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Costa Mesa Office to Oversee Expansion : Quality Inns Gamble on Suite Success

May 16, 1985|BRUCE HOROVITZ | Times Staff Writer

Quality Inns International, the nation's fastest-growing hotel chain, has checked in to Orange County with big plans to shake up the lodging industry.

Last week, the Silver Spring, Md., company opened a Costa Mesa office, from where it will oversee nationwide development of its so-called "all suite" hotels. Company officials say these hotels signal a new direction for the Quality chain and for the hotel industry. The two-room units are moderately priced--they average $65 per night--but offer amenities ranging from in-room microwave ovens to full breakfasts on the house.

So enamored is Quality with this idea that it has 30 such projects under development, including three in Orange County. Within five years, it plans to build 300 all-suite hotels coast to coast--all modeled after a prototype designed and built in Orange County.

The Robert P. Warmington Co. of Costa Mesa has designed Quality's all-suite prototypes. President Robert Warmington said his firm is building a dozen Quality projects in California and Arizona, including two in Santa Ana and one in Buena Park.

And that may just be the beginning. Although all-suite hotels now comprise less than 2% of the nation's 2.5 million hotel rooms, some experts forecast that their segment of the market could expand to 10% or even 20%.

For years, the lodging industry has struggled to find an acceptable middle ground for budget-minded business travelers. Quality's all-suite hotels are an attempt to satisfy that massive--but much-ignored--market. Shortly after Quality first introduced the idea in 1980, other chains quickly followed, including Holiday Inns, Marriott, Hilton and Ramada Inns.

Most recently, Quality made an even more unusual bid for business. It has taken the all-suite idea and added a budget price--rooms are as low as $40 a night. These hotels, marketed under the Comfort Inn banner, are sparse on amenities such as meeting rooms, restaurants and recreational facilities. But with their oversized bathrooms, plush carpeting and bright design, their rooms do not appear budget-priced.

'Not Some Lunatic Fringe'

"This is not a flash in the pan," said Robert C. Hazard Jr., chief executive of Quality, which is a subsidiary of Manor Care Inc., an owner and operator of nursing homes and hospitals. "We are not some lunatic fringe part of the market."

Industry experts generally agree that there is a demand for all-suite hotels, but some are scratching their heads over Quality's massive commitment.

Joseph Doyle, analyst at Smith Barney, Harris Upham & Co., a brokerage firm in New York, said that Quality's all-suite growth plans may be "overly ambitious." Although all-suite hotels are attractive to many executives, he said, "I just don't know how big the demand is."

Joseph G. Kordsmeier, an industry consultant based in Monterey, Calif., said the jury is still out on all-suite hotels. "No one has really proven that they're completely successful yet," he said.

But Quality's Hazard says the market is ready-made. Among the likely users of all-suite hotels are women. By 1990, women will comprise nearly half of nation's business travelers, he said. Suites, which offer a room separate from the bedroom, appeal to female executives who host business gatherings in their rooms, Hazard said.

Earlier Success

Retorted one analyst, who asked not to be named, "I don't know how much business goes on in hotel rooms--besides monkey business."

Despite the industry skepticism, it is hard to argue with Quality, which was successful in the more traditional hotel business before branching out to the suite concept. The company, which had 300 hotels in the United States in 1981, has more than 700 today. On its current growth track, Quality is building a hotel every other business day, Hazard said.

The three-story structures have about 180 rooms and skip the ornamental in favor of the utilitarian. Over the next year, Warmington said, his company will invest more than $100 million in these hotels.

Among many cost-cutting measures, Quality has trimmed expenses by eliminating the hotel's biggest traditional money-loser, the restaurant. Although buffet breakfast will be served free in a hotel dining room, guests will have to go to nearby restaurants for lunch and dinner.

"There's always been a stigma about hotel restaurants," said Jere Detweiler, Quality's vice president of franchise development. "Who wants to use a hotel restaurant unless they have to?"

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