In September, Pat Pacious took the helm at Choice Hotels as president and CEO. Since then, he has been very busy. In December, Choice announced that it would be acquiring extended-stay brand WoodSpring Suites—a deal that finalized on Feb. 1, 2018. The company is also in the midst of launching a new central reservation system (CRS) that has, thus far, exceeded all expectations. LODGING caught up with Pacious at the 2018 Americas Lodging Investment Summit to hear all about Choice’s plans for the coming months.
First and foremost, how’s being CEO?
It’s fun. And busy. I’ve been on the road almost every week, which is great because I said to myself, “I want to get back out and see the owners now as the CEO, not as the COO.” When you’re the COO, they tell you certain things; when you’re the CEO, they tell you even more. I’ve been traveling a lot, specifically spending time with our Cambria owners in their offices, sitting down with them for two to three hours and getting their thoughts on the brand, getting their thoughts on the industry. That’s been exciting.
What’s the general feeling at ALIS this year?
I think it’s optimistic. The impact of tax reform and the existing health of the consumer market, with unemployment being low and consumer confidence being high, is good for the industry. From a developer perspective, people are out looking to do deals. Lending is also in a good place—not too restrictive or too out of control. Interest rates continue to be at historic lows from the standpoint of having a favorable environment. I look at all those things as real positives.
Also, I know everybody is trying to predict the end of the cycle. I’ve got a pretty good lens out for the next 18 months and it looks pretty positive, which is good for us with brands like Cambria, Comfort, and now WoodSpring Suites, which are all very dependent on new construction. Having that favorable development environment helps us on that front especially.
Speaking of WoodSpring, why was acquiring that brand a good move for Choice?
When we sat down and thought about our strategy, we had 11 well-segmented brands, and all 11 had growth opportunities. We really like the fact that they’re well segmented. I’m adding a twelfth that will help us push more into the new construction segment.
This approach has worked. At the moment, three-quarters of our new franchise agreements are awarded to existing owners. They’re coming back for more because they like the return on investment they get, they like the effort that we’re putting in to drive more proprietary business to their hotels, and that’s a nice healthy environment.
Do you feel pressure to acquire more brands?
We are very closely watching industry consolidation because it helps us learn a lot. And when we see something like WoodSpring Suites, we jump, but I don’t feel pressure to get big. If you’re looking at things from that standpoint, your thinking in terms of, “We just need to buy something to get bigger.” But then you also inherit someone else’s problems and create a lot more complexity. I’d rather grow my brands than buy growth.
You also are in the middle of launching a new CRS. What is that like?
It’s been a long-term project over the course of the last two to three years. We started moving our hotels onto the new platform in December and expect to be finished by the end of the first quarter of 2018. It’s already connected to a significant number of third parties, both GDS and OTAs.
How are things going so far?
Great. A lot of the surprises have been on the upside. We moved our property management system to the cloud about 12 years ago. Now we’ve moved our central reservation system to the cloud. What’s really interesting is we thought, “Okay. We’re going to be able to handle more capacity.” This was true, and that capacity has far exceeded our targets. We expect it to be able to move transactions faster, and the CRS’s data analytics platform is going to help us with personalization. Having access to data in real time and being able to move it to the right places is going to be a game changer for us.
What do you have planned for Choice’s future?
I say this around the company all the time that a leader’s job is to make the uncertain certain. And so, while there is all this uncertainty about how long the cycle will last and what will go on with the economy and all these other policy issues, you have to get up and go to work everyday and set a strategy and a path that’s right for your associates, it’s right for your shareholders, it’s right for your franchisees, and right for your guests.