Accor Economy Lodging takes steps to get in step

Hotel & Motel Management, April 3, 2000 by Jeff Higley

Orlando--Accor Economy Lodging's integration of Red Roof Inns into its portfolio is a work in progress.

At the top of the agenda is setting priorities so Red Roof can get in step with AEL's other two brands, Motel 6 and Studio 6.

Dean Savas, AEL's vice president, franchising, outlined priorities for the coming year for Red Roof Inns:

* A franchise-agreement upgrade that includes reduced liquidated damages, better areas of protection, reduced transfer fees and a 50-percent insurance-requirement reduction.

* Complete implementation of Freight Train, the company's program that combines all billing accounts in the central-reservations system. AEL officials estimated that task should be completed by mid-June.

* A property-management-system upgrade in the second quarter.

* Complete reconciliation of accounts receivable.

* Timelier payments of travel-agent commissions.

* Greater product consistency, including eliminating mandatory continental-breakfast bars.

* Take greater advantage of the buying power of Accor Economy Lodging.

* A focused marketing effort.

* Improved communication.

Savas said one of the bigger issues is liquidated damages.

"A brand can't work for everyone all the time," he said. "When a franchisee hasn't been able to work things out, they should be able to get out of the contract."

The contract replicates the Motel 6 contract in terms of liquidated damages. Existing franchisees can make the change in the contract if they choose.

The company had to integrate the different financial, human-resources, property-management, reservations, purchasing and communications systems that Red Roof Inns and Motel 6 possessed.

Jeffrey T. Winslow, executive vice president, chief information officer, said both brands' systems were analyzed, and the company went with the best option. But, he said, it was not an easy choice. Even the eventual setup of the reservations system--Red Roof had its own proprietary system while Motel 6 outsourced its reservations--took some difficult thought and analysis .

"It wasn't a no-brainer," Winslow said. "Accor has a reservations system for its brands in France. The concern for keeping Red Roof's system was if we could convert all properties to it in time for the busy season. We will deliver."

Something from each

The company eventually chose a mixture of Red Roof's and Motel 6's systems to integrate into the other brand.

To house all of the new systems, AEL is opening a new data center in Dallas, which will be twice the size of Red Roof's and Motel 6's centers combined.

While integration is key for the brands, so is some independence, said Georges Le Mener, Accor Economy Lodging's president and c.e.o.

The brands will have separate operations, human-resources and training departments.

Le Mener said the company will save about $10 million in corporate expenses by having the brands under one umbrella.

All of this provided for an interesting eight months since Paris-based Accor, AEL's parent company, announced it purchased Red Roof.

"The most interesting thing is that there were no surprises," Le Mener said. "Usually in a merger, the technology department is the one area where you have surprises, but we didn't have any. We found exactly what we expected to find."

David O'Shaughnessy, group executive vice president, said there were a couple of unexpected occurrences.

"I was surprised by the overall quality of the properties," he said. "I was also surprised at how many people were in love with Columbus, Ohio, and didn't want to consider moving to Dallas. There were a lot of quality people that decided to stay in Columbus. I really respect that, but honestly, I hadn't planned on it."

jhigley@advanstar.com