|In 2009, IHG assumed management of Army Lodging hotels on 10 installations, including this Holiday Inn Express in Fort Rucker, Alabama.
REPORT FROM THE U.S.—The U.S. Army’s on-base lodging facilities are in the midst of a massive facelift, with literally every meaningful Army hotel set for renovation, redevelopment and privatization within the decade.
Large-scale owner/developer Lend Lease and operator InterContinental Hotels Group are spearheading the project, part of the Privatized Army Lodging initiative, which aims to provide a superior guest experience to service personnel and their families while dramatically slashing the cost and timeframe needed for the work.
Lend Lease recently closed on $275 million in financing for the second phase of the initiative, bringing the total affected room count to approximately 8,200 hotel rooms on 21 Army installations throughout the United States and Puerto Rico. When the forthcoming third and final phase gets underway, a total of 15,000 rooms on 42 installations will fall under the Lend Lease/IHG umbrella.
“This has been an exciting opportunity, and we think we make a great partner with strong brands,” said Arthur Holst, VP of operations for IHG Army Hotels. “We have taken a lot of time to make sure we understand the unique needs of the military and those traveling on official military business. We hope there will be more opportunities to work with the Army as we continue to see the success of the program.”
The initiative began in August 2009 when IHG assumed management and operations of Army Lodging hotels on 10 installations, known as Group A, which included the refurbishment and management of more than 3,000 rooms. Over two years, IHG Army Hotels and Lend Lease converted four properties to Holiday Inn Express hotels: Fort Polk, Louisiana; Fort Hood, Texas; Fort Sill, Oklahoma; and Fort Rucker, Alabama.
|In May, executives from Lend Lease Public Partnerships, IHG and the U.S. Army celebrated the groundbreaking for a Candlewood Suites at Joint Base San Antonio.
The second phase of the program (Group B) was launched in August 2011 to renovate, develop and sustain on-post lodging facilities at 11 more U.S. Army installations, transferring approximately 5,000 additional rooms to the overall project and bringing the total room count to more than 8,500 rooms.
Group B already has seen conversions to a Holiday Inn Express at Fort Hamilton, New York, and Fort Wainwright, Alaska, as well as groundbreakings for new Candlewood Suites hotels at Joint Base San Antonio (310 rooms) and Fort Riley, Kansas (100 rooms).
The final group of hotels (Group C) will be added to the portfolio by spring 2013, bringing another 7,000 rooms and 21 hotels into the fold.
“The Army is eager to bring the final 21 installations into the PAL program in the spring of 2013,” said Rhonda Hayes, chief, Capital Ventures Office of the Assistant Secretary of the Army, Installations, Energy & Environment. “Lend Lease and IHG have demonstrated that they have the ability to assume operation of the Army hotels and to make an immediate positive impact in terms of both facility improvements and customer satisfaction.”
The PAL initiative is exclusive to Lend Lease and IHG, with most Army hotels converting or being developed to either the Holiday Inn Express or Candlewood Suites brands, with potential for Staybridge Suites properties as well.
The deal is unique, with Lend Lease holding the properties under a 50-year lease that reverts back to full Army control when the term is expired. It includes a sustainable reinvestment program through which $38 of every $100 in generated revenue is put back into the hotel.
“It’s an incredible program, especially the sustainment portion of it,” said Charles Smith, senior VP and general manager of portfolio operations - lodging for Lend Lease. “The Army had a significant need now because the soldiers and the families were staying in facilities they shouldn’t really be staying in because they didn’t have a sustainment program. Although it’s the tail piece of this program, it was the piece that was missing before.”
Other highlights of the program include creating some of the largest properties in the IHG brand family, such as the 544-room Holiday Inn Express at Fort Sill, and a planned new-build 310 Candlewood at Joint Base San Antonio, which when completed will be the largest Candlewood Suites.
Guests staying at any of the revamped or newly constructed hotels also will enjoy greater amenities and benefits than before due to the new IHG affiliation, which offers consistency from one base to another, as well as the opportunity to accrue rewards points.
“We’ve enhanced the lodging experience for the soldiers and their families to be at least comparable, or a little better, than what they have off post,” Smith said. “They get Priority (Club) points, which they never got before. We have a concierge, which they’ve never had before either. We have shuttle vans and special things like a weekly barbecue, because sometimes these people can stay up to three months. We make them kind of a part of the family.”
Although the other branches of the U.S. Department of Defense maintain lodging facilities as well, the Army is the first to privatize and revamp its hotels. However, based on the success to date of the PAL project, Smith speculated that other branches might eventually follow suit.
“I would think that on the heels of seeing the success of this program, they’d be thinking about it,” he said. “In the midst of the cuts out there, especially the government, they’re about defending our country, not running hotels. Why not have a developer and operator run a hotel for you? Let us take care of your soldiers, their families, your airmen or your sailors. Let us take care of them so they’re happy and can go do what you hired them to do.”