Are seven hotel brands in one huge chain a stroke of genius or too much of a good thing? The duo who put Tip O'Neill in a suitcase say marketing can make it the people's Choice.


September 17, 1990|By Ellen L. James

It's a dream Robert Hazard has often, a variation on his company's long-running ad campaign: There's the sound of a zipper opening a suitcase. Then out pops President Bush, singing to European TV viewers about the ads of travel to America.

Marketing is everything in the travel and lodging industry, Mr. Hazard is convinced. By emphasizing marketing, he and his longtime business associate, Gerald Petitt, say they've built the largest hotel chain in the world. Holiday Inns? No, Choice Hotels International of Silver Spring.

"Don't get us wrong, we're not hotel operators," explains the ebullient Mr. Petitt, 44. "If you get tied down worrying about the width of wallpaper you're going to put up in the room, you can't worry about sales. Our expertise is in marketing and reservations -- the franchise side of the business."

Throughout the United States, hotel operators are fretting about sagging occupancy levels and an excess of rooms. But the two top executives at Choice, formerly Quality International, see opportunities in hard times. Independent hotel proprietors anxious about their companies are good prospects to join a franchise chain, they've discovered. Franchising cuts operating costs through a combined reservation system and fills empty rooms through mass marketing, they argue.

"The problem isn't too many rooms, it's too few guests," shrieks the flamboyant Mr. Hazard, 55, who emphasizes his points with arms shaking in the air like the prongs of a pitchfork. In the gospel according to Hazard and Petitt, mega-chains are built on the basis of TV commercials like Choice's celebrated "suitcase" campaign, and on back room economies of scale.

Since they joined the 339-hotel Quality chain -- a subsidiary of nursing home giant Manor Care Inc. -- in 1980, the two men have built it into an empire of 2,425 hotels. That makes it the largest corporate hotel chain in the world in terms of the number of properties.

(Holiday Corp. has more rooms but fewer hotels. Best Western, a non-profit membership association based in Phoenix, has more actual hotel members in a loose federation, but many industry authorities do not consider it a bona fide chain. "It's an odd kind of fish," says Carlo Wolff, associate editor of Lodging Hospitality magazine. Best Western itself compares its relationship with its members to the American Automobile Association's ties with its recommended mechanics.)

Working in what they consider the most promising segment of the business, budget hotels, Mr. Hazard and Mr. Petitt have built two chains from scratch: Sleep Inns and Comfort Inns. They've renovated the old Quality chain, kicking out owners who didn't meet standards. They've slowly expanded their upper-end Clarion Hotel & Resorts brand, becoming the first franchiser of country inns and historic properties through what they call Clarion Carriage House Inns.

The rapid expansion program has been bolstered by an aggressive acquisition campaign. This summer, Choice spent a total of $75 million to pick up franchising rights to three chains: Econo Lodge, Friendship Inns and Rodeway Inns. In so doing, it added 850 hotels, nearly doubling the number of properties under franchise.

Despite a hotel room glut in the United States, worries about recession and severe problems in hotel finance, the two men vow their chain will grow to a million guest rooms in 10 years, up from the current 231,625 rooms.

"We're riding the wave of consolidation," says Mr. Hazard, chairman and chief executive officer of Choice.

Choice is now franchiser to seven hotel brands and is more likely to expand rather than reduce the number of names in its arsenal, says Mr. Petitt. Known in the industry as leaders in the trend toward "market segmentation," he and Mr. Hazard argue that each brand can serve its own niche. They scoff at critics who wonder whether Choice is confusing its customers.

"Just as Frito-Lay has a lot of different potato chips, Procter & Gamble has a lot of different soaps and General Motors has a lot of different cars, we have a number of hotel brands. It's not a problem," says Mr. Petitt, the hotel chain's president.

Known within the company as "the Bob and Gerry show," the two men had worked together for a dozen years at three other companies before joining Quality -- each taking a 10 percent stake in Manor Care's hotel subsidiary.

Their different temperaments make them a sort of "odd couple," according to colleagues. They characterize Mr. Hazard as a workaholic and marketing visionary whose intensity is channeled the more level-headed Mr. Petitt, an engineer and operations guru.

"Hazard runs a million miles a minute, and everybody kind of looks at Gerry as the Rock of Gibraltar, the point of reason -- which makes for a really good combination," says Lynn O'Rourke Hayes, a vice president at Choice Hotels.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.