Choice Hotels kicks off 2015 conference with strong numbers, legislative concerns

Last week, as the company prepared for its annual convention in Las Vegas, Choice Hotels International launched a new brand identity that includes a new logo, an integrated advertising campaign and a redesigned website to present the company as a united whole rather than as a collection of disparate brands.

“This is a year of transformation and breakthrough for Choice Hotels,” CEO Steve Joyce said as the conference kicked off at the Mandalay Bay Convention Center yesterday. “The new Choice Hotels is not simply about launching our new logo. It’s about differentiating ourselves in the marketplace, redefining what we stand for, and making an emotional connection with guests.” That connection, Joyce added, is what will drive guests to book directly at specific hotels—and to keep coming back.

“Choice has seen many business cycles throughout our 75-year history,” he continued, noting that the company has only thrived because it was “willing and able to change and adapt.” 

As the economy continues to rebound, the company’s numbers have likewise seen steady growth. “Last year, we set new records for operating performance and for reservations contribution,” Joyce said. “And 2015 will be even better. Year to date, CRS revenue contribution is at almost 48 percent.” 

The redesigned website will be maximized for mobile booking, catering to the growing tech-savvy demographic that is as comfortable working on a phone as a computer. “Your guests want to connect with you and book your hotels when, where and how they want,” Joyce told the crowd, emphasizing that the company would have to be “laser-focused on capturing more than our share of profitable, mid-week business travelers, which also includes many Millennials. This represents a significant opportunity for you to drive up ADR. which leads to higher RevPAR,” he added. In terms of revenue, Joyce announced that for the first quarter of the year, RevPAR is at nearly 10 percent. 

Concerns
On the legislative front, Joyce said that the Choice team has been “keeping a close watch” on what’s happening in Washington, D.C. With the Affordable Care Act firmly in place, Joyce noted that the definition of full-time employment may soon be increased to 40 hours per week.

“The franchise business model is under attack,” he said bluntly, citing last year’s announcements from the National Labor Relations Board general counsel regarding unfair labor practice cases. While those specific cases focused on McDonald's restaurants, Joyce believes that the Board is targeting all franchise-based businesses.

“In those cases, the NLRB GC stated that the franchisor may be the joint -employer of the employees hired by the franchisee,” he explained to the attendees at the General Session. “If this new ‘joint-employer’ theory takes effect, it would upend the franchise model as we know it, and force profound changes in the way we work together. It means that if a Comfort Inn in Dallas is organized, It might eventually mean that all the domestic properties in the Choice Hotels system would be organized by labor unions.” 

Similarly, “a number” of states and jurisdictions have recently enacted legislation that increases the minimum wage, Joyce continued, adding that in some cases, the legislation discriminates against franchising “by giving franchised properties shorter time periods to implement the wage increase.”

To that end, the International Franchise Association is filing lawsuits on behalf of large-scale businesses like Choice Hotels, and the IFA is leading a coalition of business groups to fight the NLRB “joint employer” initiative, which Joyce described as “potentially harmful.” He encouraged attendees to join the IFA’s Franchise Action Network. “To date, there are over 2,000 franchisee members across the country,” he said. “Membership in the network will help you keep current with these key issues and many others that can have a profound effect on your business.”