Cendant Unveils Reorgation Plans; Reports New Strategy For Hotel Group

PARSIPPANY, NJ— Cendant Corp.’s hotel group has launched a long-term strategic business plan “designed to ensure the future growth and competitiveness” of the company’s hotel brands and franchised hotels, according to a statement. The Wall Street Journal reported earlier today that Cendant plans to trim as many as 300 hotels from its franchise system in an effort to eliminate substandard properties. As part of the cuts, Cendant will lay off 75 of its own employees in the lodging division and not fill an additional 55 positions, the Journal said. According to a statement from Cendant, Steve Rudnitsky, hotel group chairman & CEO, said the plan is founded on four principles: 1) re-establishing the brands value proposition, 2) improving the profitability of the companys franchised hotels, 3) ensuring the integrity and consistency of the franchised hotels, and 4) growing the system carefully through judicious site selection. A key component of the strategic plan is Project Restore, a campaign to purge its systems of substandard quality hotels as well as franchisees who have defaulted on fee payments. According to the Journal, Cendant sent out notices to the 300 hotels on Aug. 16, and the owners have 10 days to respond with suggestions of how they might meet the companys standards. Issues addressed included: the installation of electronic key locks, towel thickness, carpet wear and tear, and how the reservation desk handles customers. Project Restore will eliminate up to an incremental 40,000 rooms, or 7% of Cendants domestic hotel system, in addition to the normal 20-30,000 rooms terminated annually, Rudnitsky said in a statement. Paralleling Project Restore, Cendant plans to remove brand signs more quickly from the hotels of terminated franchisees who refused to do so on their own. Project Restore will be supported by a “new, strategic approach to franchise sales,” he said, which will involve repositioning some brands and restructuring franchise development efforts into a portfolio sales approach. In conjunction with the rollout of the strategic plan, Cendants hotel group implemented a 15% reduction in force to “realign the staff with the strategic plan and reallocate resources, making millions of additional dollars available for media advertising across all of our brands,” Rudnitsky said. Among several initiatives to re-establish its value proposition, the hotel group early next year will introduce the “most important marketing initiative in the hotel groups history,” a company-wide frequent-traveler program, Rudnitsky said.” In addition, he noted, Cendant has accelerated efforts to increase yield from the Internet. Rudnitsky announced the following staff changes today: Jean Thomas was named svp/brand strategy, responsible for developing comprehensive, long- and short-term marketing strategies for Cendants nine lodging brands as well as managing the hotel groups research team and overseeing multicultural and cause-related marketing. She formerly was a vice president of marketing for Kraft Foods, responsible for a variety of consumer and business-to-business marketing organizations. Bob Weller, who had served as group president/CEO in charge of the Super 8, Wingate Inn, AmeriHost Inn, Knights Inn and Villager brands, now will administer a reorganized group consisting of the Days Inn, Super 8, Howard Johnson, Travelodge, Knights Inn and Villager brands. Weller, a 28-year veteran of economy lodging, had served as group president & CEO since November 2001. Joe Kane, a 36-year lodging veteran who had served as group president/CEO overseeing the Days Inn, Ramada, Travelodge and Howard Johnson brands, will return as president/CEO of the Days Inn brand, which he headed for six years until last November. Nancy Poor was named Travelodge president and CEO. A 25-year marketing and hospitality veteran, she had served as group vice president of marketing, supporting the Days Inn, Ramada,