Sharing economy might be in Choice’s future
01 FEBRUARY 2016 8:48 AM
Choice Hotels International plans to quickly expand its vacation rentals platform currently in beta testing. CEO Steve Joyce said a sharing economy/alternative accommodations presence is a distinct possibility for the company.
LOS ANGELES—Choice Hotels International is on the doorstep of launching a platform that would allow consumers to rent units from third-party vacation rental management companies, and CEO Steve Joyce wouldn’t rule out the potential for the company to eventually enter the sharing economy/alternative accommodations space à la Airbnb.
During an interview at last week’s Americas Lodging Investment Summit, Joyce said the vacation rental platform could be officially launched as early as mid-February, and it wouldn’t be a leap for Choice to ultimately play in the consumer-to-consumer rental space.
The vacation rental platform will reward renters with points from the Choice Privileges program, and a potential consumer-to-consumer platform could do the same, Joyce told Hotel News Now in an exclusive interview.
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“We’re going to first work with vacation rental management companies, give them a platform, sell their inventory, give them points and create this connection between those companies’ product that they’re getting from individual owners and our customer base,” he said. “It is not a large step to look at moving beyond the vacation rental management companies.”
Choice’s website currently offers vacation rentals in three markets as a beta test to the larger program. Those options will be greatly expanded when the program is fully launched, according to Joyce.
“We’re ready to go on that, we’re signing people up and we’re going to make an announcement sometime soon,” Joyce said. “That can be a significant play for us.”
Once the vacation-rental platform is established, the flight to a consumer-to-consumer offering isn’t a long one, according to Joyce, who was hired to lead Choice in 2008 after spending 19 years as an executive with Marriott International.
“The (key) to going directly to the consumer, which I think is interesting if you look at the multiples of the companies doing it, is we could easily do it because we’ve got the technology to do it,” he said.
Choice would provide vacation rental management companies with a technology to list properties on its website as well as conduct other business. Joyce declined to provide further details of the technology system.
“It is a very lucrative, fragmented market that we think we can help consolidate,” Joyce said. “It’s a pretty big business.”
That technology could then be used for a sharing economy/alternative accommodations platform that would allow consumers to market and rent their units through Choice’s website. Joyce admitted the process to implement such an offering isn’t an easy one to conquer.
“The issues that we’re going to have are the same ones that Airbnb is struggling with now—how do you ensure a consistent delivery of a reasonable amount of (operational hospitality) … turning the key over in the proper way, making sure the place is clean,” he said.
Consumers have one of three responses when asked about their experience with Airbnb and other short-term rental platforms, according to Joyce:
- a third of them say they liked it because they received great service from the host, and the unit was clean and safe;
- a third said it was a so-so experience that didn’t offer anything extraordinary; and
- a third said they didn’t like it because the unit was dirty, they didn’t feel safe and/or the host made them uncomfortable.
Offering vacation rentals and potentially adding consumer-to-consumer listings to its offerings would be a change of direction for Choice, a company that traces its beginnings to 1939 when seven Florida motor court owners formed a marketing cooperative called Quality Courts United.
“I wish we would have thought of Airbnb … we wouldn’t have done half the stuff they’ve done—we wouldn’t have done couches, we wouldn’t have done a room down the hall … our customers aren’t going to do that,” Joyce said. “On the other hand … 30% to 40% of that is big corporate guys that are accumulating inventory and selling it.
“What you’ll see us doing is we’re going to build up a big business of vacation rental management companies, then after that we’ll see.”
Changes for Choice Privileges, CRS
The welcoming of vacation renters into the Privileges fold is one of several changes for the program in 2016, Joyce said. A refocus on the loyalty program will coincide with a continued effort to attract more mid-week business to Choice’s more than 6,300 hotels comprising more than 500,000 guestrooms.
“We’re building share, we’re building up our mid-week business—we’ve got a big focus on that,” Joyce said.
More details about the revamped loyalty program will be announced in mid-February.
A new central reservations system that will be able to complete reservations for hotel rooms and other businesses such as restaurants, golf courses and full-circle travel itinerary reservations is also on tap for 2016.
Choice wants to be more meaningful in its customers’ overall travel experience, Joyce said.
“This gets back to who we are—we don’t sell rooms, we connect people to people and we want to facilitate everything around that,” Joyce said.
Choice’s brands include Ascend Hotel Collection, Cambria Hotels & Suites, Comfort Inn, Comfort Suites, Sleep Inn, Quality, Clarion, MainStay Suites, Suburban Extended Stay Hotels, Econo Lodge and Rodeway Inn.
Growth for Ascend, Cambria
Ascend represents the evolution of the industry, according to Joyce.
“The independent, because of the distribution environment primarily, cannot really survive unless they’re in a unique situation,” Joyce said. “That’s why we came up with it, and the fact that we had this enormous demand that was being unmet in urban markets.”
Last week, Choice announced the expansion of Ascend into the United Kingdom. Joyce said European expansion for all of its brands is a big part of the company’s growth strategy.
“Over time Europe is going to be the next U.S. for us—it’s a bigger hotel market,” Joyce said. “Clearly, it’s going to move to branded just like the U.S. did in the ‘80s.”
The company is making strides in its quest to further establish Cambria, which hasn’t had the traction expected since its launch in 2005, Joyce said. The brand has 25 properties open and signed 26 financed deals in 2015.
Cambria is opening billboard locations in places such as New York, Miami, Chicago and New York—something it should have done from its inception—that will make it more visible, Joyce said.
“You need to go to major markets—that’s when you get the attention both from the consumer and from the developer,” he said.
Demand from consumers traveling to major markets that were underserved by Choice’s brands is the key to the future success of Ascend and Cambria, Joyce said.
A developing plan for Cuba
The company also has plans for expansion into Cuba, and Joyce said it could happen sooner than later.
“When the law changes, we’ll come with investors and get product built,” Joyce said. “But we think we can play earlier than that through an Ascend-like relationship. We’re going to try to push for that and do that reasonably early.”
Choice is working through a coalition called Engage Cuba to help jump-start its Cuba strategy, Joyce said.