Choice execs predict success amid growing competition
Choice execs predict success amid growing competition
02 MAY 2018 8:05 AM

Choice Hotels International’s executives welcomed owners, managers and developers to the company’s 64th annual conference by showing them how much more the company can accomplish.

LAS VEGAS—Choice Hotels International President and CEO Pat Pacious said 2017 was a “truly transformative year” as he welcomed attendees of Choice's 64th annual brand conference.

The company opened nearly one hotel per day last year, marking it the best year for development since 2007, he said. The company also awarded 704 franchise agreements in 2017, two-thirds of which came from owners in the audience.

While other companies have launched a number of new brands in the midscale and upscale segments, Pacious said his company has long been working in that space, knows the segments best, and will continue to invest in its brands.

Brands update
“We disregarded those who said it’s impossible to transform a brand as large as Comfort,” he said. “We knew there were no limits to what we could do. We worked with you, our owners, to invest $2.5 billion in Comfort’s renaissance. Together, we are transforming our flagship brand that has been around for nearly 40 years to make sure it’s around to lead the segment for another 40 years.”

The company’s Ascend Hotel Collection was the industry’s first upscale soft-brand collection, he said, and its portfolio has more hotels open than its top two competitors combined.

Cambria Hotels has properties operating in multiple top markets such as New York City, Los Angeles and Chicago, he said. The brand has nearly 5,000 rooms open in the U.S.*

Choice completed its acquisition of Woodspring Suites in February, tripling the company’s presence in the extended-stay segment, Pacious said. It’s a young brand with hotels built within the past seven years, he said, and it has “an incredibly successful model.”

“It generates outstanding operating income and cash-on-cash returns,” he said.

The extended-stay segment continues to report some of the strongest gains in demand, he said, and Choice will maximize this at every opportunity.

“We are committed to success in the extended stay segment,” he said.

Leveraging data
Choice Hotels collects an enormous amount of guest data that it turns into information franchisees can use to better run their businesses, Pacious said. The company looks at larger trends across the country, he said, and it has a more detailed view looking at monthly and weekly data.

The company’s proprietary revenue-management system has proven to be a success for franchisees who use it, he said. On average, those using it for six months have a 6% revenue per available room premium compared to the previous 12 months.

One size does not fit all, he said, which is why Choice has a sophisticated team that analyzes RevPAR to make it easier for franchisees to maximize their opportunities.

This data also helps the company determine the best locations for new development, Pacious said, outlining the process it takes to analyze locations: The company reviews year-over-year RevPAR growth, submarkets and surrounding areas, economic issues, gross domestic product and new jobs coming into the sector. The company also weights local points of interest as well as future points of interests that will be coming to the market. The company’s own distribution channels also identify where guests are looking for more Choice Hotels options.

Choice Hotels’ proprietary channels hit a new high in 2017, according to Robert McDowell, chief commercial officer. Sixty percent of franchisees’ business came through Choice’s channels, he said, and that led to 4 million more reservations delivered, equating to nearly half a billion dollars’ worth of increased revenue.

The company’s loyalty program, Choice Privilege, has more than 36 million members. It took the company eight years to grow its first 5 million members, he said, but it enrolled 5 million members last year alone. Enrolling new members hooks them into Choice’s distribution engine while rewarding these guests for coming back through benefits such as exclusive rates, gift cards and points that never expire.

“Customers who book a member rate are 40% more likely to return,” he said.

McDowell said he’s heard there is a fair percentage of front desk staff who find it awkward and uncomfortable to recognize loyalty members when they check in. Everyone is a customer, he said, and everyone likes being recognized by staff at places they frequently patronize. It’s about being welcomed, wanted and respected, he said, and people love that.

This is the hospitality industry, he said, and guests expect personal treatment. Hotels that don’t take this approach will lose money, he said, so franchisees should explain to their staff how important it is to recognize loyalty members when they check in.

“It will help you make more money,” he said.

*Correction, 2 May 2018: This story has been updated to correct the number of open Cambria Hotels guestrooms.

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