This year at the Hunter Hotel Investment Conference, LODGING spoke with Anne Smith, vice president of brand strategy, and Janis Cannon, senior vice president of upscale brands, both of Choice Hotels, about the company’s strategy for success and the future of the hospitality industry. Here’s what they had to say:
What do you see for the hotel space in 2017?
Cannon: We’re seeing more lending resources becoming available, more transactions, and more overall growth for Choice. This is not just growth in the sense of unit growth, but also strong growth across our portfolio of brands, with the biggest uplift right now being in ADR.
Smith: Coming off of last year, we were about 3.9 percent RevPAR growth and we saw growth in, I believe, nine of the last 10 quarters. We are continuing to see that strong performance, and are capitalizing on the strength behind leisure travel and growing occupancy. We also have had strong improvements in ADR and expect it to continue.
What is Choice investing in?
Smith: Choice has always had a strong focus on technology for both owners and guests. We’re investing in a whole new reservations platform that will be transformative in the industry. We want to make sure that our owners are tapped into whatever channel of distribution is going to be part of the future to help customers most easily find and book hotels.
Technology also plays a role in our loyalty program, which now has 30 million members, including 4 million added last year. Also to aid booking, we’re investing a lot in our app, which is not just a booking tool but also an opportunity for members to engage with us.
The Choice Privileges Program is not a loyalty program that requires you to travel to 18 segments for a free cup of coffee. We’ve really ensured that this is a loyalty program for the everyday person. Once they’ve checked into their room, members who signed up for the Your Extras program get a message that they’ve got a free cup of coffee or a discount on gas. Finding out about these perks is one of the reasons to keep checking the app.
Cannon: USA Today voters voted the Choice Privileges Program the number one loyalty program. Knowing that our younger demographic in particular wants rewards, we launched Your Rewards Program, which is tied to the mobile app and provides those instant rewards upon check-in. Understanding our consumers’ needs differentiates our brands from other brands.
Choice has invested heavily in the whole digital guest services (DGS) experience. This end-to-end tool covers the entire experience—whether its keyless check in, Your Rewards upon check-in, controlling lights in the room, or setting up a room.
How do you ensure that a franchisee relationship is healthy?
Smith: On my side of the business, I’ve got the upper mid-scale, mid-scale and economy brands. Part of Choice’s DNA is going above and beyond to make sure our customers feel welcomed, wanted, and respected. That’s central to our mission, because we understand that a contract lasts for 20 years, which is longer than a lot of marriages. If someone is signing a contract to build up a new construction hotel, we have tailored opening services, with someone to help you understand your milestones and ensure success both upon and after opening. We also continue to invest in field support—including highly engaged director support—at time when many companies are pulling back. Our area directors are like mayors of their territory. They know those hotels, and they understand the hotel’s situation, their market environment, and what the ownership group may be going through when there’s a change in general manager. Area directors are really a lifeline of support and a connective tissue between the hotel and Choice corporate.
All of these things come back to relationships. We build the connective tissue and the points of engagement because it’s a 20-year agreement and we want the hotels to be successful in their first year and in their 20th year. When you join Choice, you’re really part of a family.
What industries do investors come from?
Smith: We host development seminars at our headquarters a couple of times each year. At that time, folks that have been looking at investing with us come to the headquarters. These are very successful individuals and they’re saying, “What’s going to be my next investment? If I know franchising and I know how to work with a franchise or I know operations, how can I translate that into a different kind of investment?” They’re interested in the real estate side and labor model side of the hotel. We are interested in working with people who are interested in growing a business and learning a business, and we will help teach people who are not from the hotel industry how to buy, own, operate, maintain, and then ultimately make money from its sale.
Cannon: We are different because we find owners with heart, which is why relationships are so important for them. Yes, people invest because it is a financially sound investment, but I think they’re attracted to this versus another businesses because of our point of differentiation.
Where do you see the future of the lodging industry?
Janis: I think that the forecast is exceptionally bright. It is a good environment for owners, investors, operators, and for our guests in terms of what they’re receiving. There are also more new locations and more new hotels, and so I think, overall, it’s a positive period for the industry.
Anne: I was thinking the same thing. There has been a sense of optimism over the last 18 to 24 months. There has also been a lot of talk about a downturn, but we may just have talked ourselves into it. Some statistics may look that way, but we don’t know what’s going to happen, so let’s not assume the worst or get careless. Things are good. So let’s behave like things are good. And so I think the mood has just shifted from one of caution to one of optimism. It’s not irrational exuberance, but it’s exuberance.
Janis: In summary, I’d say we’ve moved from let’s wait and see to let’s do.