Steve Joyce, president and CEO of Choice Hotels International, admits he and the company were guarded in the past when analysts and other industry watchers were predicting the economic turnaround and the better days for the hotel industry where just around the corner. But after consistently rising numbers in occupancy, demand, and now RevPar, he’s become a believer like many others in the industry.
“People always asked me when things will turn around and I’d say, ‘in about six months’. It’s finally at a point where I may be right,” he quipped to assembled industry reporters during the 58th Annual Choice Hotels International Convention at Mandalay Bay in Las Vegas this week. Earlier in the day he addressed the approximately 5,000 attendees and proclaimed, “With every passing month the downturn is further and further in our rearview mirror.”
There are numbers to back up that claim. Industry RevPAR is up 8 percent. Demand is up 4 percent. Supply is holding steady. The numbers even showed in Choices first quarter earnings this year. It’s franchise sales are up 15 percent. It’s had a 40 percent relicensing rate as well.
But the numbers that have Choice executives optimistic are the ones indicating travelers’ intentions. Joyce cited a survey stating that 9 out of 10 travelers say they intend to travel more this year. Many of the predictions for rise in travelers center on the leisure market, which makes up two-thirds of Choice’s customer base. Combine that with the lack of new supply entering the marketplace and as Joyce said, “We feel like we are going to be in for a good run over the next three-and-a-half years. We think things are generally moving in the right direction, and most of our franchisees feel good about things.”
He also said he felt that gas prices, which are now dropping, wouldn’t be much of a concern for travelers this summer. “Our research show that most people are still planning to travel primarily by car,” he said. It’s another sweet spot for the company, which makes its living in the limited-service and roadside hotel arena.
Joyce and his executive team talked a lot about consistency and value proposition during the three-day convention. “To our advantage, perhaps more than ever, consumers are demanding value for their dollar,” Joyce said. “That’s what Choice is all about. It positions us perfectly to capture this existing consumer demand.”
But that doesn’t mean Choice is standing still. The company announced several plans and initiatives for its brands that are designed to increase the value proposition for its customers and its franchisees.
One of the biggest focuses for Choice is a renewed commitment to its upscale Cambria Suites brand. With 19 properties in existence, the new-build brand had to wade through the downturn and stoppage of lending in its infancy. But now that some lending is coming back, and with the financial help of Choice itself, the pipeline for the brand is re-energized and beginning to move forward again.
“We just finished our best quarter for Cambria Suites,” said Michael Murphy, senior vice president for Cambria Suites and Ascend Collection. “We saw a 19 percent rise in RevPAR.”
As the brand continues to grow, Murphy allowed that for an upscale brand to be successful it must get into major, high profile markets such as New York, Los Angeles, and Miami. Cambria Suites is set to break ground in the Chelsea neighborhood of Manhattan and Joyce announced at the convention that it would soon be entering Anaheim, Calif, right across from Disneyland.
The biggest news for Cambria Suites this week was the launch of its new food and beverage program, which focuses on meals featuring American comfort foods. (See “Pretzels on a Stick” for more on the new cuisine.) The program is a result of a year of research and development and has been launched in the Noblesville, Ind., and Columbus, Ohio. “We changed our F&B program to reflect the consumer trends we’re seeing and what people desire to eat while they are on the road,” Murphy said.
The program was also developed to maximize profitability for franchisees. “Our F&B cost was in the high-40 percent range, and that’s a dangerous place to be,” he continued. “We wanted to get it down into the 30 percent range with this and have.”
Meanwhile Murphy discussed the new Ascend Collection marketing strategy, which brings a consumer-centric message to the campaign. (See “New Ascend Collection Marketing Message Puts Focus on Guests.”) “We wanted to migrate the identity of the Collection: he said. “We’ve always had a hotel-centric message but we wanted to change how we communicate the language to the consumer.”
Murphy said the Collection is growing with about 18 new hotels to be announced over the next 90 days. This week, the company announced 13 new hotels.
David Pepper, senior vice president of global development, added that with the conversion environment picking up steam, Ascend is growing along with it.
SLEEP INN/MAINSTAY SUITES
Pepper also said that hotel development is beginning to start in some aspects. He mentioned the Shale Oil areas of Pennsylvania, Ohio, and North Dakota as areas of opportunity, particularly for the company’s new Sleep Inn/MainStay Suites combination prototype announced this week.
The prototype combines the transient and extended-stay models into one efficient footprint. He said markets, such as the shale oil areas allow for more than a standalone model for either brand and the prototype captures operating efficiencies for owners to service both needs. (See “Sleep Inn and MainStay Suites Introduce Dual-Branded Combination Hotel Prototype.”}