The first-time membership of Choice Hotels International, Inc., in the 
American Hotel & Lodging Association (AHLA) was big news. Now, AHLA counts the 10 largest hotel companies in the United States as members. Choice’s CEO and president, Pat Pacious, sat down with LODGING to cover a range of topics, including why Choice chose to sign on with AHLA now, the trends that are driving the extended-stay segment, the company’s new extended-stay brand, Everhome Suites, and what differentiates him as a leader and Choice as a hotel company.

Why did Choice decide to become an AHLA member in 2020?

We were already actively involved in a number of advocacy groups, chambers of commerce, U.S. Travel, the International Franchise Association, and AAHOA; and we’ve been very successful at creating coalitions to advocate on things like joint employer legislation. It just came down to where to spend our time, including that of our internal policy folks.

It’s also important to understand that we don’t own hotels for the most part; we’re a franchise business, so it’s the voice of the franchisee at the policy level that has been our major focus in the past, so joining AHLA was a natural next step for us.

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We also like the direction AHLA has been heading from the standpoint of the issues they’re now focused on. They line up more effectively with the issues that we’re working on. It was the right time to come into it and make sure that we have a seat at the table.

AHLA’s advocacy helps our franchisers deal with regulatory issues on both the state and national level that impact small business owners in general, and franchise owners in particular. Partnering up with AHLA enables us to use their footprint and their impact in dealing with the government; it’s really important for us to be engaged with them on the policy front to make sure we help shape the agenda, not just be carried along by it. It also enables us to be in conversation with our fellow companies facing the same issues on the ownership side, the management side, and the branding side, and helping us all come to some solutions for pressing concerns including labor, environmental sustainability, and human trafficking, as well as government regulations.

In what way do you think AHLA membership will be helpful for Choice?

With nearly 6,000 hotels in the U.S., we have a big footprint in the industry. This association will enable our leaders to interact more with the right committees, to get up to speed with what’s happening, and be able to add input and thereby have a bigger voice to represent our owners’ issues. We have already identified committees we think are most relevant, and Rolf Lundberg, VP and assistant general counsel, head of external affairs and global public policy, and Simone Wu, SVP, general counsel, corporate secretary and external affairs—who has already been appointed to the board—have already looked at who from my leadership team should be the participants at that level, so that we’re make sure we get the right voice at the table and also the right ears so we can keep listening for what’s happening.

Is there any one thing about this partnership that is most exciting, looking ahead?

It’s important to be able to not just impact at the national level but also at the state level. It’s tougher to do it without the partnership of AHLA. That was another thing that was a driver for our decision to become involved—that it would enable us to expand the impact we’re having from a national level, but also down to the state level.

Also, important to our particular company is that while it appears to be large, we actually are just the representatives of more than 13,000 hotel owners in the United States. Therefore, advocacy at that level, such as in situations where the hotel owner is inviting a legislator to do a back-of-house tour, to hear the individual stories of owners, more so than my going and having a meeting with the speaker of the house or going down to talk to the administration. That’s where AHLA offers our owners a powerful opportunity to help make that even more effective.

What’s going on with your brands, starting with the launch of 
Everhome Suites?

Everhome Suites was a brand for which there was both significant consumer and developer demand. We hadn’t launched a new-construction brand in over a decade—and generally wouldn’t create a new brand for fewer than, say, 200 hotels, but this was the right opportunity.

“This extended-stay model could be built relatively 
quickly and inexpensively—about 12 months—because of how clean the prototype is. There isn’t a fancy lobby or expensive lighting package, meaning cash will be flowing in sooner.”

As I said in my panel [at ALIS], it’s important to listen to your owners, and they were saying they wanted to do an extended-stay model with Choice, but they needed a brand to accommodate a trend they were seeing: For a variety of business reasons, people need to travel for longer than seven nights. And during that stay, they don’t want to be in a transient hotel. They want to lay out their stuff. They want a place to cook. They want to be able to feel like they’re not just in a room to sleep. Based on our market research about these consumers, Everhome has features they want, like an ergonomic work station, where you can move your shelving around, and a bathroom sink that is offset, so there’s more counter space.

This extended-stay model could be built relatively quickly and inexpensively—about 12 months—because of how clean the prototype is. There isn’t a fancy lobby or expensive lighting package, meaning cash will be flowing in sooner.

Everhome Suites
Everhome Suites

What is critical for success is finding the right site and managing the inventory and clientele. There must be sufficient extended stay, not transient, demand to fill the hotel to generate desirable returns.

How about Cambria 
and Comfort?

Cambria has really hit its stride. There are now 50 open and 28 are under construction. The reason Cambria is exploding is that people want to build something that they can localize to their market and customize to their location. We just opened one in Anaheim across from Disneyland’s Star Wars Park last month with a waterpark; one in College Park, Maryland, with the Maryland State flag, and one in New Orleans that lets you know you’re in the Big Easy.

As for Comfort, which was started in the 1980s as a budget brand, it’s becoming more upscale. Our $2.5 million refresh has helped make it viable for the next 30 years. The brand is actually getting younger. Its pipeline is at almost 300 hotels—80 percent of which is new construction.

Where does loyalty figure in now and in the future?

We want to know who are customers are, how often they stay with us, and where else they stay, and have made a significant investment in technology to understand that. We have re-platformed our data analytics, and are now starting to generate a lot of insights geared toward personalization.

What your guests know is that they’re going to a location for a certain price, amount of time, and reason. If you can create an environment where they’re served what they’re looking for in a meaningful way and the price is right, then you’re going to get that stay, and that’s where the loyalty programs figure in. Loyalty programs help brands understand more about the guest, and the more a guest is willing to share with us about their stay, the more options we can offer. This allows us to improve their experience.

Where I see it going is that guest are going to be able to pick what they want to pay for and what they don’t. That’s attribute-based pricing. We have to be able to react to what that guest is actually looking for. If they want to check in early, we can make sure the room is available before check in time if they’re willing to pay for that—or, if they’re a loyal customer, without additional charge.

How did you reach your current position and what has been your own unique contribution?

I started out in the military; I was in the navy for six years. Then I got my education—a degree in finance from Duke and an MBA from Northwestern’s Kellogg Graduate School of Management. I was introduced to hospitality while working for Arthur Anderson as a consultant. I did a number of projects for Choice, Marriott, and IHG over that time period. I think starting out as a consultant and seeing all the very different companies and how they approach the industry is a great way to understand it. In 2005, the CFO at Choice called me and asked if I knew anybody that would want to do our corporate development and corporate strategy at Choice—I did, me; I was sick of traveling and intrigued by the industry. I started in 2005 and then in 2008 was asked to take over our technology organization. In 2014, I became the COO of the company, and became in CEO in the fall of 2017.

The Cambria Anaheim, which opened in December of last year, is the 50th property to join the Cambria brand.
The Cambria Anaheim, which opened in December of last year, is the 50th property to join the Cambria brand.

In addition to having been a consultant, I think being a CEO who has spent time running the technology organization has been a key professional differentiator. I understand how hard it is to make technology investments and actually make them pay off and be on top of the changing distribution landscape—all of those parts of the organization reported to me. I’m able to bridge the two languages of capital investment and return on it, the things that Wall Street wants to hear; but I can also speak the language of the technology world, which uses a very different lingo.

You can sell the dream, or you can really say, “Okay if you want to do this, here are the 10 things you have to do, and they’re really hard, and I know, because I lived and breathed it.”

What sets the Choice model apart?

I really love the Choice model. We’ve got something unique here. We have a tight relationship with our franchisees.

As I explained about the other advocacy groups we work with, our focus is on our franchisees, many of whom are small business owners, entrepreneurs who in many cases started with nothing, but may now have 20 to 30 hotels and employ thousands of people. We see them at our meetings and give them awards for what they do to improve their communities. They want to share their success, to give back. We’ve been a part of their success story. And it’s not just making that owner successful, it’s really having an impact on the broader community around them. I can look at the more than 13,000 owners who own our almost 6,000 hotels in the U.S. and see that each one of them has an impact that’s bigger than themselves. Our aim is not just to make our hotels profitable but also to positively impact those local communities they serve.

 


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