MEMPHIS, TN ? Promus Hotel Corp. is bringing back the Red Lion name after a two-year hiatus, an acknowledment that the brand still retains strong identity. The company will begin the process by reflagging 16 converted Doubletree?s back to Red Lions, according to an intelligence briefing released by Bear Stearns & Company. The company created a separate Red Lion subsidiary that segregates the brand from Promus? other brands. Promus officials did not return calls seeking comment. Jason Ader, senior managing partner at Bear Stearns, said management firmly believes that there is equity in the Red Lion name and is willing to commit the time and capital ($150,000 per property to re-flag) to make a go of it as a regional entity. At completion, there will be about 30 Red Lions. ?Most people had written off the brand but, in fact, there is value there,?? Ader said. ?They?re positioning the brand to maximize value for shareholders.? Management will give this experiment a year to yield results, before deciding whether to keep or sell these properties by the second quarter of 2000. If it is successful, they will keep and grow the business, Ader said. If not, they will sell the brand. A different issue is the real estate related to these hotels. Management will look to sell the assets (while keeping the management) in 1999. As one of his stated goals, CEO Norman Blake wants Promus to emerge in the four-star market segment, preferrably with the Doubletree brand. As it stands today, that is not possible. The brand was quilted together through a series of acquisitions and, according to Bear Stears, lacks the consistent product quality and service levels throughout the chain. By the end of 99, Promus will also be in position to determine if the Doubletree brand can become a ?four-star? brand. Properties that cannot or will not be brought up to acceptable levels on both counts will either be sold if they are company owned, or booted out of the system. Doubletree and Promus Hotel merged in the fall of 1997, creating a combined company with $5 billion in annual revenue. Before that, Doubletree and Red Lion Hotels merged in late 1996, an agreement that created one of the largest management companies in the industry. Following the merger, most of the Red Lion hotels began to operate under the Doubletree brand name, with the companies? reservation systems becoming integrated. At the time, analyst Bjorn Hanson, chairman of Coopers & Lybrand?s National Hospitality Consulting Practice, said retiring the Red Lion brand ?would be a shame, given the pricing? of the acquisition. Hanson said it might seem a waste to pay a premium to acquire a brand name and then not use it, but noted that there is an equally logical, opposite school of thought, that in a competitive situation, ?you pay the goodwill to get rid of the brand, to make it go away.? Hanson at the time noted that there were other suitors for Red Lion, and suggested that prior to the closing of the Doubletree deal, it wouldn?t be surprising to see one or two of them submit follow-on bids.
