Major Reservations

When he came to Holiday Inn Worldwide in 1990, Bryan D. Langton ordered 160-odd staffers to pair off and visit every Holiday Inn in the U.S. They took in peeling paint, unkempt parking lots, outdated lobbies, and enough smelly rooms to house a large army. "We saw the good, the bad, and the ugly," he says.

On Sept. 13, Langton unveiled a program to upgrade Holiday's good hotels, refurbish the ugly, and remove the big green sign from the incorrigibly bad. The company is breaking its domestic hotels into five separate segments and erasing the Holiday Inn name from its fancy Crowne Plaza hotels. In the next three months, Holiday will order its 1,080 U.S. franchisees to pony up $500 million in repairs or leave the system. Meanwhile, the company will add 1,205 new properties worldwide, growing to a 3,155-hotel chain by 1998.

It's not Langton's first spin with big plans. After England's Bass PLC bought the chain for $2.2 billion in 1989, Holiday Inn spent $1 billion expanding and sprucing up. But the investment wasn't enough to make a difference in the cutthroat hotel market.

So Langton now is taking another crack. His strategy: Develop a multibrand strategy so that customers can choose among the upscale Crowne Plaza, the traditional Holiday Inn, the budget Holiday Inn Express, and the business-oriented Holiday Inn Select and Holiday Inn Suites & Rooms. Overseas, travelers will find different brands. As many as 200 hotels will be forced to leave the system because they won't be able to handle the $350,000 to $2 million needed per site to upgrade to new standards.

The response from franchisees is mixed. "You'll be telling consumers that you've got a problem with the core product," frets Robert A. Alter, president-elect of the Holiday's main franchisee group. Still, others believe killing the turkeys will boost brand image. "The system needs this," says John Q. Hammonds, owner of 94 Holiday Inns.

NO FEARS. Indeed, the competitive picture demands it. Fast-growing Holiday Inn Express faces tough competition from the likes of Promus Cos.' Hampton Inns and Marriott Corp.'s Fairfield Inns. Rivals say they're not worried: Although 70% of the budget hotels will be new, converting old ones risks undermining the makeover. Says Promus Hotels Chief Executive Ray E. Schultz: "Changing the name is not going to matter a great deal."

Holiday Inn's original success grew from its dependable image as a reasonably priced, clean place for Middle America to stay. Langton's biggest challenge may be communicating just what the Holiday Inn brand means today.

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