A lot can change in a thousand days. At the 2013 Choice Hotels International annual convention, President and CEO Steve Joyce announced a $40-million Comfort property improvement incentive. Hundreds of Comfort brand hotels took advantage of the incentive over the following 18 months and invested close to $250 million in total.
The effort has paid off, with participating hotels seeing incremental gains across key performance metrics, including guest satisfaction ratings, revenue per available room and RevPAR index. With a new prototype to entice developers, Comfort had a 33-percent increase in new construction franchise agreements last year alone.
Skin in the Game
Back in 2013, the industry was still digging itself out of the last lodging downturn. “We knew that was the opportune time to accelerate an improvement plan for Comfort Inn and Comfort Suites,” said Patrick Pacious, Choice’s COO. “One of the things we looked at doing was putting some of Choice’s money alongside our franchisees’ money to accelerate a lot of the improvement to the brand.” The company allocated $40 million to kickstart a refresh, taking advantage of the incipient upswing.
“If you look at the franchise business in general, when have you ever seen a company invest $40 million into their franchisees to improve their product?” said David Pepper, Choice Hotels’ chief development officer. “It showed Choice’s commitment that we wanted to take Comfort and revitalize the brand. We feel like we’ve accomplished that by investing with our developers and requiring them to improve their product. That $40 million accelerated brand improvement for Comfort.”
Comfort is Choice’s revenue engine, Pacious said, and delivers about half of the company’s annual revenue. Therefore, maintaining its image—and improving it—were vital not only to Comfort hotels as a brand, but to all hotels under the Choice umbrella. “We put that $40-million announcement out there to accelerate renovations that were planned into the 2014 timeframe,” Pacious said. “About 300 hotels took part in that process. When you take the $40 million that Choice put in and the franchisees money together, you’re talking about a quarter of a billion dollars that went into renovating the system.”
Comfort, Pepper said, is a 25-year-old brand that was due for revitalization. “We wanted brand improvement,” he said. “We wanted RevPAR improvements. We wanted to gain share against our competitors. We, as a company and—luckily—as a board of directors, were very supportive of taking this brand and making sure that we were solidifying our leadership in the upper-midscale segment.”
About 600 Comfort hotels were cut from the system between 2010 and the end of 2015. “Some were at the end of their contracts, and some didn’t keep up with guest satisfaction scores,” Pepper said of the eliminated properties. “For some, we thought another brand was appropriate.”
The Comfort team saw the move as an opportunity to bring in new product “at a higher level from product consistencies,” as Pacious said. Pepper echoed his sentiments: “By removing non-performing properties, we took the product to the upper-midscale level that leisure and business travelers are looking for,” he said.
Now, Comfort hotels are expanding into major markets nationwide. Hotels have either newly opened or are in development in Pittsburgh; New York City; Fort Lauderdale, Fla.; Denver; Asheville, N.C.; and Kanab, Utah. “We’re starting to gain entry into markets we’ve never been in before,” Pepper said. “We’re gaining traction in these urban locations where more business travelers will stay and see the product.”
The new prototype, designed with input from focus groups and franchisees alike, offered existing franchise owners the chance to get in on something new. “We wanted to ensure that we had a contemporary but timeless prototype,” Pepper said, noting that the design would have to appeal to millennials, gen-Xers and boomers alike. “It’s not your dad’s Comfort Inn, but he’ll stay here, too,” he said. The prototype was also designed to be cost-effective, he added, to ensure the best possible return on investment proposition.
Ultimately, Pacious said, the investment and the efforts to update the brand are attracting guests the team wanted Comfort to see—particularly midweek business travelers. “When they show up at the front door, they have a business center, Wi-Fi, opportunities to work in their room,” he said. Consistent business-travel growth, he added, reflects consistency in the brand. “Upper-midscale expectations have increased, and people have higher expectations of what they’ll find than what they had five to 10 years ago,” he said. “We had to push it up.”