REPORT FROM THE U.S.—While parent company Wyndham Worldwide Corporation has been relatively quiet about its growth, the Ramada Plaza “sub brand” has slowly been carving out a unique niche in the hotel landscape.
The Ramada brand has somewhat of a rocky history, starting in the 1950s in Phoenix and having been juggled by several owners since, including Marriott International, Cendant and now Wyndham. At one point during the 1980s it was associated with the Renaissance brand and tagged Ramada Renaissance until the two brands were divided and Marriott bought the Renaissance brand in 1997.
Around that time, with the growth of limited-service products in the U.S., many hotel franchisors were forced to take a hard look at brand differentiation. Marriott moved on with the Renaissance brand and Cendant divided Ramada into several sub brands—Ramada Inn, Ramada Limited, Ramada Plaza and Ramada Suites.
Therefore, it has been about a decade since Ramada Plaza really got its footing and the brand continues to grow as the upper-tier of all Ramada sub brands. Today, there are 75 Ramada Plaza hotels globally, including 32 in the United States.
“We did some studies back in the early 2000s as to how the customer perceived Limited, Inns and Plazas,” said Mark Young, Ramada’s senior VP. “The customer actually didn’t get the difference between Limited and Inn when we plotted them on a chart with all of our competitors. However, Plaza, they understood was more of a center city or airport location. A high-rise building where they expected to pay more.”
Which is what Ramada Plaza remains today. According to STR, parent company of Hotel News Now, it falls in the upper midscale chain scale. Well-known competitors are Comfort Inn, Country Inn & Suites, Hampton Inn, Fairfield Inn, Holiday Inn and Holiday Inn Express. Because of customer perception with the “Plaza” moniker, Young said Ramada Plaza is perceived to compete with full-service Sheraton hotels, Marriott or Hilton properties.
That’s precisely why Norm Leslie, president of owner-operator National Hospitality Services, owns three Ramada Plazas.
“We tend to be in the select-service segment but we had a really great track record with full-service Ramadas,” Leslie said.
NHS opened its first Ramada Plaza in Fargo, North Dakota, in 1996. The hotel has always performed “exceptionally well,” Leslie said.
“(Revenue per available room) index always been in the 120-160 range,” he said. “We kicked off our relationship with Ramada in a very good way. Since then we’ve added a property in Green Bay (Wisconsin) and another property in Grand Rapids (Michigan).”
“It was very clear that Ramada Plaza versus Ramada Inn and Ramada Limited, there’s a perception of an upper-end facility with the Plaza designation,” Leslie continued. “The public perceives it as a bigger box, an upper-scale project.”
Brand growth
Growth opportunities for Ramada Plaza are primarily in the U.S. market and conversion-based, Young said. Ramada Plaza is a good brand for owners looking to leave the Holiday Inn or Crowne Plaza brands as parent company InterContinental Hotels Group overhauls the brands, requiring significant property-improvement plans, he said.
Today, there are four Ramada Plaza hotels in Wyndham’s pipeline and the company has been opening two or three a year for the past couple years. “We’re being very aggressive to continue to add to the Plaza family,” Young said.
Leslie said Ramada Plaza fits well into the mix when considering PIPs and conversions. While he “completely understands what brands are doing” with their relaunches and repositionings, Ramada Plaza often times offers a less-expensive alternative, he said.
“It’s all math; you’ve got to make sure when you buy a hotel you’re doing the right improvement,” he said. “If a brand is telling you to invest $5 million toward a PIP but the market doesn’t support it, maybe another brand will let you get away with $3 million.”
Can Ramada Plaza survive in a new normal where the full-service segment is often deemed less profitable and much harder to finance? Both Young and Leslie think so.
“It’s definitely two-fold,” Leslie said. “If you don’t have the management infrastructure to really structure a full-service property the right way, food and beverage will eat you for lunch. On the other side, because we are a value-oriented buyer, we look at hotels all over the country and see properties that are severely undermanaged. There are properties that, because of lack of management expertise, allow F&B to deplete operations.
“We feel there is a way in most cases to optimize the performance of F&B so we can neutralize the loss and increase the value of that property significantly.”