Source: David Halberstam. The Fifties (1997)
The vacation that changed the landscape of the American road occurred in 1951 when Kemmons Wilson, a successful home builder in Memphis, took his family to Washington, D.C. In 1951, the interstate system didn't exist, and it was a crapshoot at the end of every day of travel as to the quality and cost of a motel. Wilson was charged extra for his kids, and sometimes he spent $20 a night ($184 in 2015 dollars), and there weren't any restaurants handy.
One day during the trip, a very frustrated Wilson told his wife he was going into the motel business. Most everyone in America had a car and a family and Wilson saw the demand for roadside motels in his absolute frustration. Wilson envisioned 400 motels, and kids would stay free . . . it was the beginning of the modern American motel chain.
One day during the trip, a very frustrated Wilson told his wife he was going into the motel business. Most everyone in America had a car and a family and Wilson saw the demand for roadside motels in his absolute frustration. Wilson envisioned 400 motels, and kids would stay free . . . it was the beginning of the modern American motel chain.
Wilson was 38 years old, and he had always loved wheeling-and-dealing; even though he was a high school dropout, he had become a millionaire. Wilson also knew how big his motel room would be: 12 x 30 feet + a bathroom. The name for his motel chain, Holiday Inn, came from a Bing Crosby musical by the same name. Wilson decided that the perfect location for the first motel (120 rooms) would be between Memphis and Nashville, near where he owned a lumberyard. If he did everything right, Wilson figured the motel/restaurant would cost $325k.
Wilson took out a loan for that amount, and built his first motel/restaurant for $280k, using the remaining $45k as carryover for his next venture. The first Holiday Inn was built in just 90 days, and it opened in August 1952, a year after Wilson's immensely frustration vacation. The first Holiday Inn had a restaurant, gift shop, swimming pool, and in each room there was an air conditioner, as well as a rent-free television. Wilson charged $4 an night for single occupancy, and $6 for double, and children stayed free. Within two years Wilson built three more Holiday Inns, all on the main approaches to Memphis. Wilson wanted a large, highly visual sign for his motels, and the soon-to-be-famous sign soared to a height of 50 feet.
Wilson took out a loan for that amount, and built his first motel/restaurant for $280k, using the remaining $45k as carryover for his next venture. The first Holiday Inn was built in just 90 days, and it opened in August 1952, a year after Wilson's immensely frustration vacation. The first Holiday Inn had a restaurant, gift shop, swimming pool, and in each room there was an air conditioner, as well as a rent-free television. Wilson charged $4 an night for single occupancy, and $6 for double, and children stayed free. Within two years Wilson built three more Holiday Inns, all on the main approaches to Memphis. Wilson wanted a large, highly visual sign for his motels, and the soon-to-be-famous sign soared to a height of 50 feet.
But Wilson was 396 motels short of his goal, so he turned to the people he knew best, homebuilders. Each homebuilder that wanted to be part of Wilson's motel investment group would pay $500 for the right to own a Holiday Inn at their own location, plus a user's fee, plus .05 cents a night per room. At the first meeting, 70 homebuilders showed, and Wilson was sure that within a year every major U.S. city and major highway junction would have a Holiday Inn. Wilson's optimism was misplaced, in that only 3 builders accepted the proposal, but Wilson was actually lucky his colleagues didn't take him up on his bottom bargain-basement offer.
Wilson realized that most of his fellow builders didn't see America changing as he did, so Wilson became the head of Holiday Inns, and he would franchise to others. Instead of homebuilders, Wilson contacted investors, such as doctors and lawyers (one of his investors was his friend Sam Phillips, who first recorded Elvis Presley). Wilson started building Holiday Inns for $3000 a room, and he franchised them out for $3500 a room, making a clean $500 per room during the construction phase. From the start, Holiday Inns were a success; the rooms always seemed to be filled. In 1954, eleven Holiday Inns opened, and that was also the year that the first franchised Holiday Inn was built.
Wilson realized that most of his fellow builders didn't see America changing as he did, so Wilson became the head of Holiday Inns, and he would franchise to others. Instead of homebuilders, Wilson contacted investors, such as doctors and lawyers (one of his investors was his friend Sam Phillips, who first recorded Elvis Presley). Wilson started building Holiday Inns for $3000 a room, and he franchised them out for $3500 a room, making a clean $500 per room during the construction phase. From the start, Holiday Inns were a success; the rooms always seemed to be filled. In 1954, eleven Holiday Inns opened, and that was also the year that the first franchised Holiday Inn was built.
In 1956, the U.S. Interstate System was authorized at a cost of $76B, and America seemed to be coming to Wilson and his Holiday Inns. With the interstate, travelers could avoid going through cities altogether if they chose. In 1957, Wilson decided that he had to take his company public. Wilson and a handful of partners sold 120,000 sharea for $9.75/share on the Initial Public Offering. For awhile, Wilson had the roadside motel industry all to himself, in large part because Wilson could eye the perfect locations for a Holiday Inn in every area that didn't have a motel.
Wilson wanted a highly visible venue that was on the right side of the highway leading into a city, with a lot of additional land just in case he wanted/needed to expand. Wilson had tremendous fun selecting locations and choosing franchises. When Wilson started to fly his own airplane, his ability to see traffic patterns greatly enhanced his selection of sites . . . Wilson's eye became a legend within the industry.
Eventually Wilson's Holiday Inn chain reached 1500 motels. At his peak, Wilson was building a new Holiday Inn every 2.5 days, and a new room every 15 minutes. By the early-1970s, Holiday Inns had triple the rooms of its nearest competitors, Ramada and Sheraton, and Wilson was receiving 10,000 requests each year for franchises.
Wilson wanted a highly visible venue that was on the right side of the highway leading into a city, with a lot of additional land just in case he wanted/needed to expand. Wilson had tremendous fun selecting locations and choosing franchises. When Wilson started to fly his own airplane, his ability to see traffic patterns greatly enhanced his selection of sites . . . Wilson's eye became a legend within the industry.
Eventually Wilson's Holiday Inn chain reached 1500 motels. At his peak, Wilson was building a new Holiday Inn every 2.5 days, and a new room every 15 minutes. By the early-1970s, Holiday Inns had triple the rooms of its nearest competitors, Ramada and Sheraton, and Wilson was receiving 10,000 requests each year for franchises.