Austin, Texas-On the evening of Sept. 2, a small group of franchisees met in Austin to discuss their concerns about Cendant Corp.'s Project Power Up technology initiative-a company program aimed at automating by July 1999 all  5,800-plus hotels flying the various Cendant - brand flags. 

Within a month, this group-which began as 40 franchisees in the Austin area- snowballed into a faction of more than 300 upset licensees across the United States, said Vijay Mehta, one of the original 40 and owner of a 48-room Howard Johnson Express Inn in Temple, Texas. 

The group launched a counter initiative called Project Power Down-with each member pledging to refuse to use, or input any guest data into, the new property-management systems installed under Project Power Up, Mehta said. Each member has agreed to contact at least 10 other Cendant franchisees to notify them of the group's concerns-a move Mehta expects to push Project Power Down's supporters to more than 1,000 franchisees by as early as year's end. 

"Suppose 1,000 franchisees refuse to input data-what will Cendant do then?" Mehta said. 

According to Scott Anderson, Cendant's vice president of sales and marketing, the counter initiative, however, could prove to be counter-productive for a property intent on remaining competitive. Furthermore, the Project Power Down members are in violation of the technology 
standards recently adopted by all Cendant brands, Anderson said. Investing in the future 

Cendant-through Project Power Up-is investing $75 million to arm its franchisees with the technological tools necessary to compete in the new millennium, Anderson said. 

About 14 months ago, about a third of Cendant's franchised hotels were electronically enabled. Today, a similar percentage (about 1,400 hotels) have the Project Power Up PMS, with Internet connectivity and database marketing tools either in place or to follow, Anderson said. The firm is installing the system at 100 locations a week. 

Many of the 1,400 equipped properties already have realized revenue per available room gains of 5 percent to 19 percent, Anderson said. Other benefits, such as optimal average daily rates and yield management, improved training and communication, and 1-to-1 direct marketing, will help the properties capture increased business and win repeat customers, he said. 

"Project Power Up won't make a stupid general manager a good one, but it will make a good one a great one," Anderson said. 

Cendant was ranked No. 1 in Hotel & Motel Management's  Top 100 Hotel Companies Survey  [Sept. 21] with 5,821 hotels comprising 516,262 guestrooms. The firm's lodging brands include: Days Inns of America, Howard Johnson International, Knights Inns, Ramada Franchise Systems, Super 8 Motels, Travelodge, Villager Lodges and Wingate Inns. 

Gift horse or Trojan horse? 

Why would some property operators not want to participate in the program? According to Mehta, the answer is simple: "This is not a gift, it is a Trojan horse. We are better off without it than with it." 

For starters, many franchisees are irked that Cendant handed down this edict that franchisees will do this, Mehta said. 

"I know people who said they would use the system if they had a choice, but now refuse to because they had no say [in the matter]," he said. This, however, is the minority of Project Power Down members, Mehta said. For most members, the main issue is guest privacy - something they believe may be compromised since Cendant wants access to all customer data. 

"We were happy until we were told this $75 million gift meant sharing confidential customer information with Cendant," Project Power Down members said in a released statement. "We in the innkeeper business have a duty to protect the privacy of our guests. ... While Cendant tells us not to worry about security, no one can guarantee the security of this data." 

What happens if a disgruntled Cendant employee - or a computer hacker-steals and sells the data?, said Vinayak Patel, a Project Power Down member and g.m. of a 42-room Super 8 in Salado, Texas. What if Cendant does a 180-degree turn and decides to own and operate hotels? 

"They would have all my guest information, and would become my biggest competitor overnight," Patel said 

Further complicating matters, Mehta claimed some properties have encountered daytime nightmares - being locked out of the system for hours at a time with little help from Cendant's support desks. 

 "The gift arrived with too many 'bugs,'" the group said in the statement. "It was difficult to use, and in many cases produced a long line at the front desk - not because we had more customers, but because now [fewer] of them were waiting longer." 

Patel said the Project Power Up PMS has frustrated customers and employees at his property. He said that after one week of using the system he became irritated with it. 

"I'm not using the system at all now, and a lot of the people I've talked are saying they're doing the same thing," Patel said. 

"They want me to pay $750 or more a year in maintenance fees for this. No way, I'm not paying them," he said. "If they want to throw us out of the system, let them pay us liquidated damages." 

Shawn Patel, g.m. of Mehta's Howard Johnson in Temple, claimed he has waited anywhere from 30 minutes to two hours for human contact from Cendant's help desk, and a lot longer for a problem-solving answer. 

"It's not a very user-friendly system, and there isn't much help on the other end," he said. "Eventually, you just give up and go back to doing things the old way." 

Ranchhod Lakha, g.m. of a Days Inn in Troy, Ala., expects to get the system within three months, but said he's not looking forward to it. "I've heard-and seen firsthand - the headaches this system causes," Lakha said. "They call it Project Power Up, but they're really only upping their power, not the franchisees' [power]." 

Just the facts 

"My experience is in that the absence of fact, fantasy can rush to fill the void," Anderson said. 

To erase misconceptions, Anderson fielded franchisees' concerns one by one. Yes, Cendant is mandating its licensees use this PMS, but most other franchisors have made similar demands and aren't shelling out $75 million from their own coffers to pay for the project. 

Most, he said, are charging their franchisees $20,000 to $60,000 for the initial install, while Cendant is giving hotels the system and a year of free maintenance and training. Also, while an independent system could cost $300 or more in monthly maintenance fees and would cover only off-site hardware, Cendant will charge franchisees $750 to $3,200 a year for maintenance fees and will offer on-site hardware and software services. Two-thirds of Cendant's franchised properties will pay between $750 and $1,000 annually in maintenance fees, with the cost rising for larger hotels with multiple work stations and interfaces, he said. 

As for the confidentiality of customer information, Anderson said Cendant understands fully that security must never be compromised and has taken the necessary steps to prevent such an event. 

"Security, we understand, is key," Anderson said. "Neither I nor Henry Silverman [Cendant chairman] has access to all this information. Only about three employees have access to this information and they live on a diet of pizza and flounder-because that's all that will fit under the door. 

"Under absolutely no circumstances we will ever sell or share this information to anybody, anytime," he said. "This information is to put more heads in beds for our hotels and for the cross-marketing purposes of other Cendant businesses for our hotels." 

For instance, Anderson said about 40 percent of Cendant's Avis rental - car customers haven't  selected a hotel before reserving their vehicles. In the past, Cendant has call-prompted these customers, sending them to its various hotel brands on a rotating basis. Soon, however, Cendant will be able to match up its car-rental customers with the hotel brand that best fits their profiles. 

Anderson said the firm's help desks have come a long way, but can and will improve further. He said the worst-case scenario in August was a 10-minute wait for assistance, with resolution coming anywhere from 1 hour to-in rare cases- days later, he said. "It was completely unacceptable," he said. 

To rectify the problem, Cendant expanded its training of its 200 installers / trainers and increased its support staff to 150 from about 100. By late September, Cendant's help desks on average answered calls in under two minutes and usually solved problems within an hour, he said. Anderson said there's a learning curve for Project Power Up for both the franchisor and the franchisee. 

The growing pains will go away with time and training, but those that shy away from embracing the technology will be left behind-by their competitors and customers, he said. 

"I think this whole concept of Project Power Down comes from franchisees who both fear technology and don't understand what it brings to the table," Anderson said. "I understand their fears. There was the same fear of the telephone, the TV and the radio, but computers are here to stay, and we must all learn to live with that fact. 

"We have to change with the technology," he said. "If you just do what you  always did, you won't get what you always got."