May 15, 2004 - Wyndham International Inc. chairman Fred J. Kleisner still remembers his disgust when he learned his hotel chain had received the worst grade in the industry in the NAACP's annual lodging report.

What was particularly crushing was how the D had been earned: "It wasn't even for something we did," Mr. Kleisner said. "We had the arrogance to refuse to fill out the survey."

But that D grade four years ago set a new course at Dallas-based Wyndham -- one that made diversity a priority for how the company does business.

"I decided that we would be the leader in the industry," Mr. Kleisner said.

He met with top managers and told them he wouldn't be associated with a company with a failing grade.

Wyndham executives analyzed hiring and promotion practices at all levels. Mr. Kleisner nominated minorities and women to Wyndham's board of directors as positions opened up. And he asked the board to elevate two female executives -- including one who is also African-American -- to corporate officer status. The company examined its supplier contracts -- increasing participation from women-and minority-owned firms from almost nothing to 12 percent last year. This year, the goal is 16 percent.

The result: In the three years since the company launched its minority marketing efforts, revenue from those customers has grown from $1 million in 2000 to $4 million last year.

Granted, the $4 million is just a small fraction of the company's revenue. And Mr. Kleisner reiterates that diversity and gender balance reflect the heart of the company's effort.

Women business travelers account for more than 35 percent of Wyndham's revenue -- or about $300 million. By 2005, that figure is expected to rise to about 50 percent. Women hold half of all Wyndham's management positions -- up from about 40 percent a few years ago.

"I won't be satisfied until it's 58 percent -- because that's what the workforce is," Mr. Kleisner said.

Mr. Kleisner, who has considered himself a civil rights supporter since he marched in his first demonstration at Michigan State University in the 1960s, said he took the poor rating from the NAACP personally. He has since met with the executives of the organization and several minority-targeted publications.

"I asked for their help and told them that this was what our company would stand for," he said. "This was not going to be a flavor of the month."

Wyndham established an external diversity board to help guide how the company pursues minority customers -- a strategy similar to the one it launched in 1997 to court women business travelers.

The goal:

To become the preferred brand for minority, gay and lesbian travelers, similar to the way it courted women business travelers. As buying power among minority groups has grown, so has the attention paid by corporate America. But securing brand loyalty takes more than just making sure advertising photos aren't limited to white customers.

"If you want your brand to stand out, you have to be involved in the community," said Johnnie King, president of The King Group, a Dallas-based advertising agency that specializes in travel marketing to ethnic groups.

Once the relationship has been established, those groups also reward with repeat business.

"If I'm in charge of a big meeting, I'm more likely to go to a company that has proven they want our business rather than risk a unpleasant experience with a new company," Mr. King said. "Everything is amplified when you're dealing with the minority markets."

Wyndham's efforts seem to be paying off. The company won a contract to host Black Enterprise magazine's Entrepreneur conference for the next three years. It's an important event because it attracts around 3,500 of the nation's most prominent African-American business leaders, who influence millions in travel spending.

And its Wyndham Palace Resort & Spa will be the headquarters hotel for next month's "Gay and Lesbian Day at Walt Disney World" in Orlando, Fla.

The two contracts represent business that previously went to other hotel brands.

In the latest NAACP rankings, Wyndham was second only to Marriott International Inc. in the annual report. The grassroots organization named Mr. Kleisner to chair its corporate giving program. And earlier this year he was named chairman for the American Hotel and Lodging's new Multicultural & Diversity Advisory Council.

Mr. Kleisner says Wyndham's efforts to diversify aren't just about looking good.

"It's good for our shareholders," he said.

Company officials credit the efforts for Wyndham's market-share growth during each of the last seven quarters.

"Some associations and groups started doing business with us because of our diversity initiatives," said Donna Deberry, Wyndham's executive vice president of global diversity and corporate affairs. "They wanted to do business with hotels that shared their values."

Wyndham's changes to its business operations have also paid off. Many corporate clients now include questions about the hotel's diversity initiatives in contract proposals, including make-up of Wyndham's vendors and workforce and how the company allocates its charitable giving.

"Corporate America sees diversity as a way to figure out who they'll do business with," Ms. Deberry said.

Ms. Deberry joined Wyndham in 2000, as part of Mr. Kleisner's plan to aggressively forge relationships with minority groups and attract business.

It proved to be good timing.

When an economic downturn began to slow business travel during the spring of 2001, Wyndham was able to win new group business from minority and emerging market customers. "We've been able to tap into these customer groups because we've built relationships in the community," Ms. Deberry said. "It was the one market that didn't cancel contracts during the downturn."

Hotel companies can't afford not to market to minorities and women, said Melinda Bush, chairwoman and chief executive of New York consulting firm Hospitality Resources Worldwide LLC.

She also serves as a board director for Irving-based FelCor Lodging Trust Inc.

"Competition is on every corner," Mrs. Bush said.

"You have to look at every market to gain market share. If 40 percent of the nation's business travelers are women and you're only getting 20 percent, you have to do something different."

Earlier this year, Wyndham launched its first advertising campaign aimed at gay and lesbian travelers, a customer segment whose buying power has only recently been recognized in the tourism industry.

Research by San Francisco firm Community Marketing Inc. shows that more than 90 percent of gay and lesbian consumers will select what they consider to be gay-friendly companies to do business with based on its progressive social policies and practices.

"That's enough to get my attention," Mr. Kleisner said.

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