As recently as the spring of 2009, Chanhassen, Minn.-based Northcott Hospitality was still entertaining offers to sell. Right around this same time, the trustees—the daughters of the founder—had a change of heart and decided it was better to hold onto the company—despite entertaining offers. Since then, Northcott has brought on new leadership which has already begun to implement initiatives to reinvigorate its AmericInn brand.
The additions of industry veterans Paul Kirwin and Ron Burgett are part of the company’s plan to help move the AmericInn brand in a different direction by increasing its portfolio from a regionalized midscale market player to one on a national level.
Northcott brought in Kirwin in May 2009 as president and COO with the intention of having him take over as CEO at the beginning of this year. Prior to joining Northcott, Kirwin worked at Carlson Hotels in a variety of upper management positions. As Northcott’s CEO, in January, Kirwin brought in Burgett as vice president of development. Burgett had previously spent time at Choice Hotels International as well as being a partner in a lodging real estate company. At Northcott, Burgett is charged with heading up the biggest AmericInn initiative.
Traditionally, Northcott has opened one to three new AmericInn properties annually, primarily in the upper-Midwest region. Now, the company is looking to grow more aggressively and to expand nationally, mostly through Northcott’s cornerstone initiative: targeted conversions.
“I have committed to doing 20 transactions [targeted conversions] in 2010,” asserts Burgett. “We have the ability and the brand to do it.” One particular area he says that the company can capitalize on is other franchise companies which may have gotten a little “more aggressive in their PIPs (property improvement plans).” Burgett asks, “I sincerely believe there are not a lot of options in those situations. If you are an owner, where can you go?”
Burgett says that with the economy being what it is, the emphasis will be mainly on conversions for the next couple of years, but the company is not totally ruling out new projects either.“Ten percent of the deals we do this year and next will be new construction,” he says. “If you had asked me this two years ago, I would have said 100 percent would be new construction—this is a big sea change for us in the direction we are going.”
And in order to accomplish their goals, the executives have hired six sales representatives to cover large regions of the United States. “The first line of defense for any brand is the sales people; with us especially, you don’t know who we are,” Burgett says. He also says that he and the sales team are just finding their footing but he could see possibly up to 10 sales representatives in this role by next year. Previously, Northcott only had two people selling the brand.
Burgett has finite vision about what types of environmental settings the company wants as well as targeted geographic locations for conversions. “We are looking for major markets in the outskirts; we are not going to be in city centers,” explains Burgett. “We just don’t feel our brand fits there as well. If, by default, there is room for us, of course we can go in there because we are going to get overflow. I think we are going to be strong-est in secondary markets. What we are going to get away from is the small hometowns.”
Burgett says the brand plans to grow in smaller cities such as St. Louis, Indianapolis, and Columbus, Ohio, and in the suburbs of bigger cities along major highways—like in the Ohio Valley, specifically along I-75 and I-65 as well as the East Coast’s I-95 corridor.
He also says the company has other indicators to help it figure out what markets would be advantageous. For example, data from call centers indicates who is trying to book rooms and where, and this data can be harnessed to help deliberate about potential properties. Another way to determine if a geographic area is a good target market is feedback from corporate company customers. Burgett gives the example of taking an application for a new conversion in the Dallas area based in large part from a corporate customer who said it spent a lot of time in that city.
Northcott has put a great deal of consideration into what it sees as its core philosophies in presenting its brand to franchisees and to the public. For example, Kirwin says AmericInn’s biggest theme has been the development of its “America’s Welcoming Neighbor” concept, a continuation of the brand’s “family oriented culture”. The theme helps explain how AmericInn hotels serve their local communities.
Nasir Raja, vice president of organizational development and training, concurs and points out that this most likely will not become part of a marketing campaign that gets into the public domain but remains internal. “What we really want to become is America’s Welcoming Neighbor inside out.” He expects to instill this through systems, processes, and training.
Raja, another Kirwin addition, wants to harness the brand’s existing people and its high scores in customer satisfaction, but he believes there is room to create an expectation of consistency in guest and employee interactions. “We have a personality in our people that we are not taking advantage of,” he says. “How can we harness something that is already in our DNA and make it a competitive advantage? It is that guest and employee interaction that brings guests back. We believe we can make that a competitive advantage.”
He also says a brand can have the best intentions in making changes, but those changes can become pedestrian if you don’t have true acceptance from employees. “We can design cultural changes, but if you can’t have folks move with you, those changes become the program of the month,” Raja says.
Operations and Amenities
Northcott has adopted some new measures to upgrade the brand and drive revenue. For example, it has instituted its new hotel loyalty program, Easy Rewards. The program replaces the older program, which utilized stamped cards with electronically activated cards for guests.
“The conversion has been seamless,” explains Kirwin. “The old system did not allow us to know many of the parti-cipants. We continue to be surprised at how many people are engaged in the program.” The adoption of electronic cards has allowed Northcott to collect data about which guests are using the program.
Another initiative is to grow AmericInn’s central reservation system revenues from its current 23 percent up to 30 percent in the next few years. Kirwin notes that the company changed the fee model for how reservation services are paid. He readily acknowledges the exponential growth of travel sites is difficult to track, but it is the environment in which the marketplace exists today. “In the new electronic distribution-oriented hotel market we operate in, it is critical that operators and brands are plugging into all the possible distribution channels that customers can use to find their hotels, understand what the pricing is, and buy quickly and easily,” Kirwin says.
He also says the company is planning to upgrade the functionality of its website to make it fit with the contemporary model of hotel websites’ capabilities. “We are probably less inclined to create new solutions for the market as much as making sure AmericInn has the tools that the customers are getting from the larger brands they do business with,” says Kirwin. For example, the company is working on a site that lets guests pay for stays when they are making the reservation in advance. While a common practice, the technology and connectivity have to be there in order to facilitate the request.
There will be interior design changes in the rooms with different color schemes, bedding packages—meaning no more bedspreads—and new flat screen TVs. Lobbies will continue to have fireplaces and open meeting spaces for guests.
Important amenities will include its complimentary Perk breakfast, which features cereals, waffles, fruit and coffee; swimming pools; free local calls; and high-speed Internet.
As these changes will be rolled out for everyone—including the existing properties—franchisees of these properties will have some time to implement the new room standards. Burgett explains that the company will offer services and support to help with upgrades if need be.
Burgett says Northcott Hospitality understands and respects the family philosophy and legacy behind the AmericInn brand, and he points to the importance of acceptance from the franchisees before adapting new initiatives. “We don’t do anything unless we are talking to our franchisees,” says Burgett, pointing out the ongoing consultations Northcott has with its owners’ council.
According to the company executives, Northcott is also looking at other potential opportunities. For example, Kirwin, Burgett, and Raja all have experience in the international markets, so they’re comfortable working with markets abroad. And, the Minnesota-based company does have an eye on the country’s neighbor to the north. Burgett points to feedback from Canadian business travelers who do business in the United States and says there is some interest in bringing a U.S. brand hotel into Canada. He says many American travelers may be attracted to a familiar brand as well. Burgett also points to the brand recognition of McDonald’s overseas and how it can bring a level of comfort to American travelers. He thinks the same can hold true for AmericInn.
“Our name almost lends itself to take it international,” Burgett says. “This [the U.S.] is where our focus is, but in the next two years, we absolutely will be in Canada, and maybe even Mexico.”