Army taps Lend Lease, IHG for privatization
 
Army taps Lend Lease, IHG for privatization
10 JULY 2012 6:19 AM

The U.S. Army’s on-base hotels are in the midst of a massive facelift that aims to provide a superior guest experience to service personnel and their families.

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.”

 

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 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.

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.”

Program highlights
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.”

7 Comments

  • CU1865 July 10, 2012 3:27 PM

    Let me get this right: My hard-earned tax dollars are indirectly paying for franchise & marketing fees. We know where Priority Club Points come from, and how much they cost. This is not helpful, nor is it good news.

  • Lobster July 10, 2012 11:28 PM

    Sounds fishy, how was the tender process like and did they take other hotel chains into consideration?

  • CHUCKGL July 12, 2012 7:41 AM

    To CU1865- no, your tax dollar was funding the hotels and operations before when the Army was running the hotels. Now, Lend Lease and IHG are paying for the operational costs which cuts billions of dollars of expense from the federal budget.

  • SCAM July 27, 2012 2:13 PM

    Army G3 if forcing students to stay in the privatized hotels. If they stop forcing soldiers into the privatized hotels like Congress approved then soldiers can bring their families and stay in local extended stay family friendly off post facilities. Do away with privatization or let it fail!

  • Road July 28, 2012 8:54 AM

    Stayed at the one at Ft. Bliss, Tx. The biggest waste of Army monies. The worst experiance ever, only 3 people on staff speak english. What gives? All other military contracts require english speakers, even when I was in the Middle East. Will stay at Motel 6 before staying here.

  • POLITICAL SCAM July 30, 2012 7:03 PM

    THis is huge scam that is making money to lend lease which is a subsdiary company of Picerne Military Housing. I can bet some one involved in this that general public is not aware of that got congress to pass. Hotels on base is taking business from OFF-post hotels. Hotels on base DO NOT pay sales tax or Property tax in community they are located. Yet Base demands community to build schools, roads, recreation facilities and more. all of community development comes from the taxes that is not contributed by the businesses on POST.

  • SCAMS COMMENTED July 31, 2012 4:22 AM

    In response to: Army taps Lend Lease, IHG for privatization THE MILITARY WANTS THE CITIZENS AROUND THE BASES TO INVEST IN TO NEW BUSINESS AND IMPROVE THE LOOKS AROUND THE BASES WITH OUR TAX DOLLARS YET, THE GOV'T/MILITARY DO NOTHING TO SUPPORT THOSE BUSINESSES OFF THE BASE IN RETURN! I'M SURE IHG IS MAKING GOOD MONIES OFF OF THESE TYPES OF DEALS WITH LEND LEASE AND ENJOYING SCREWING THEIR VERY OWN FRANCHISEES OFF BASE IN THESE AREAS!! IHG WOULD NEVER LET ANY JUNK MOTEL TO BE RE-FLAGGED TO HOLIDAY INN EXPRESS UNDER THEIR BRAND STANDARDS. I THOUGHT THAT WAS THE WHOLE PURPOSE OF GOING TO INTERIOR CORRIDOR PROPERTIES. IHG MAKES IT BOTH WAYS WITH THE ROYALTIES AND MGMT FEES.

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