. GAINING MOMENTUM For 2013, Rezidor’s EBITDA margin increased by 3.3 percentage points to 8.8 percent, and all Route 2015 areas delivered on or above target. Company efforts in revenue generation resulted in a strong market share increase for Radisson Blu® and Park Inn® by Radisson. Rezidor also achieved revenue per available room (RevPAR) growth across all geographic regions, and it reported the highest increase among all its peers. Rezidor’s growth continues to concentrate on the emerging markets of Russia/CIS and Africa, and the company defines Russia, Nigeria, Saudi Arabia and Turkey as key focus countries. More than 90 percent of Rezidor signings last year represented projects in emerging markets, and 60 percent of all projects are located in its key focus countries. External market conditions are showing continued signs of improvement in the theater, and international tourist arrivals are rising: From January to October 2013, the World Tourism Organization reported an increase of 5 percent. Rezidor’s strong portfolio and market focus will yield additional development opportunities.
Rezidor’s total signings were in line with the previous year and on target. The number of hotels opened lagged slightly behind due to the focus on emerging markets where delays occur more often than in mature markets. An accelerated conversion strategy and a re-defined management process from hotel signing to opening helped Rezidor to cover and minimize such risks. The company’s organization optimization process is delivering clear results and Rezidor is in line to deliver the targeted cost reductions of EUR 13 to 15 million through a streamlined and decentralized business model. Asset Management became a crucial contributor to the company’s turnaround: The newly created department is optimizing the lease portfolio in the Nordics and Rest of Western Europe and reported an EBITDA margin impact of 1 percentage point through the exits from unprofitable leases and the restructuring of profitable leases over the past two years. LAUNCH OF 4D Building on the principles of Route 2015 and Rezidor’s mission of providing unique Yes I Can! SM service, in 2013 the company also launched its 4D Strategy, which has four fundamental pillars: Develop Talent, Delight Guests, Drive the Business and Deliver Results. The strategy clearly outlines Rezidor’s priorities and defines specific focus areas in pursuit of the company’s vision to be perceived as the most passionate team of hoteliers, the most innovative and responsible organization, the most dynamic hotel company in EMEA, and the preferred hotel company to invest in and to do business with. 4D is designed as an engaging and empowering business approach where every team member at hotel, area and corporate levels plays a role in bringing 4D to life and in working towards the company’s objectives. Other Rezidor highlights include the launch of the company’s first employee value proposition, Our Promise, and the announcement of the Women in Leadership project, targeting having 30 percent female representation among company leaders by 2015.
Opposite, The 265-room Radisson Blu Riverside Hotel, Gothenburg in Sweden opened in the first quarter of 2013. The stylish hotel features dynamic meeting spaces, a location in the bustling Lindholmen Science Park and convenient access to other attractions in Gothenburg.
At-A-Glance The Rezidor Hotel Group is one of the fastest growing hotel companies in the world and a member of the Carlson Rezidor Hotel Group. Rezidor operates the core brands Radisson Blu® and Park Inn® by Radisson in Europe, the Middle East and Africa.
Targeted Growth Strategy Rezidor growth continued to concentrate on the emerging markets of Russia/CIS and Africa, and the company’s key focus countries of Russia, Nigeria, Saudi Arabia and Turkey. More than 90 percent of Rezidor signings last year represented
€919.5 Million
Managed Revenue
projects in emerging markets, and 60 percent of all projects are located in key
+5.8%
focus countries.
90%
60% Signings in Key Focus Countries
Signings in Emerging Markets
Like for like RevPAR Growth
337
Hotels in Operation
92
Hotels under Development Signings by Brand
Radisson Blu
55%
Park Inn by Radisson
45%
Signings by Region Rest of Western Europe
14%
Middle East and Africa
47%
38 | Carlson Annual Report 2013
Hotel Signings 2013
39%
Eastern Europe
Notes: All snapshot figures based on 2013 data.
32
€80.7 Million EBITDA
Executive Team
The Rezidor Hotel Group’s leadership team has extensive experience in global hospitality.
Wolfgang M. Neumann President and Chief Executive Officer
Knut Kleiven
Deputy President and Chief Financial Officer
Marianne Ruhngaard Senior Vice President, General Counsel
Richard Moore
Area Vice President, U.K. and Ireland
Olivier Harnisch
Executive Vice President and Chief Operating Officer
Eric De Neef
Executive Vice President and Chief Commercial Officer
Elie Younes
Senior Vice President and Head of Group Development
Michael Farrell
Senior Vice President, Human Resources
Eugene Staal
Senior Vice President, Technical Development
Thomas Engelhart Area Vice President, Nordics
Michel Stalport
Area Vice President, Western Europe and Northwest Africa
Willem van der Zee Area Vice President, Central Europe
Tom Flanagan
Area Vice President, Eastern Europe and Russia
Mark Willis
Area Vice President, Middle East and Sub Saharan Africa
Carlson Rezidor Hotel Group: EMEA | 39
TGI Fridays
TGI Fridays
TGI Fridays
At-A-Glance
Industry Icon TGI FridaysSM continues moving ahead—by keeping the brand relevant for guests, maintaining its employee focus and expanding into untapped markets.
Carlson Lexicon
Net Promoter Score
NPS is a customer loyalty metric that is based on survey responses to the question: “How likely is it that you would recommend our company to a friend or colleague?” The answers are based on a 0 to 10 scale. Promoters are those who respond with a score of 9 to 10 and are considered loyal enthusiasts. Detractors are those who respond with a score of 0 to 6. NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.
42 | Carlson Annual Report 2013
Despite a casual dining industry still facing challenging economic headwinds stemming from the 2008/2009 recession, TGI Fridays maintained stable sales performance in 2013. The brand continued introducing dynamic programs and driving key metrics that are evolving the brand and positioning the company for future growth. In 2013, Carlson’s restaurant business reported system-wide sales were down slightly at $2.7 billion year over year. At the same time, the company drove its restaurant re-imaging program and international growth; introduced a new, refreshed logo; continued to refocus the menu with new offerings; and continued initiatives to maintain a leadership position in employee development. NEW LOOKS TGI Fridays remains a well-established brand presence as one of the United States’ top 10 casual dining chains. The number of U.S. units declined slightly in 2013 and average unit volume (AUV) remained flat. U.S. comparable sales and traffic were negative, but U.S. units saw improvements in average margin per guest, driven by effective promotions, reduced discounting and the brand’s refocus on bar sales. Keeping its restaurants relevant and fresh for guests, TGI Fridays is rolling out a multi-year re-imaging campaign and has completed 38 restaurant re-images to its U.S. locations in 2013. The latest prototype features a fresh, contemporary design that elevates the bar experience, making it the center of activity and unleashing the fun and engaging corner bar vibe that retains the brand’s nearly 50-year heritage. Overall, the brand has re-imaged more than 50 restaurants, and it’s seeing a 50 percent improvement in sales in the locations that
Founded in 1965, TGI Fridays has grown to become one of the world’s leading American casual dining restaurant chains.
+930
Restaurants
+60%
Franchised
60
Countries
+70,000
Employees
+2.7 Billion
System-wide Revenue, USD
#1 Ranked International Presence
have been re-imaged compared with those restaurants’ sales prior to the re-imaging. Newly designed restaurants have recently opened in key markets including Boston, Dallas-Fort Worth, Orlando, Miami and Washington, D.C. GLOBAL GROWTH Worldwide, Fridays opened 39 new restaurants in 2013, with continued momentum internationally, specifically in the U.K. and Shanghai. TGI Fridays opened its doors in three new countries with restaurants in Bolivia, Sri Lanka and Pakistan. The company continues to see significant opportunity ahead in international markets. In its international business, TGI Fridays has an unmatched presence among U.S. casual dining brands, with nearly 50 percent more units than its nearest competitor. Overall, the brand’s number of international units, system-wide AUV and system-wide sales all continued upward growth trends in 2013. In the U.K., TGI Fridays is enjoying robust performance. It’s the leading casual dining brand in the U.K., and momentum continued in 2013 with increases in number of units, AUV and net revenue. TGI Fridays also continued to outperform the industry in the U.K. in same store sales. In addition, TGI Fridays continued to leverage its brand equity as a licensor of retail food and beverage products. In the frozen snack category, Fridays remains the largest brand. Licensing revenue was relatively flat in 2013 but continues to provide the company with a high-margin revenue stream.
GUEST FOCUS In 2013, TGI Fridays also embarked on a journey to evolve and contemporize the brand through the launch of its new logo. The new Fridays logo is based on the premise of using only the very best ingredients in a simple recipe for maximum taste and presentation, and the contemporary design complements the brand’s growth and energetic vibe. TGI Fridays also continued rolling out its Best Corner Bar In Town concept via a focus on great People, Place, Product and Promotions. In addition to Place-focused initiatives with restaurant re-images and Promotion initiatives that reduce discounting combined with more effective value offerings, the brand continued to develop its People in 2013 with employee training initiatives created to help team members deliver unique experiences tailored to each guest’s needs. The Fridays Service Style program—conducted through Stripes U, the company’s online university—is elevating team capabilities and driving increased guest engagement. The brand is also enhancing its Product by refocusing its menu on handcrafted, fresh food offerings that provide good value for customers and are profitable for the company. New menu items for 2013 included the Taste & Share Menu and Stacked Burgers and Wine Menus. Introduced in October, the burger menu includes a trio of Stacked Burgers, showcasing two fresh, 100-percent USDA Choice beef burger patties served with freshly baked,
Leading Position in the U.K. Market Growth TGI Fridays has created a leadership position in the U.K. by providing a highly differentiated experience from local and chain restaurants. The brand’s restaurants are recognized across the country for high-quality service and food. In 2013, TGI Fridays continued its 2012 momentum with local comparable sales growth of 3.6 percent and improved guest counts. The brand also saw a nearly 10 percent portfolio growth in the U.K. and more than 9 percent growth in revenues.
Snapshot: U.S. System NPS Trend In the U.S., TGI Fridays net promoter scores (NPS) rose to an all-time high in 2013, proving that the company’s focus on People, Place, Product and Promotions—with initiatives such as new menu items and re-imagined restaurants—was resonating with guests. 85 80 75 70 65 JAN
FEB
MAR
APR
MAY
JUN
2012
JUL
AUG
SEP
OCT
NOV
DEC
2013
TGI Fridays | 43
Snapshot: Store Unit and Contribution Mix With a truly global footprint, TGI Fridays enjoys a strong U.S. presence as well as the strongest international presence among U.S. casual dining brands.
Geographic Location United Kingdom
6%
United States
56%
International
37%
Contribution Mix
United States
55%
International
45%
Franchise Mix
Company
36%
Franchised
64%
44 | Carlson Annual Report 2013
brioche-style buns. The Stacked Burgers feature premium ingredients such as peppered bacon and house-made onion bacon jam as well as vine-ripened tomatoes. Earlier in April, the brand introduced its new Taste & Share menu featuring seven smaller-sized, lower-priced selections, allowing customers to sample multiple dishes and share. The Taste & Share menu emphasizes handprepared dishes with bold, fresh ingredients and sauces like sriracha aioli, wasabi ranch and craft beer cheese. The menu is complemented by a new selection of regional craft beers and three new innovative scratch-made cocktails featuring premium liquors and unique, fresh ingredients. Proving that the Fridays brand’s focus is resonating with customers, 2013 guest satisfaction scores increased—achieving a record net promoter score in the U.S. Samestore sales also exceeded the U.S. casual dining segment in eight of the 12 months in 2013. Best Corner Bar In Town activations are also driving increases in liquor, beer and wine (LBW) sales. FRIDAYS TEAM With team members serving as the critical element in bringing the Fridays experience to life, the brand continued its emphasis on providing industry-leading benefit programs to employees in 2013, and Fridays improved
its employee engagement scores by four points for the year. Among other initiatives, Fridays introduced Hot Schedules, which lets team members conveniently create schedules via smartphone, and its internal employee portal Stripes Nation on Yammer. These innovations are giving its team members the tools they need to succeed in their jobs and creating a enhanced sense of community for all Fridays locations. Fridays also continued its unique Have a Heart program. For more than a decade, Fridays has managed its own internal foundation, the Have a Heart fund, which provides financial assistance to team members who experience a tragedy, natural disaster or unforeseen emergency. More than half of Have a Heart program funds come through generous payroll contributions from thousands of Fridays team members. The Fridays Have a Heart fund reached new heights in 2013 by launching its Life Changer program, which provides grants to Fridays team members so they can pursue life-changing dreams. In 2013, the brand gave more than 250 Fridays team members in-need grants totaling more than $760,000. Above, TGI Fridays restaurant re-imaging program is driving a 50 percent improvement in sales in the locations that have been re-imaged compared with those restaurants’ sales prior to the re-imaging.
TGI Fridays Executive Team
Fridays’ proven management team has deep experience in the restaurant industry.
Nick Shepherd President and Chief Executive Officer, TGI Fridays
Ricky Richardson
Ian Saunders
President and Chief Operating Officer, TGI Fridays USA
Karen Forrester
President and Chief Operating Officer, TGI Fridays International
Kathy Kotel
Senior Vice President, General Counsel and Head of Business Affairs, TGI Fridays
Senior Vice President and Chief Executive Officer, TGI Fridays U.K.
Tom Kurrikoff
Executive Vice President and Chief Financial Officer, TGI Fridays
Anne Varano
Senior Vice President and Chief People Officer, TGI Fridays
TGI Fridays | 45
Responsible Business
s
Responsible Business
Greater Good With the company’s values as its guide, CarlsonSM is committed to operating its businesses and delivering results in a responsible manner.
Carlson Lexicon
UN Global Compact
The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, environment and anti-corruption. Carlson has been a signatory to the UN Global Compact since 2010.
48 | Carlson Annual Report 2013
Carlson is a responsible business in practice as well as in theory and aims to be among the leaders in the industry. An important milestone year for responsible business efforts at Carlson, 2013 marked the 75th anniversary of Carlson and the 10th anniversary of Responsible Business Action Month in September, which originated in The Rezidor Hotel Group and has since spread across all of Carlson. As part of Carlson’s 75th anniversary celebration, Carlson planted 7,500 trees in the Americas, another 7,500 in Asia Pacific and 7,500 in Europe, Middle East and Africa—a total of 22,500. Departments and teams across the company worked on local community service projects that range in scope from stuffing school backpacks with supplies to building houses for needy families to organizing environmental cleanups and blood drives. Here’s a look at just a few highlights of the company’s responsible business efforts over the year. CWT AMBITION TO LEAD In 2013, Carlson Wagonlit Travel released its first Responsible Business report, outlining the company’s 15 long-term responsible business commitments, and its Responsible Business Ambition for 2015, outlining its plans for future responsible business initiatives. In addition, EcoVadis, a reputable corporate social responsibility monitoring organization covering ethics, social, environment and responsible purchasing, granted CWT a Silver Recognition Level. CWT’s Silver rating is recognition of the responsible business progress CWT made in recent years. HOTELS AMERICAS The Carlson Rezidor Hotel Group took action in its local communities by organizing social and
environmental activities. Hotels from Barbados to New Orleans participated in World Clean Up Day, while other properties chose to donate their time to local food charities such as Second Harvest. At Carlson’s world headquarters, Carlson Rezidor Americas employees joined corporate center employees and colleagues from CWT to participate in their fourth annual consecutive Habitat for Humanity project in north Minneapolis, collectively donating more than 10,000 hours and helping to build four houses for families in need. CARLSON REZIDOR ASIA PACIFIC On Earth Day, the hotel group in Asia Pacific invited hotels to focus on water conservation for the day. More than 55 percent of hotels participated, conducting efficiency reviews and checking systems for leaks. On World Clean Up Day, more than 2,800 employees took part and collected 8.6 tons of trash and recycled 4.7 tons of waste. During Responsible Business Action Month, 100 percent of hotels participated. Asia Pacific employees, taking part in various activities across the theater, collectively donated more than 1,400 units of blood, collected 2.8 tons of trash, and raised or donated $101,000 and collected $172,000 in in-kind donations. The Radisson Blu Plaza Sydney alone hosted a gala dinner for World Childhood Foundation raising more than $30,000.
Responsible Awards & Recognitions
World Headquarters LEED Silver level certification for Existing Buildings: Operations and Maintenance Carlson Rezidor Hotel Group More than 400 Carlson Rezidor hotels have earned eco-labels from recognized third-party organizations. CWT U.K. Category A rating with Achilles Verify, an accreditation which monitors sustainable procurement in the energy industry. CWT improved its score to an average of 97.6 percent across all categories.
Fridays Support Center to commemorate RESPONSIBLE REZIDORIANS the 22,500 trees Carlson planted around the Carlson’s hotels across Europe, the Middle world. The brand also applied a Carlson East and Africa organized almost 700 activities Family Foundation grant to helping Feeding and raised EUR 240,000 for Carlson Rezidor’s America with the organization’s Community charity partner World Childhood Foundation. Kitchens program. Childhood is an organization founded by Queen Silvia of Sweden that focuses on aiding children at risk for abuse and exploitation. Another Above, A team member at the Radisson Hotel Cebu EUR 133,000 was collected for local charities in the Philippines tends to plants on the hotel’s unique in more than 260 communities rooftop herb garden. in 70 countries. FRIDAYS MAKING A DIFFERENCE Snapshot: Club Carlson TGI FridaysSM partnered with Feeding America through Carlson Rezidor Hotel Group leads the industry by being the first loyalty program its World Bartender to launch a global meetings and events carbon offsetting initiative. Championship competitions and presented a check to Club CarlsonSM, the hotel rewards program for Carlson Rezidor Hotel Feeding America at the Group, announced on 2013’s Earth Day that it became the first hotel company’s championship loyalty program to commit to a global meetings and events carbon event for $250,000. offsetting initiative. Club Carlson will purchase carbon credits to offset Fridays also made a the estimated carbon footprint of 100 percent of Club Carlson for $35,000 donation to Planners meetings and events globally, across the group’s hotels Minnie’s Food Pantry and in operation worldwide. was recognized with an The carbon offsetting, a free service for the meeting planners, award from Minnie’s at its will be managed through Carlson Rezidor’s partner, Carbon annual gala for the number Footprint Ltd. Carbon credits will be purchased and invested in of Fridays team members renewable energy in India and with the planting of one tree for who have volunteered. every ton of carbon offset in the Great Rift Valley in Kenya. Any Fridays celebrated of the millions of Club Carlson members globally will also have the Carlson’s 75th Anniversary opportunity to redeem their Gold Points®, in various increments, to by planting a tree at the these projects on an ad-hoc basis.
Responsible Business | 49
Responsibility in Action CarlsonSM takes its commitment to leadership in responsible business activities seriously. For the company, responsible business means taking care of people, the communities in which it conducts operations and the environment.
22,500
Responsible Business Practice People
Community
+
Taking responsibility for diversity and inclusion, and the health and safety of employees and customers.
Showing social and ethical leadership within the company, as well as in the community.
+
Environment Reducing negative impact on the earth.
Hotel Participation Abroad Asia Pacific +55% of hotels participated on Earth Day
Trees Planted Worldwide
1st
CWT Responsible Business Report
$250,000
TGI Fridays Donation to Feeding America
2,800 employees participated on World Clean Up Day
11.4 tons of trash collected
4.6 tons of waste recycled
1,400 units of blood donated
$101,000 raised or donated
$35,000
Fridays Donation to Minnie’s Food Pantry
$172,000 in-kind donations
$30,000 raised for World Childhood Foundation
100% of hotels participated during Responsible Business Action Month
Europe, Middle East and Africa 700 activities
107,000 EUR raised for World Childhood Foundation
133,000 EUR raised for local charities
260 communities involved
70 countries participated
50 | Carlson Annual Report 2013
10
Years of Responsible Business Action Month
100%
Participation in Club Carlson Carbon Offsetting Initiative
Responsible Business | 51
Glossary ACT Actual (historical) financial results
BLS U.S. Bureau of Labor Statistics
ADJUSTED NET INCOME Net Income excluding asset impairments and gains and losses on material and non-recurring transactions. Consolidated Adjusted Net Income includes CHREC and CWT’s equity earnings.
BPS Basis points: 100 basis points equal 1 percentage point
ADR Average Daily Rate: hotel industry measure of daily room rate trends AFE Authorization For Expenditure: Capital expenditure approval process AGM Annual General Meeting ALIS Americas Lodging Investment Summit AMEX American Express
CAGR Compound Average Growth Rate: geometric growth rate over a specified period of time
CRC Carlson Real Estate Company
CAPM Capital Assets Pricing Model: a model that describes the relationship between risk and expected return and that is commonly used to determine cost of capital and to price securities.
DEBT CAPACITY Carlson’s maximum borrowing threshold under which the company maintains compliance with its debt covenants
CBOE Chicago Board Options Exchange CDBAR Casual Dining Restaurant concept with an enhanced emphasis on the bar
APAC Asia Pacific theater
CDR Casual Dining Restaurant
AUV Average Unit Volume
CHI Carlson Holdings, Inc.
AVAILABLE CREDIT Committed and uncommitted lines of credit arranged and available for use by CarlsonSM
CHREC Carlson Hotel Real Estate Company
BDT & COMPANY Merchant bank that provides advice and capital to family-owned companies. Founded by Byron D. Trott
CIM Confidential Information Memorandum CIO Chief Information Officer CIS OR CI&S Country Inns & Suites CLUB CARLSON Carlson Rezidor Hotel Group loyalty program
52 | Carlson Annual Report 2013
COVERAGE RATIO EBITDAR divided by Interest and Rents
CAPEX Capital Expenditures: resources, as in cash or property, owned or used in business regardless of accounting treatment. (i.e., capitalized or expensed)
AOP Annual Operating Plan (Plan or Budget): 12 calendar month bottom-up operating budget
BCD TRAVEL Global travel management company competing with CWT
COMP STORE SALES Comparable Store Sales: sales change (generally defined as a percent change) over the prior year for stores that have been open more than one year. This measure eliminates growth over prior period driven exclusively by opening new stores and focuses on organic growth, aka, Same Store Sales.
CWT Carlson Wagonlit Travel
DIVIDEND CAPACITY The amount of equity (retained earnings) available to distribute as dividends per Carlson’s credit agreements DMA Designated Marketing Area DR Disaster Recovery EBIT Earnings Before Interest and Taxes: excludes extraordinary asset impairments, gains and losses on material and non-recurring transactions, and discontinued operations EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization: commonly used as a surrogate for cash flow EBITDAR Earnings Before Interest, Taxes, Depreciation, Amortization and Rents
EBITDAR LEEWAY Amount of EBITDAR available after providing the minimum Interest Coverage, i.e., EBITDAR could be reduced by the amount of Leeway and Carlson would remain in compliance with the Interest Coverage component of the debt covenants. EMEA Europe, Middle East and Africa theater ENTERPRISE Includes all Carlson businesses, affiliates, and subsidiaries, whether wholly or partially owned ERM Enterprise Risk Management ERP Enterprise Resource Planning EUR Euro EYS Earn Your Stripes F&B Food and Beverage FCF Free Cash Flow: cash generated through operations less cash used for investments FCST Forecast: annual quarterly Forecast that includes year-to-date actual results and forecasted financial performance for the remainder of the year. E.g., Q1 Forecast includes January–March actual financial results and nine months of projections.
FX Foreign Exchange rate
I/C Intercompany
FY Fiscal Year
IFRS International Financial Reporting Standards
G&A General and Administrative
IG Investment Grade
GAAP Generally Accepted Accounting Principles
INCREMENTAL DEBT CAPACITY Maximum amount of incremental debt permitted under the Carlson debt covenants
GBC Global Business Conference GBTA Global Business Travel Association
INTERCOMPANY ELIMINATION Sales between Carlson entities that are eliminated at consolidation to properly report total Carlson Net Revenues
GDP Gross Domestic Product
IPO Initial Public Offering
GDS Global Distribution System
IRR Internal Rate of Return
GEM Guest Experience Monitor: Carlson Restaurant’s customer feedback process/metric
IT Information Technology
GEN 4 Country Inns & Suites Generation 4 design prototype GMMS Give Me More Stripes: TGI FridaysSM loyalty program
JD Jack Daniel’s JV Joint Venture KKR Kohlberg Kravis Roberts: a private equity firm
HPT Hospitality Properties Trust
KNAPP CASUAL Domestic casual dining comparable store sales benchmark that includes brands such as Applebee’s, Bennigan’s, Chili’s, The Olive Garden, Outback Steakhouse, Ruby Tuesday and TGI Fridays
FDD Franchise Disclosure Document
HVAC Heating, Ventilation and Air Conditioning
L&M Leased and Managed
FFE Furniture, Fixtures and Equipment
IATA International Air Transport Association
LATAM Latin America theater
FTE Full-Time Equivalent: the equivalent of one employee working a 40-hour week
IBT Income Before Tax
LEVERAGE RATIO Total interest bearing indebtedness divided by EBITDA
GOP Gross Operating Profit
Glossary and 2014 Events | 53
Glossary LFL OR L/L Like-for-Like LOI Letter of Intent LOOK TO BOOK Carlson Hotels travel agent incentive program LRP Long Range Plan: The current year Annual Operating Plan (or current Forecast) plus two additional years of financial projections. The two additional years are generally not a bottom-up plan but a high-level financial driver-based projection. LTIP Long-term Incentive Plan LTM Last Twelve Months LTV Loan To Value ratio: percent of total asset value lenders are willing to leverage with debt M OR MM $ in Millions
NAFCO NAFCO Insurance Company: insurance captive managed by Carlson and owned by Carlson Holdings primarily for the benefit of it and its subsidiaries including CHREC and Carlson
OBIEE Oracle Business Intelligence Enterprise Edition
NBV Net Book Value
OPEX Operating Expenditures
NDA Non-Disclosure Agreement
OTA Online Travel Agencies
NET WORKING CAPITAL Current assets (cash, accounts receivable, inventory, prepaid assets) less current liabilities (accounts payable, accrued liabilities, customer deposits)
P&L Profit & Loss or income statement.
NOI Net Operating Income: for Carlson Hotel’s use, this is calculated as EBITDA less FF&E Reserves.
PAYBACK The length of time required to recover the cost of an investment, usually represented in years
NOL Net Operating Loss
PCI Payment Card Industry data security standards
NORAM North America theater
M&A Mergers and Acquisitions
NPD The NPD Group Inc.: provides retail and consumer tracking services, analytic solutions, and advisory services
MFA Master Franchise Agreement
NPS Net Promoter Score
MANAGED REVENUE Sales generated by operations that are consolidated into Carlson’s financial statements, including management and franchise fees. In addition, it includes client and supplier fees from CWT.
NPV Net Present Value: A project’s net contribution to wealth — present value less initial investment
MOA Mall of America MODIFIED NET INCOME Adjusted net income (ANI) modified for dividend capacities of 50% for CWT and 33% for Rezidor.
54 | Carlson Annual Report 2013
NRN Nation’s Restaurants News NSO New Store Opening (Restaurants) NYC New York City
OFAC Office of Foreign Assets Control
PACE Profit After Controllable Expenses
P/E Price to Earnings multiple: company’s stock price divided by earnings per share PIP Property Improvement Plan PIR Post Implementation Review: the process to review approved AFEs after implementation of the project PPA Per Person Average PPNOC Pre-Post Net of Control: analytical methodology used in retail and restaurant industries to determine the sales impact of any action. It compares a store’s pre-wave sales growth performance to a representative control, and its post-wave sales growth performance to the same control.
ROI Return On Investment
USD United States Dollar
S&P Standard and Poor’s
USP Unique Selling Proposition UST United States Treasury bill/note
PV Present Value
SEB Skandinaviska Enskilda Banken: Sweden-based bank that is Rezidor’s lead lender and also an investor and advisor
PY Prior Year
SLA Service Level Agreement
Q1 First Quarter: Three calendar months of January–March. Q2 is April–June, etc.
SNAP Stay Night Automated Pricing: Carlson Rezidor’s revenue optimization tool that dynamically establishes prices based on competitive rates, capacity constraints, local market demand, and economic and company factors
PPTS Percentage Points: used primarily by Carlson Restaurants. For example, a 9% increase is expressed at +9.0 ppts. PSF Per Square Foot
QSR Quick Service Restaurant QTR Quarter R&M Repair & Maintenance REVENUE Includes sales of products from wholly-owned entities and subsidiaries where Carlson consolidates. Products include goods and services as well as commissions and fees charged for a service. REVPAR Revenue Per Available Room (hotel room): Hotel industry measurement of yield. Average daily rate times occupancy %. RGI RevPAR Generation Index ROE Return On Equity: adjusted after-tax return to the shareholders, based on book, not market, value of equity ROIC Return on Invested Capital: Adjusted after-tax earnings divided by average Capital Invested for the respective period
SOV Share of Voice SSS Same Store Sales: aka Comp Store Sales SYSTEM-WIDE REVENUES Total sales figure for all transactions occurring under one of Carlson’s brands whether owned, managed or franchised as well as all CWT traffic
VIX Volatility Index: the ticker symbol for the Chicago Board Options Exchange Market volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market’s expectation of stock market volatility over the next 30 day period. VOIP Voice Over Internet Protocol: Internet telephony medium WAN Wide Area Network WHQ World Headquarters YOY Year-over-year YTD Year to Date
TBD To Be Determined TMC Travel Management Company TRANSACTIONS CWT gross transactions, including issued and refunded air, rail, hotel, and car transactions TTM Trailing Twelve Months TTS CWT Traveler and Transaction Services. Includes core operating costs
Glossary and 2014 Events | 55
2014 Update
Carlson continues its momentum into 2014 as it executes plans against its strategic blueprint.
NEW HOTEL BRANDS February 18, 2014 Carlson Rezidor Hotel Group launched two new global hotel brands with Radisson Red and Quorvus Collection. Carlson Rezidor aims to have more than 60 Radisson Red hotels and 20 hotels in the Quorvus Collection by 2020. With the introduction of Radisson Red, Carlson Rezidor seeks to create a new industry category, “Lifestyle Select,” an upscale, select service concept that boasts a forward-thinking focus on design and detail, the customer experience, and the increasingly important role that technology plays in everyday life. Radisson Red will launch simultaneously in 2015 in urban centers in the Americas, Asia Pacific, and Europe, the Middle East and Africa. Quorvus Collection is a new generation of expertly curated luxury, five-star hotels that offer a truly distinctive experience for contemporary global travelers. Each is individual in design, heritage, history and architecture. The future Quorvus portfolio will include historic properties, contemporary residences, classic boutiques and urban retreats. FIRST HOTELS JOIN QUORVUS May 5, 2014 Carlson Rezidor Hotel Group announced the first member hotels of its luxury brand Quorvus Collection: The May Fair Hotel London, the G&V Royal Mile Hotel Edinburgh, and the Symphony Style Hotel Kuwait. Each property has its own heritage and provides a five-star luxury hotel experience. The May Fair Hotel London, owned and operated by Edwardian Group London, is an icon of expressive contemporary design and grand hotel service. The May Fair Hotel was first opened by King George V in 1927 and offers 404 bedrooms. The G&V Royal Mile Hotel Edinburgh enjoys a prime location in the heart of Edinburgh. Each of the 136 rooms and suites feature designer Rosita Missoni’s aesthetic look combined with the latest technology. The Symphony Style Hotel Kuwait is part of the Symphony complex in Salmiya, the main shopping and entertainment district of Kuwait City. At 18 floors high, the hotel has 169 rooms and offers views of the Arabian Gulf. The hotel features interiors designed by Rosita Missoni,
56 | Carlson Annual Report 2013
state-of-the art technology, three restaurants, six event spaces and a signature spa. TGI FRIDAYSSM SALE May 20, 2014 Carlson announced that it had entered into a definitive agreement for the sale of TGI Fridays to Sentinel Capital Partners and TriArtisan Capital Partners. For Carlson, the transaction frees up resources that the company can deploy to accelerate the growth of its hotel and travel businesses, at a time when significant opportunities exist in these markets. This transaction represents the conclusion of a thorough and exhaustive strategic alternatives process initiated by Carlson for TGI Fridays in November of 2013. TGI Fridays will continue to be run by its proven management team, led by President and Chief Executive Officer Nick Shepherd. Sentinel, who will be TGI Fridays’ majority shareholder, has extensive restaurant and franchising investment experience and a demonstrated ability to create successful independent businesses through complex corporate carve outs. Sentinel has completed numerous acquisitions of both franchisors and franchisees, including Checkers/Rally’s, the largest franchisor and operator of dual drive-through hamburger quick service restaurants in the U.S.; Falcon Holdings, the largest franchisee of Church’s Chicken restaurants; Huddle House, a leading franchisor of family dining restaurants in the Southeast; and Southern California Pizza Company, a 223-unit Pizza Hut franchisee operating in the greater Los Angeles market. REZIDOR RIGHTS ISSUE June 5, 2014 The final result of Rezidor Hotel Group AB’s (publ) (“Rezidor”) rights issue show that 24,250,597 shares, representing approximately 99.4 percent of the offered shares, were subscribed for by the exercise of subscription rights. Carlson subscribed for and received 12,507,454 shares at a cost of $42.7 million. The 136,220 shares that were not subscribed for with subscription rights have been allocated to persons in accordance with the principles outlined in the prospectus. Notification regarding allocation based on
subscription without preferential rights is only sent to those who have been allocated shares. Through the rights issue, Rezidor will receive proceeds amounting to approximately SEK 544 million (corresponding to approximately EUR 60 million1) before transaction costs. The proceeds will allow Rezidor to capture additional opportunities within asset management, continue to invest in the leased hotels at an accelerated rate and further drive focused growth in emerging markets. Through the rights issue, Rezidor’s share capital increases by approximately 1,625,766 EUR to approximately 11,625,766 EUR.2 The total number of shares increases by 24,386,817 to 174,388,857.3 The new shares subscribed for with subscription rights were registered with the Swedish Companies Registration Office on May 27, 2014, and started trading on NASDAQ OMX Stockholm on June 3, 2014. The new shares subscribed for without preferential rights were expected to be registered with the Swedish Companies Registration Office on June 5, 2014, and to start trading on June 9, 2014. 1.
Based on the Swedish krona/euro exchange rate of 9.1036 as published by the Central Bank of Sweden (Sw. Riksbanken) April 17, 2014 2. Rezidor’s shares are denominated in EUR 3. Includes the 3,681,138 treasury shares held by Rezidor FULL OWNERSHIP OF CWT June 23, 2014 Carlson announced that it had entered into a definitive agreement to acquire from JPMorgan Chase & Co. (JPMC) the 45 percent equity interest JPMC indirectly holds in Carlson Wagonlit Travel (CWT). As a result of this acquisition, Carlson will own 100 percent of CWT. The transaction was expected to close in July 2014, subject to customary closing conditions. Based on the momentum, growth and results realized by the management team at CWT, the acquisition—along with the ongoing investment in Carlson Rezidor Hotel Group and its family of brands—solidifies the longterm direction for the company.
Carlson Leadership
Board of Directors
Carlson’s board strategically guides the company and supports delivery of long-term value.
“There’s an incredible amount of momentum in
all of our businesses. It’s an exciting time to work with our teams to realize our ambitions for growth and performance. Diana Nelson, chair, Carlson
”
Brad Anderson
Lee A. Chaden
former chief executive officer, Best Buy
former chairman, Hanesbrands Inc.
Marilyn Carlson Nelson
Wendy M. Nelson director, Carlson
co-CEO, Carlson Holdings, Inc.
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Edwin C. “Skip” Gage founder and president, Gage Marketing Group
Gregory R. Page
executive chairman, Cargill
Geoffrey C. Gage
Richard C. Gage
founder and president, Geoffrey Carlson Gage Brand Communications
chief executive officer and founder, Nebulous/ YourMLSsearch.com
Trudy Rautio
Michael T. Sweeney
president and chief executive officer, Carlson
chief executive officer, Steinway & Sons and president and chief executive officer, Steinway Musical Instruments
Management Team
Carlson’s experienced management executives are leaders in their respective fields.
DOUGLAS ANDERSON President and Chief Executive Officer, Carlson Wagonlit Travel Anderson was named president and chief executive officer of Carlson Wagonlit Travel (CWT) by the company’s board of directors in April 2008 after joining CWT as executive vice president and chief financial officer one year earlier. Anderson reports to CWT’s board of directors. He also serves on the board of directors for The Rezidor Hotel Group. Currently based in Paris, Anderson has also worked in Geneva as senior vice president and chief financial officer for the SITA Group, the information technology and telecommunications service provider to the air transport industry. Before joining CWT, Anderson was director of Finance and Business Transformation for the Consumer Digital and Film Products Group of the Eastman Kodak Company. Anderson is a certified public accountant with a degree in business administration from the University of Nebraska.
DAVID P. BERG Chief Operating Officer, Carlson Berg leads the global hotel business and participates in the overall strategy for Carlson, working closely with key leaders to develop and implement strategic initiatives for growth. Most recently, Berg served as chief executive officer and chief customer service officer for Z Wireless, the fastest growing reseller of Verizon services. Previously, he worked as executive vice president and president of Outback Steakhouse International and as chief operating officer of GNC with 7,200 retail locations around the world. Prior to that, he was executive vice president and chief operating officer of Best Buy International.
62 | Carlson Annual Report 2013
Berg currently serves on the board of directors for The Rezidor Hotel Group. He received a degree in economics from Emory University and a law degree from the University of Florida College of Law.
BRAD HALL Executive Vice President, Chief Financial Officer and Treasurer, Carlson Hall has been with Carlson since 1998, and prior to assuming the chief financial officer role, was responsible for the company’s treasury, strategic planning, investment analysis and risk management activities. In this capacity, he directly led and advised on loan transactions totaling more than $2.5 billion. Hall also oversaw the share purchases that secured Carlson’s majority interest in the Rezidor Hotel Group. Hall holds a master’s degree in business administration with Finance and Strategic Management concentrations from the University of Minnesota’s Carlson School of Management. He participates in several finance-related organizations, including the American Institute of Certified Public Accounts and the Association for Financial Professionals. He is also a Certified Public Accountant (inactive).
TONY PELLEGRIN Senior Vice President, Corporate Development, Carlson Pellegrin leads corporate development efforts and the strategic planning process. His key responsibilities include sourcing potential acquisitions, partnerships and joint ventures that align with Carlson’s strategies; seeking investment opportunities; and identifying opportunities for growth.
He also is instrumental in long-range strategic planning for the company and provides environmental scans and analysis of organizational positioning and competitor intelligence. Pellegrin joined Carlson from Supervalu Inc., where he served as vice president of Corporate Development. Prior to this, he served as general counsel of a global business unit of Honeywell International, Inc. He also served as director of Corporate Development at Federated Direct/Fingerhut Companies, Inc. Pellegrin earned a Bachelor of Arts degree in political science, magna cum laude, from the University of Minnesota. He holds a law degree from the University of Chicago Law School.
TRUDY RAUTIO President and Chief Executive Officer, Carlson Rautio presides over Carlson’s three businesses: Carlson Rezidor Hotel Group, TGI FridaysSM and Carlson Wagonlit Travel (CWT). Rautio has been a senior executive with Carlson since 1997 and has served as executive vice president and chief financial and administrative officer of Carlson and president of Carlson Rezidor Hotel Group, Americas. Previously, Rautio served in a dual role as executive vice president and chief financial officer of Carlson Consumer Group, plus chief administrative officer of Carlson Hospitality Worldwide. Prior to joining Carlson, Rautio was senior vice president and chief financial officer of Jostens, Inc. She also served as vice president of Finance for Pillsbury Co. Rautio also serves as chairman of the board for both Carlson Wagonlit Travel and The Rezidor Hotel Group. A graduate of Bemidji State University in Bemidji, Minnesota, she holds a Master of Business Administration degree from the University of St. Thomas, Twin Cities. In addition, she is a Certified Public Accountant and a Certified Management Accountant.
CYNTHIA RODAHL Executive Vice President, Human Resources and Communications, Carlson Rodahl is serving as executive vice president and chief human resource officer for Carlson. Rodahl previously served as divisional vice president within Carlson’s Hotels and Travel divisions. In her more than 20 years of strategic human resources experience, Rodahl has substantially increased the creditability and influence of the human resources function within the company. Prior to joining Carlson, Rodahl served as BUCA Inc.’s chief family resource officer. Rodahl also held senior executive roles with The Pillsbury Company and Transport for America. Rodahl is also a founding partner of Tevera Consulting, which is dedicated to helping companies strengthen the links between strategy, organizational effectiveness and governance. She holds a Bachelor of Science in business from the University of Minnesota. She recently completed a term as a member of the Citizen’s Finance Committee for the Orono School District, a volunteer group that works with the school board on financial matters.
NICK SHEPHERD President and Chief Executive Officer, TGI Fridays Shepherd was named president and chief executive officer of Carlson Restaurants, parent company to TGI Fridays, in February 2009. Shepherd began his career in restaurant operations, and he has more than 25 years of leadership experience in global operations, development, franchise, marketing and brand management.
After starting his career with Whitbread PLC, Allied Lyons PLC and London-based Grand Metropolitan PLC, Shepherd established his own successful service management consulting business and then served at Blockbuster Inc. as global chief operating officer. Prior to joining Carlson and TGI Fridays, Shepherd served as the chairman and chief executive officer of Sagittarius Brands Inc., a private-equity-owned restaurant holding company that owned and operated the Del Taco and Captain D’s restaurant brands. Shepherd earned his bachelor’s degree in Catering Systems from Sheffield City Polytechnic in England.
WILLIAM A. VAN BRUNT Executive Vice President and General Counsel, Carlson Van Brunt joined Carlson as senior vice president and general counsel in February 2000. Since February 2006, Van Brunt has served as executive vice president and general counsel. Prior to joining Carlson, Van Brunt served as vice president and associate general counsel for General Mills and as senior associate counsel for the Hershey Foods Corporation. Before this, he was in private practice, specializing in business/corporate law, patent law and trade regulation. Van Brunt earned a Bachelor of Science degree at Pennsylvania State University, a Master of Science degree at Massachusetts Institute of Technology, a Juris Doctor degree at Boston University School of Law and a Master of Laws degree at Harvard University. He also studied in the Advanced Management Program at Harvard Business School. Van Brunt is admitted to the bar in the states of Massachusetts, Pennsylvania and Minnesota. He is a member of the State Bar Association for each of those three states, as well as the American Bar Association.
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Our Purpose Serve millions of guests and travelers in a way that positively influences their lives. Provide tens of thousands of jobs and help our employees grow and achieve their potential. Contribute to the common good through our commitment to social responsibility. Generate attractive financial returns for our shareholders and business partners.
Carlson Credo Whatever you do, do with Integrity. Wherever you go, go as a Leader. Whomever you serve, serve with Caring. Whenever you dream, dream with your All. And never, ever give up.