Cendant Gives A Boost To Its AmeriHost Brand

PARSIPPANY, NJ— A new brand identity and a fresh attitude backed by financial incentives from the big guns at Cendant Corp. are pushing the chain’s baby franchise— AmeriHost— to be top-of-mind with developers and bring it nationwide. According to Chip Ohlsson, svp/franchise sales and development, some 37 new franchise agreements have been signed since December following Cendant’s deal with AmeriHost Properties (API), in which it acquired the brand names and franchising rights to AmeriHost Inn and AmeriHost Inn & Suites. API recently changed its name to Arlington Hospitality Inc. and, with interests in 70 properties, is expected to remain the largest AmeriHost franchisee. Arlington will continue to be headed by Michael Holtz and will maintain its agreement to share royalties on AmeriHost properties for 25 years. It expects to develop 15 to 20 properties per year. Currently 82 properties are open representing 5,203 room and some 15 to 20 AmeriHost properties are expected to open this year, said Ohlsson. With Arlington’s support, Cendant is widening its scope to draw in more developers for the new-construction brands. “We’re starting to deal with a lot of individual franchisees, people who have built Comfort Inns, Fairfield Inns, Hampton Inns and especially [sister brand]Super 8s. This year we’re on target to do approximately 110 franchise agreements with the average ramp-up time between 12 and 18 months,” said Ohlsson. New developers can expect to pay $35,000 to $42,000 per key (turnkey, depending on market/product). AmeriHost Inn is a two-story, 60-room prototype, while AmeriHost Inn & Suites runs three stories and 92 units, with a minimum of 20% whirlpool suites. Right now prospective franchisees can take advantage of financial incentives via a license agreement signed no later than July 1. Cash incentives payable upon opening run $70,000 for 60 to 80 rooms; $95,000 for 80 rooms plus (The incentive is forgiven one-fifteenth per year over the life of the franchise agreement). Ohlsson noted the products are SBA-financeable, with equity contribution at the lower end— 20% to 25%— depending on track record. The incentives have drawn more developers to AmeriHost, said Ohlsson, noting a slight skew toward the Suites product, given a 20% rate differential. The incentives are part of $50 million Cendant has made available to fund separate development incentive and mezzanine financing programs for new construction or conversion projects across its nine franchise brands. (See Feb. 7, 2001 issue of HOTEL BUSINESS®.) With the AmeriHost incentive, however,developers don’t go through a loan committee for approval, only a credit check. In targeting Super 8 developers, AmeriHost is being presented as a “Super 8 with a tuxedo on it. They’ve always been looking to step up to the next level and this fits that niche very nicely. They’ve been growing with Comfort Inns and Hampton Inns and now we can offer an alternative,” said Ohlsson. Founded in Ohio in 1989, AmeriHost under Cendant is expected to spread out from its concentration in the Midwest. “We see our biggest pop in Texas and the southeast regions in terms of development,” said Ohlsson, due largely to land availability. Something else set to “pop” is the brand’s new logo, a bold red, white and blue diamond reminiscent of the Superman insignia. The eye-catching graphic replaces a staid red and green diamond that was found “hard to read,” said Ohlsson. “We’re very proud of it,” said Eric Pfeffer, chairman/CEO, Cendant’s travel division. “We’re now beginning to launch an aggressive campaign to grow this brand. The previous owners realized the strength of having the brand associated with a big machine like us, where the infrastructure is already in place. We’re going to take it from regional level to national level.” As the largest franchisee, Arlington Hospitality is expecting to retrofit its signage over the next six months, which will help update the corporate image relatively