Howard Johnson Franchises Plan Cheaper Rest for World
BOSTON — ERIC PFEFFER, president and CEO of Howard Johnson Franchise Systems, has a vision about travel - and hotels - in the Middle East.
''By around the year 2000,'' he says, ''I see people flying to Cairo, renting a car, seeing the pyramids, driving on a new road through the Sinai in a couple of hours, seeing Jerusalem, Tel Aviv, Beirut, then Damascus, and driving over to Turkey.''
His vision includes tourists staying at Howard Johnson hotels planned for the region.
Pfeffer, who was born and raised in Israel, recently concluded a licensing agreement that will put Howard Johnson hotels in Egypt, the United Arab Emirates, and other Middle Eastern countries. The Farhan Group of Companies in Dubai, United Arab Emirates, will set up the hotels through franchise rights.
The confluence of the peace process, Christian celebrations of the 2,000th birthday of Jesus, and demand for things American, Pfeffer says, is opening doors as never before in the Middle East.
This region, however, is just one area of new overseas business for Pfeffer.
''Globalization, the opening of borders, more travel, economic development, especially in the third world - these are rapidly creating a middle class all over the world in areas that never had a middle class,'' he says. As a result, ''the world has a growing need for mid-priced hotel rooms in areas where it has never had them before.'' He cites the needs of business people as well as of tourists.
In less than 24 months, Howard Johnson, based in Parsippany, N.J., has signed the Middle East deal, another contract for at least 60 hotels in India, and a third for a string of hotels in Indonesia, Malaysia, and Thailand. Howard Johnson hotels are already sprouting in Canada, Mexico, and other Latin American nations.
''China is next; we're working on it,'' he promises, explaining that business ''is a little more complicated there and has to be done at the state level and through more political channels.''
Howard Johnson does not own the hotels it franchises. The company, through a trademark franchise, sells the use of its name and also markets such services as its reservation system, design, purchasing, training, and sales methods.
A firm that obtains such a franchise for a region can pull in existing properties or build new ones. Howard Johnson makes its profit on fees. The franchising arrangement lets local initiative have the widest possible influence, Pfeffer says. It can lead, he hopes, to wide distribution of hotels and resulting name recognition. He claims his firm already has a lot of recognition over the years from visitors to the United States.
Pfeffer sees Vietnam as another potentially active area as economic development proceeds there. The Vietnamese market comes under the Indonesia-Malaysia contract, a 40-year licensing agreement with Hospitality Systems Asia-Pacific Ltd. (HSA) of Singapore.
HSA also has been granted an option to develop Howard Johnson properties in Singapore, China, Taiwan, South Korea, Hong Kong, Burma, Nepal, Laos, and Cambodia.
A new Howard Johnson hotel is opening in November in Dubai, and other hotels have opened recently in Ahmadabad and Surat in India, and Santa Marta, Colombia.
Holiday Inns Inc., which has about 160 hotels overseas already, owns and manages most of its units, in contrast to franchise arrangements, says spokeswoman Kerri Wightman. Holiday Inns' marketing emphasis overseas, however, is shifting to franchising, she says, with a focus on the Asia-Pacific region, India, the Middle East, and Europe. These are the same markets Howard Johnson is moving into, except for Europe, which Pfeffer sees as more difficult and less profitable.
The market Howard Johnson seeks consists of those individuals who want to pay less than $150 a night.So Pfeffer will be competing directly with Holiday Inn, which offers, for example, a room with two twin beds in Jerusalem for $119 a night in mid-November.
Howard Johnson is a subsidiary of HFS Inc., which also owns Days Inns of America and Super 8.
David Young, director of international franchise development for HFS, says both of those hotel chains are also moving into the overseas market.