Some hotels check out of Holiday Inn chain


Before he arrived at the Beverly Garland Holiday Inn in North Hollywood, Rick Mitchell had heard it was undergoing a makeover, part of a companywide plan to standardize every room in the chain.

But the new curtains, linens and shower heads weren’t what caught his attention. It was the choice of firm or soft pillow on each bed.

“I’ve never encountered that in another hotel I’ve stayed in,” said Mitchell, a wedding officiant from Ohio who was in Southern California on vacation recently.


The improvements at the Beverly Garland were part of a chainwide renovation effort by franchise operator InterContinental Hotels Group to give guests in each hotel the same quality services and amenities, right down to identical sheets on every bed and the same easy-listening music channel playing in every lobby. It harks back to the founding goal of the 52-year-old chain: to offer uniform service at every hotel.

At the North Hollywood location where Mitchell stayed, that has meant a $2.5-million renovation, with a remodeled lobby and courtyard and flat-screen TVs in every room.

But not all of the Holiday Inn hotels -- most of which are owned by individual investors, families or private companies -- are going along with the program.

Already, dozens of hotels across the country have dropped out of the chain because of the cost of the upgrades, which run an average of $150,000 to $250,000 per property, most of which must be paid by the owners.

Still other hotel owners, including a handful in Southern California, have abandoned the chain for another reason -- to break away from the cookie-cutter image proposed by the hotel’s corporate leaders. InterContinental officials expect about 300 hotels to drop out by the time the two-year project is completed at the end of 2010.

Under the relaunch, InterContinental requires the hotels to remodel cluttered lobbies and add new bed linens, pillows, curtains, shower heads, shower rods and bath soaps, among other improvements. A machine in every hotel lobby sprays a fragrance approved by InterContinental.


Upgrades have already been completed at some hotels. Kevin Kowalski, a Holiday Inn senior vice president, said those facilities have already begun to generate up to 7% more revenue per available room than those that have not remodeled.

Hotels that fail to make the changes will be dropped from the chain. InterContinental set a Feb. 1 deadline for hotels in North, Central and South America to commit to the relaunch effort.

As of November, about 300 hotel owners had failed to make that commitment. InterContinental officials could not say how many hotel owners were opting out because of cost.

“If the owners can’t or are not willing to [pay for the upgrades], those properties are voting themselves out of the system,” said Mark Carrier, chairman of IAHI, the association that represents the owners of the InterContinental properties. “It’s not a positive thing, but we want to be part of a very high-quality system.”

Already, dozens of former Holiday Inn owners have broken ranks and joined competitors such as Best Western and Choice Hotels, among the nation’s largest economy and mid-scale hotel chains.

Those hotels that have joined Best Western or Choice Hotels won’t have to worry about paying for upgrades. Both hotel chains have forgone mandated improvements, partly because of the economic slump.

“We’ve benefited from Holiday Inn’s decision to go in this direction,” said Choice Hotels spokesman David Peikin.

At the other end of the economic spectrum are businesses like the Hotel Hanford in Costa Mesa, which left the security of the Holiday Inn chain Dec. 1 to be an independent hotel.

“We felt the Holiday Inns have a certain image,” said Donald Sodaro, president of Hanford Hotels Inc., which operates the 225-room hotel a few bocks west of the John Wayne Airport. “We felt constrained in our ability to attract the customer that comes in that area.”

Instead of investing $4 million to upgrade the hotel and meet the Holiday Inn renovation program, he said the Hotel Hanford has spent about $7 million on upgrades, including new bathtubs and a remodeled restaurant.

Another secessionist, the Hollywood Heights Hotel, abandoned the chain in the summer of 2008 to be a “boutique in waiting,” said Kathleen Cook, the hotel’s director of sales and marketing.

Its owner, CIM Group Inc., instead invested in new paint inside and out, linens, flat-screen TVs, drapes and pillows, among other improvements to attract young, hip Hollywood tourists, including guests visiting the nearby Hollywood Bowl.

The 160-room hotel also remodeled its bar and restaurant, converting it from what Cook called an “outdated and tired” eatery to a stylish restaurant with a retro 1960s look that specializes in comfort food.

The hotel lost some customers by dropping out of the Holiday Inn chain, she said, but the property is slowly rebounding. “It was tougher than we expected, but we are gaining,” she said.

The move to break free may be risky. Business is way down for hotels, and pricey ones are feeling the pinch even more than most.

Revenues per room have dropped by more than 20% this year, the steepest decline in more than 50 years.

“It’s a gamble for those guys,” said William Edmundson, a hospitality executive and consultant from Bethesda, Md. By breaking away, independent hotels lose out on the chain’s nationwide marketing efforts and reservation system, he said.

But independent hotels can succeed, he said, by attracting young, tech-savvy travelers who are looking for a unique lodging experience.

In addition, independent hotels don’t pay franchise fees, one of a hotel’s largest expenses, after payroll.

For hotels that have stayed with Holiday Inn and invested in the upgrades, there is a payoff, said Bert Seneca, general manager of the Beverly Garland Holiday Inn.

Seneca said guests have praised the improvements at the 255-room hotel over the last two years. “Our property was very tired,” he said.

The upgrades included new furniture in the lobby, potted plants near the entrance, 37-inch flat-screen TVs in each room, a new courtyard and a remodeled restaurant.

Maeve MacDermod, who has stayed at the Beverly Garland Holiday Inn several times over the last few years while on business trips from Cincinnati, said she was impressed by the new courtyard, the new carpeting in the hallways, the remodeled lobby and improvements around the pool.

“The difference in the decor was amazing,” she said. “The older rooms had a kitschy ‘70s feel, while the newer ones had new carpet, updated bed and window linens and a definably more modern feel.”