Cendant Shifts To Direct Franchising In W. Europe

NEW YORK— Cendant Corp. has reacquired the rights to directly franchise the Days Inn and Howard Johnson brands in the U.K. and Western Europe from Premier Hotels, and plans to develop the chains aggressively throughout the continent. Premier Hotels, which has held a master licensing agreement for the brands since April 1998, has run into “financial problems unrelated to the brands,” according to William Hanley, svp/managing director of Cendant International Hotels. “We made the decision that instead of reselling the license to another company, we would operate the license ourselves,” Hanley said that Cendant has significantly grown its businesses in Europe recently, particularly in the U.K. where the company owns the National Car Park, the Holiday Cottage Group, the Cendant Travel Agency, and the CIS marketing group, which handles accounts with a number of large international banks, including the National Bank of Scotland. “We felt we had the infrastructure in place in the U.K. to operate the franchise business there ourselves,” he said. He added that the company will manage the European franchise business from its London office, which is headed by Scott Forbes, Cendant Europes group managing director. Markus Deutsch, managing director of Cendant Europes Travel Division, will directly oversee the development of the two franchises throughout the continent. Cendant has also appointed a new operations manager, David John, and a new training manager, Sarah Jones, as well as a staff of business development executives to help execute the Days Inn and Howard Johnson European pipeline. Currently, the company plans to develop 25 Days Inn properties and 12 Howard Johnson hotels throughout the U.K. by the end of 2004. Hanley noted that Days Inn properties in Europe will be smaller than the American prototypes, approximately 80 to 120 rooms, and will be located in roadside and out-of-city locations. The Howard Johnson hotels, however, will be slightly larger, approximately 150 to 300 rooms, and will be four-star, full-service properties located in city centers and suburbs. The first property within Cendants European pipeline, a Days Inn in Oxford, is set to open within the next 60 days, the company said. The company is still creating its development schedule for Western Europe. Hanley noted that Cendant plans to “build on a base in the U.K., which will help [it]to build business in the rest of Europe.” He added that business is “thriving” at the European properties and that the companys Days Inn hotel in London typically runs at 90% occupancy. “It became a question of whether we wanted to give that business to someone else, or if we wanted to do it,” he said. However, he was quick to note that Cendants move to reacquire the right to the brands in Western Europe was “an unusual situation that presented itself and not something that [the company]plans to use as a strategy going forward.” “Our strategy towards international growth has always been master license agreements,” he said, noting that it would take at least five years for a developer to move into an unfamiliar country and acclimate him/herself with the laws and regulations of building hotels there. “Our master franchisors develop and operate our hotels wonderfully,” he said. Cendant has existing license agreements in Italy and Malta in Western Europe, and has nine license agreements in Eastern Europe.