Word: motels
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Though the recession cut into the profits of most motel chains in the past couple of years, the lodging business is now surging in the midst of a sharp economic rise. An alltime high of 123.5 million Americans will hit the road on overnight trips this year. Meanwhile, a record 14.7 million foreign visitors will travel to the U.S. Every night, close to 200,000 of these travelers will stay in Holiday Inns...
...Wilson packed his family into a car and drove to Washington, D.C., for what turned out to be a fateful vacation. The family stayed in motels, but all were costly, cramped and uncomfortable. Wilson sensed a need for decent accommodations for the growing number of motorists and says that "as soon as I got back to Memphis, I decided to build a motel that had all the things we missed." The draftsman who designed it, Eddie Bluestein, scrawled a title across the bottom of the plans: Holiday Inns. He got the name from an old Bing Crosby movie that...
...cost of land and construction is entirely financed by franchisees, who put up about a quarter to a third of the amount and borrow the rest from banks, insurance firms or mortgage companies. Lenders prefer prospective franchisees over independent owners because there is less risk of failure with a motel (hat is backed by the resources of a chain...
...room motor inn in southern Illinois can cost up to $1,100,000, of which the franchisee group puts up $350,000 or less; on this it can expect an after-tax return of just over $50,000-a handsome 15% or more on its investment. For such a motel, Holiday Inns charges an initial fee of $15,000, plus royalties and fees of 6% on the annual gross. In return, the franchisee gets the marketing advantage of a household name, national advertising and a steady flow of customers provided by the chain-wide referral system. The massive Holidex reservations...
Holiday Inns has a products division that makes and markets a myriad of goods: furniture, bologna, kitchen equipment-everything that is needed to start a motel from scratch. The division even manufactures prefabricated bars. One popular item is a $25,000 Club Escadrille bar, complete with World War I flying decor, wing emblems, portraits of Rickenbacker and Von Richthofen, and a muted sound track of planes landing and taking off. Though franchisees are free to get their equipment anywhere, most choose to avoid the bother of shopping around and buy from the parent company. Last year the products division sold...