PARSIPPANY, NJ— Cendant Hotel Group is betting on the Baymont Inn and Suites brand to carry a significant portion of the franchisor’s midscale activity, so much so that it has decided to merge its 112-property AmeriHost Inn franchise system with the recently acquired Baymont system.
While the move erases AmeriHost from the lodging map, it nearly doubles the 115-property Baymont system, returning it to the distribution level it enjoyed prior to its sale to Cendant in April by affiliates of The Blackstone Group. Blackstone, which earlier this year acquired the Baymont system as part of its $3.4 billion purchase of La Quinta Corp., plucked 100 company-owned Baymont properties to convert to La Quintas before selling the franchise system.
Cendant group president Keith Pierce said the decision to meld the two was largely driven by the similarities between the brands and the opportunity to leverage a reinvigorated Baymont system within the robust midscale without food and beverage sector.
“It allows us to grow off a bigger base with 200-plus hotels versus running two smaller hotel companies side by side,” said Pierce. He noted AmeriHost Inn and AmeriHost Inn and Suites, acquired in 2000 from AmeriHost Properties, Inc. (subsequently Arlington Hospitality, Inc.), as a system has been a strong performer for the company. When acquired, there were 84 properties representing 5,703 rooms; as of March 31, there were 112 properties representing 7,955 rooms.
Model Of Consistency
He characterized the mostly new-construction, Midwest-concentrated brand as “extremely consistent…it’s a great brand…Baymont also is a Midwest brand, so we’ve really capitalized on that region. Now our footprint is much stronger for us to then go and sell in other regions of the country where we don’t have distribution. Baymont also brings distribution in Florida and Texas for us.”
AmeriHost is primarily in tertiary markets while Baymont is in secondary and some primary markets. The brands overlap in 22 states.
Cendant’s desire to push distribution also played into why it’s AmeriHost that’s being absorbed into Baymont and not vice versa. While Pierce stressed the physical plant, service and performance attributes of each brand were similar, he said the name “AmeriHost doesn’t translate internationally. Therefore, AmeriHost is not a brand that we can grow in Canada, as an example. When you put the brands side by side, you want to be able to develop the brand worldwide. The Baymont name allows [us]to grow in Canada, as well as internationally.”
Baymont also has twice the history of AmeriHost. It started out in 1974 in Wisconsin as Budgetel Inn and was reflagged in 1999 by parent Marcus Corp. as Baymont Inn and Suites. It was acquired by La Quinta Corp. in 2004, which led to the most recent transactions for the brand. AmeriHost was founded in Ohio in 1989.
In terms of properties, Pierce noted each brand’s generational prototypes are on par with each other. “They’re also very, very similar in terms of continental breakfast, guestroom services and amenities. When you match up the generation-two prototypes, the exterior elevation has a more modern look and feel to it. All of the AmeriHosts have pools, that’s a signature item; pools are optional on the Baymonts. Some have business centers, some have fitness centers.” He added the average room count (80) is about 20 units higher for the Baymont brand, which as of April 7, had 9,415 rooms.
Pierce acknowledged the potential for impact issues. “There are some areas where there are both products in the marketplace— there are very few— but in those situations we’ll work with the owners directly” to determine the market dynamics, he said. He added there were no plans to create another tier within Baymont that might offset such market complications.
In late April, Pierce and other Cendant executives met with AmeriHost and Baymont owners to detail the changes ahead.
“It was a successful experience for both licensee groups,” claimed Pierce, who indicated while there may have been some dissenting opinions, the general tone of the meetings was supportive.
“The AmeriHost owners understand it will strengthen the system overall by having a larger system,” he said, noting the Baymont owners were grateful to have their distribution numbers back. Toward that, Pierce observed a larger system would deliver more distribution, awareness and rooms, therefore higher gross rooms revenue and a larger marketing fund. He said Baymont will grow via new construction and conversions.
To help transition AmeriHost properties, Cendant is earmarking several million dollars to provide all of the signage necessary for conversions.
All first-generation AmeriHost’s also will get a product/site inspection within the next 60 days, and, depending on the outcome, may or may not have to make improvements. If they do, owners will have a designated period of time (to be determined) to do so, after which they will be awarded the Baymont sign.
To achieve consistency, Cendant also is focusing on a three-prong upgrade program that includes exterior elevation, public space/ breakfast area and corridors/guestrooms. “We presented all of the interior-design packages and what the property should look like after the exterior’s been modified. We’ve given them, directionally, what we’re looking for…We’re also providing an interest-free loan program up to a certain dollar amount if they qualify,” said Pierce.
He expects the transition to be completed by Jan. 1.