Rank no.111 – Ramada – US
Products & Services: Hotels
Number of Locations: 837
Total Investment: $220.66K – 12.5M
Began Franchising: 1990
In 1954 a group of investors opened an inn in Flagstaff, Arizona, the first in a series of motor hotels to be opened by the group. Five years later, the chain was named Ramada, meaning “a shaded resting place” in Spanish.
Today Ramada, which has been owned by Cendant Corp. since 1997, operates hotels throughout the United States. The company is comprised of three segments, Ramada Inns, Ramada Limiteds and Ramada Plaza Hotels, serving value-conscious and mid-market travelers.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $35,000
Ongoing Royalty Fee: 4.5%
Term of Franchise Agreement: 15-20 years
|FINANCING TYPE||IN-HOUSE||THIRD PARTY|
How This Franchise Supports Franchisees
Franchise Ranking History
The lodging chain was founded in 1953 by longtime Chicago restaurateur Marion W. Isbell (1905–1988) and a group of investors including Michael Robinson of McAllen, Texas who later went on to start Rodeway Inns in the early 1960s; and Del Webb of Phoenix, who owned the New York Yankees and went on to establish his own lodging chain, Hiway House, in 1956. Other original investors of Ramada Inns included Bill Helsing, Isbell’s brother-in-law; Max Sherman of Chicago, a produce operator dubbed “The Tomato King”; Chicago attorneys Ezra Ressman and Mort Levin; and Frank Lichtenstein and Robert Rosow of San Antonio, Texas.
Ramada opened its first hotel – a 60-room facility – on U.S. Route 66 at Flagstaff, Arizona in 1954 and set up its headquarters in Phoenix, Arizona, where the chain built the Sahara Hotel on North 1st Street downtown in 1956 (which later became the Ramada Inn Downtown) and a 300-room Ramada Inn in the 3800 block of East Van Buren in 1958 that would become the chain’s flagship property and headquarters. Mr. Isbell, like his contemporary, Kemmons Wilson, the founder of the Holiday Inn hotel chain, devised the idea of building and operating a chain of roadside motor hotels while he was on a cross-country trip with his wife, Ingrid, and their three children. On that trip, Isbell noted the substandard quality of roadside motor courts along US highways at the time. He saw the possibility in the developing market for a chain of roadside motor hotels conveniently located along major highways which would provide lodgings with hotel-like quality at near-motel rates plus amenities such as TV, air conditioning, swimming pools, and on-premises restaurants.
The Ramada name is derived from the Spanish term rama (meaning branch) and was applied to temporary open air structures called Ramadas that were made of brush or branches (similar to an arbor) and were popular in Arizona during harvest time. Company websites commonly refer to the structure as a “shady resting place.”
Through its early years until the early 1970s, a typical Ramada Inn was built of colonial Williamsburg-style architecture to set their hotels apart from the standardized architectural designs used by competitors such as Holiday Inn and Howard Johnson’s. These are properties that have distinctive triple pillars and a white overhang in the front of the hotel, in addition to all-brick architecture. However, most of these are now rebranded under various other names but a few original Ramada Inns of that colonial design continue as franchises of the chain today including a hotel in Ocala, Florida.
Ramada’s logo, from its start in the 1950s until around 1976, featured a friendly bald innkeeper, dubbed “Uncle Ben”. He sported an apron (later a suit and tie) and held a top hat in one hand and in the other hand, a red trumpeted banner that read “Ramada Inn Roadside Hotels”. From 1976 to 1982, the chain’s logo was a simple rounded rectangle that read “Ramada Inn” in the same gothic Western style lettering of the original design. From 1982 to 2004, Ramada changed to a revised, rounded rectangular design with more modern lettering.
The chain at one point was owned by Ramada Inns, Inc., a holding company created by Isbell to oversee Ramada’s various divisions including hotel operations, franchising, real estate, and equipment purchasing. Under Isbell’s leadership, Ramada grew into one of the nation’s largest lodging chains during the 1960s and 1970s with 100 Ramada Inns in operation by 1964, which grew to 250 in 1970 and nearly 650 by 1976. By the late ’70s, Ramada ranked as the second largest hotel chain in the U.S. behind industry leader Holiday Inn. Also during the 1970s, Ramada expanded into worldwide operation by opening new hotels in various European nations and on other continents.
Marion W. Isbell served as president and CEO of Ramada until 1970, when he resigned the presidency and turned it over to his son, William M. Isbell. The senior Isbell continued as the chain’s CEO until his retirement in 1972 and then chairman of the board until 1979. William M. Isbell would serve as Ramada’s president and CEO until 1981.
Ramada developed a chain of restaurants, which were located inside the hotels, similar to the Howard Johnson’s restaurants. Ramada operated them under various names including Uncle Ben’s Kitchen, Ramada Pancake Cottage, and Chez Bon, as well as other names used by individual local Ramada Inn franchises. The company-owned Ramada restaurants became defunct in 1990, though the franchised hotels continue to include on-premises dining facilities.
Split of hotel and casino operations
In an attempt to revive the company’s lagging business, Ramada Inns, Inc. in 1989 decided to split its hotel/restaurant businesses and its gaming businesses. The Ramada hotels and restaurants were sold for $540 million to New World Development Company and the gaming business which included the Tropicana Las Vegas, Tropicana Atlantic City, andRamada Express in Laughlin, Nevada, were spun off to a new company called Aztar Corporation. In the original deal for the gaming business Ramada shareholders were supposed to get $7 in cash per share plus half a share of the new Aztar Corporation. However, this changed quickly to a new deal where shareholders would receive $1 per share plus one share of Aztar Corporation. In the late 1990s Ramada was sold to Cendant Corporation of New York City.
The chain offers different hotel “tiers” based on price and services offered.
- Ramada Limited—budget-oriented properties, typically with no on-site restaurant, though a pool and deluxe continental breakfast are standard. Some Ramada Limiteds consist of rooms mixed with suites, or are entirely suites.
- Ramada Inn/Inn & Suites/Suites—full-service properties with swimming pools, exercise rooms, room service, and free breakfast items. If there is no restaurant on site, a convenience store is usually on the premises. Some hotels have mixed rooms and suites, and a few are entirely suites.
- Ramada Hotel/Hotel & Suites/Hotel & Resort -found only in Canada and international destinations, these are full-service hotels with room service, a full-service restaurant, and fully developed fitness centers. Many of the international hotels also offer suites in addition to rooms, and a few have a resort and hotel together.
- Ramada Plaza—lower “upscale” properties offering business centers, full-restaurants, enhanced room service, and concierges at many locations.
- Ramada Resorts—found in international locations outside the USA; located in tourist destinations and high-traffic locations.
One of the “tiers” is no longer part of Ramada:
- Ramada Renaissance—a division of upscale business and resort hotels begun in 1982. When Ramada was sold in 1989, the new owners divided the Renaissance Hotels brand into its own chain, and then sold it to Marriott in 1997.
Under Cendant/Wyndham ownership
Under Cendant’s (and now Wyndham’s) ownership, Ramada franchises Ramada Inn, Ramada Limited, Ramada Plaza, and Ramada Suites in the United States and Canada. Ramada itself no longer directly or indirectly owns or operates any of the Ramada hotels. Outside of the U.S. and Canada, Ramada hotels are owned and operated or franchised byRamada International, which was owned by hotel operator Marriott International. However, in 2004, Ramada International was purchased by Cendant, giving Cendant the worldwide rights to the Ramada name. Ramada International remains separate from the Ramada operations in the United States and Canada. In 2006, Cendant spun off its hotel operations, including Ramada, to Wyndham Worldwide.
In Australia, Ramada Inn is a traditional motel in Parkville, Melbourne affiliated with the Australian “Golden Chain” group of hotels and motels. It underwent extensive renovation recently, but is known locally for its use of the humorous Uncle Ben vintage logo and idiosyncratic abbreviation of the word “kilometre” on its signage.
In the United Kingdom, Jarvis Hotels Ltd were the largest franchisee of the Ramada brand. They operated corporately as “Ramada Jarvis Hotels”. Six of the properties were bannered as Country Collection hotels; they are properties that were historic buildings previously owned by local business magnates and in beautiful landscaped gardens. Ramada Jarvis went into liquidation in September 2011, ceasing trade on every hotel formerly franchised from Ramada. Ramada’s United Kingdoms operations came to an end. Shortly after selected Days Hotels were rebranded as Ramada hotels bringing the brand back to the United Kingdom.
Ramada International currently manages three hotels on Sri Lanka‘s western coast, under the “Ramada” name, including one in Sri Lanka’s capital Colombo. The Ramada Colombo was formerly the Holiday Inn Colombo but management recently changed.