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John Merkin Discusses the Major Upgrade Campaign Currently
Underway for the 57-year-old Holiday Inn Hotel Chain

By Douglas Hanks, The Miami HeraldMcClatchy-Tribune Regional News

Jun. 29, 2009--John Merkin supervises all the Holiday Inns in North and South America -- including the one in Miami Beach where he didn't want to have breakfast for a recent interview.

Business Monday suggested hitting the morning buffet at the Holiday Inn on 43rd and Collins, but the New York publicist who offered us the Merkin interview insisted on somewhere else -- ultimately a Lincoln Road restaurant.

The reason? Merkin wanted to talk up a major upgrade campaign underway at the 57-year-old hotel chain, and he didn't want to bring a reporter to a Holiday Inn (like the one in Miami Beach) that hadn't had the facelift.

His reluctance captures the image makeover underway for the Holiday Inn brand, too, as Merkin and his team try to retire its reputation as a dated family vacation stop.

In his interview, Merkin boasted of the more than 1,000 Holiday Inn franchises booted from the chain in recent months.

And he emphasized the new badge of honor for the properties: jazzy signs with stylized H's that owners can only install after completing the mandated renovation program, including an acceptable score on a customer-service review.

He argued that even though Holiday Inn is the affordable hotel chain that basically invented the concept of the affordable hotel chain, the purge and expansion of the chain and its business-friendly Holiday Inn Express will give the hotels a more youthful countenance than their rivals.

"Holiday Inn is one of the fastest new-build brands in the industry," said Merkin, a senior vice president at InterContinental Hotels Group, Holiday Inn's parent company. He was in Miami Beach for the annual Pow Wow international travel show, one of his occasional visits to South Florida.

Over breakfast with Business Monday, Merkin talked about improving Holiday Inn's facilities and image, some of the upside in the recession for the mid-scale chain and why he was sleeping at an Intercontinental.

Q: How is the Holiday Inn brand different in Latin America than in the United States?

A: Latin America tends to be more modern in what they do. I would consider them more trendy, more artistically focused on their design than what you would see in branded hotels in the United states and Canada.

We opened a beautiful Holiday Inn Express in Costa Rica at the airport. Down in Chile, there was a Holiday Inn Express opened that was actually part of a historical complex -- it was a family's mansion that was converted.

It tends to be our owners there are very established families within their countries, and they take a lot of pride in their product. It's a different ownership mentality a lot of times because of family pride. It's prestigious for them to be involved in an international brand.

Q: Would you say that the discounting by hotels after 9/11 was an overreaction or an appropriate reaction?

A: No, it was an overreaction. We have worked hard to get the word out that price discounting by itself does not drive demand.

People have to have an inkling they want to travel. Whether the room is $40 cheaper or not may not stir extra demand for corporate travel or business travel. So are you leaving money on the table by going to the lowest common denominator?

By moving rates dramatically, you change your business mix. You have to make a decision as a hotel operator. Do you really want to change your mix that much? Because there can be reputation harm. It's like Vegas saying well, we're going to go after families. They were trying to change their business mix, and it was turning off their bread-and-butter business. So they went back.

Q: What percentage of the Holiday Inn portfolio out there makes you wince, would you say?

A: In the last seven years, we've removed over 1,000 hotels from our system. This year we've already announced we're going to remove another 190 hotels. And this relaunch has to be completed in 2010. We have 1,100 hotels in our pipeline. By the end of 2010, our average age will drop dramatically -- it will be younger than our competitors'.

Q: Where do you stay when you're in town?

A: I'm staying at the Intercontinental downtown that's on Biscayne Bay because it's close [to Pow Wow].

Q: How come you don't stay at a Holiday Inn?

A: I do stay at a Holiday Inn. But on this, I visited the one at the airport. New signs are going up in 10 days -- I've got meetings there all day tomorrow. I'm not ashamed of my brand.

Q: I do have to say, when we were setting this up with your publicist in New York, I suggested several times, "Let's do this at the Holiday Inn nearby." I got a pretty adamant: "No."

A: Well, we wanted to get into a relaunched hotel. But all the relaunched hotels are up in Kendall and out in Dade. None of them are nearby. The one that is downtown and one near the Fontainebleau, they're in the process of being relaunched and there's construction.

Q: The AIG effect has hammered Miami Beach. Fox News had someone live reporting from the AFL-CIO convention at the Fontainebleau saying, "You wouldn't believe how fancy this hotel is . . . "

A: Nobody gets in trouble by putting Holiday Inn on an expense report.


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