Cloudy Forecast Fails To Frighten Econ., Budget Chains

<B>Cloudy Forecast Fails To Frighten Econ., Budget Chains</B>

By Bruce Serlen

Thoughts of a softening national economy, which might lead to a downturn in business travel in 2001--and hence in the lodging industry--are being met with equanimity by the leading chains in the economy and budget categories of Business Travel News' 2001 Top U.S. Hotel Chain Survey.

"It may well be a tough year coming," said Ravi Saligram, brand president of the Americas for Bass Hotels & Resorts, whose Holiday Inn Express brand placed first in the economy category. "There are some early signs of softening, with demand levels not as robust as they had been. Historically, however, when economic conditions are difficult, travel managers look for brands that offer greater value."

The amount of travel that occurs in a downturn may well increase or, at least, remain stable. "Business travel will continue and chains that operate at more economical price points may see their market share rise," said Carol Kirby, group executive vice president for Accor Lodging North America, whose Motel 6 brand placed first in the budget category this year. As a result of this silver lining behind the cloudy economic forecast, both Saligram and Kirby said they were confident about their brands' prospects for 2001.

As different lodging segments look to pull market share from the segments above them, Bear Stearns industry analyst Mark Abramson noted that in 2000 midprice chains found themselves increasingly squeezed from below by the "more modern" budget chains.

"In the United States, Holiday Inn Express crossed the 1,000-property mark in 2000," Saligram said. "There are another 140 in international locations. On average, we've been opening a new hotel every three days, so the momentum is there for further success in 2001."

The company's market research suggests that many of Holiday Inn Express' business travelers are self-employed or traveling on a per diem. "They're drawn to the brand's efficiency and convenience," Bass' Saligram said. "They see it as limited service, but not in the sense of something lacking. Rather, they see the value in not paying for services or amenities they neither want nor need."

At Motel 6, extensive renovation has accompanied expansion in recent years. "Business travelers who haven't visited a budget property lately are positively impressed," Accor's Kirby said. "Many of the amenities that they expect at higher price point hotels, such as dataports and T-1 phone lines, have been incorporated into the brand standards here."

Motel 6, which has 800 U.S. properties, completed its renovation program last year. "Because our properties are mostly company owned, we're able to develop brand standards and make sure they're in place," Kirby said. Given that Motel 6 is strongest on the West Coast, Kirby expects development in 2001 to focus on the Midatlantic and Northeast.

In the survey, buyers singled out Holiday Inn Express for its corporate rate program, timely commission payments, and the properties' physical appearance. In its category, Motel 6 also was recognized for its corporate rate program and overall price-to-value relationship.

The runner-up to Holiday Inn Express in the economy ranking was Baymont Inns & Suites, which formerly was known as Budgetel. Baymont received high marks for its ease in arranging individual travel, helpful and courteous staff and overall relationship of price to value.

The runner-up to Motel 6 in the economy segment, meanwhile, was Econo Lodge, which is part of Choice Hotels International. It placed highest for ease in arranging individual travel and for its helpful and courteous staff.