Choice commits $250 million to Cambria reboot

From left: Brad LeBlanc, VP of franchise development for upscale brands; and Michael Murphy, SVP of Cambria Suites and global sales.

BOSTON–Choice Hotels International’s Cambria Suites brand has weathered the storm and is ready for a comeback, backed by a $250-million investment in the brand by Choice. The goal is to have 150 properties open by 2017.

The brand is rebooting with new designs and development deals in the works following a rocky few years marked by a difficult financing environment and March’s news that Choice terminated franchise agreements with 11 properties—including four Cambria Suites hotels—owned by Summit Hotel Properties.

At this week’s Choice Hotels convention in Boston, the board of directors committed $250 million in investments to fuel Cambria's growth, primarily in urban markets. Steve Stoycos, special advisor, capital markets, for the company, said the plan is for the company to purchase interest in development sites. “We will be patient holding those sites until we have an owner,” he said. “We will hold that site until lending improves and a Cambria franchisee can buy it.”

Brad LeBlanc, VP of franchise development for Choice’s upscale brands, said the company has done this so far in Boston, Los Angeles and Dallas, and has six to eight other sites in the same situation.

It’s not a high-land-risk deal, Stoycos said, since Choice doesn’t close on the land until it’s fully entitled. The plan meshes with Choice’s overall strategy to remain asset-light, though brand executives said it wasn’t completely out of the question for Choice to ever own or jointly own a Cambria Suites in the future.

DEVELOPMENT PLANS
Currently, 19 Cambria Suites are open, with 32 properties comprising 4,067 guestrooms under contract [as of March 31].

In March the company named Michael Murphy SVP of Cambria Suites and global sales. Murphy previously handled global sales for all of Choice, and one of his main charges is to lead what the company is calling “generation 2” of the brand’s design and development plans.

In the meantime, the company’s latest Cambria projects are slightly refined from the original new-build footprint that launched in 2005. Starting with Cambria’s property in Pittsburgh, which opened in January, the footprint has been reduced from 88,000 square feet to 77,000 square feet, removing 10 percent of construction costs.

“It’s all to bring [Cambria] more in line with SpringHill Suites, Hyatt Place and Courtyard,” LeBlanc said.

Also in January the company announced two development deals in New York City—a 194-suite [the brand’s largest] hotel in Times Square, and a 140-suite property in Chelsea. Extell Development Co. will develop the Times Square property and We Care Trading Co. will develop the Chelsea property; both are scheduled to break ground by the third quarter of 2011.

The Pittsburgh and New York projects characterize Cambria's goal to be in top MSA markets, Stoycos said.

And as for developers, Murphy and LeBlanc said they want current Cambria franchisees to continue with additional properties and attract franchisees loyal to other brands.

“In this environment it takes a hefty balance sheet and a great relationship with a lender,” LeBlanc said. “We’ve been successful in educating a lot of solid Marriott developers … they have committed.”

Untapped brand penetration is another attractive point, Stoycos said. “There’s unlimited growth opportunities because of the newness of our brand,” he said. “Some of our competitors already have reached their depth.”

LOSING FRANCHISES
The brand lost four Cambria franchises in March when it ended franchise agreements for 11 Choice properties with Summit Hotel Properties. The Cambria Suites hotels affected were in Boise, Idaho; Baton Rouge, La.; Bloomington, Minn.; and San Antonio.

While Choice executives have not spoken out about the reasons behind the split, LeBlanc said the loss won’t affect the brand adversely.

“At the end of the day, those aren’t key markets for us,” he said. “Our effort is to replace them in higher MSA [cities].”

“I’d rather be in New York City than in Boise,” he added, then said he would eventually like to bring the brand back to San Antonio and Baton Rouge.