Choice Hotels International CEO Steve Joyce said the company plans to have a significant number of Cambria hotels up and running by 2018 and will continue to push booking direct to customers.
ROCKVILLE, Maryland—Choice Hotels International CEO Steve Joyce said the company’s Cambria Hotels & Suites brand will be “a brand to be reckoned with” in a few years.
“We know we have a winning formula, we just have to continue the distribution of (Cambria hotels,)” Joyce said on a second quarter earnings call. “We’re looking to have a significant number of hotels opened and operating by 2018, and once we have that and a firmly established stance, then we think we’re going to have a brand to be reckoned with.”
Choice’s domestic pipeline for the Cambria brand totaled 53 hotels as of 30 June, which was a 112% increase from the same time period in 2015, according to the company’s Q2 earnings release. The company signed nine domestic franchise agreements for the brand in the three months ending 30 June for Cambria projects in locations such as Boston, Los Angeles and Seattle.
Less than 10% of Choice’s portfolio is located in urban markets, Joyce said, but the company is focusing Cambria’s growth in those locations.
“Performance (in urban markets) is varying, but anywhere we’ve got Cambrias, it’s obviously a very up (revenue per available room) growth cycle because they’re relatively new and they’re increasing in every case every year,” he said. “We’re starting to see the kind of results that we thought were available to us in the urban markets because of the excess demand that we’ve got because our product is simply a newer and better product than anything else out there.”
Continued loyalty improvements, direct bookings push
Choice began offering discounted rates to loyalty members on 20 July as the next step in its efforts to improve Choice Privileges.
Joyce told an analyst on the Q2 earnings call that Choice has not seen a drag in RevPAR as a result of discounted rates for loyalty members. He said RevPAR is “at least being offset,” and that he anticipates the company will benefit “net-net” from new members joining Choice Privileges.
He also said the company’s direct bookings push makes Choice more attractive to developers because “if they know they’re going to get 57% of their business from us, that’s going to lower their overall cost of customer acquisition.” He said Choice, as well as other brands, are tired of hearing rates are lower on online travel agency sites rather than brand sites.
“(The OTAs) spent $2 billion a year saying it, but it’s simply not true, and we’re trying to get the consumer to be aware that the lowest rates achieved are on brand.com sites …,” he said. “We particularly don’t want to be lectured by the OTAs about how we should approach the customers, and so I think you’re going to see a much more aggressive stance not just from Choice, but across the board.”
RevPAR increased 4.3% in Q2 2016, according to the earnings release. Occupancy increased 0.8%, and average daily rate increased 3%. The company expects RevPAR to range between 3.5% and 4% growth for the full year, which is slightly down from the 3.75% and 4.5% full-year forecast it made at the end of the first quarter.