Holiday Inn Express, Econo Lodges Lead Sectors

<B> Holiday Inn Express, Econo Lodges Lead Sectors</B>



The economy and budget segments held no surprises for industry analysts or travel and meetings buyers this year. With Hampton Inns moving to the midprice without food and beverage category, Holiday Inn Express solidified its position in the industry and slid into the first-place economy slot. Last year, it had tied for second place with Fairfield Inns.

Using a combination of new construction and renovation, Holiday Inn Express and Ramada Limited increased their usage and improved their buyer image.

"They have been successful getting franchisees and new builds," said analyst Robert Mandelbaum, director of research at New York-based PKF Consulting. "They both include a lot of older core brands that have been converted. Those brands were initially full-service properties that were worn down and given a flag. But there's been new inventory with a name on it that has made an impact."

Red Roof Inns moved up from sixth to fourth place by renovating existing properties, opening new ones and reducing rates chainwide, said senior sales and marketing vice president Steve Parker. The company spent about $70 million on renovations in 1997, and last year opened 40 new properties. Fifty more Red Roof Inns are slated to open in 1999, half of them new constructions and the other half conversions of hotels from other brands.

But most importantly, Red Roof Inns listened to its buyers, reassessing its pricing strategy and reducing its rates.

"The business traveler was telling us the product was getting worn and a little outdated, and travelers were feeling that the price/value relationship was not as good as it had been," Parker acknowledged. "They believed our prices might have gone a little too high."

Last year, Red Roof Inns increased its sales force and partnered with several companies, including Pizza Hut and a telephone card company, to update its guest amenities and services. "We try to make sure we don't get a bad case of amenity creep," Parker said, "but we try to have the items business travelers need."

In the budget arena, Econo Lodges of America moved from third place to first, while Microtel held its second-place position. Constantly trying to grow its business traveler client base, Microtel is developing many of its new properties near airports.

"In terms of perception of the product, Microtel has an appropriate ranking," said analyst Ted Mandigo, of Chicago-based T.R. Mandigo & Co. "When it gets more representation, it will move up more. The people surveyed know the product and know what to expect."

While improving upon its location choices, the company also won the category of physical appearance. Even in this cost-conscious segment, it believes the key to winning and keeping customers lies in combining location with good-looking accommodations. All Microtel properties are new construction.

"It seems like more and more companies are cutting back on costs and looking to new construction," said Barbara Weiner, Microtel spokesperson.