GlobeSt.com UPDATE: Owners Back Cendant Tough-Love Plan

NEW YORK CITY-Cendant Corp. hotel group’s decision to remove its brand names from 300 US hotels represents the first step in a sweeping long-term business plan designed to improve its franchise system’s overall competitiveness. Two major franchisees tell GlobeSt.com the program is exactly the shot in the arm needed for a company that has been too lenient for too long.

Cendant hotel group chairman and CEO Steve Rudnitsky’s four-pronged plan is designed to re-establish brand value, improve profitability of franchised hotels, ensure hotel consistency and grow the franchise system through the addition of high-quality hotels. And the first step–a put-up-or-shut-up ultimatum that could result in Cendant rescinding brand affiliation from as many as 300 properties–will eliminate up to 40,000 keys from the group’s worldwide total of 547,303 rooms. (See original story, Cendant to Cut Loose 300 Hotels.)

“This is an initiative to really make sure all our brands are consistent with our standards,” Rudnitsky tells GlobeSt.com. “These 300 properties are the worst offenders, not just on quality assurance issues but on payment as well. Some of them just aren’t paying us.” The affected properties were notified last week.