Choice Hotels International President and COO Patrick Pacious said the upscale segment represents “open space” for his company.
LOS ANGELES—Choice Hotels International officials believe they’ve been riding a wave of strong growth, spurred by the strength of the company’s upscale brands.
Speaking with Hotel News Now during the 2017 Americas Lodging Investment Summit, Choice President and COO Patrick Pacious said growth of the Cambria Hotels & Suites brand and the Ascend Hotel Collection soft brand has been welcome because expansion in the upscale segment represents a new opportunity for the company.
“It’s all open space for us,” he said. “The Cambria brand itself does really well particularly because there is demand in some urban markets for upscale product, and we don’t have many rooms in those markets.”
Cambria currently has 29 open hotels, and Pacious said he expects that number to grow quickly.
“That brand will grow significantly,” he said. “You’ll really see the footprint we have in upscale is starting to expand. We have a lot of growth opportunity there.”
Pacious noted Ascend has more than 200 hotels open or in the pipeline.
A recent news release touting the company’s upscale growth cited recent openings and groundbreakings for the Cambria brand in major markets like Chicago; Nashville, Tennessee; and New York City. Ascend signed 30 new hotels in the U.S. in 2016, along with new international properties in Ecuador, Finland and New Zealand.
Beyond the potential for upscale growth, Pacious said Choice is seeing success from updates to the Comfort Inn and Sleep Inn brands.
Pacious said Choice has spent the past three years working to turn around Comfort, which he believes is now coming to fruition.
“The RevPAR momentum for that brand is really strong,” he said. “While we have fewer hotels in the brand now because we removed 600 over the past five years to get the brand repositioned, it’s really created a better guest experience because our guest satisfaction scores are at an all-time high and have been sustained.”
He said developers in particular appreciate the work put into rejuvenating that brand and new builds for Comfort hotels comprise two-thirds of Choice’s pipeline.
Pacious described Sleep Inn as the “best-performing brand in the midscale segment” and sees it as one of the company’s greatest opportunities for growth.
“We repositioned that brand several years ago,” Pacious said. “All of the interior design work has been redone for the brand. Last year, at our convention we launched a new prototype that was very well-received. It kind of brought what we had done on the inside to the outside of the hotel.”
One of the stated focuses of that redesign was to bring down construction and development costs.
“Developer interest in that has been pretty significant,” he said.
Sleep Inn has also represented a chance for the company to move into more dual-branded developments, and roughly half of Sleep Inn deals are part of a dual development attached to a MainStay Suites property.
“That really gives a developer the opportunity to attract both leisure and business travelers,” Pacious said.
Expectations for future growth
Pacious said he doesn’t believe worries about the hotel industry nearing the end of its current cycle will deter Choice’s growth.
“There’s positive feeling out there from developers with regard to not just the projects they have under construction now but in terms of doing more deals,” he said. “Plus, long term, particularly where we play in the upper midscale segment with Comfort, the demographics of long-term leisure trends are pretty compelling.”
He said there are reasons to feel travel will continue to grow in a general sense.
“If you think about the number of baby boomers who retire every day, and they’ve got a lot of free time and discretionary income,” Pacious said. “They’re using more of that on travel. When they’re not traveling on a corporate card, and they’re traveling on their own personal wallet, then they tend to stay at our kind of product.”
Pacious noted that growth in the upscale segment in urban markets will put the company in a better position to take advantage of future growth in business travel.
He said one of the biggest opportunities for his company is the fact that Choice brands are nowhere near a point of oversaturation but are competing with brands that have already crossed that line.