U.S. Army to Privatize Lodging

Fresh off what is widely regarded as a monumental success in the privatization of its military housing (described in detail here and here), the U.S. Army is rolling out a new, major privatization initiative to improve the quality of its lodging facilities on military installations. From the Defense Department’s press release:

The U.S. Army today announced that it will transfer the first 10 installations under the Army’s Privatization of Army Lodging (PAL) program on August 15, 2009. The transfer is a reinforcement of the U.S. Army’s commitment to improving its transient lodging to enhance the quality of life of soldiers and their families.

Actus Lend Lease will perform the redevelopment of the lodging facilities and lodging operations will be assumed by the InterContinental Hotels Group (IHG).

“PAL brings world class lodging practices and private sector investment to support Quality of Life requirements of our Soldiers, Families and civilians as they serve,” said Lt. Gen. Robert Wilson, assistant chief of staff for installation management.

Most of the Army Lodging employees affected by the transfer will receive offers of employment from IHG. Retained employees will have their Army Lodging employment honored as IHG service time. Seven of the ten affected Army lodging general managers have accepted IHG positions.

The 10 Group A installations are: Fort Rucker, Ala.; Fort Leavenworth, Kan.; Fort Riley, Kan.; Fort Polk, La.; Fort Sill, Okla.; Fort Hood, Texas; Fort Sam Houston, Texas; Yuma Proving Ground, Ariz.; Fort Myer, Va.; Fort Shafter / Tripler Army Medical Center, Hawaii.

Upon transfer of the lodging rooms, the project will begin correcting commercial code noncompliance issues and overhauling the mechanical, electrical and plumbing systems of the existing inventory. These renovations and the conversion of five hotels to Holiday Inn Express hotels will be complete within the first two years.

The end-state portfolio of hotels will be a mix of well recognized and well respected IHG brands such as: Candlewood Suites, Staybridge Suites, and Holiday Inn Express, and renovated historic facilities. Enhanced guest services including complimentary breakfasts, pet-friendly rooms, and the IHG Priority Club frequent-stay program will start upon transfer.

Through the PAL program, the Army has engaged the private sector to manage, build, renovate, maintain and operate transient lodging on Army installations. The program is modeled after the Army’s successful privatized family housing program, the Residential Communities Initiative (RCI).

Just as the Army realized several years ago that providing housing was not a core competency and should thus be outsourced to competent private sector providers, it has now come to the same conclusion regarding hotel operations.