After a breakthrough 2015 marked by record revenue, operating income, and net income performance, as well as the launch of a new brand identity, Choice Hotels International intends to keep the momentum going across its 11 brands. At the company’s 62nd annual convention, which drew nearly 6,000 franchisees and hospitality professionals to Las Vegas this week, Choice Hotels announced exclusive, discounted rates for loyalty members who book direct and an evolved prototype for the Sleep Inn brand, among other initiatives.
Choice Hotels is poised to make the most of every opportunity during one of the longest and most positive lodging cycles on record, President and CEO Steve Joyce told attendees during the opening session. “One of the reasons why we feel so optimistic is because the environment is finally enabling our progress,” he said. “The current lodging cycle is still in a ‘sweet spot.’ That’s when your opportunity to invest in developing and improving your business and optimizing rates could not be better.” Positive trends on the consumer spending front—lower household debt, increasing home values, higher wages, and lower unemployment—mean more opportunities for hoteliers to capture and connect with travelers, Joyce explained.
In 2015, Choice’s average daily rate increased nearly 4 percent and revenue per available room rose by more than 6 percent, EVP and COO Pat Pacious said. “And both are still poised for significant growth. We are taking RevPAR share from our competition.” The company’s new website and mobile platforms are performing better than expected, Pacious added. “We focused on helping to drive mid-week business to your hotels, and we’ve seen double digit growth in corporate sales every month for the past six months.”
This strong momentum is also a chance for Choice to capitalize on some of its competitors’ distractions, Joyce said. He cited Marriott’s acquisition of Starwood as an example, noting that Marriott will be navigating the transition for the next two to three years. “We’ll be moving forward, to build or convert more properties to Choice-branded hotels, to invest in improving your operations, to maximize rate, and to drive millennials, mid-week business, and just more travelers to your door,” Joyce said.
Another way Choice intends to attract more customers and build brand awareness is through its new vacation home rental division, which launched in February. With Airbnb capturing 60 million guests to its more than 1 million listings, and Expedia’s nearly $4 billion acquisition of HomeAway, vacation rentals are big business, Joyce said. “We can own that and benefit by jumping into the online vacation rental market. We have the opportunity to expose more consumers to Choice and capture more loyal customers.” Choice is offering its distribution platform to a select number of vacation rental management companies and introducing them to the recently redesigned Choice Privileges rewards program.
Business travel remains a key priority at Choice Hotels, said Robert McDowell, chief commercial officer, during a marketing and distribution session. “Our global sales team is really starting to deliver,” he said. “Year-to-date, we’re up 13 percent in corporate room nights.”
Throughout the conference, brand leaders emphasized Choice’s mobile platform, loyalty program, and rate strategy as key drivers of growth. The company is in the midst of redesigning its mobile app to add new capabilities, such as mobile check-in, in-room food ordering, and two-way communication with hotel staff. And Choice Privileges has been gaining major momentum since its redesign in February. Five years ago, the loyalty program grew at a rate of 1 million members per year. With the relaunch, the company captured more than 1 million members in the first 100 days, and is on pace to add more than 4 million new members by the end of the year, Pacious said. This summer, Choice will join the likes of Hilton Worldwide, Marriott International, InterContinental Hotels Group, and Hyatt Hotels by offering an exclusive hotel rate for loyalty members who book directly on its online and mobile channels.
Jamie Russo, vice president of loyalty and customer engagement, reported that enrollment in Choice Privileges is up more than 65 percent year-over-year. Its more than 25 million loyalty members are on track to spend almost $2.5 billion in 2016, he added. “Landing more [Choice Privileges] members will help you combat OTAs—and the much higher commission rates they charge you,” Russo said.
Franchisees also learned about Smart Rates, a pricing optimization tool that Pacious likened to a radar system for hotels. The tool analyzes market conditions, the way owners have set rates in the past, and how competitors have set theirs. “With occupancy at peak levels, most of the RevPAR gains this year will come from setting your rates correctly,” Pacious advised.
Look for further coverage of the Choice Hotels Conference on Monday.
