IHG on Wednesday announced plans to expand its portfolio of IHG Army Hotels.
The exclusive hotel manager and operator of on-post lodging under the Department of the Army’s Privatization of Army Lodging (PAL) program will add another 18 U.S. Military installations to its portfolio to reach 76 hotels and more than 11,000 guestrooms on 39 U.S. military installations.
The hotels are owned by Australian conglomerate Lend Lease Corp., which on Tuesday finalized a long-term US$465 million loan with Bank of America for its program to renovate and build more hotel rooms at U.S. Army posts. The new loan replaces US$275 million of old debt and makes Bank of America the sole lender on the project.
The program, which started in 2009, puts all the hotels under IHG’s Holiday Inn Express, Candlewood Suites and StayBridge Suites brands. The hotels previously operated without a brand. This third phase of the PAL program will entail renovating and building nearly 3,800 hotel rooms in the next eight years. The hotels are subject to 50-year ground leases with the Army.
Of the 21 U.S. Military installations in the first two phases of the PAL program, branding has occurred at six installations and new-builds are under construction at five installations, according to IHG. Renovations, upgrades and branding for this third phase announced Wednesday will begin right away.
HOTELS Magazine spoke to Arthur Holst, vice president of operations for IHG’s Army hotels about the unique program and how it is different from an operations perspective.
In fact, IHG now directly employs nearly 1,800 people at on-post lodging facilities and since many came from the Army a lot of time has been spent blending them into the IHG culture. “We have the ability to create economic opportunity for people in the communities where we operate,” Holst said. “We hire, train and cultivate talented employees empowered with skills to succeed in the hospitality industry.”
Since there also is a big focus on training at Army posts, the IHG hotels there operate a bit differently. For example, study rooms are set up so Army staff can work on their terms, and shuttle van services are part of the management agreements as guests need to be shuttled around these mini cities – some as big as 3 million acres (1.2 million hectares).
“A lot of our competitors wanted these contracts, too, but the key for us was that our brands appeal to the unique audiences,” Holst added. “They stay for a long time, sometimes as much as a year, so they get to know the staff, services and amenities. We do things like a weekly barbecue social with the staff. The IHG culture is employee centered and that works well with these types of guests.”
Because the army hotels have little meeting space, there is limited banquet and restaurant service. “Soldiers want to grab things and go,” Holst added. “So it makes Express, Candlewood and StayBridge perfect from breakfast offering perspective because it is not a sit down event.”
When it comes to managing rate, IHG follows an army guideline that no rate shall be greater than 75% of per diem in the aggregate across all the army posts.
Holst said the value of these contracts does not just come from the fees generated by the management contracts as, among other things, it also helps grow brand awareness and enrollment in IHG’s frequency program. In fact, IHG has awarded 460 million priority club points at the army hotels, which are being used at its hotels outside the bases around the world.
“It is a great, passionate story for IHG,” Holst added. “It is not just good business. The people who work on these projects love what they do. The audience is highly appreciative, is with us a long time, and gets that we care about them. Our motto is, ‘Proud to serve those who are proud to serve.’”
Through this contract, IHG supports other organizations with aligned values, including the IHG Academy Program, which is actively exploring options to raise awareness of hospitality careers among veterans and enhance their employment prospects through skills training; the Fisher House Foundation, which donates “comfort homes” to families whose loved ones are being treated at far-away military medical centers; and Soldiers to Summits nonprofit, a No Barriers USA program that helps wounded service men and women overcome personal barriers.