When do you reflag, deflag or negotiate?

The Openings, Sales and Renovations section is one of the most dynamic parts of this magazine, mainly because the hotel industry is one that demands constant change to accommodate consumer tastes.

Hoteliers often respond to changes by reflagging, deflagging or renovating. Here are some of the answers I get when I ask hoteliers, why did you make the change?

Changing of the guard. Sometimes it’s a case of new management wanting a new direction. There’s a story in this issue about an independent in Saskatchewan that rejoined the Howard Johnson family once new owners took over.

The renovation option. But changing of the guard doesn’t necessarily mean a brand change—in the case of Inn at the Quay in New Westminster, BC, the decision was to stay independent, but to spend just over $1 million to totally change the look and feel of the hotel.

Branding as insurance. Over the past several years, there has been a move towards brands, as smaller independents seek the stability and security of a brand name during a recessionary economy. Brand loyalty programs and online reservation systems are often a big draw.

The only “name” in town. Sometimes hotels seek to be the only brand in a smaller market. And then there are those stories about communities that thrive once a branded property comes to town.

The cost consideration. When big chains announce that they are embarking on an extensive upgrading and renovation program, the flip side of the coin is that there will be hotels that can’t afford to renovate, or don’t think the economics work for their hotel in their neighbourhood. I know at least one hotelier who opted out of Holiday Inn’s major relaunch. The math just didn’t work for him. He changed to a smaller, regional hotel chain.

And last summer, the former Holiday Inn Select Hotel Halifax terminated both its franchise agreement and the management agreement, deciding to manage the hotel itself as an independent. The cost of those two agreements was definitely a factor in the decision.

The neighbourhood is changing. The Hyatt on King in Toronto used to be a Holiday Inn back when Queen Street West was a neighbourhood of eclectic shops, small restaurants and sports bars. But now Queen West has gone upscale—it’s the “Entertainment District,” a hip and exciting area of the city—a place that can support a more upmarket brand.

Or the neighbourhood now demands a brand. I’m thinking of the small centres that reach a certain critical mass where they can support a brand. I’m also thinking of The Wheels Inn in Chatham, ON, a destination resort for U.S. travellers for much of its 36-year life. The decrease in U.S. rubber tire traffic took its toll, and the Wheels closed last year. The tower portion is being branded as a Holiday Inn Express.

The fault may be with the chain. Sometimes, for various reasons, due to financial problems or poor management, the chain may be losing its reputation or cachet.

Or it may just be a communication problem. Before you change flags or become an independent, it’s important to explore all the avenues in the existing situation. At every chain conference I attend, the executives say they want to communicate and work with all their owners and franchisees. Take them up on it!

—Colleen Isherwood, Editor