PARSIPPANY, NJ— Nine months into a major restructuring, Cendant Corp.’s hotel division last month found itself revamping again, with significant staff cuts and shifts being made at various levels of the organization, from brand presidents to media relations personnel. The division eliminated 75 existing jobs and it will not fill 55 other positions that had been open. At the same time, as part of a four-pronged strategy aimed at raising the bar on quality, value, profitability and distribution growth for its nine brands, the division said it intends to cull U.S. properties that are not meeting quality standards, expecting to purge at least 300— or 7%— of its franchise properties from the system by year’s end. It gave a first wave of 300 franchisees 10 days from initial notification to state their intentions to shape up, including working out fee-payment defaults, with an additional 90 days to complete the changes before they’d be dropped from the system. The targeted properties already had been cited for “numerous QA failures” or had reneged on paying franchise fees to Cendant. Hotel Group Chairman/CEO Steve Rudnitsky said he worked with several divisional teams over the past months “to really sort out the strengths, the weaknesses, the opportunities and the threats to the business. We came out with a very compelling business analysis that said we really needed to change our overall business proposition to the franchisee community. That really needed to start, first and foremost, with customer satisfaction— their customer satisfaction. When we got into the numbers… it was clear that the customers that weren’t satisfied with our product was in correlation to the QA measures that we had by brand. In fact, they were directly correlatable. It became clear to us that while we have many consumers that are very satisfied with our good properties… that the few properties that were not up to our standards were hurting customer satisfaction, and that’s not a tenable proposition for a brand-oriented company like ours.” More cuts are expected to follow, representing as many as 40,000 rooms in addition to the 20,000 to 30,000 rooms dropped annually— as part of a continuing overall plan by the division to improve all its brands, which include Days Inn, Howard Johnson, Travelodge, AmeriHost Inn, Super 8, Wingate Inn, Ramada, Knights Inn and Villager. Rudnitsky said the division would work through the first 300 properties with them either getting fixed or “amicably parting company. Then we’re going to go on to the next 300 properties.” He didn’t consider as feasible a “shotgun approach” of notifying all under-performers at once— “we need to be far more laserlike in our initiatives”— and non-domestic properties are not in the mix. As far as the financial impact tied to the potential of losing poor performers, Rudnitsky did not provide figures, but acknowledged “it was not a painful process,” noting such properties already have RevPARs that are “pretty damaged.” As far as division-sponsored financial support to franchisees looking to fix their hotels, Rudnitsky said there weren’t any specific initiatives in place currently. “The stronger performing hotels, they typically don’t need our assistance, and they’re the ones we really want to focus against as we roll out our new marketing initiatives. Having said that, we certainly want to help franchisees that are genuinely good operators, that are struggling at this point in their company’s lifecycle. I’m sure we always look at different options for these people, but I know we don’t have anything specific in place,” he said. On the flip side, cutting poor performers opens up “huge opportunity” for the franchise sales team in terms of distribution in markets previously hindered from further growth, according to Rudnitsky. He also noted a more consistent product in the marketplace will allow for more effective marketing in tandem with specific initiatives by brand in the future. Sta
