With the overhaul of its largest brand — the midscale Comfort Inn — almost complete, Choice Hotels International wants to raise its upscale profile by growing its Ascend Collection and increasing the pipeline for the fledging Cambria brand.
“Upscale is the future,” CEO Steve Joyce said Thursday during the company’s annual convention in Las Vegas. “It’s our No. 1 priority.”
It’s a message that was repeated over and over, directly and indirectly, during the conference. It’s one that is clearly behind most of the initiatives Choice has announced over the past few weeks, from a number of upcoming changes in its loyalty program and listing the upscale brands first on its new website to the messaging in its new advertising campaign and a ramp-up in its sales force.
The strategy shifts Choice’s message away from one focused on value to that of experience and connecting with people — two concepts that are more closely aligned with the fast-growing upscale and lifestyle sectors than economy and midscale hotels.
Joyce said the new emphasis was driven by two things: the desire to compete in the popular sector and to retain second- and third-generation owners who are looking to move up. “One of our primary motivators to get into upscale was we were losing some of our best franchisees,” Joyce said, noting that moving from economy brands to upscale “is a sign of success in the hotel business.”
Choice launched the industry’s first upscale soft brand, the Ascend Collection, four-and-a-half years ago. Joyce said the collection now boasts 150 hotels and resorts and expects to add 45 more this year.
And while many companies are targeting China right now, Joyce said Choice will be looking to Europe. “It’s all about Europe for us because that’s the model that is going to work best for us,” he said. “It’s largely unbranded. It’s a conversion market. That’s where we excel.”
Still, Choice faces ever-increasing competition as more traditional upscale players like Hilton and Marriott have added collections to court independent operators.
Choice first entered the upscale segment during the last hotel boom with the launch of Cambria Suites in 2005. But that growth was stalled by the Great Recession, and there are currently just 23 properties, less than half than were reported to be in the pipeline in 2007. But officials say there now are about 50 Cambrias in the pipeline —11 of which are under construction — and the goal is to have 100 open by 2018.
With Cambria properties recently opened in key markets like Washington, D.C., and Manhattan, Joyce said the “wind is now at our back on Cambria.” Still, he and other executives acknowledged the company has a way to go.
David Pepper, senior vice president of global development, said the company is aggressively scouting new sites for Cambria and will even start development in prime spots while it looks for buyers.
Asked whether the company would look to add more upscale brands, Joyce said he might be interested in a full-service or extended-stay opportunity, “but our view is let’s get Cambria done.”
The upscale focus comes as Choice nears the end of its overhaul of Comfort Inn, which over the past three years has booted some 600 hotels from that brand’s portfolio of more than 2,000 properties. The company has spent more than US$30 million on reimbursements to hotels that invested in upgrades, and it will likely spend another US$10 million to US$20 million on incentives before the program is complete, said COO Pat Pacious.
In other news from this week’s convention, Choice Hotels said it will be rolling out a number of changes to make its Choice Privileges loyalty program more valuable. Officials said Choice points will no longer expire; the company will launch a flexible program that lets members combine cash with points and will soon announce a digital redemption program that lets members use their points at places like Starbucks and Target.
Choice announced the opening of its first dual-brand hotel property, a Sleep Inn and MainStay Suites in Meridian, Mississippi. Owned and operated by JTM Hospitality, the property has 38 rooms under the Sleep Inn & Suites brand and 31 rooms on the MainStay Suites side.