Business News: laying out the welcome mat

Black Enterprise, Oct, 1998 by Herbert L. White

Cendant Corp. signs hotel franchise deals with black ownership groups

Cendant Corp. is looking for a few good innkeepers. Hot on the heels of the NAACP initiative targeting the hotel industry nationwide, the Parsippany, New Jersey, parent company of eight economy lodging chains, including Days Inn, Ramada Inn, Travelodge and Howard Johnson, started an aggressive diversity initiative last year to recruit African American hotel owners. And their search is paying huge dividends now as they recently signed over 40 franchise agreements with several African American licensees.

"We are actively recruiting across North America, trying to interest African Americans to take a hard look at franchising," says Robert Zapletal, former president and CEO of Travelodge Hotels Inc. "Our goal for this year is to encourage 20 franchisees from the African American community to join the Cendant family." Prior to this initiative, Cendant had only three African American franchisees.

The lodging industry has come under attack in recent months for its failure to advance minorities in management and ownership roles. The NAACP gave most of the largest hotel chains below-average or failing grades in their relationships with African American employees and vendors (see "Sleeping With the Enemy," Newspoints, June 1997). Zapletal says Cendant started its initiative as a result of that survey. It was a move not lost on NAACP President Kweisi Mfume, who noted Cendant's commitment was a sign of "positive movement within the lodging industry." Cendant had previously earned a "C" from the NAACP, which was later upgraded to a "B."

The first franchise to start operations under the new initiative is located in Charlotte, North Carolina. Westside 2000 Ltd., an investment group led by the city's first African American mayor and U.S. Senate candidate Harvey Gantt, opened a Travelodge Hotel in July. "Cendant was very aggressive in our being part of their system. We felt they really wanted us," says Gantt, whose group spent $2 million to purchase a bankrupt hotel and cafeteria in the heart of Charlotte's African American community and an additional $2 million on renovations. Cendant also has deals to open Ramada Inns in Dallas and Lancaster, Pennsylvania; a Super 8 Motel in New Orleans; four Wingate Inns in Texas and Florida; and a pair of yet-to-be-named brand affiliates. The names of Cendant's other minority franchisees have not been disclosed.

Gantt's 105-room Travelodge Hotel & Suites will also provide another boost to Charlotte's African American community, which is undergoing something of an economic renaissance after years of neglect. The hotel and an adjoining cafeteria will employ 300 people. "Other businesses have been sprucing up in the area, and for us to come back as a totally renovated hotel and getting it under a national flag will have a good impact," says Gantt.

Cendant's program hinges on five major issues: franchise development, supplier development, philanthropy, career development and mentoring, and target marketing. To help spur growth, Cendant has developed Keys to Success, a development program open only to new minority franchisees. Twenty qualified applicants receive $1,000 a room for properties up to 74 rooms and $1,500 for properties of 75 or more rooms, with a limit of $150,000. The funds are to assist with start-up business costs. Cendant has joined the New York-based National Minority Supplier Development Council in hopes of building relationships with potential vendors, and is working with Caroline Jones Inc. (No. 12 on the BE ADVERTISING AGENCIES list). It plans to spend $2.5 million on media placements promoting its diversity initiative.

"Cendant is one of the few clients we have that not only understands how profitable the African American market can be to its various business lines," says Caroline Jones, "but also recognizes the potential for viable business partnerships with African American entrepreneurs."