Kemmons Wilson

Industry First:
Wilson's Holiday Inn is a cornerstone of hospitality
American City Business Journals
2002
By Kate Miller

Pulitzer-prize winning journalist David Halberstam called Kemmons Wilson's 1951 family trip to Washington, D.C., "the vacation that changed the face of the American road," in his book The Fifties.

It is a phrase that is being repeated again and again in company press releases and media coverage of Holiday Inn's 50th anniversary, officially Aug. 1.

The Holiday Inn is now dwarfed in size by competitors such as Best Western, which owns 4,000 hotels compared to Holiday Inn's 1,600, but Kemmons Wilson's innovative ideas in the 1950s and 1960s have so permeated the American hotel/motel industry that few recall their origin.

"I think as far as the industry is concerned, it gave birth to the industry," says Frank Flautt, head of Holiday Inn's international franchising division in the 1960s and the owner of several Southeastern hotels. "Before that there were hotels, but it was the first hotel system. It created the industry."

The trip that changed America occurred in the summer of 1951 when Kemmons Wilson, wife Dorothy and their five children piled into the unairconditioned family Oldsmobile for the long drive to the nation's capital. Loathe to take time off from his 16-hour work days as a home builder, Wilson wasn't accustomed to the inconveniences of travel.

Unimpressed with the inconsistent and unpredictable quality of motels along the way and infuriated with the extra charges per child, Wilson saw vast untapped commercial opportunity on the roadside.

Upon returning home he told his wife he was going to build 400 hotels across the country, the number he figured it would take to reach coast to coast.

"In 1951, Kemmons Wilson had an idea. 15 years later he owned the largest hotel/motel chain on the planet Earth," says John Pepin, dean of the Fogelman College of Business and Economics at the University of Memphis.

Wilson opened the first 120-room Holiday Inn at 4953 Summer Ave. on Aug. 1, 1952. By 1966, there were 728 Holiday Inns with 91,878 rooms.

From the beginning, the Holiday Inn introduced innovative ideas to the industry. It was the first to implement a "kids stay free" policy; offer air conditioning and television sets in every room; and feature an on-site restaurant at every hotel. No matter where in the country travelers pulled over, the Holiday Inn product was the same.

"As standardization succeeded, other people emulated it," Pepin says.

Holiday Inn and Kemmons Wilson also had wonderful timing. The company took off just as the federal government began its $76 billion interstate project. Wilson realized early on the changes this would bring.

Travelers would soon tire of fighting traffic to get to downtown hotels, he thought, so he built his hotels on the outskirts of town near interstate interchanges.

"Kemmons would literally get into his airplane, fly over the interstate system and point out sites for the Holiday Inn," says Tom Johnson, managing director of the Fogelman Executive Center and the Holiday Inn at the U of M, and former Holiday Inn vice president of quality.

The fast-paced growth of Holiday Inns was fueled by more than the federally funded project.

"He implemented the use of franchises to expand operations," Pepin says."This was never done before in the industry."

The first Holiday Inn franchise opened in Clarksdale, Miss., in June 1954 at a cost to the franchisee of $500 and a flat fee of $.05 per night for each occupied room. A tough sell at first, franchises would be in high demand at $10,000 a piece in a decade.

"It was a matter of managing the success of Holiday Inns," Flautt says.

"Our job was really to find the best franchisees that we could find."

Flautt says Holiday Inn franchises were so successful that they would look at 5,000 proposals to complete 800 deals.

The increased demand was due in no small part to another Holiday Inn innovation, the Holidex. The industry's first national computerized reservation system, introduced in 1965, fueled demand from travelers that liked knowing where they would sleep before they hit the road. That in turn fueled franchise demand as business became more predictable.

"Next to starting the thing in 1952, it was the next most significant thing," says Spence Wilson, one of Kemmons Wilson's sons.

Holiday Inn was so far ahead of its competition it didn't have to market itself.

"Up to that point in time, I don't recall any real organized high dollar effort," Johnson says. "In the early days you could just turn on the great sign, open the front door and step back."

That began to change in the 1970s, when recession and an oil crisis dampened America's traveling spirit. By the time the travel industry began to recover, new competition was entering the market at a rapid pace.

"During the 1980s, the Holiday Inn product had gotten tired on the franchising side and then there were more and more hotels developing," says Lorna Brown-Ray, marketing director for the U of M's Fogelman Executive Center and Holiday Inn, and longtime Holiday Inn corporate employee.

In response, Holiday Inn joined the rest of the hotel industry in developing new brands aimed at particular market segments. The Embassy Suites rolled out first in the early 1980s, followed by the Hampton Inns. Lacking gift shops, restaurants and discos, the newer hotels had lower overhead costs.

Johnson recalls a survey done in the mid-1980s that revealed the average age of a Holiday Inn patron to be 17, compared to just 5 years old for competitors. Johnson says the difference was due to increased competition entering the market in the late 1970s and early '80s.

In 1990, the Holiday Inn brand was sold to Bass PLC. The remaining Holiday, Inc., brands, including the Hampton Inn and the Embassy Suites, were reorganized under the name Promus.

Spence Wilson recalled his father called it "the deal of the century."

Bass, which has since changed its name to Six Continents, soon found its purchase was badly in need of repair.

"Some of the properties were aging, that was clear, and there were some quality issues that we were grappling with along with many of our competitors at that time," says Vicki Gordon, Six Continents senior vice president of corporate affairs.

Senior executives for the company were sent in pairs to every domestic Holiday Inn, about 1,800 hotels, to assess the needs. The result was a $1.5 billion modernization campaign. Bass later sued Promus after discovering many hotels didn't meet zoning laws, with Promus settling in 1995 for $49 million.

But that's all in the past as Six Continents prepares to honor Kemmons Wilson and celebrate the Holiday Inn's anniversary. Six Continents senior executives will attend a celebratory dinner in Wilson's honor July 31 at the Holiday Inn at the University of Memphis.

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