Holiday Inn's ultimatum to shabby hotels: Renovate or the Holiday's over
Filed under: Company News, Economy
For Holiday Inn franchise owners, 2010 is starting to look a little bleak. At its annual meeting on Thursday, the chain's owner, Intercontinental Hotels Group (IHG), told its American franchisees that, recession or no, they need to renovate. At the very least, every outlet has to install new lighting and signs, renovate its lobby, and buy new pillows, towels, and bedclothes. For older hotels, the changes will be more extensive.Most of Holiday Inn's 3,300 hotels have already undergone these changes, but the owners of 300 have been dragging their feet. One large reason for their procrastination arises from the cost: The $150,000 to $250,000 renovations have to be financed by the individual outlets. In today's tight credit market, many franchisees are having a hard time raising the money.
The Holiday Inn renovations are part of a larger IHG strategy that is aimed at expanding the chain and creating 140,000 new hotel jobs in the next few years.
In general, it's a tough time for the hospitality industry. Recession miseries have convinced many consumers to cancel vacations, and anemic finances have pushed companies to cut back on lodging expenses. In fact, according to a recent study by PricewaterhouseCoopers, 2009 hotel occupancy will come in at 55.5%, leading to a revenue drop of more than 16%; in 2010, the consulting company expects a modest increase to 56.1%, which will not be enough to significantly raise the industry's revenue.
While this might seem to be a good time for hotels to keep a tight grip on their purse strings, Holiday Inn isn't the only chain that has chosen to embark on a major upgrade. Over the past two years, Sheraton has undergone a $6 billion renovation and, on Oct. 23, unveiled its new look by inviting 2,100 customers to spend a free night in its hotels.
In Holiday Inn's case, the renovations have already caught the public's eye. While public response to the chain's new signs has been mixed, there is no doubt that the company continues to be a valuable property: According to the company, nine out of 10 travelers have stayed at a Holiday Inn, and it is the preferred chain of under-30 consumers. What's more, the renovations are, apparently, impressing many longtime customers.
With the battle for hotel customers heating up, Holiday Inn's decision to join the rebranding battle makes sense. And, with finances stretched tight, it's hardly surprising that they have chosen to pass the bill on to their franchisees. The question is, however, whether a $200,000 renovation is worth it for the chain's last holdouts, or if their owners will decide that the recession is the perfect time to rebrand as independent hotels.
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Reader Comments (Page 1 of 3)
11-16-2009 @ 2:18PM
Alex said...
Yikes
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11-16-2009 @ 4:16PM
tori said...
Please, for what these hotels charge they should be able to pay for upgrades. No excuses!!!
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11-16-2009 @ 2:44PM
Mike said...
As a frequent traveler, 3-4 nights out a week, 42 weeks a year, all I can say is that it is about time. they ought to sutter half of them.
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11-16-2009 @ 6:44PM
Rog said...
How do you stutter a hotel???
11-16-2009 @ 2:59PM
John F.C. Taylor said...
Renovate? Sure, but the corporate headquarters should be aiding in the financing of the renovations instead of making the franchisees carry the whole financial burden.
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11-16-2009 @ 3:07PM
Tom said...
FOR YEARS I STAYED AT HOLIDAY INNS THROUGH DUMB ALLEGIANCE, KNOWING THERE WAS SOMETHING BETTER OUT THERE. ABOUT THREE YEARS AGO, ONE NIGHT AT THE BUFFALO NY AIRPORT HOTEL CURED ME. BELIEVE ME, THERE ARE BETTER CHOICES OUT THERE
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11-16-2009 @ 3:27PM
Bob said...
Having been an over-the-road driver for an air freight company--there are whole bunch of hotel/motels that I'll stay at while on vacation. If they have cheap price--there is a reason!
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11-16-2009 @ 3:32PM
Jane T. said...
Holiday Inn has become synonymous with dirty, noisy, unfriendly, and depressing. We never stay there. In fact, we have frequently driven much farther than we wanted to just to avoid one.
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11-16-2009 @ 3:34PM
AP said...
I just stayed at one of these places this weekend with family and friends we scrapbooked from 8am -12 midnight in one of the conference rooms.Anyhow we took the scrapbboking back to the room and were going to scrapbook all night long as we dont do that very often. However the power went out at 1 and didnt come back on till 4 am. Very dissapointing and to top it off we had checkout at 2pm but wokeup to banging drums and all kinds of music sounding like they were right below us. Well they forgot to mention that Protestant church would be going on from 1030-1230..Nice and the hallways smelled like bo..The place sucked!!
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11-16-2009 @ 3:47PM
Terry said...
If their prices were competive with the times , they would have plenty of buesmess, Who wants to pay 75.00 a night just to sleep for a few hours when traveling?
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11-16-2009 @ 3:45PM
Trace said...
I've always said my idea of "roughing it" was a Holiday Inn & no room service. I'm kind of an upscale indoor girl myself... LOL
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11-16-2009 @ 3:54PM
Orlando said...
I work in the Airline Business, and by far, Holiday Inns are the worst. Dirty rooms poor lighting etc...
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11-16-2009 @ 4:02PM
jess said...
I hate this chain, I wouldn't stay there no matter how nice the renovations are. I make a point of telling everyone I can that they have no reguard for the customers.
In September 2001 I was 6 months pregnant and the heat caused my fingers to swell so I set my wedding set on top of the phone book before going to bed, forgot and checked out the next morning, two hours later I remember and had my husband call the hotel. They said they never found them which is impossible since the maid would have had to pick up the phone book to put it away in the drawer. This happened at the Boise Idaho Holliday Inn Express. I can't stand a thief, and the management at that perticular Holiday Inn was completely unhelpful and unsympathetic.
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11-16-2009 @ 4:03PM
BILL said...
Trace said...
I've always said my idea of "roughing it" was a Holiday Inn & no room service. I'm kind of an upscale indoor girl myself... LOL
****************************************************************
YEAH, YOU SOUND LIKE A HIGH PRICED%#&###
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11-16-2009 @ 4:08PM
califbus said...
Yeah, we do a lot of traveling, and have been avoiding Holiday Inns for several years. They started looking like s____ h____s.
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11-17-2009 @ 11:35AM
Jeff said...
I avoid the Holiday Inn too, their beds are like sleeping on a slab of granite and half of them dont heat their indoor pools. For what they charge, they should have much better beds and heat their pools.
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11-16-2009 @ 4:50PM
Benwa said...
What percentage of the Holiday Inn rooms are owned by Indians? What do they know or care about creature comforts? Other than the creatures that swim about in the Ganges while they're taking baths!! The hotel industry has sold out to the Patels, etc. and we are taking it like the sheep we are.
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11-18-2009 @ 1:29PM
Patel said...
Yes what the hell do we know (Patel's)...we laugh all the way to bank with your money.
11-17-2009 @ 8:13AM
EWIN JONES said...
DUMB ASS RACIST.
11-16-2009 @ 4:51PM
bluqe said...
Business is a nightmare all over. The economy is a shambles. Banks closing,corporate bailouts failing, stimulous package a failure, health care an out of contrl farce, unions a total failure, yet that arrogant guy sitting in our white house continues to tell us, "not to worry, I am here and know what is best for you".
Ain't life just grand.
Give him another year and you will not recognize America
anymore.
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