Where Choice execs see white space for existing brands
 
Where Choice execs see white space for existing brands
09 MAY 2019 8:21 AM

Choice Hotels International executives share details of their strategies to grow the company’s brand portfolio, build on the success of its dual brands and help owners attract and retain new talent.

LAS VEGAS—Taking care of and expanding its current family of brands is a primary focus for Choice Hotels International, executives said during a media roundtable at the company’s recent business convention.

In the past year, Choice’s commitment to its brands has manifested in three ways, according to President and CEO Pat Pacious.

“We acquired a brand, WoodSpring Suites; we launched a new brand, Clarion Pointe, which has gotten off to great success; and we’re also going to continue to invest in our current brands,” he said. 

That investment might include “helping Cambria owners enter the upscale space” and strengthening brands such as Quality Inn, Pacious said.

“Quality, which was the first brand this company had … (is) an 80-year-old brand, but it’s had more openings than the next three midscale brands combined in the industry,” he said, adding that Quality Inn has 94% brand awareness, 160,000 rooms globally and opened 132 hotels last year.

“We don’t just look at the world as everything has to be some new brand extension or new brand launch. We also want to make sure we’re reinvesting in the brands that have had such great success for our current owners,” Pacious said.

Pacious said Choice looks at a lot of factors when considering whether to add a new brand to the portfolio.

“If you look at where our portfolio is today, there’s some white space,” he said. “We don’t have an upscale, extended-stay brand yet; we don’t participate in the full-service side of the house in upscale. Those are opportunities for us in the immediate to long term, but right now we’re focused on the 12 brands that we do have, and we’re pretty excited about the growth prospects of those brands.”

International growth
Choice is focused on development growth primarily in Europe, Pacious said.

An alliance with Spanish operator and franchisor Sercotel Hotels has allowed Choice to enter new markets, “Spain in particular, and then also Latin America,” he said.

“We’ve added a significant number of hotels … where we didn’t have a footprint before, in Spain,” he said.

Pacious added that Choice is also growing with its master franchisees in the Nordic countries with Nordic Choice, in Brazil with Atlantica, and in Japan “with our partner there who is growing hotels again in a pretty significant fashion.”

While Choice is growing across the world, Pacious said Europe has been a focus in the past year, noting the business there is different than in the U.S.

“We’re more leisure than we are business in the U.S. today, but Europe, it’s the other way around,” he said. “It’s more of that business traveler than it is leisure travel. So therefore, we’re focused more on that three- or four-star segment in the European countries.”

Dual brands
Choice has seen dual-brand success with its Mainstay and Sleep Inn brands, according to David Pepper, chief development officer at Choice.

The company executed 60 Sleep/Mainstay dual brands last year, he said, adding that it’s been a hit with owners because “there’s been a lot of focus on midscale new development, and Sleep/Mainstay allows you to go after two markets in one hotel.”

Sleep/Mainstay dual-branded hotels are different than a lot of their counterparts in the industry because they are two brands in one hotel, meaning they share all of the space. Others might have two brands housed in the same building, but it still feels like two separate hotels because they have their own lobbies, Pepper said.

“You’re looking at a lot of 100-room hotels where half of the hotel is a Sleep and half of the hotel is a Mainstay,” he said. “It’s really been an exciting development for developers. They see it as a real opportunity to go after two markets in one hotel, (and) go after that midscale, transient business and the midscale, extended-stay both in one property.”

John Bonds, SVP of enterprise operations and technology at Choice, added that the Sleep/Mainstay dual brand is a great profitability play for owners.

“We’re not doing two completely separate hotels with a wall between them; we’re running it as one hotel. They have two different systems, but our systems are pretty low cost. They are able to manage that much more profitably than if it were two hotels,” he said.

Helping owners
The tightening labor market has been a topic of concern in the industry for a while now, which Choice is aware of.

To address this, Pacious said Choice is doing as much as it can to help owners attract and retain talent.

“With the whole joint-employer world, there’s certain things we don’t want to cross into from the standpoint of directly impacting wages or hours or anything along those lines,” he said. “The franchise business model works because those are employees of (owners). That doesn’t mean we can’t help (franchisees) be better small business owners.”

One way Choice does this is by offering courses to franchisees through its Choice University program.

“We’re not just teaching people about housekeeping, revenue management and sales; there’s a whole track on small business,” Pacious said. “Getting your workman’s comp the right way, getting your local taxes done the right way, just basics of running a small business, whether it’s a hotel or a Dunkin’ Donuts franchise.”

He added that Choice also has a Rising Star program that recognizes successful owners who built big businesses. These owners, he said, want to help the next generation of hoteliers.

“Sometimes the next generation is their own children, and sometimes it’s just somebody that they have taken a shine to and want to help along the way,” he said. “We really want to enable that, and (with) the Rising Stars program … you’ll see a lot of the folks who have been successful and they want to pay it forward. … It’s an important aspect of what we do, and the more we do that, it helps bring the next generation along.”

Pacious said the company has noticed African-American women are underrepresented as owners in the industry.

“That’s another area that we’re seeing a lot of growth potential for, and we’re willing to put some dollars in their hands to help them get started,” he said. “This company helped the Asian community get into the hotel business decades ago, and it’s been hugely successful for us and for them. We want to make sure we’re being as inclusive as possible, and that’s another way we think about not just who are our hoteliers today, but who are going to be our hoteliers 20 years from now.

“The more of those folks we can help get started today, those will be our big franchisees 10, 20 years from now.”

Editor’s note: Choice Hotels International paid for meals and accommodations at the Mandalay Bay Resort and Casino, where the conference is held. Complete editorial control was at the discretion of the Hotel News Now editorial team; Choice had no influence on the coverage provided.

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