Bristol Hotel Company

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Bristol Hotel Company

14285 Midway Road, Suite 300
Dallas, Texas 75244
U.S.A.
(972) 391-3910
Fax: (972) 391-3799
Web site: http://www.businesspr.com/bristol

Public Company
Incorporated: 1981 as Harvey Hotel Company
Employees: 4,500
Sales: $504.5 million (1997)
Stock Exchanges: New York
SICs: 7011 Hotels & Motels

One of the largest owners and operators of full-service hotels in North America, Bristol Hotel Company operates in 19 of the top 25 lodging markets in the United States, with more than 120 hotels clustered in 25 states and in Canada. Bristol, the largest Holiday Inn franchisee in the world, recorded animated growth during the mid- and late 1990s, as it developed from primarily a southern U.S. chain into a national chain with extensive coverage in the mid-priced to upscale segments of the hotel industry. Through acquisition deals that brought more than 80 Holiday Inn hotels under its control during the late 1990s, Bristol ranked as one of the fastest growing operators in its industry as the 21st century neared.

Origins and 1980s Expansion

Founded in 1981, Bristol began business as Harvey Hotel Company, the owner and operator of The Harvey Hotel, located in Dallas, Texas. The Harvey Hotel was the first of many hotel properties the company would control during its first two decades of existence. During this first chapter in the company’s history, Bristol grew from one hotel in Dallas to more than 120 hotels clustered in 25 states, achieving its growth through aggressive acquisitions completed in the 1980s and, at a more accelerated pace, in the 1990s. Although the ambitious acquisition campaign waged by Bristol engendered constant change at the company’s headquarters in Dallas, there was one key element during Bristol’s swift rise within the hotel industry that never changed: the senior management at Bristol remained the same. Two senior executives orchestrated Bristol’s resolute growth; the first was the company’s first employee, J. Peter Kline, who joined Bristol in January 1981.

Prior to joining Harvey Hotel Company (the company changed its name to Bristol Hotel Company in 1995), Kline worked for Laventhol & Horwath, a prestigious consulting firm. Like the growth of the company he would later lead, Kline’s rise within Laventhol & Horwath was swift. He was named partner of the firm in record time, assuming control over Laventhol & Horwath’s entire consulting practice in Texas and surrounding states. Between 1976 and 1980, Kline and his staff conducted market studies for virtually every hotel project proposed for development in Texas, experience that greatly assisted his development of Harvey Hotel Company in Texas, where the greatest concentration of the company’s hotels would be located. A graduate of Cornell University, where he earned bachelor of science and master of science degrees, Kline was joined by another Cornell graduate, John A. Beckert, during Harvey Hotel Company’s inaugural year. Prior to joining Harvey Hotel Company, Beckert operated his own restaurant and catering business in Dallas and spent three years working at the hotel and theme park divisions of Marriott Corporation. Together, these two Cornell alumni helped direct the growth of the one-hotel Harvey Hotel Company into the Bristol hotel chain.

With Kline in charge and Beckert serving as the general manager of The Harvey Hotel in Dallas, Bristol operated its lone hotel for two years before another property was added. In 1983, the company opened the first of five new hotels it developed during the 1980s, The Harvey Hotel in Piano, Texas. When the hotel in Piano opened, Beckert vacated his general manager post at the Dallas hotel, making room for his brother and future senior vice-president of administration for the company to take over as general manager of the Dallas hotel. Beckert then served as the general manager of the new Piano hotel for the property’s first two years before being promoted to vice-president of operations. When Beckert moved into Harvey Hotel Company’s executive offices in 1985, the company opened its third hotel, The Harvey Hotel in Addison, Texas, followed by the development of another Harvey Hotel in 1987 at the Dallas-Fort Worth Airport. Subsequent hotel developments during the remainder of the 1980s were opened under two new proprietary brands, Bristol Suites and Harvey Suites. The first was a Bristol Suites in Dallas that opened in 1988, followed by a Harvey Suites at the Dallas-Fort Worth Airport, which opened in 1989. Late in 1989, the company acquired The Sheraton Hotel in Houston and renovated it, converting it to Harvey Suites.

By the end of the 1980s, steady expansion had created an eight-unit chain operating under three proprietary brands. Although the pace of expansion during the decade represented the rise of a growing contender in the Texas hotel market, the methodical physical growth of the company was not enough to turn heads, at least in comparison to the aggressive expansion of the company during the 1990s, as it spread its presence throughout the southern half of the United States, up the Atlantic Coast to Boston, and into the Canadian province of Ontario, At its briskest, expansion during the 1980s occurred at yearly intervals. Expansion during the 1990s, however, was a monthly event, occurring at a dizzying pace that greatly increased the physical and geographic scope of the company.

Behind the frenzied acquisitive activity at the company’s corporate offices in Dallas there was a carefully thought-out strategy. Kline and Beckert were not simply trying to make their company the largest hotel operator in the industry, they were clustering their new hotels in concentrated groups, thereby realizing significant efficiencies for the marketing, management, and logistical coordination of their burgeoning enterprise. Further, they were shaping Harvey Hotel Company to compete in a specific market category, tailoring their hotels through renovations to compete in upper mid-priced and upscale segments of the hotel industry. As the number of hotels operating under Harvey Hotel Company’s corporate umbrella increased, general characteristics of the chain emerged. All the hotels were primarily larger, full-service facilities offering state-of-the-art banquet and meeting facilities, with a variety of dining options. Sales were promoted locally, by on-site marketing teams that addressed the specific needs and desires of the area.

Mid-1990s Acquisitions

Although the company’s physical growth during the 1990s would dwarf the accomplishments of the 1980s, expansion did not get underway until mid-way through the decade. In August 1994, the company made its first move since the establishment of the Harvey Suites at the Dallas-Fort Worth Airport in 1989, acquiring a Holiday Inn in Houston and converting it into a Harvey Suites. Next, the company made its boldest move to date when it acquired 26 hotels owned by Memphis-based United Inns, Inc. Overnight, the deal lifted Harvey Hotel Company’s hotel count to 36 and extended the company’s geographic presence into seven states. The purchase of the United Inns hotels also ushered in an exhaustive, $130-million renovation program aimed at redeveloping the hotels, most of which were in disrepair, to bring them up to Harvey Hotel Company standards, which represented part of the company’s general strategy to purchase distressed hotels and transform them into vibrant money-earners once again. Phase one of the United Inns redevelopment program began in March 1995, when renovations on seven of the properties started. As this program was underway, the company picked up another Sheraton Hotel, located at the Atlanta Airport, in June and converted it to a Harvey Hotel. In September, the company changed its name to Bristol Hotel Company.

Phase one of the United Inns renovation program was completed in October 1995. Phase two began the following month, when work started on renovating five more of the former United Inns properties. The company also purchased another hotel in the Dallas area in November 1995, acquiring the downtown Dallas Holiday Inn/Howard Johnson, to which Bristol added its restorative touch and converted it to a Hampton Inn. In December, after a year of frenetic activity that increased the company’s hotel count from ten to 38 and included extensive renovation work, Bristol converted to public ownership. In the company’s December initial public offering, 4.89 million shares were sold to investors at $20.50 per share, and Bristol made its debut on the New York Stock Exchange.

Company Perspectives:

By concentrating clusters of hotels in geographic locations, the company has created significant efficiencies for marketing, supervising, and shipping operations. Office spaces configured without walls or doors emphasize the company’s commitment to communication and teamwork. All employees, from the bellman to the CEO, are on a first name basis. The Bristol marketing approach, which relies heavily on aggressive local sales by on-site property sales teams, has consistently produced superior and stable occupancy rates. This successful direct marketing approach is complemented by a full-service, in-house advertising department. Food and beverage has historically been a highly profitable source of revenue for Bristol hotels, as management has concentrated on this area as a way to distinguish itself from other national chains. With a variety of innovative restaurant concepts and an aggressive approach to the catering business, margins run well over 30 percent.

Phase two of Bristol’s redevelopment program, which began in November 1995, was finished in June 1996, but before the second phase ended phase three began. In March 1996, the last of the $130 million earmarked for the renovation of United Inns was invested in the redevelopment of eight more United Inns properties. This final stage of the redevelopment project lasted a year, during which time the company continued to acquire hotels, selecting mismanaged or deteriorating properties near a cluster of Bristol-operated hotels. In May 1996, the company acquired a Holiday Inn in Piano, Texas, and in January 1997 the company purchased the historic Allerton Hotel in Chicago. Located on Chicago’s North Michigan Avenue, where the most heavily concentrated area of upscale retail stores in the country flanked a famous section of the city known as the “Magnificent Mile,” the Allerton Hotel stood as a landmark, comprising 383 rooms divided among 25 floors. Bristol paid $35 million for the hotel, but intended to spend more on the property to finance its conversion to a more than 400-unit Crowne Plaza hotel.

1997: A National Contender Emerges

Although Bristol’s pace of acquisitions slowed significantly from the ambitious rate of expansion in 1995, the company’s accomplishments in 1997 more than made up for the temporary lull. Phase three of the redevelopment program concluded in April 1997, the same month Bristol completed a mammoth deal that more than doubled its size and made it the largest franchisee of Holiday Inn properties in the world. At a price of $665 million, the company acquired 60 full-service Holiday Inn hotels located in the United States and Canada from U.K.-based Bass Pic, a deal that raised Bristol’s number of hotels to 98. As it had throughout its history, Bristol intended to renovate the acquired properties and set aside $200 million to fund capital improvements on the 60 hotels. When Kline announced the completion of the deal, his words underscored the significance of the acquisition to Bristol’s stature within the U.S. hotel industry. “This transaction,” he told reporters, “marks a new era for Bristol, taking our regional presence to a national level. The deal,” he added, “also signals a new strategic alliance between Bristol and Holiday Inn Worldwide, and firmly establishes Holiday Inn as a leader in the competitive corporate business category.”

After a decade and a half of converting money-losing hotels in disrepair into well-appointed, profitable properties, Bristol had proven its capabilities as one of the most successful hotel owners and operators in the country. The April 1997 deal with Bass Plc was testament to this esteemed record of accomplishment, and its successful completion promised further acquisitions of Holiday Inn hotels. Bristol, having completed the evolutionary step from regional hotel operator to national hotel operator, had no intention of slowing its acquisitive pace.

Three more Holiday Inns were acquired in separate transactions before the end of 1997, a 318-room hotel in St. Louis in October, a 364-room hotel in Philadelphia in December, and a 305-room hotel in San Jose, California, also in December. In February 1998, the company increased the number of hotel rooms under its control 14 percent in a $100 million transaction that included 20 midwestern Holiday Inns.

As Bristol prepared for the future, with co-founder Kline at the helm, the company was one of the fastest-growing hotel companies in North America. Its remarkable physical expansion during the late 1990s had pushed its financial total upward, making Bristol a company to watch as the 21st century approached. From $70 million in revenues generated in 1994, the company’s sales volume swelled to more than $500 million three years later, while the company’s earnings rose strongly, jumping 163 percent in Bristol’s fourth quarter in 1997 alone. Additional acquisitions in the years ahead appeared assured, as the company narrowed its sights on the $15 to $20 billion of acquisition targets it had identified by the end of 1997. With this vast selection of hotels that met the company’s buying criteria, Bristol’s expansion throughout North America was highly likely, provided its enviable record of profitability and astute management continued into the future.

Principal Subsidiaries

Airport Utilities, Inc.; Austin Innkeepers, Inc.; Bristol Dallas Downtown, Inc.; Bristol-Harvey Partners, Ltd.; Bristol HHCL Company; Bristol Hotel Asset Company; Bristol Hotel Beverage Company; Bristol Hotel Management Corporation; Bristol HTS Company; Bristol IP Company; Bristol Piano Company; Endlease, Inc.; Glenjon, Inc.; Harvey BHP, Inc.; Harvey Hotel Company, Ltd.; Harvey Hotel Corporation; Harvey Hotel DFW, Inc.; Harvey Hotel Management Corporation; Harvey Hotel Purchasing Company; Harvey Hotels Financing I, Inc.; Harvey Hotels Financing II, Inc.; Harvey Hotels Gen Par, Inc.; Harvey Hotels Investments I, Ltd.; Harvey Hotels Investments II, Ltd.; Harvey Hotels Limpar, Ltd.; HHH Hotel Corporation; HHHC GenPar, L. P.; Houston Inns Service Company; Lam-mons Hotel Courts, Inc.; Limited Service Inns, Inc. of Mississippi; Mid-Atlanta Investment Company; Penrod Club; Rier Properties, Inc.; Rodgers Hotel Courts, Inc.; United Inns, Inc. of Tennessee; Wichita Harvey Partners, Ltd.