Accor Building Stable For More Economy Brands

PARIS and DALLAS? Accor?s latest move, the formation of an economy lodging division, can be described as a means to an end. The Paris-based lodging company hopes to build a multi-branded, economy growth engine that will likely include more than just the three brands it now retains. According to George Le Mener, the president/CEO of Motel 6 and president/CEO of Accor Economy Lodging (AEL), the $1.1 billion Red Roof Inn brand acquisition last month is the first of several Accor will execute in the next two to three years. ?Red Roof was our number one priority, but there are more deals out there,? said Le Mener of the company?s desire to add other lodging brands to the newly-formed economy division. As president/CEO of AEL, he will be responsible for overseeing the further growth of that division. Le Mener hinted that the next purchase will be a brand that will help grow the Studio 6 extended-stay chain, one which to date has not been very aggressive in development. But for now, AEL will focus on the integration of Red Roof Inns and its brand portfolio. With the addition of Red Roof, Accor is the largest owner and operator of lodging properties in the economy segment, with 1,112 properties and 122,000 rooms. The integration process is expected to take six months, according to Le Mener, during which time synergies between Motel 6 and Red Roof will be identified and redundant resources eliminated. Some areas that have already been identified for consolidation include: franchising, development, purchasing, marketing, sales, reservations, financial functions, construction, management information systems, and legal. But the joining of these back-of-house operational departments will in no way reflect the joining together of the Motel 6 and Red Roof brands, said Le Mener. ?Our key goal is to keep the brands separate,? he said. ?They must continue to exist as separate entities.? Combined franchising efforts will immediately be a relief for both Motel 6 and Red Roof due to the fact that both brands did not sell enough franchises in order for it to be very profitable, said Le Mener. However, combined, the numbers make much more sense, he said. Each brand has approximately 60 to 70 open franchised properties. While staff at the headquarters in Dallas will be undergoing integration, it has not yet been decided where the reservations system will be based. Motel 6 has twice the volume in reservations calls of Red Roof Inns, said Le Mener, but that does not necessarily mean that the company will get rid of Red Roof?s Columbus, OH and Springfield, IL reservations centers. Over the next several weeks, Accor will work on establishing a new management team for Red Roof and the economy lodging division. Many of those positions will be filled by Red Roof executives, said Le Mener. An AEL executive committee has already been named and includes: Emmett Gossen, group executive vp responsible for corporate affairs and development; Carol Ann Kirby, group executive vp/marketing and sales; David O?Shaughnessey, group executive vp/franchising, quality and technical resources; Armand Sebban, group executive vp/CFO; and Joe Wheeling, evp/COO of Red Roof Inns. Wheeling will be responsible for daily operations of the Red Roof Inns brand. He previously served as senior vp/external and technical resources for Motel 6. He has been with the company for six years and helped execute the $600 million systemwide Motel 6 renovation program. Following the integration process, AEL plans to execute Red Roof growth through both companion development and franchising, according to Le Mener. With most of Red Roof?s 300 hotels located east of the Mississippi River, AEL will look to increase Red Roof?s presence in the Northeast and bring the Red Roof brand to the West by securing ?highly visible locations.?