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Is Holiday Inn's Billion Dollar Overhaul Paying Off?

By Julie Wernau, Chicago TribuneMcClatchy-Tribune Regional News

September 19, 2010 -- In 1986, Holiday Inn told us, "We want you back." In 1997, they said, "We're making every Holiday Inn hotel as good as the best Holiday Inn hotel." And in 2006, they asked us to "Look again."

But surveyed customers said the only things they saw when they looked again were the same tired carpets, chintzy floral bedspreads and rooms just off the highway.

Today, Holiday Inn is trying, again, to change.

By the end of this year, franchisees who haven't signed on to a billion-dollar overhaul that began in October 2007 will no longer be able to call their hotels Holiday Inns. The relaunch -- new signs, business traveler-friendly rooms, comfy bedding and a new customer service philosophy -- seeks to do what previous efforts could not: Bring consistency to one of the world's largest and oldest franchised hotel brands.

The undertaking is massive -- thousands of franchisees paying $150,000 to $200,000 per hotel to revamp in one of the worst hotel industry downturns.

"We just hadn't kept up with the brand. We hadn't made it contemporary," said Gina LaBarre, vice president of brand delivery for InterContinental Hotels Group, parent of Holiday Inn.

The most obvious sign that a Holiday Inn has been relaunched is, well, the sign. It features a large green-and-white "H" above the words "Holiday Inn," in a modern font that contrasts with the script-laden signs associated with the company's beginnings a half-century ago. Acknowledged LaBarre, "The worst thing you can do is put up a different sign, and they get in there and nothing has changed."

So far, the relaunch seems to be working. A J.D. Power and Associates survey, done annually, shows leaps in customer satisfaction through June. Those were Holiday Inn's best scores since 2005.

Still, not everyone is impressed. Rob Kantner, 57, president of management consultancy Kantner and Co., in Blanchard, Mich., stays in hotel rooms 150 nights per year. He considers himself a Holiday Inn brand loyalist because he likes the service, but he says the changes are "purely cosmetic."

"This new look, is it some demonstrable leap forward? I wouldn't say that," Kantner said. "You can get into some that are just not good." He said, for example, when he complained that the Internet in his room had gone down, the front desk told him to send his complaint through Holiday Inn's Web site.

Getting high marks from customers may even be tougher for Holiday Inn because "they've been trying to pull the rabbit out of the hat for a long time, and the challenges that face them are enormous," said Mark Eble, regional vice president of PKF Consulting in Chicago.

If successful, however, Holiday Inn could benefit from the economy. The chain is among several budget-friendly brands looking to cozy up to business travelers, who, because of slashed travel budgets, are downshifting from upscale brands.

"What we normally see in tough economic times is that people economize in lower price points," said John Arabia, senior lodging analyst at Green Street Advisors.

A National Business Travel Association study in 2008 cited the economy as a reason 65 percent of travel managers were encouraging midprice hotels. The hotels have been responding.

Best Western two years ago introduced a niche for business travelers. Super 8, Motel 6 and Red Roof Inn also announced sweeping changes as they try to cater to business travelers, but on eight- to 10-year cycles as opposed to the intense time constraints set by Holiday Inn.

Jim Abrahamson, president of the Americas at Holiday Inn's parent company, said if Holiday Inns were a person, she'd be that reliable, comfortable friend you bump into and wonder if she did something different with her hair. In the Chicago area, 25 of 32 Holiday Inns have a new do.

"We still want to be that midscale hotel, but a better product. ... That older image of Holiday Inn wasn't helping us," said Russell C. John, general manager of the Holiday Inn & Suites Chicago-O'Hare/Rosemont. Renovations of the 300-room hotel were completed in June 2009.

The hotel directly competes with Sheraton, Courtyard by Marriott and SpringHill Suites, John said.

A $135-plus per night Holiday Inn room featured modern amenities: free Internet access, a big flat-screen TV, a desk and large cushy office chair, a microwave, refrigerator, and coffee maker. An upgraded bathroom boasted granite countertops and Bath and Body Works shampoos and soap, as well as a bowed-out shower curtain for extra elbow room.

Other changes made the room appear more homey: a thick comforter encased in a white duvet, cappuccino-colored carpeting, warm lighting, earth-toned curtains and artwork unique to each room. The old rooms, John said, sported gray and black carpeting, outdated furniture, and white walls that gave them an "institutional" feel.

"You went from a dark, depressed not-so-happy demeanor," John said, "to a bright, refreshed, more lively appearance."

jwernau@tribune.com

Upgrades aim upscale

Best Western

Founded in 1946. More than 4,000 independently owned and operated hotels worldwide.

Typical room price: $70 to $100 per night

Initiative announced: October 2007. Best Western Atrea, an upper-midscale prototype designed to attract business travelers. First Atrea property opened in May 2009 in San Antonio with 1,000-plus square feet of meeting space, an indoor pool and spa, and business and fitness centers.

Cost: $85,000 to $95,000 per room; new hotels only

Scope: Limited. Best Western sees Atrea as niche brand, 25 Atrea hotels are in the pipeline and six are open.

Overall brand rating: 76/100 (Consumer Reports); 750/1,000 (J.D. Power and Associates)

Red Roof Inn

Founded in 1972. Approximately 345 owned and franchised properties in 36 states and D.C.

Typical room price: $50 to $72 per night

Initiative announced: May 2008. NextGen, a top-to-bottom redesign that includes wireless Internet, flat-screen TVs, granite countertops, plush bedding and ergonomic workspace. Guests can connect their electronic devices to TVs.

Cost: $50,000 per room for new hotels; $3,500 per room to renovate

Scope: Sweeping. Approximately 25 percent of Red Roof Inns have signed on to the NextGen design so far and two new NextGen hotels have been built.

Overall brand rating: 72/100 (Consumer Reports); 697/1,000 (J.D. Power)

Motel 6

Founded in 1962. Approximately 1,060 owned and franchised properties in the U.S. and Canada.

Typical room price: $40 to $59 per night

Initiative announced: March 2008. The Motel 6 "Phoenix" prototype features a more modern look with faux-wood flooring, flat screen TVs, multimedia panels with plug-ins for MP3 players, video game systems and laptops. Bathrooms feature granite countertops and vessel sinks. Renovated properties have an updated logo on their signage.

Cost: Undisclosed

Scope: Sweeping. Properties in the Motel 6 brand are required to renovate every eight to 10 years, and each property will update to Phoenix standards during its next renovation phase. Currently, 70 properties have undergone the renovations.

Overall brand rating: 68/100 (Consumer Reports); 653/1,000 (J.D. Power)

Super 8

Founded in 1974. Nearly 2,150 franchised properties throughout the U.S., Canada and China.

Typical room price: $55 to $75 per night

Initiative announced: February 2007. Innov8te Concept, a redesign that includes contemporary color palettes, platform beds, two-sided bed covers, modular TV units that provide additional storage and seating, two-tiered bath vanities, and an "inviting" workspace. The design complements existing amenities like free wireless Internet access.

Cost: $41,220 to $52,265 per room for new hotels; $2,718 to $19,931 per room to renovate

Scope: Brandwide. Approximately 20 properties have begun implementing the concept in various stages, including two newly built properties that feature the concept from top to bottom. Additional hotels will begin incorporating the prototype as they join the brand or renovate.

Overall brand rating: 70/100 (Consumer Reports); 686/1,000 (J.D. Power)

Holiday Inn

Founded in 1952. More than 3,400 franchised hotels branded as either Holiday Inn or Holiday Inn Express.

Typical room price: $80 to $119 per night

Initiative announced: October 2007. A $1 billion brand relaunch, with a new logo and customer service training for relaunched properties, modern furniture, flat screen TVs, and ergonomic workspaces. Bathrooms feature granite countertops.

Cost: Averages $150,000 to $200,000 to renovate a single property

Scope: Sweeping. All Holiday Inn-branded hotels are required to relaunch with the new design by the end of 2010.

Overall brand rating: Holiday Inn 75/100; Holiday Inn Express 81/100 (Consumer Reports); Holiday Inn 759/1,000; Holiday Inn Express 790/1,000 (J.D. Power)

NOTE: All room price figures are from a Consumer Reports survey of 27,506 of its readers.

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