Cheaper Havens on the U.S. Road

By Barbara Rudolph

They were once known in the trade as hot-pillow spots because they were a favorite for trysts. In Hollywood, cheap motels are forever associated with Alfred Hitchcock's classic, Psycho. The image, though, is an antiquated one. As travelers take off on summer vacations, more and more are checking into a new and booming breed of budget chains.

No one would mistake any one of the 60 low-priced motel groups for the Ritz. They offer spare, though not Spartan, accommodations. Rooms at Days Inns, Econo Lodges and other budget operations run around 20% less than the rates at Ramadas or Holiday Inns and up to 60% below prices at Hiltons. Says Econo Lodges' owner and president, Ben Douglas: "We offer a good bed, clean sheets and a cup of coffee in the morning. When you turn the lights off, we like to think you can't tell the difference between an Econo Lodge and a Hilton."

) The limited-service motels now constitute the fastest-growing and most profitable sector of the $36 billion lodging industry. The number of these motel rooms is up 15% from last year and 78% from 1980. Charlotte, N.C.-based Econo Lodges, whose slogan is "Spend a Night, Not a Fortune," and rival Super 8 are opening a new property about every four days. Americans, who are expected to take 282 million trips within the U.S. this summer, are flocking to these chains, which have a total of 276,000 rooms.

Some major hotel corporations are launching low-priced motel divisions in an attempt to attract their own crop of value-conscious travelers. In August 1984 Holiday Corp., parent of Holiday Inns, inaugurated its limited-service Hampton Inn. Ten such inns are now in business, and by the end of the year an additional 90 are expected to be open or under construction. Quality Inns runs 160 lower-priced Comfort Inns. Says Quality Inns President Robert Hazard: "The economy sector is where the action is today."

Running a limited-service operation is roughly twice as profitable as managing one that offers a lot of amenities. Most budget locations lack swimming pools, in-house restaurants and convention facilities. This means less land and lower construction costs. Once the establishment is opened, the operator saves by using a skeleton staff, since he dispenses with waitresses, convention-hall managers and other service employees.

Patrons of budget inns cannot be too persnickety, although their sacrifices do not seem onerous. They may have to tolerate thinner towels, smaller soap bars and less closet and drawer space. "We sell bread and let others sell quiche," says James Trueman, president of Ohio-based Red Roof Inns.

No-frills establishments fall into three price categories. The top tier, which includes Days Inns and the San Antonio-based La Quinta chain, typically charges $35 to $40 a night for one person. In the medium-price range, for $30 or less a night, travelers can check in at Super 8 and Red Roof Inns, whose roofs are indeed painted red. Cheapest of all is Motel 6, a favorite of truckers, who appreciate the $17.95 price tag.

Inexpensive inns are attracting a clientele similar to that of more expensive places. More than half of all customers are now businessmen traveling alone. "Corporate controllers have started rapping knuckles on expense accounts," says Econo Lodges' Douglas.

The success of low-priced lodging in part reflects effective marketing. Red Roof Inns advertises with signboards that say SLEEP CHEAP. Says President Trueman: "It may be grammatically incorrect, but it sure pulls travelers off the highway." His occupancy rate of 84% is the highest in the economy-lodging industry.

Still, experts wonder how long no-frills operators can enjoy such a smooth journey. As new companies enter the market and established chains expand, there is the growing risk of a glut. "Profit potential now is high, but success breeds excess," says Daniel Daniele, an analyst at Laventhol & Horwath, an accounting firm specializing in the lodging industry. Daniele predicts an industry shake-out in the next two to five years, but that is a distant prospect. This summer travelers tooling down interstate highways are sure to find plenty of bargain motels.

With reporting by Lee Griggs/Chicago