Choice Hotels' future in focus at annual convention

Steve Joyce, CEO of Choice Hotels International

Steve Joyce, CEO of Choice Hotels International, addresses the 6,000 convention attendees.Pictured: Steve Joyce, CEO of Choice Hotels International, addresses the 6,000 convention attendees.

Las Vegas – Choice Hotels International’s convention here at Mandalay Bay was its 60th annual, and celebrated the 75th year of the company, which was founded in 1939 by the late Stewart Bainum Jr. A long history, for sure, but the focus remains the same as it always has been: driving revenue to and through its stable of brands and franchisees.

The only thing that has changed is the way the company is accomplishing it. “We have the tools to thrive on change, drive reservations and position all brands for growth and profitability,” said Choice Hotels International CEO Steve Joyce.

The convention drew almost 6,000 attendees and carried the tagline of “Igniting the Future,” which means refreshing the brands, focusing on mobile, driving traffic and expanding into upscale markets.

But first, Joyce looked back on 2013, which he called a record year. “We set new highs in performance,” he said, specifically in reservation contributions through its own channels. “We drove more than $1 billion through,” Joyce said, adding the site accumulated 160 million visits in 2013—up 16 percent from 2012.

Anne Smith, Choice’s VP of brand strategy, touched on subjects related to Choice’s 10 brands.Pictured: Anne Smith, Choice’s VP of brand strategy, touched on subjects related to Choice’s 10 brands.

Toward that, the focus was and remains on mobile, as guests continue to adapt to the technology. In 2013, Joyce said that Choice received 60 million visits through mobile devices—up 75 percent from the year prior.

“We are doing a lot to help your performance,” Joyce told the audience. “All tools are designed to drive more guests to your door.”

The timing to do so is “great,” he added. “The outlook for the industry is good. People are traveling again. Job growth is helping.” Joyce pointed to data that say unemployment is down to 6.3 percent. “A better job market drives demand for your hotels,” he said.

That said, Joyce has his disagreements about the Affordable Care Act; specifically, the definition of a full-time work week, which stands at 30 hours right now. Joyce said it should be 40. “Where else but D.C. could 30 hours be full time?” he said.

He also implored the crowd to support the JOLT Act, which modernizes the visa process “so more foreign travelers can come and spend money,” Joyce said, adding that in 2013, $143 billion was reportedly spent by overseas travelers. “They stay in our hotels,” he said.

Big Push

One of Choice’s bigger pushes this year is driving more mid-week travel, particularly business travel.

“Delivering mid-week travel is a company-wide initiative,” said Anne Smith, Choice’s VP of brand strategy.

Pat Pacious, Choice’s COO, discussed millennial travel.Pictured: Pat Pacious, Choice’s COO, discussed millennial travel.

Another huge focus for Choice is its Comfort brand, which is undergoing a refresh that includes a new developer fee incentive equal to three years of royalty for new construction. “It is already driving new construction,” Joyce said. Choice also committed $40 million of its own money toward Comfort renovations.

Driving loyalty continues to be top of mind. In fact, Joyce said that Choice Privileges, the company’s loyalty program, will hit 20 million members in June. And that’s where the importance of brand comes in. “If we compete only on value and price alone, it’s a race to the bottom,” Smith said. “It encourages disloyalty. Loyalty is based on emotional benefits, putting the guest at the center of the universe. What makes them tick?”

Not to be left out was the millennial traveler, who continues to be a focus for Choice. “Millennials don’t buy without reading a review,” said Choice COO Pat Pacious. Choice’s launch of Verified Reviews plugs into that. “Eighty percent of our reviews are 4 or 5 star,” Pacious said, adding that the conversion rate lift is 2 percent.

“Millennials are here and are the future,” Joyce said. “They are the next influential generation, and will outspend baby boomers by 2017. But they have the least established brand loyalty and make buying decisions differently.”

Going Upscale

Beyond Choice’s Comfort refresh, what was most evident from Choice’s conference, something the company made abundantly clear, is its push into the upscale segment with its Cambria brand and Ascend Hotel Collection. For the former, the big news was a change of name. Known since its inception as Cambria Suites, the brand will now be known as Cambria Hotels & Suites, a move to make the brand more inclusive of all types of rooms and accommodations. With that, it also unveiled a new logo to complement the name change. Joyce said the brand had a bit of a false start, having opened first in secondary markets rather than urban locations.

“Our tier is transforming,” said Mike Murphy, Choice’s SVP of upscale brands. “The customer is demanding it. And demand for the upscale tier is outpacing supply.”

At the Comfort session, John Seabreeze, brand strategy director, Comfort Suites, on keys to success.Pictured: At the Comfort session, John Seabreeze, brand strategy director, Comfort Suites, on keys to success.

Rebecca Mervis, director of brand strategy and marketing for Cambria Suites, said the new approach for the brand is two-pronged, focusing on both millennials and what Mervis referred to as medium-frequency business travelers, or those with less status but who want recognition.

With only 20 Cambria properties now open, Mervis said it allowed them to be nimble and design an experience that meets the needs of travelers. After testing, they came up with four attributes to define the brand: human, approachable, flexible, warm. “That’s our niche,” Mervis said. It also came up with a new positioning: “Where everybody is somebody.”

For 2014, the goal is to have at least 23 Cambria Hotels & Suites open and another 30 under construction. Future construction starts include Phoenix; West Orange, N.J.; Calgary Airport; El Segundo, Calif.; and Halifax, Canada.

Ascend Hotel Collection is also growing and could grow significantly in Europe, where Joyce said Choice is making a big push. “It is largely unbranded and wants to be,” he said. “They can’t compete in the distribution market.”

Joyce is quick to acknowledge that Ascend Hotel Collection is not a brand but a membership program. “It’s the result of the distribution environment,” Joyce said of how Ascend—and other affiliation programs—came about. “They can’t afford to pay the OTAs.”

In 2013, the brand nearly doubled in size and now has 125 properties worldwide. “There are millions of folks looking for rooms in urban markets and we couldn’t accommodate them,” Joyce said. “That’s where Ascend and Cambria come in.”