Holiday's Impact Studies Make An Impact

Holiday's Impact Studies Make an Impact

Reprited from Advanstar
Hotel & Motel Management Magazine
April 27, 1992
By Jeff WilderWilder Group, L.L.C.

These days, highly competitive franchisors are searching hither and yon for new flagging opportunities. Everyone is doing deals in order to grow their various brand products, oftentimes stepping on the toes of existing franchisees by selling other lines offered by the same chain. Many industry observers have been astounded at the voracious way that some franchisors pack an area, impact existing franchisees and leave everyone except themselves poorer in the process.

Usually the franchise bearing impacted has a long-term non-cancelable agreement and must suffer in silence. He can't even drop his existing flag in protest without hefty termination fees.

It is against this background that I wish to share with you a recent example of responsible behavior exhibited by Holiday Inn Worldwide. The story sheds a positive light on Holiday's fundamental policy of balancing fairness toward existing franchisees with the natural corporate desire for brand expansion. It is a valuable insight into the company's corporate morality.

Holiday is attempting to expand its Holiday Express chain of limited-service hotels. I operate a full-service Holiday Inn relatively near a hotel that recently applied to Holiday for an Express affiliation. As we'd be quite competitive, I was most concerned at the negative impact that a nearby sister franchise would have on our inn.

As is its policy when a franchise application is received, Holiday corresponds with and invites comment from every potentially affected franchise in the area. Simultaneously, the parent company does an impact study to learn how both Holiday Inn customers and existing franchisees would be affected by a potential addition to the system.

Since Holiday would have earned roundly $100,000 of fresh annual franchise income from the new affiliation, its gut instinct is to push for acceptance of the application. If you were Holiday, you would feel the same way.

We felt that it was neither fair nor good long-term business practice to impair one hotel's profitability by affiliating another nearby inn.

Not Just Lip Service

Holiday treated our concerns seriously. The hotel company even offered to bring in a team of outside analysts to study the situation and arrive at an independent conclusion. Subsequent to the suggestion, the other hotel's application was withdrawn.

To me this recent incident demonstrates that Holiday understood that a lodging brand is built on the backs of its franchisees. Concepts such as impact, quality, fairness, building long-term relationships with franchisees, and honorable behavior really mean something to the people at Holiday's headquarters.

Obviously my outlook is colored by the result. However, regardless of the outcome, I was still very impressed by the extensive internal-impact study done by the parent company. The study wasn't a cover for the franchisor to say that it analyzed the situation and concluded that there'd be little impact on the way to signing up another motel. I am certainly not alone in suggesting that this is an all-too-often occurrence in our industry these days.

I'm already looking to do another project with Holiday, in large measure because it showed its true corporate soul to me, and I trust it's really in the franchisee's corner. Hopefully, other chains in the industry will follow Holiday's example.