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Holiday Inn to Turn Bars Into Social Hubs

Simpler Foods Take Pressure Off Need for a Fancy Restaurant; Livelier Setting Appeals to Business People Eager to Mingle

By KRIS HUDSON

[HolidayInn]

Holiday Inn has turned its attention to redesigning and expanding its hotel bars to make them livelier.

LAS VEGAS—Now that it is wrapping up a $1 billion overhaul of its 3,400 hotels across the globe, Holiday Inn has turned its attention to its next project: redesigning and expanding its hotel bars to make them livelier.

At its annual conference for franchisees in Las Vegas this week, Holiday Inn parent InterContinental Hotels Group PLC unveiled a preliminary concept it calls the “social hub.” The plan makes the bar the center of several Holiday Inn services, including the restaurant, game room and business center.

The social-hub plan is partly an effort to address an issue that has dogged midmarket, full-service hotel chains like Holiday Inn for years. These hotels, especially those with 150 or fewer rooms, often don’t generate enough traffic to support full-scale, 24-hour food-service operations—at least not profitably.

It is also a response to the findings of a customer study that Holiday Inn conducted in 2007 and 2008, when it canvassed 10,000 midscale hotel guests in six major cities.

Among other things, the study found that frequent Holiday Inn guests—who are most often middle managers, route salespeople, entrepreneurs and government supervisors—want to be around other people rather than holed up in their rooms, Holiday Inn executives say.

“These are more extroverted, charismatic people who like people,” says Kevin Kowalski, senior vice president of global brand management for Holiday Inn’s U.K.-based parent, InterContinental Hotels, or IHG. “They’re not going to hang out in their rooms and watch TV. They’re just social animals.”

That’s partly why Holiday Inn wants the bar to play a bigger role at the hotels. The social hub would tailor Holiday Inn’s lunch and dinner menus to bar fare that can be shared, such as gourmet meatballs, sesame chicken wings, hamburgers and a few significant entrees, such as steaks and salmon club sandwiches.

Those changes would allow for more food to be served by the bar staff, which in turn would allow Holiday Inn’s franchisees to limit their labor costs by reducing restaurant staff, especially at slow times of the day. (Standard Holiday Inns have restaurants and bars, but Holiday Inn Express, the chain’s limited-service version, does not.)

“We’re not thinking about it as dinner,” Mr. Kowalski says. “We’re thinking about it as this evening social occasion. You may want just a snack or a burger with friends.”

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Holiday Inn

The changes would allow more food to be served by bar staff. That would enable franchisees to reduce restaurant staff, especially at slow times of the day, lowering their labor costs.

Holiday Inn would still treat breakfast as the most substantial meal it serves. But the social-hub concept will make breakfast more of a self-service offering, with buffets and cook-to-order stations for omelets and the like. That, too, would allow Holiday Inn owners to pare labor costs by limiting their wait staffs.

Other aspects of the social-hub plan call for moving other services adjacent to the bar, such as the hotel’s business center, game room, dining patio and lobby. Holiday Inn envisions that the game room will offer such diversions as a Wii game console and billiards table and the patio will feature fire pits and cabanas.

Holiday Inn won’t rush its franchisees into installing the social hub. The concept is so preliminary that it probably won’t start appearing in newly built and renovated Holiday Inns until 2012.

Nearly all of Holiday Inn’s hotels are owned by small franchisees, and most of those owners hold only a few of the hotels. Those franchisees have just completed a sweeping, global overhaul that upgraded their hotels’ bedding, signs, lobbies and showers, among other things, at an average cost to them of $300,000 a property.

Thus, Holiday Inn plans to go slowly with the social hub. The company will test the concept in a handful of new hotels next year and then include it in several hotels under development. Owners of existing hotels will start adopting the less-costly aspects of the plan—such as new menus and the breakfast program—by 2012.

Pricier changes—such as reconfiguring the bar, business center and game room—will most often be done as hotels undergo periodic renovations.

Holiday Inn doesn’t have an estimate yet for the average cost of installing the social hub, partly because the concept is likely to undergo changes during testing over the next year.

Several Holiday Inn franchisees interviewed at the Las Vegas conference were receptive to the social-hub project, especially because it promises to help them cut costs. But will they embrace it on the heels of the expensive global overhaul?

Mark Carrier, senior vice president of hotel owner B.F. Saul Co. and past chairman of Holiday Inn’s franchisee association, believes they will. “They have to make sure they’re pushing forward and keeping their hotels relevant,” he says.


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