At the 66th annual Choice Hotels International, Inc., convention—which took a three-year hiatus due to the pandemic—franchisees and corporate leaders alike shared excitement over networking with others and discussing the possibilities for the future. With thousands of attendees, the convention’s corporate business meeting, brand sessions, and marketplace focused on helping owners’ bottom lines, awarding franchisees who exceeded expectations, and making deals and decisions that facilitate growth. Aligning with this year’s theme of “GO,” Choice announced new programs, like HERtels, and sustainability updates that focus on growing ownership to not only be more diverse, equitable, and inclusive but to also implement positive changes for the environment. Executives also described the company’s focus on working with franchisees to meet changing consumer trends and needs; during a media roundtable, President and CEO Pat Pacious shared how Choice is working toward meeting what he likes to call “the customers of tomorrow and the brands of tomorrow.”
Choice continues to position its brands to keep up with the evolving hospitality landscape. Pacious reflected that the brands performed well during the pandemic through today. “We were the first hotel company to beat the 2019 performance levels. We started doing that last year. As we got to the fourth quarter, we were at 14 percent higher RevPAR in the fourth quarter of last year and the fourth quarter of 2019. So, this post-pandemic performance of this company is much better than we were before the pandemic began.”
Pacious explained that guest demands shifted during the pandemic, as more travelers needed extended-stay options and relied on familiar brands. Many of Choice’s customers are those who are traveling nurses, truck drivers, and workers who are constantly on the road. Pacious added, “Guests want limited-service, they want leisure travel, and they want longer-length stays. Those are where our brands play. We have been a key investor in those segments for years.”
Chief Development Officer David Pepper noted, “We have some very happy franchisees. The company really proved itself during the downturn. Not only do we have some great brands and we’re in the right segments, but we’re also a great company. [Our franchisees] knew they had somebody to work with them the whole time. We weren’t letting people go. We were hiring people, making sure we were trying to drive more room nights to these owners. You see a lot of that now in development.”
The company shared the ways it is updating and tailoring its brands to continue meeting the needs of today’s travelers. Choice launched Everhome Suites in late January 2020 as a midscale extended-stay brand, and the segment has since seen increased demand among both guests and owners. Choice’s additional extended-stay brands—WoodSpring Suites, MainStay Suites, and the newly-rebranded Suburban Studios—are garnering momentum as well. “The opportunity for return on investment is really strong; we’re seeing a lot of investment in WoodSpring. A lot of our WoodSpring owners…wanted another midscale extended-stay brand, and that’s why we launched Everhome Suites. The response has been tremendous. We’re seeing a lot of institutional money not only looking at WoodSpring but now at Everhome for multiunit developers. I think that’s going to be the next big brand for us at Choice,” Pepper said.
Choice also highlighted its upscale brands during the convention, including Cambria, which recently launched a new, lower-cost prototype “that allows us to go into more secondary and leisure markets,” Pepper said. “Obviously, we’ve proven our strength, and we’re seeing a lot of excitement and a lot of interest in Cambria this year and going forward.” Interest is also growing in the Ascend Collection, he added, and the upper-midscale Comfort Rise and Shine prototype will debut to travelers soon.
Choice’s corporate leadership is also looking to ease operations for its owners amid issues stemming from the pandemic, like supply chain disruptions and labor shortages. The company is actively working to “drive down the cost for our partners and vendors,” said Senior Vice President of Enterprise Brands and Technology John Bonds. He said that all processes are backed up because of slow international deliveries; he shared the examples of fire marshals and elevator inspectors having to delay property inspections because of other commercial venues pushing theirs back because they can’t get supply on time.
However, with both acquiring and changing supply, Bonds added that the company aims to look at every property on a case-by-case basis. Although owners may want to source a similar product for less or because they can get a similar product sooner, the company pushes quality and consistency over cheaper options. For conversions, he noted that Choice will take into account recent upgrades to FF&E and other items before encouraging replacements. “We want to be as flexible as possible,” Bonds noted. “If someone is a conversion, for example, and they just joined the system and they just bought new coffee makers and fridges, we’ll look at that and take that into consideration every time.”
Chief Commercial Officer Robert McDowell said, “We’ve got to get across that yes, I can get chairs that are probably less expensive than we do. I’m not sure the quality would be there. It’s really about quality, volume, and price. Those are the three key things we look for.”
Concerning labor, Choice only reduced its workforce by 15 percent during the pandemic, according to Pacious; he noted that the company was able to retain talent. But “to get workers back in, we’re doing a number of things,” Pacious mentioned. “We have a program to try to get more students interested, really starting people earlier in their career. We do work with AHLA and some of the others that are more focused on driving interest in the hotel space.” Pacious said the company is hoping to bring in 25 percent more workers than what they currently have within the next year. He also shared that across the board, Choice is having difficulty finding data scientists and real estate analysts.
The leaders also discussed technology and automation and how their implementation can affect hiring young, early-career workers with the potential to rise to corporate levels. Pacious said that while having automated work across properties is helpful and wanted, “I think this is always going to be a relationship business.” He added, “The hotel can be old, the hotel can be in the wrong place, but staff service can drive ‘likelihood to recommend’ scores through the roof. That doesn’t come from a robot; it comes from a smile. It comes from when we engage.”
Early-career employees also are looking for different job attributes than those from years prior. Pacious said, “Kids coming out of school today want to run the hotel day one, so their expectations are high. There’s going to be a lot of opportunity for people in our industry to grow their careers.”
Future hotel owners are getting into the industry differently, too. Pacious discussed that this is the first time that a franchisee “discovered the brand through a TikTok video.” A development team member posted the video, “they reached out to him through that, and we got a real deal working on that front.” And Pacious noted a franchisee is working on “a WoodSpring that raised the equity through crowdsourcing.” While Pacious said the company previously expected this would happen, “it’s now starting to show up in real deals and real opportunities.”
The next generation of customers has new expectations as well. McDowell shared that Choice has seen that tomorrow’s travelers aren’t involved in loyalty programs in the same way as older travelers—they want more instant benefits. In response, McDowell said, “We’re in the process right now of looking at specific areas of how to match up the guests of the future, where they’re going to stay…what are the brands and what are the technologies in those brands, and how to reach them through loyalty and through different marketing channels and different marketing messages. That’s all a process.”
As for the future of Choice, the executives plan to stay on their course to attract consumers in the current environment. Pacious added, “When I look where our investment is focused, it’s on our two main growth factors: extended-stay and upscale. And we’ve done enough investment and brand launches in those areas. So, we have a lot on our plate to be even more successful in those two key segments.”