Privatization of Army Lodging

Monday December 5, 2011

What is it?

The Privatization of Army Lodging (PAL) program is the Army's preferred means of revitalizing its transient housing facilities and providing for their long-term sustainment. Under PAL the Army conveys existing lodging facilities with a 50-year lease for the underlying ground to a qualified development partner and hotel operator. The private PAL developer obtains private capital and expertise to build, renovate, operate, and maintain adequate and affordable transient lodging over the long term.

What has the Army done?

The PAL program competition was won by the development firm Lend Lease and their hotelier, InterContinental Hotels Group (IHG). The Army transferred the first ten PAL installations (3,200 rooms) in August 2009. The developer began correcting commercial code noncompliance issues and overhauling the mechanical, electrical and plumbing systems of the existing inventory. During the first two years, six facilities with 1,141 rooms were converted to the Holiday Inn Express brand standard. Enhanced guest services include complimentary breakfasts, pet-friendly rooms and the IHG Priority Club frequent-stay program.

The Army expanded the privatized hotel portfolio by an additional 11 installations (4,800 rooms) in August 2011. Construction of new Candlewood Suites hotels and additional renovation work to the existing facilities is set to commence in the months ahead.

What continued efforts does the Army have planned for the future?

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. It is the Army's intent to privatize all continental United States Army Lodging operations by 2013. The requisite real estate and environmental work is currently underway at the remaining 21 to-be-privatized installations. Upon completion, the privatized portfolio will span 42 installations (15,500 rooms) with more than $1 billion dollars of private capital reinvested in the facilities.

Why is this important to the Army?

The PAL program reflects the U.S. Army's commitment to improving its transient lodging to enhance the quality of life of Soldiers and their families. The recapitalization of the on-post lodging facilities is critical to ensure that Army students and other official travelers have safe, affordable accommodations designed to facilitate their mission. The program also allows the Army to divest itself of a non-core function and transfer to the private sector in a manner that ensures the long-term sustainability of the hotels.

Resources:

Privatization Army Lodging
IHG Army Hotels
Assistant Secretary of the Army for Installations & Environment (ASA I&E)
Assistant Chief of Staff for Installation Management (ACSIM)
Office of the Under Secretary of Defense for Acquisition, Technology & Logistics (ACQ)
Military Housing and Lodging Institute (MHLI)

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