<B> HoJo Heads To Europe</B>
By Cheryl Rosen
Howard Johnson is hitting the road with a major global expansion that will bring 40 hotels to eight European countries in the next five years.
HoJo president Mary Mahoney last week announced the signing of a master franchise agreement with Premier Hotels Plc of the United Kingdom to develop hotels in Austria, Belgium, Germany, Luxembourg, the Netherlands, Portugal, Spain and Switzerland.
Premier, which already holds the U.K. franchise, is scheduled to open one Howard Johnson in Birmingham this year and one in London in 2000. Stones Hotels Ltd. in February was awarded the first European franchise, under which it will open 20 properties in Italy over the next 10 years.The contract "will set the stage for Howard Johnson to be recognized as a strong midmarket global brand on a continent that has no such product," Mahoney said. Where in the United States 75 percent of all hotels operate under the brand names of chains, only 30 percent of U.K. properties and 10 percent of those in Spain do.
After watching the European market for 20 years, HoJo and parent Cendant Corp. decided the time is right as the continent moves rapidly from a national to a trans-European marketplace. "A business traveler whose traditional route was in Germany, for example, and who always stayed in the same local hotel, now has four countries to cover. They're becoming road warriors, like we are in the U.S.," she said.
Owning the master franchise gives Premier the right to either open hotels itself or license the Howard Johnson name to franchisees of its own. But "the expectation is that at least initially Premier will own, operate and manage them itself." The new Howard Johnsons also are expected to offer average daily rates of about $75 a night in city locations and $40 or $50 a night "on the highways and byways."Like all Howard Johnsons, the European properties will get a standardized reservation system from Cendant that includes front office, yield management and Internet-based reservation systems that allow all properties to book travelers at another HoJo online, bypassing the GDSs, and to access guest profiles.
The addition of a higher-than-average business-oriented clientele in Europe also is expected to lift the percentage of business versus leisure customers at Howard Johnson from the current 54-46 ratio to a more 46-54 split.
Mahoney would not cite the exact amount Premier paid for the right to use Howard Johnson's name, but she did say "to tie up a market as important as Europe obviously costs a lot--certainly well over $1 million."She also said HoJo has been upgrading its domestic franchise program, terminating contracts with 200 properties that fell below par.