Franchisors often flexible about design to make a deal work

Hotel & Motel Management, Sept 20, 2004 by Bruce Adams

While brand standards can help make hotel companies strong, franchisors will be flexible about certain design elements, according to developers and owners who have experience with multiple brands.

"Most brands are prepared to allow a little deviation," said Larry Wright Sr., president of Wright Investment Properties, a development, owning and managing company whose 21-property portfolio primarily features Marriott International, InterContinental Hotels Group, Hilton Hotels Corp. and Carlson Hotels Worldwide branded properties. "They are more willing to bend if you have a unique structure, such as a historic building, that you have to design around. If you do deviate from brand standards, it should be parallel or an improvement over what is standard."

Some franchisors have a reputation of being far more stringent than others, according to Bill Weatherford, president and c.o.o. of Premier Hotel Corp., an owner and manager of 26 hotels flying the Suburban Extended Stay Hotels, Choice Hotels International, Cendant Hotel Group, IHG and Hilton flags.

"It is hard to make a prototype fit every possible situation," Weatherford said. "It is possible to retain the integrity of a brand and allow a developer flexibility. We deal with some unusual sites and some municipalities have ordinances that require flexibility."

Regional issues

Hotel companies will be more flexible with hotels that are being built or reflagged in downtown and urban locations.

"Almost any brand will be flexible in a downtown urban location where you can't do things easily," said Mark Burden, president and c.e.o. of Rim Hospitality, a development, owning and managing company with 20 hotels in its portfolio.

The company's hotels include brands from Carlson, Marriott, IHG, Starwood Hotels & Resorts Worldwide, Best Western International and Prime Hospitality Corp., as well as independent hotels.

"Brands are more flexible in an existing structure in an urban environment that's being converted," said Dean Morgan, president of Focus Hospitality Services, a development, owning and management company whose 20 hotels include Hilton, IHG, and Cendant brands, as well as four independents. "With space constrictions, the prototype won't always look the same."

Franchisors would likely bend their standards the most to get into midtown Manhattan, Weatherford said.

"Franchisors will allow you to take a building in Manhattan and retrofit it so the exterior does not look anything like a typical prototype," he said. "As long as the quality of the furnishings and the inside are consistent with the brand, they are happy, especially if they get into a market with high barriers to entry. The revenue stream off the hotel will be healthy, so the desire to secure the franchise fees will drive some flexibility, especially on the building's exterior."

Sometimes franchisors will waive the minimum square foot requirement in guestrooms.

"I did a Courtyard conversion where the guestroom was 6 inches narrower than it should be and they gave me that," Burden said. "But if it gets much smaller than that, the furniture package won't fit in the room."

Some hotels will be flexible even in midmarket or suburban locations.

Focus Hospitality developed a 76-room Hampton Inn in Kansas City, Kan., last year that looks like a log cabin.

"It's the only Hampton in the system like that," Morgan said. "They allowed it because all the other buildings in the development were the same type of structure."

The Hampton is next to Cabela's, a 225,000-square-foot retail building that sells hunting and fishing gear, and a 900,000-square foot furniture mart. A nearby franchised candy store and a restaurant have the same rustic look.

"Typically, Hilton is stringent about its franchise program," Morgan said. "They said we could do it without too much hesitation because they wanted to be there with their franchise. If they had said no, we could have moved on to the next franchise."

Morgan said Focus Hospitality is a preferred developer with Cabela's and he plans to develop another Hampton at Cabela's next location in Hamburg, Pa.

"There may end up being two log cabin Hamptons," he said.

Mike Patel, president of Diplomat Hotels, a development, owning and management company whose brands are primarily from IHG, La Quinta, Carlson and Accor, had a different experience when building the first of the new Holiday Inn prototype in Georgia's Gwinnett County.

"This was not IHG's fault, but Gwinnett County does not want you to use a stucco system for the exterior of the building," he said. "We had to use more steel to support the weight of lightweight concrete instead of foam and stucco. Steel has gone up 30 [percent] to 40 percent in the last year. The prototype will cost 8 [percent] to 10 percent less to build elsewhere because of the building codes we encountered."

The new Holiday Inn prototype is owner and developer friendly because it takes up less space and features multiuse space in the restaurant and bar, Patel said.