Last Year's Winners Dominate Leading Slots

In 10 years of polling our 55,000 readers, the business-travel decision makers who control more than 120 million room nights, <I>BTN</I> annual hotel surveys have identified a group of perennial all-stars: the luxury Ritz-Carlton, upscale Hyatt, Marriott and Westin, midpriced Hilton Inns and Courtyard by Marriott, and economy Hampton Inns and Fairfield Inns.

Those chains again took the top slots this year, joined by new entries Dusit/Kempinski and Holiday Inn Select debuting among the top three in their categories.

This year we garnered more than 500 total responses, with Marriott's Residence Inn gaining the highest usage across all segments, at 83.8 percent. Marriott's Courtyard brought in the highest midpriced usage at 81.7 percent, while its core brand topped the upscale usage at 80.7 percent. Hampton Inns, at 79 percent, gained the fourth highest usage, followed by Hilton at 69.7 percent.

This year we revamped the all-suite category--where suites had competed across price points and with extended stay brands--placing each all-suite chain in the appropriate upscale or midpriced categories and creating a pure extended stay segment.

Analyst recommendations prompted us to switch Fairmont and Swissotels from luxury to upscale this year and La Quinta from midpriced to economy.

The flurry of mergers and new extended stay brands are bound to shake up next year's results, as Doubletree attempts to increase its might with a Red Lion acquisition, Regent gains Carlson's backstage eminence and Hilton allies with its overseas namesake and tries to capture the Sheraton flag.

Luxury Brands

The unbeatable Ritz-Carlton Hotel Co. took first place for the fourth year in a row, despite new entries this year such as Sheraton Luxury Collection and Dusit/Kempinski. The chain swept seven of the 14 categories and topped the usage percentage, at 51.8 percent, followed by Four Seasons' 30.1 percent usage.

While analysts have attributed the chain's past triumphs to lavish spending of its owners' money, many noted that it has become more efficient under the influence of 49-percent-owner Marriott.

"Ritz-Carlton is getting control of some of the expenditures that are not valuable to the guest," one source said. "They've dealt with overstaffing. So even though it's causing head-count reduction, it's actually improving service. This is an indirect benefit of Marriott, and guests see that. "

Four Seasons-Regent fell this year from second to fifth place, losing ground to Mandarin as well as newcomers Sheraton Luxury Collection and Dusit/Kempinski.

"I'm flabbergasted that Sheraton and Kempinski have popped ahead of Four Seasons," said Ted Mandigo, director of Landauer Associates Inc., Chicago. "Although Ritz-Carlton has a broader distribution base, Four Seasons has the quality that should have put them close to the top."

Upscale Update

Westin took first place for the third consecutive year, this year sharing the top slot with Hyatt. Westin swept the business center and business amenities categories as well as quality and variety of in-room amenities, while Hyatt won the frequent-traveler program and ease in arranging individual travel categories.

Both chains have refined their images under new leaders and bold ads over the past few years, analysts said.

Westin president Juergen "J.B." Bartels "is fanatical about the details," one source noted. Travel managers such as Philips Electronics' Bob Brunner herald the chain's "landmark props with splendid amenities."

Westin also won the first J.D. Power & Associates/Frequent Flyer magazine hotel survey, followed by Renaissance, Hyatt, Marriott and Omni. Announced last month, the survey of 3,584 frequent business travelers evaluated 11 upscale chains.

Hyatt has steadily climbed BTN 's survey each year, finishing fourth in '94, third in '95, second last year and finally tying for the lead this year. "I think that Hyatt is on the verge of edging Westin out," Mandigo said.

The two chains managed to win despite taking the early-checkout fees nationwide this year--a strategy matched only by Hilton. Yet those fees may explain why each chain lost points in the key corporate-rate category, analysts noted. Hyatt, which won that category last year, fell to 11th, while Westin fell from third to 13th. Wyndham won the corporate rate category this year--although the chain finished 11th overall--followed by Sonesta, Hilton, Inter-Continental and Marriott.

Hyatt also broke Marriott's seven-year winning streak in the frequent traveler program category. Marriott placed second this year, followed by Sheraton.

"Marriott had predicted that they were losing ground in their frequent guest program this year," one source said. "They're about to announce new enhancements to the program that should be very unpopular with their owners and franchisees."

Runzheimer International senior consultant Rolfe Shellenberger stuck by Marriott, claiming that the chain, along with Hilton, still offers the best program.

"Hilton offers double dipping--both hotel and airline points--and Marriott will give you miles for anything, even lunch."

Landauer's Mandigo noted that "Marriott tends to focus their marketing on business hotels, while Hyatt promotes exotic locations and a bit more glamour."

Two smaller chains, Sonesta and Peabody, which last year did not gain enough usage percentage to make the final cut, tied for fourth place this year.

Peabody won the categories of timely commission payment and helpful and courteous staff, took second place for business center and took third place for quality of food, business amenities and price/value relationship.

Sonesta placed second for facilities for resort meetings as well as corporate rate.

"This tells me that corporations still recognize smaller chains and boutique hotels," said Mandigo.

At a time when hotels have taken food and beverage to extremes, either focusing on it intensely or outsourcing to fast-food brands, Peabody has taken the former route, said Robert Mandelbaum, director of research and vice president, PKF Consulting.

"They're leveraging the popularity of their food and beverage to gain rooms business. The Peabody is the largest meetings property in Memphis. Their restaurant, Chez Philippe, is the place to eat in Memphis."

With just two properties--in Memphis and Orlando--the chain "can't go very far wrong," one analyst noted. A third Peabody currently under construction in Arizona is slated to debut in the coming months.

This year we mixed Embassy Suites into the upscale category after splitting up the former all-suites category. The chain that was eighth among the all-suites last year ranked 15th among 30 upscale chains this year.

Analysts, dismayed with the low rating, surmised that the chain is caught between the upscale and midpriced segments. "You get more square footage at Embassy but more-formal service--the four layers of bellmen--at Westin," Mandigo said.

Walt Disney World Resorts fell from third to sixth place while still winning two categories: facilities for resort meetings and overall price/value relationship.

The Florida chain's array of midpriced hotels mixed with grand upscale properties could have swayed its ranking, analysts said. "The Grand Floridian is one of the country's top resorts, whereas the Caribbean Beach is more midpriced," Mandigo said. "That broad range of facilities throws their rating off track."

One source noted that the chain is not keen on negotiating, while others said the properties had fallen into disarray.

"When I was there and walked around, it looked like everything needed a renovation," another source said.

Meridien fell from fifth place to 29th. While last year's rating might have been a fluke, the chain has lost some of its U.S. presence recently, including its Chicago hotel. "They've just fallen off the radar," said Mandigo.

Hilton, which fell from eighth in '95 to 10th last year, this year fell two more notches to tie with Loews for 12th.

While the chain boasts an array of high profile properties such as the Waldorf-Astoria and Beverly Hilton, its international hotels need sprucing up, analysts said.

"Someone needs to grab that international operation and shake it," said Mandigo. "They're losing ground with their aging international hotels. As Hilton and its international namesake, owned by Britain's Ladbroke Group, have only recently united, star chief executive Stephen Bollenbach hasn't had time to impact that organization, Mandigo said.

"Mr. Bollenbach is known for his business genius in terms of doing deals," one source said. "He is focused on expanding the company, while the service and operations aspects fall under another team's responsibilities."

"I think Hilton has been in a decline for a long time," another source said. "The chain invested a lot of money a few years back, cleaned up the assets and raised people's expectations of Hilton but haven't been maintaining things as well."

Runzheimer's Shellenberger thought Hilton should have fared better. "They've got some problems with inconsistency. Sheraton had the same problem, but both hotels are working on that. Sheraton has put a lot of money into its properties over the past few years, and it's showing."

Midpriced

On a five-year winning streak, Hilton Inns and Hilton Garden Inns again took first place. While analysts last year attributed the rating to the glamour of the Hilton name--to perception--this year they tagged "new and innovative" as the key. "There's an absolute bias toward new properties," one source said.

Like Westin, Hilton Garden Inns swept the amenity categories, winning quality of business center and business amenities as well as quality/variety of in-room amenities.

Newcomer Holiday Inn Select debuted well, placing third overall and winning the categories of ease in arranging group travel, corporate rate program and overall price-value relationship. While the brand is priced slightly above the standard Holiday Inns, travel managers concur that it's worth it.

"The chain took the best Holiday Inns and created a separate category, so they should have moved up," said Mandigo. "They've skimmed out the best properties."

Wyndham Garden hotels, which last year debuted at fifth place and drew raves from analysts, this year jumped to second, winning the helpful and courteous staff category and placing second in the physical appearance, business center and quality and variety of in-room amenities categories.

"Wyndham has done a very good job of instilling in their people the kind of guest relationship that brings people back," said Mandigo.

Country Inns & Suites placedfourth, jumping from the 10th slot last year to surpass the venerable Courtyard by Marriott chain.

The 73-property Country chain won the categories of timely commission payment and physical appearance.

"I was surprised that they surpassed Courtyard," one source said. "While they're excellent products, they don't have that much market share yet."

Courtyard fell from second place to fifth as Holiday Inn Select, Country Inns and Wyndham Garden stepped ahead. After a climb from fourth place in '94 to third in '95 to second last year, the chain lost points but not guests.

"For a period of about six months I could not get a room at a Courtyard," said Runzheimer's Shellenberger. "They were sold out every time. They're reliable, clean, consistent."

That occupancy crunch has driven rates up, rivaling the upscale Marriotts in some markets, analysts noted. "Marriott never misses a beat," Shellenberger said. "If they're getting the volume, they raise the rate."

Another source noted that Marriott has been trying to keep Courtyard from breaking out of the midpriced niche. "Marriott felt that Courtyard was getting too close to full-service Marriotts and has looked for ways to downscale Courtyard a bit."

Others noted that Holiday Select, Country Inns and Wyndham Garden Hotels have infused the market with newer models, while Courtyards are getting older.

Four Points Hotels/Sheraton Inns fell from third place to ninth, though the chain won the frequent traveler program category this year.

"When Sheraton first announced Four Points, it converted the best ones first," one source said.

"The initial promotion of Four Points was fairly strong," concurred Landauer's Mandigo.

Shellenberger defended Best Western, which gained 61.5 percent usage--the midpriced segment's second highest--but fell to the bottom of the list. "Best Western should compete in the economy category. They represent a very high value and are much better in terms of consistency than some of the others on the list."

Economy

Fairfield Inns dashed Hampton's three-year winning streak, taking the first place slot this year.

Best Inns of America, the regional chain that matched Hampton for first place last year, fell to 14th place, while Shoney Inns fell from fourth to 12th and Holiday Inn Express jumped from sixth place to third. (Best Inns and Shoney are not listed in the chart because they did not have enough usage.)

"Fairfield's a winner for the economy-minded business traveler," said Philips' Brunner. "They offer a consistent line of properties and a friendly and courteous staff."

While most analysts thought Hampton should compete with Courtyard in the midpriced segment, some noted that the chain's properties are approaching seven years old. That's when hotels have their biggest capital expenditure requirement, and they're running such high occupancies that no one wants to take rooms out of service.

Budget

Susse Chalet took first place for the second year in a row. "They've cleaned up their act, improved their image," said Mandigo. "They seem to have a very loyal following," said Bjorn Hanson, hospitality industry chairman for Coopers & Lybrand.

The chain, which only this month announced a mission to step up to the level of Hampton and Courtyard, has poured $8 million into its 36 New England and midAtlantic properties. Rooms, which averaged eight years old in '94, now average three and a half years, and exteriors feature upgraded lighting, landscaping, signage and resurfacing.

Econo Lodges shot up from eighth to second place this year and claimed the highest usage percentage at 45.9 percent, up from last year's 29.6 percent. Motel 6, which had finished near last in past surveys, jumped ahead this year as well, from seventh place to third. The key to both ratings, analysts noted, are chainwide overhauls with strict prototype designs.

Super 8, which pulled in 37.8 percent usage--second only to Econo Lodge--slipped from fourth to fifth place. "They do more than any other brand to maintain their franchise standards," said Coopers & Lybrand's Hanson.

Extended Stay

The new extended stay category ranked Residence Inn, Woodfin Suites and Manhattan East Suite Hotels as the top three chains.

"Manhattan East is a very good value in New York," Hanson said. "It's twice the space and more like a real suite."

"Both Residence and Manhattan East are willing to work with corporations on pricing structure," said Philips' Brunner.

Most analysts would have boosted Homewood Suites and Summerfield Suites to higher slots.

"Many Homewoods are former Residence Inns that have been reflagged," said Mandigo.

Many of the new brands didn't gain enough usage this year--such as Extended Stay America--but should emerge as strong contenders next year.