ATLANTA— While the 2005 U.S. Franchise Systems, Inc. Conference & Trade Show here gave plenty of the spotlight to the company’s three traditional brands— Microtel Inns & Suites, Hawthorn Suites and America’s Best Inns & Suites— it was the most recent addition, AmeriSuites, which garnered the most attention during the event.
Following the January 2005 acquisition of AmeriSuites by USFS’ parent company, Global Hyatt, the parent firm turned around and assigned control of the brand to USFS. In the words of Mike Leven, USFS’ president and CEO, that turn of events will subsequently bring benefits to the rest of the group’s brands.
“A few weeks ago, AmeriSuites entered our family of brands with high prospects to become a leader in its competitive set,” Leven said. “The addition of AmeriSuites lowers marketing costs for our other brands and makes more dollars available to do all we can with what we have as we look ahead to the time we have over the next three years of this cycle.
“There are not only financial benefits, but emotional and psychological benefits as well for all of USFS, as the halo of a solid, well-known, high-quality hotel chain enters our portfolio,” he added.
Leven also mentioned that between now and the end of 2006, AmeriSuites, which has 143 properties in its portfolio, will be repositioned as a direct competitor to Hilton Garden Inn and Courtyard by Marriott. Jon Leven, USFS’ senior vp, marketing, pointed out that USFS won’t be selling AmeriSuites franchises for about three to six months as the rebranding begins. Many of the brand’s properties will also be renovated, and Hyatt will continue to own and manage 100 of them in all, while the rest of the portfolio will be franchised.
Impact On Hawthorn
Mike Leven noted that USFS will try to identify any impact that the AmeriSuites addition creates for current brands, specifically Hawthorn Suites. But one positive implication for Hawthorn will be the fact that it will now be sold in unison with Hyatt and AmeriSuites to corporate accounts.
“As you may know, some of our larger competitors derive advantages by jointly representing their family of brands with corporate decision makers,” Leven said. “I believe that leveraging the Global Hyatt national sales force represents a terrific opportunity to expand Hawthorn Suites’ penetration into key Fortune 1000 corporations.”
During the course of Hawthorn’s general session, Leven revealed that the brand’s aggregate RevPAR rose 4% in 2004, which trailed only Residence Inn by Marriott and Homewood Suites. Those two brands, respectively, posted 5.7% and 6.1% RevPAR gains in 2004.
Later on during the session, Leven announced that in 2005, new Hawthorns will be opening in such places as Victorville, CA; Carson City, NV; Laredo, TX; West Palm Beach, FL; Charleston, SC; and Sandy Springs, GA. But despite those future additions, the number of Hawthorns isn’t growing by leaps and bounds, according to Leven, who noted that “in fact, in 2004, brand management successfully removed nine hotels that could not meet the quality standards required. These hotels will not be missed. And for 2005, we have identified four more locations that, frankly, will be encouraged to leave the system. We cannot settle for anything less than 100% effort to meet our standards.”
Leven also mentioned that during the past year USFS’ Senior VP of Development Chick Armstrong and his team have been working on developing a new-build prototype for Hawthorn that could trim more than $500,000 in building costs from previous designs for a 92- to 100-room suite property.
Meanwhile, Microtel Inns & Suites apparently continues to impress guests, as Leven noted during the brand’s general session that it has won the J.D. Power award for customer satisfaction in the economy hotel segment for three years running.
Helping to bring the brand to that position has apparently been its rise in overall occupancy, which moved from 55% in 2003 to 56.3% in 2004. Leven added that he expects that percentage to climb near 60% in 2005. Furthermore, Microtel’s overall RevPAR rose to a chain-wide average of $28.04 in 2004, a figure that outpaced such competitors as Days Inn, Super 8, Econo Lodge and Motel 6, according to Leven.
In terms of development, the brand saw 15 new hotel openings in 2004 as well as 22 groundbreakings. By the conclusion of 2005 there should be another 25 openings, which would bring the brand to a total of 285 hotels.
Both Mike and Jon Leven also asserted during the session that the brand’s Project Reveille— which provided free wireless high-speed Internet access, free local phone calls and free long-distance calls in the continental U.S. to all Microtels— has been a success with guests. Hawthorn could one day provide similar free amenities, according to the company.
As for America’s Best Inns & Suites, it seems that its recent name change from simply Best Inns & Suites has brought some marketing advantages to the brands’ franchisees since the new name has acted as a type of differentiator. The name was changed in 2004 when Best Western won the rights to the singular “Best” designation in a lawsuit against the USFS brand and Best Value Inn, which subsequently changed its name to Americas Best Value Inn.
“I have also received questions regarding Americas Best Value Inn and why we didn’t object to that naming,” Mike Leven noted. “However, our lawyers advised us that ‘Americas’ is not a protected name. Frankly, with about 400 Americas Best Value Inns out there, it makes us look bigger as a brand when customers confuse us with them.”
Failed Attempts
Leven added that he actually tried to acquire ABVI two years ago and, in turn, ABVI tried to do the same with America’s Best Inns & Suites to no avail. Also of note during America’s Best Inns’ session was the fact that it came in second in the J.D. Power customer satisfaction ratings for the economy segment in 2004.
In addition, Mike Leven revealed that the brand’s contract with Evergreen Rooms, a supplier of water and air filters for guestrooms, will end in April and will not be renewed because it was too difficult to make franchisees adopt Evergreen as a brand standard. Going forward, the amenity will be offered in only those individual hotels that choose to renew their contracts with Evergreen. The Evergreen Room amenity package had been used as a brand differentiator for America’s Best Inns.