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Outside looking in Featured

10:10am EDT July 22, 2002

Outside looking in

By Joan Slattery Wall

Lodging industry watchers call Red Roof's inn renewal program a necessary investment that paid off.

There was no risk in the move, says Eric Belfrage, president of Columbus consulting and appraisal firm Lorms & Belfrage Inc. Rather, he says, it may have headed off problems.

"I think Red Roof has had very good consistency throughout their history, and I think that they did their inn renewal program just in time, before their quality suffered substantially," he says.

The chain's consistency will help as more supply is added in the budget- and economy-lodging segments, adds Belfrage, whose firm has conducted appraisals for Red Roof.

"It's just like McDonald's. You know what you're going to get when you go in there," he says.

Doug Lance, hospitality management program coordinator in Ohio State University's College of Human Ecology, points out that Red Roof's new look may give it a more competitive edge. In 1997, five hotels opened in the Columbus market, and 10 more are under construction this year. As many as 18 are planned through 1999, he notes. Of all those planned or built since 1997, nearly half would compete in the economy segment with Red Roof, which itself plans to open a new property downtown later this year.

"It appears to us that what they're doing is trying to reposition for new growth, new customers, and certainly a new average daily rate-which is money," Lance says of Red Roof's renewal program.

Red Roof's renovations became worth the investment when customers were more willing to pay higher room rates following the changes, adds David Sangree, director of hospitality consulting with US Realty Consultants Inc. in Columbus, another firm that does appraisals for Red Roof Inns.

"They did a very nice job with the renovation, so really the average traveler doesn't look at them and see that the property is 20 years old and the Fairfield Inn next to them is 2 years old," he says.

With a good existing base of properties, Red Roof may be more successful with its franchising efforts, too.

"The advantage here is no one would want to franchise a Red Roof Inn if all the other Red Roofs were in poor condition," Sangree says.

In fact, notes Michael Mahoney, director of hospitality consulting for Coopers & Lybrand LLP in Los Angeles, Red Roof would have taken a bigger risk had the chain opted not to overhaul its properties.

"You have to understand that guests migrate to newer or well-maintained properties," he says, "so therefore the risk of falling behind is more important."