Lodging Hospitality

It was a busy week for the folks in Parsippany, NJ. On Monday, Cendant Hotel Group announced its acquisition of the Baymont Inn & Suites brand from The Blackstone Group. This is a smart move for everyone involved. Cendant’s forte is brand distribution, and Baymont is a good product that has just lacked the geographic reach a first-tier chain requires. Franchisees should be happy, too, that their fate will be in the hands of experienced pros whose only game is franchising.

Cendant’s second announcement, which came today, is a little more puzzling. When Cendant Corp. splits into four separate companies later this year, the hospitality firm will be called Wyndham Worldwide, a nod to its second-most recent acquisition, the brand and management contracts of Wyndham Hotels (also purchased, not coincidentally, from Blackstone). While a recognizable hotel name is much better than the Cendant moniker, Wyndham is a name that comes with some baggage. Like Baymont, Wyndham has had a solid mix of products, some innovative marketing (e.g., Wyndham by Request) and a high-powered lineage (i.e., the legendary tycoon Trammell Crow founded the chain). Yet, the company never really became a household hotel brand, with the cachet and brand clarity of rivals like Hyatt, Hilton and Marriott.

I guess the other side of the coin is that Cendant (er, Wyndham Worldwide) has an opportunity to build the new company into a global powerhouse. Time will tell, but I wouldn’t bet against its excellent leadership team: Stephen Holmes and, most particularly, Steve Rudnitsky.

In case you thought the way to beat the competition is to underprice them, new research reinforces the notion that discounting room rates is a fool’s journey. Cornell Hotel School professors Linda Canina and Cathy Enz just released an update of an earlier study that counsels against room rate discounting, no matter in what segment or market you operate.

Using numbers from 2004, the research showed that “when a given hotel discounted its room rates to a greater degree than did its competitive set, the result was decreased RevPAR compared to the competition.” Put another way, discounting leads to higher occupancy but lower RevPAR. The reverse is also true: hotels that charge a rate premium compared to their competitive set have lower occupancies but higher RevPAR numbers.

To many people, this is a logical conclusion, but many owners and operators panic when times get a little tough. Resist the urge, and your property will perform better in the long run.

For a free copy of the report, go to www.hotelschool.cornell.edu/chr/research/centerreports.html

We received more bad news yesterday, with the announcement that Hyatt executive Steve Hymans died on Sunday due to complications from heart surgery. Last week, Marriott International Vice President Doug Ely died in a freak auto accident in which a load of lumber from a truck fell from a freeway overpass onto his car. The tragedy occurred in suburban Washington, DC as Ely was on his way to work as assistant general counsel for the hotel giant.

Hymans was vice president of the Southeast region for Hyatt Select Hotels and its AmeriSuites and Summerfield Suites brand. Before that post, which he took last September, Hymans was senior VP-operations for the Hawthorn Suites brand of US Franchise Systems.

It didn’t take former Hilton Hotels exec Dieter Huckestein to land a new gig. Forbes magazine reported late yesterday that Huckestein will become president and CEO of Yellowstone Club World, reportedly the highest priced vacation club in the world. Timber baron Tim Blixseth is launching the club as an extension of his Yellowstone Club, a private ski and golf community in Montana.

To stock the new Club World, Blixseth purchased nine resort properties, including two chateaux in France, a private golf course in Scotland and a beachfront estate near Manzanillo, Mexico. It costs between $3 million to $4.5 million to join, and the membership roster will be capped at 150. Existing members in the original Yellowstone Club get a modest discount to sign up.

In January, Huckestein retired abruptly after a 35-year career at Hilton. Most recently, he was CEO of Conrad Hotels and president of the Hilton Global Alliance.

We send our condolences to the family, friends and co-workers of Marriott executive Douglas Ely, who died yesterday in a freak auto accident in Maryland.

According to Associated Press, a truck carrying a load of lumber overturned on the Capital Beltway in Bethesda, sending part of the load careening off the overpass to another road below, where it struck and killed Ely in his car. Three other motorists were hurt.

Ely, 47, was a vice president and assistant general counsel at Marriott International, where he worked for 10 years.