Double Take

While other corporate hotel execs might swoon over PowerPoint presentations of RevPAR growth and development activity, Doubletree Hotels' Dave Horton relishes presentations of another sort. Hauling boxes of kids' art projects into his corner office in tony Beverly Hills, headquarters for parent-company Hilton Corp., Horton beams like a proud father as he displays a grade school's creations from recycled milk cartons.

While the senior VP, brand management can spout facts and figures with the best of them (and he does, rocket-fire fast), Horton smoothly steers the conversation back to his heart's passion: Doubletree's CARE Program, which fosters value-building among customers, community and internal team members. In fact, during a daylong visit, he devotes a good chunk of time detailing the growth of the program and the dedication of its creators and participants.

While that's all well and good, we say, investors and owners are sure to ask how much, if anything, the do-goodism contributes to the company's bottom line.

Horton firmly maintains the program does indeed advance bottom line results — and anything that fosters good customer, employee and community relations is bound to do so.

And to that end, the numbers support his claim. The once unfocused, ill-defined and sluggish brand is on an upward projection in both sales and development. In the past six years, since Doubletree was acquired by Hilton, the upscale, conversion-heavy flag has posted impressive growth in development activity and performance. Doubletree has gone from a RevPAR index of 91 in 2000 to 103.8 today, “a huge lift,” says Horton. The brand has grown from 158 hotels in 1999 to 175 open today and 22 under construction or conversion. That includes aggressively defaulting 61 under-performing properties. Seventy-five deals are in the works, says Horton. That doesn't include the international development being explored following Hilton's acquisition of Hilton Group, plc, earlier this year.

“We've eliminated over a third of the hotels in the system and then doubled our size in just five years,” boasts Horton. “Nobody in the industry has done that with one upscale brand.”

Now he's on a roll with the numbers: “We saw total revenue growth of 21 percent in '05, 20 percent over '05 in '06. National sales group bookings in Doubletree were up 65 percent over last year, which was up 34 percent over ‘04. We should be leveling off six years into it (Hilton's ownership) and yet that's 100-percent growth.

“What we've done basically is build a whole new brand. We've got all new money. We've become the number one full-service conversion brand in America today.”

BACK ON TRACK

To industry observers and the travel public alike, Doubletree has been off the radar the past few years. Prior to its purchase by Hilton in late 1999, the Doubletree brand was “anemic and floundering,” says Horton. “This was a brand that didn't know what it was.” Its earlier merger with Promus was “not a good fit” as its leaders butted heads over management styles and operating philosophies. The brand had gone through 26 months of RevPAR decline prior to its acquisition. And, except for the popular fresh-baked cookies offered at check-in, Doubletree lacked a clear identity. What it did have were good properties and industry heavyweight owners.

“It was like a NASCAR body without a performance engine,” explains Horton. “Promus had a wonderful branding culture with great brands. Hilton brought the engine — national sales, the Hilton HHonors guest rewards program, a great reservations network, the OnQ technology platform and a revenue management culture. The synergies were perfect.”

However, it would take some heavy selling to convince leery owners and investors. “They knew its history and struggles and there were questions, doubts and concerns,” recalls Horton.

Within Hilton, Doubletree operates autonomously, as do each of the brands. “We're part of the Hilton family but we believe strongly that each brand should be differentiated,” says Horton. “Strong brands are highly distinctive.”

Speaking to corporate culture, Horton says, “I don't believe in bureaucracy. We're paid by the hotels so I'm here to serve them, not create overhead.” To that end, 54 cents on the dollar collected by hotels goes directly into advertising, he reports. “In 2000, our central reservations contribution was 26.5 percent. Today it's 55.3 percent…we've more than doubled it. The one dollar we get also pays for all reservations, online, GDS, field support and PR. We're very lean.”

Doubletree's new advertising program, combined with its Teaching Kids to Care Community relations initiative, contribute to growing brand awareness. The community relations efforts alone garnered over 17 national and local public relations awards and generated billions of media impressions that support its brand positioning, the company reports. This year Doubletree is launching a new national television ad campaign which aims to continue building momentum for the brand.

“We didn't have much advertising in the past but now we have a story to tell,” says Horton. “We've doubled our advertising in the past two years. We have the largest budget in the company — about $25 million just in media buys, including TV, print, radio and online.”

BRAND SNAPSHOT

Today, the growing collection of upscale accommodations is focused on gateway cities, metropolitan areas and vacation destinations throughout the U.S., Canada and Latin America. Doubletree Hotels and Resorts offer contemporary accommodations and full-service facilities and amenities. Doubletree Guest Suites claims to be the world's second-largest full-service, all-suite brand, offering one- and two-bedroom suites.

The average Doubletree hotel size is 300 rooms; the smallest is 80, the largest 850. Horton says foodservice is focused on developing new restaurant concepts and standardizing the breakfast buffets. Fitness “is a huge thing,” says Horton. “We just did a partnership with Precor for their global distribution and maintenance and we're looking to bring a true fitness experience to each hotel.”

Development is split evenly among the West, central U.S., Northeast and Southeast. The breadth and concentration over the past few years is significant. Doubletree previously was a one-hotel-per-market company. For example, in New York the sole Doubletree was a Times Square property. “Now we've got the Metropolitan, also in Manhattan,” reports Horton. “We just opened the Doubletree Newark airport hotel, a converted Wyndham owned by Highgate and Goldman Sachs. Also, we've got a great property at JFK airport, Jersey City is going through a PIP (product improvement plan), and we're working three other deals in Manhattan. In the last 24 months we've gone from one hotel to covering the whole New York metropolitan area.”

A major improvement initiative over the past two years has created more than $700 million in product enhancements and property improvements, resulting in a 21-point increase in guest approval, according to the J.D. Powers & Associates 2005 North America Hotel Guest Satisfaction Index Study. Cornerstone of the initiative is the brand's Sweet Dreams sleep experience, which features a luxe linen package of a down-filled duvet wrapped in triple sheeting, four to five pillows on each bed and a plush-top mattress and box spring system.

Horton takes a keen interest in design and architecture and firmly steers Doubletree's aesthetic. “Full-service hotels are by nature highly individual in architecture and décor,” says Horton. “That can be a good thing.

“We're trying to bring a much more contemporary and residential look to the hotels,” says Horton. “Hotels should be interesting and fun and have a sense of style and place. I like clean lines, more natural colors on the furnishings and carpet and putting the colors into art and accessories. And I insist all designs for hotels come to my office for review.

“There are brands out there that will take a hotel without a PIP; they'll just do the deal. We're doing the deal and getting the PIP, crossing the t's and dotting the i's. We want to be partners but we want quality. And I've got owners who say ‘your PIP was tough but it shows you care about your brand.’

“But owners will find us very flexible,” Horton adds. “We're very collaborative and we turn around design plans quickly. We work with them on creating a vision.”

On the other hand, when it comes to quality assurance, “we're very aggressive,” says Horton. Each hotel is reviewed twice a year, unannounced, and a team of directors works on performance and quality issues to keep hotels ahead of the curve. “But if issues come up, we take action.”

GOING GLOBAL

With the recent acquisition by Hilton Hotels Corp. of Hilton Group, plc, all restraints to international growth for the collection of American brands have been removed. In July global expansion for the Doubletree brand commenced with the signing of a multi-year agreement with Bangkok-based Destination Properties Ltd. to manage a newly built 358-room golf resort and spa in Sriracha, Thailand.

Says Horton, “We think there's significant opportunity globally for the brand and we've got deals working in the United Kingdom, South America, Europe, the Middle East and Asia. We're touching every continent.

“We're focused on how we differentiate the brand, making sure we're strong in customer satisfaction, market share and growth in revenue and development. If we can grow five to seven percent a year, that's a vibrant momentum and that gets people investing.”

THE BIG IDEAS

Doubletree by the Numbers

Owned hotels: 3; 1,349 rooms

Leased hotels: 5; 1,746 rooms

Joint venture hotels: 14; 4,306 rooms

Managed hotels: 26; 7,146 rooms

Franchised hotels: 119; 29,102 rooms

Total hotels: 167; 43,649 rooms

Doubletree 6 months YTD 2006

Occupancy: 72.3%; +3.9 pts from YTD 6/2005

ADR: $112.89; +7.6% from YTD 6/2005

RevPAR: $81.56; +13.7% from YTD 6/2005

(as of June 30, 2006)

CARE Package

Maybe it's his property-level and operations background that drives Dave Horton's empathetic leanings to line-level employees and the local community. Horton cut his hospitality teeth as a teenage bell-boy rising through the property level ranks in sales and management.

“I believe the heart of any good organization is its shared values and culture. When we came in, Doubletree was lacking pride and culture,” says Horton. The existing CARE culture, a program that fosters employee empowerment and community outreach, had fallen by the wayside. Its revival has “translated to our customers and our marketing and positioning Doubletree.”

Since 2002, Teaching Kids to CARE is a community-based outreach initiative that has connected Doubletree hotels with local elementary schools and youth groups to educate children about making conscious decisions, such as caring for their community and the environment.

“We think it's an obligation as a hotel company and a member of the community to embrace the community, to be a good community steward,” says Horton.

COOKIE MONSTER

Everyone loves the Doubletree welcome, a warm and gooey chocolate chip cookie, presented to each guest upon check-in. This simple gesture has become a huge hit for the company and a brand icon.

Cookie dough from a tightly guarded recipe is prepared at a factory in Nashville and daily shipped out frozen to hotels nationwide. Frozen dough is baked on property and then packaged in individual wrappers and kept in warmers at the front desk.

About 12 million cookies year or 34,000 a day are distributed to guests and another three quarters of a million are given away annually to charity.

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