USFS Determined To Hold, Grow Position In Franchise Arena

ATLANTA— It looks like the gloves are off in the fight to sign— and retain— franchisees as U.S. Franchise Systems President/CEO Mike Leven told a combined Best Inns & Suites, Hawthorn Suites and Microtel Inns & Suites audience on March 4 that several hotel franchisors— notably Choice Hotels and La Quinta— have been “strategically targeting our franchisees.” During the course of a State-of-the-Company Address delivered here on the closing day of the USFS franchise conference, Leven took issue with what he painted were “unmerciful and unethical attacks by competitors [armed]with larger wallets, eager sales forces, and false promises of reservations productivity.” Admitting that soliciting franchisees who have left a particular system— or those whose contracts are expiring— has long been a routine and accepted practice in the industry, Leven pointed out these recent competitive incursions into USFS territory differ in that many franchisees being approached are those who “have just broken ground, are recently opened or about to open, or have been open less than a year.” Adding that “we have never crossed [this]ethical line,” Leven reported that USFS has “fought back with every ‘right’ means at our disposal…every legal means at our disposal…and every human being we could muster to try to help those who were under pressure.” In Leven’s estimation, what makes this “predatory practice” particularly onerous at this time is the current depressed state of the market and the challenge inherent in locating viable, financially capable franchise prospects. To this end, he noted that while 2001 “was a disappointing year for [franchisees]and for USFS,” the system did move forward on several fronts nonetheless. In terms of brand growth, Leven noted during the course of the two-day proceedings that Best opened 15 new properties in 2001, 20 Hawthorn Suites were similarly added to the fold last year, and 44 Microtel locations opened in 2001— with three coming on line in The Philippines. All told, up-to-the-minute tallies for all three brands show 131 Hawthorn sites, 132 Best properties, and 252 Microtel locations up and running— about half the critical mass Leven ultimately envisions for each. Indeed, along these lines, Leven unveiled nine items on his “to do” list for 2002. These include: • Increase franchisee profitability. • Grow USFS brands in a non-growth environment. • Do not compromise USFS ethics…under any circumstances. • Bring the Microtel brand up to 350 – 400 units. • Build Hawthorn Suites up to 200 – 250 units. • Grow Best up to 300 units. • Make sure technological innovations work, like StayOnline and e-folio (for Hawthorn). • Monitor Microtel’s MicroPass frequent-stay program and ensure the new RezView reservations system builds productivity. • Upgrade the Best website, in addition to “pushing” Evergreen rooms as its major point of product differentiation. Finally, in a look down the road, Leven maintained: “2002 is, in some ways, a new beginning for our industry after the trauma of 2001.” As such, he pointed out there have been bleaker times, just as there have been better times. And while “no one really knows when it will be like 1999 – 2000 again [if ever],” he contended that the lodging industry continues to be a business that provides considerable opportunity in many areas and at many levels.