Four Points, Hampton Gate-Crash Midprice Top Spots

<B> Four Points, Hampton Gate-Crash Midprice Top Spots</B>

New entries broke into the two midprice segments, with and without food and beverage, this year, capturing first place and forcing last year's winners to find new spots on the chart.

As expected in these segments, the top hotel chains are those that have reinvested in developing new products or renovating their existing ones. Given the tough competition in the segment, hotel buyers negotiating at this price point have come to expect lower costs and a higher quality of property.

"The new brands we're seeing here represent a fresher product than has been on the list for a while," said analyst Ted Mandigo, president of Chicago-based T.R. Mandigo & Co. "You've got Holiday Inns, Ramada Plazas and Best Westerns where there hasn't been a lot of new development of product in the past few years. At the same time, there's big inventory of these products again. As new brands come in, these older chains lose their positions and their images."

Surprising many analysts, Four Points by Sheraton took top honors in the midprice with food and beverage category. Given its lesser status compared to its sister brands, Four Points parent company Starwood Hotels & Resorts Worldwide invested more time and capital in improving these properties.

"Money is being spent on renovating Starwood's hotels," said analyst Bjorn Hanson, hospitality and leisure industry leader at New York's PricewaterhouseCoopers. "Since Four Points was the worst of the Sheratons, they've been upgrading like the rest of the industry has been doing."

Some analysts still consider the 1995 brand a new chain, though, and were surprised at its besting of Courtyard by Marriott. Courtyard ranked second, a step up from last year.

<B><CENTER>Less F&B Is More</CENTER></B>

At the same time, the top scorers in the midprice with food and beverage category are proving the trend that business travelers prefer less in the way of food and beverage offerings than in the past.

While travelers may not be willing to move to a property with no food and beverage at all, they appear to prefer hotels with less extensive kitchen operations, such as Doubletrees, Hiltons, Marriotts, and Sheratons.

"The top scorers are all the limited-food concepts; it's not the standard hotel with three meals a day and a coffee shop. They have food and beverage, but they're not out there with fine dining," said Robert Mandelbaum, director of research at New York-based PKF Consulting. "It's more limited full-service as opposed to traditional full-service. They'd rather have limited and higher quality food and beverage than a lot with little quality."

Meanwhile, the midprice without food and beverage category welcomed two new players, Hampton Suites in first place and Signature Inns in third. Again, companies that provided new guestrooms and designs moved into higher positions.

Slipping to fourth place, Prime Hospitality's Amerisuites won first place among corporate rate programs, which senior marketing vice president John Leavitt attributed to its multi-tiered approach. Sales forces in Atlanta, New York and Washington started handling Amerisuites' top 500 corporate, consortia and mega agency accounts in 1997. The Special Accounts Program, begun in June 1998, provides discount programs to about 125 companies that primarily bring volume to a single region. For smaller companies, sales teams at the individual property iron out local preferred deals.

Winning the silver this year was Country Inns & Suites, based in Minneapolis under the Carlson Hospitality umbrella, which moved up from fifth in 1998.

Company officials said rising usage rates are one of the main reasons for its success. The chain has grown about 35 percent for each of the past four or five years.

Despite industry rumors of oversupply in the midprice without F&B segments, Country Inns will continue to expand its portfolio to suburban and residential properties, said brand president Paul Kirwin. While demand might hit a peak and begin to fall, it eventually will plateau as other competitors leave the market. About 90 percent of Country Inns are newly constructed.

Remaining in the middle of the charts in fifth place, La Quinta also continues to expand, adding 24 inns and suites last year, for a total of 58 properties. The company hopes to capture even more market share as it works through its paper-clip REIT structure with Meditrust.

For travel buyers, the draw of this segment's limited service product is its price/value relationship. Eric Miller, senior travel specialist for Memphis-based Federal Express, who has 22 La Quinta properties in his hotel program this year, said the chain's strategic development plans, focused on opening near airports and restaurants, meshed exactly with what FedEx was looking for in a preferred hotel partner. In all, FedEx's hotel program includes about 15,000 frequent travelers using 600 preferred properties in 150 U.S. cities.

"When we consolidated our travel and needed to save on T&E costs, we were looking forward to a product like this," Miller said. "The only thing lacking onsite was a restaurant for dinner, but they are building their properties near restaurants anyway. And most people don't want to eat in a hotel at night. The way they built this product was phenomenal. The amenities are superior to full-size hotels."

Miller said the value ratio offered by La Quinta is helping to move its competitors in the same direction."We're growing with them and they are helping us try to watch our T&E expenses for the company," he added. "The other hotel chains are aware of these properties and it affects the market."

Unlike some midprice chains, La Quinta's construction uses interior corridors, a necessity to be included in FedEx's program, since female employees account for more than 50 percent of the company's frequent travelers. "We do rank safety and security up there," Miller said. "We're concerned, and it makes our travelers happier."

Analysts believe the decline of Clubhouse Inns of America, which fell from first place to seventh, was caused by the management of Patriot American being distracted by its financial problems. The chain's management responsibilities have been moved to corporate.