In the franchise world, you are only as good as your brand. It's why franchisees pay a premium to affiliate their hotel with a particular brand flag. There are, of course, fees that come with that (in its most recent Franchise Fee Guide, HVS concluded an overall average franchise cost of 10.7 percent), but with fees also come the myriad tools and programs brands offer their franchisees.
In some cases, however, franchisees aren't taking full advantage of them, which is a mistake, according to Brian Quinn, who is VP of franchise development with Choice Hotels International. Quinn frequently makes this assertion known and implores franchisees to use their brand as much as they can to optimize and grow revenues.
He should know, having worked for prior franchisors including IHG and Red Lion Hotels Corporation. "It is sometimes surprising that franchisees don't take advantage of us," he told HOTEL MANAGEMENT, during The Lodging Conference, in Phoenix. "My number one suggestion: take advantage of the systems that the franchisor has."
In Quinn's estimation, not leveraging the brand to the hilt may be a mistake on the franchisee, but it's also up to the brand to educate and promote the often robust tools it has on offer. "Don't fight the machine," Quinn is apt to say, adding that Choice has spent "an incredible amount of money," whether it's on marketing (the "Badda Book. Badda Boom." campaign) or its Smart Rates revenue management tool. "You're paying for all of those services," Quinn said. "As somebody that was a franchisee at one time in my career, take advantage."
(While Choice doesn't publicize its actual dollar amount spent on marketing, a Choice Hotels spokesperson told us it's a "multi-million-dollar marketing effort.")
Top- and Bottom-Line Success
Like any business, hotels are concerned with generating as much revenue as they can, while at the same time making sure they are keeping expenses down. It's historically been the job of the franchisor to concern itself with helping drive top-line growth, but with mounting costs—from labor to CapEx—brands need to help impact all parts of the P&L. "We continue to look for ways to drive top-line revenue, but are also becoming more and more mindful of cost," Quinn said. "It's really about having a good relationship with the franchisee, and making sure that the brand uses its scale against both of those levers."
Quinn ticks off a few ways that Choice leverages its scale. One is through its procurement program and the aforementioned marketing. "All that messaging includes a big drive to ChoiceHotels.com, and also a call-to-action to Choice Privileges, our frequency program. All of that is done very purposefully," he said. "If we can get the guest to book direct, it's a lower-cost booking, so there's savings immediately."
Quinn said that Choice has now engineered it to the point where the guest "knows they're getting the lowest price out in the marketplace." In the face of mounting pressure from online travel agencies, like Expedia and Priceline, this messaging is vital. Quinn said that after that, it's imperative that individual hotels push the loyalty program, "so we can create a two-way communication with the guest." Instant Rewards has become a hallmark of Choice Privileges, giving guests a level of immediacy to such gifts from the likes of Starbucks and Amazon.
In the Field
Another area Choice is heralding is its closeness and proximity to franchisees. Franchises often thrive on the relationship franchisees have with their franchisor, and Choice has made a commitment to keeping those open lines of communication in place, Quinn said. "We've really maintained our commitment to having a field-based consulting organization, where our area directors visit with the hotels multiple times a year, sit down, work through compliance issues, work through service issues, work through revenue issues, work on brand initiatives that are out there and encourage them to sign up for those," he said.
Choice is also committed to training, Quinn added, and has tweaked its Choice University to make it more digestible and easier to use as a training module. "We've moved a lot of the content to video, which allows you to jump past some of the language barrier issues, and different struggles around that," Quinn said.
One other facet Quinn talks up is management at Choice's headquarters. This summer, Pat Pacious replaced Steve Joyce as CEO after 10 years at the helm. Even so, it was a rather painless transition since Pacious has been with the company since 2005. "When you're looking for a franchise, I think you should be looking at the senior management of that business. Is it stable? Are there experts in that group? Do they come and participate in your events? It's been an exciting transition," Quinn said.
Pacious, who prior to becoming CEO was president and COO of Choice, is challenging his management teams to form even stronger bonds with its hotel owners. "Choice is committed to the top-line, but there's a combined interest there, because of the way that the fee structures are set up," Quinn said. "We want these to be healthy businesses, and long-term relationships. People that may start with an Econo Lodge, and end up with a Comfort Inn, or Sleep Inn or do a dual brand. We have franchisees that walked the entire 'Stairway to Heaven' with us and are now building Cambrias."
For now, Quinn, who joined Choice Hotels in January, is focused on specifically growing the Comfort Inn, Comfort Suites, Sleep Inn, MainStay Suites and Suburban Extended Stay brands. Globally, and as of Sept. 30, 2017, Choice has 5,421 hotels operating in the U.S., with 751 hotels currently under development. Worldwide, the Comfort Inn and Quality brands have the highest concentration of hotels, though with regard to hotels under development, it's the Sleep brand, with 123 hotels under development, that is second only to the Comfort Inn brand with 171 hotels under development.
The dual-brand development trend is also something Choice and Quinn are pushing, with the combination of its Sleep and Mainstay brands. Dual-brand projects are viewed as a way to offer customers two separate experiences under one roof, while also saving owners on certain costs through shared services. "It allows us to have two hotels under one roof and allows the franchisee to take advantage of the efficiencies that come from that," Quinn said. "It also allows you to look into demand generators differently. You go into a secondary market, or even a tertiary market, that may have a small college, or some regional medical, and some government that's there."
Choice's flagship Comfort brand, according to Quinn, is opening a new hotel each week this year, but at the same time has exited some underperforming and undercapitalized hotels. "Part of our multi-year strategy involved a significant amount of exits, then a business-planning process to be able to get back into those markets and validate them," Quinn said. "We wanted to make sure a significant portion of what comes into the system is new construction. We know new wins, we know it helps reset the brand and we know that we can drive a higher rate off of that product."
For some of the Comforts that exited the system, Quinn said that the breadth of Choice's brand family allowed some of them to stay in the system, but under a different flag.
Meanwhile, new Comforts to the Choice system include the Truly Yours design package, which has been in place for the last five years, and features a more expansive lobby—"a little bit more aesthetic that fires on what travelers' are looking for," Quinn said.
For existing Comfort properties, Choice has embarked on an enforcement plan for franchisees. In its “Move to Modern,” Choice has implemented the following mandates to be phased in—all linked to its Truly Yours design program.
Phase 1: All Comfort hotels must be compliant to Truly Yours public space standards by 2017, including flooring, window treatments and other items.
Phase 2: All Comfort hotels must be compliant to Truly Yours guestrooms by end of 2019 or next contract renewal.
Choice currently has 11 brands in its portfolio, with its upscale Cambria brand being the last added, in 2005. Is there room for another? Perhaps a full-service brand? Quinn's response toes the party line. "We're out in the market always looking—you have to respond to the market, and to the guest, and there's a couple of natural places where you can see Choice expand," he said. "We've got a discipline process around that, though. Sometimes it's more about working with the brands that you have, and continuing to make them relevant."