Choice sees near-term opportunity in Cuba
18 FEBRUARY 2016 4:05 PM
President and CEO Steve Joyce said company leaders think an “Ascend-like arrangement” with a number of hotels makes sense in the country.
ROCKVILLE, Maryland—Executives from Choice Hotels International said they are considering entry into Cuba on a near-term basis, and they don’t see significant financial implications in entering the country.
“We think there is an opportunity for us to participate (in Cuba) on a much near-term basis when (the) Helms-Burton law changes and you can bring down partners to help build hotels,” said President and CEO Steve Joyce during the company’s fourth-quarter and year-end earnings conference call Thursday. “We are not planning on investing on any capital in Cuba.”
He said company leaders think an “Ascend-like arrangement”—Ascend is Choice’s soft brand—with a number of hotels makes sense in the country. He said Choice executives have had productive conversations with government officials on the subject, adding that the company is a significant supporter of efforts to open up Cuba because Choice customers want to go there in droves.
- Read also: “Spanish chains welcome US competitors in Cuba”
“We think it’s a great opportunity not only for us, but for the island and the Cuban people and everything else,” Joyce said. “We actually are hoping we’re going to be there playing relatively short-term. The financial implications for them are not significant, and we’re not putting money into it.”
Loyalty program revamp
Last week, Choice announced the redesign of the Choice Privileges loyalty program. Joyce said the redesign was the biggest change of the loyalty program in the company’s history.
After concluding a study that showed 43% of millennials want their first benefits as soon as they sign up, Choice redesigned the loyalty program to allow travelers to get perks and rewards faster and more frequently than ever before, Joyce said. Loyalty points also never expire.
“More and more travelers, especially millennials, want instant gratification,” Joyce said.
Q4, year-end results
In 2015, Choice’s domestic system-wide revenue per available room increased 6.5%. Occupancy increased 160 basis points, and average daily rates increased 3.7% during the year.
Domestic system-wide RevPAR was up 4.3% during the fourth quarter, as occupancy increased 60 basis points and ADR increased 3.2% from the previous year, according to a news release announcing the company’s earnings.
Revenues increased 13% to $859.9 million from the previous year. Fourth-quarter revenues increased 14%, totaling $211 million.
As of press time, Choice stock was down 1.7% year to date. By comparison, The Baird/STR Hotel Stock Index was down 6.1% for the same time period.