Holiday Inn Express, Fairfield Top Economy Segment

<B>Holiday Inn Express, Fairfield Top Economy Segment</B>

By Bruce Serlen

Strong national economy or not, corporate travel buyers' eyes remain firmly focused on the bottom line, which suits executives at the economy chains just fine because it created strong demand for their product in 1999. Executives at three of these chains--Holiday Inn Express, Fairfield Inn by Marriott and Baymont Inns & Suites--now have an additional reason to be pleased: They took top honors in the economy segment of this year's hotel chain survey, claiming the number one, two and three positions, respectively.

"Business travelers remained a crucial part of our strategy in 1999," said Greg Marcus, interim COO of Baymont, which changed its name from Budgetel during the year. "We represent a great value for the product we offer. As is true for the segment generally, our properties are mostly in suburban, highway or airport locations, which works well for our typical business traveler in terms of convenience."

This core traveler appreciates amenities like Baymont's new Business First room, which comes with ergonomic chair, work desk and telephone dataports. As with business travelers at the budget level of the industry, many of the economy-level guests are sales representatives and sales managers whose jobs are becoming increasingly automated. Consequently, they need to be able to access their laptops often to file daily sales reports, and therefore appreciate these room features, according to Marcus.

As at any level hotel, the more personal the service a property is able to offer, the better. While economy class chains can't provide the bells and whistles of full service or deluxe hotels, they're hardly ready to surrender the service mantle.

"We focus on the attitude of the staff precisely for this reason," said Nick Kellock, brand vice president for Fairfield Inn by Marriott. "If staff members can be motivated to show guests genuine, friendly service, guests will have a positive experience and be more likely to return."

With corporate guests, these stakes are raised because business people tend to be stressed from life on the road and under time pressures of one kind or another.

Last month, the Fairfield Inn brand was expanded by Marriott International to include a new designation, Fairfield Inn & Suites by Marriott. The business travel market drove the change. "Our market research data indicated that business guests wanted a suite option," said Kellock.

Existing Fairfields will be affected by the change. "Where appropriate, we'll retrofit the large bays in the room to convert them into suites," he said. New builds will include suites from the start.

Meeting guest expectations starts with guest checkin at Holiday Inn Express. "The typical length of stay by busines travelers is one night, compared to two-and-a-half nights at a regular Holiday Inn," said Tom Seddon, vice president of marketing.

"Because business travelers place a high value on efficiency, many use our Priority Checkin, " he said. "Checkin is one of the stress points in staying at a hotel and since they're here for such a short stay, business travelers say they really appreciate anything that expedites it."

In this year's survey, Holiday Inn Express beat the competition on two counts: in ease of arranging individual travel and for its corporate rate program. Said Seddon, "Given how eager we are to work with corporate travel buyers, we try to provide a variety of distribution channels from an 800 number to GDSs to online." Seddon is seeing an increasing number of business travelers call the 800 number from their car phone while already enroute.

For its part, Fairfield Inn by Marriott beat the competition for its helpful and courteous staff and the overall relationship of its price to value, among other criteria. "We've really built the brand on the value concept," said Kellock.

Concerning Internet bookings, economy chains report a significant increase in the number of reservations being made by business travelers. At the same time the number is increasing, however, the percentage relative to sales overall is still quite modest.

Corporate travel managers view the trend with skepticism. "The numbers may be up--and the long-term prospects promising--but it depends on the policy and culture in place at individual companies. Here, for instance, it's not being used at all this way," said Amy Doepke, travel coordinator for the Orscheln Company, a maker of automotive systems in Moberly, Mo., and president of the Gateway Business Travel Association.

"When a corporate rate is in place, travelers can't be sure they're getting that rate on the Web," said Kathleen M. Kaden-Reven, who manages corporate travel for advertising agency McCann Erickson.

"Because it's the Internet, travelers tend to think the rate offered is the lowest, which isn't always the case," said Kaden-Reven, who is also president of the Long Island Business Travel Association. "Should they not get the lowest rate, we won't reimburse. Travelers also tend to think the Web is the most expedient way of making a reservation, which may not be true."

Kaden-Reven would much prefer having a "hot link" from her company's intranet direct to hotel chains overall, if not to specific properties in the chain that are used heavily by her travelers. "That way, we could be sure they're getting the negotiated rate," she said.

As with other industry sectors, the economy category is in the midst of an aggressive growth spurt. Baymont Inns & Suites, for example, has 170 properties across the United States and another 25 in development.

Unlike many of its competitors, Holiday Inn Express doesn't shy away from urban locations, formidable barriers to entry notwithstanding. It's even in the midst of two historic conversions of properties--in Cleveland and Santa Barbara-- that previously hadn't been hotels.

Of the more than 1,000 Holiday Inn Express locations, more than 100 are outside the United States. "Operating in places like the United Kingdom and Germany is a challenge," said Seddon, "because you want to adapt to the local culture without sacrificing your core identity."

Marriott International, the parent of Fairfield Inn and other brands, has found favor with Wall Street analyst Michael Mueller, senior lodging analyst for Banc of America Securities.

Speaking at last month's 17th Annual Hospitality Conference in New York, Mueller was bullish on franchise/management companies like Marriott and Hilton. He praised their growth prospects because of their strong balance sheets and significant free cash flow.