HM on location: Choice set to build on record-breaking year

Choice Hotels President/CEO Pat Pacious detailed some of the chain's successes and upcoming strategies for the crowd at the conference's opening general session. Photo credit: Choice Hotels

LAS VEGAS—As he kicked off the opening general session for Choice Hotels’ 65th annual convention here, President/CEO Pat Pacious emphasized the conference theme of “stand out” to the attendees.

“It’s never been a more important time to stand out,” he told the more than 5,000 hotel owners, general managers and hotel staff gathered this week at the Mandalay Bay resort. “Today, there are more hotel brands for travelers to choose from—and more competition for you.”

2018 in Review

By the end of last year, Choice Hotels reached 7,000 open hotels in its global system with nearly 570,000 rooms in more than 40 countries and territories (growing the  international room count by nearly 6 percent) and brought its domestic pipeline to a record 1,000 hotels.

Chief Development Officer David Pepper said the company had signed 756 domestic franchise agreements in 2018, 60 percent of which were with existing and returning owners. “Demand is strong for Choice brands,” he said, adding 2018 was "the best development year in a decade.”

The company also launched its new midscale select-service Clarion Pointe brand late in the year, and the first property under the flag opened during the conference in Sulpher Springs, Texas. Nearly 30 Clarion Pointe hotels are in the pipeline, 10 of which are planned for this year. Medford, Ore.; North Charleston, S.C.; Oklahoma City; and Rochester, N.Y. will all get Clarion Pointe hotels by 2020.

Next-Gen Technology

Choice has been incorporating technology into every facet of its business model for decades, and is still launching new programs. The new Openings Portal is designed to help owners through the process of opening a new hotel, starting with the franchise agreement and ending with the first guest arrival.

The program will not, Pacious emphasized, replace the Opening Services team as a primary resource for the process, but will serve as supplementary support, covering three tracks: critical milestones, brand requirements and training/activation, where owners can monitor their progress as they complete each step in the hotel's opening process. The platform can be accessed on smartphones so owners can update their progress anywhere, and will include educational content to help franchisees learn about the process and how to help improve profitability.

The new resource is meant to build on several innovations that Choice Hotels launched previously, including virtual pay capabilities and the group management platform. Virtual pay lets travel managers book rooms without a personal credit card and the group management platform is an online reservation platform to facilitate booking group travel.

All corporate customers can use virtual pay, Pacious said, noting businesses that participated in the platform’s initial rollout booked 37 percent more room nights over the course of seven months.

Technology isn’t always perfect and Pacious recounted an incident from last summer in which the company achieved record-breaking volume over the weekends, with half-a-million people checking into hotels across the system. The infrastructure couldn’t keep up with the demand, leading to “pains” for the hoteliers. “I’m sorry,” he told the crowd. “We will do better by you.”

After this incident, Pacious said, the company’s tech team spent a combined 9,000 hours improving the system, dividing the platforms into different programs for checking in, checking out and other processes. Beyond that, the company sent engineers to hotels to help staff troubleshoot any problems. The upgrades have increased system capacity by 50 percent, he said, and the overall system is 90 percent faster.  

“We’re positioned to lead the way on new trends, like machine learning and 5G technology,” Pacious said, adding the company is focused on driving profits in three different tech verticals.

The first is through the company’s in-house engineering capabilities that focus exclusively on developing technology for the hospitality sector. “We build it ourselves because no one knows your business like we do,” Pacious said. The ChoiceEdge program lets the company roll out new features in a tenth of the time it used to take, he added. (For example, the company is launching overselling capabilities for the booking platforms, reducing lost revenue from cancellations and no-shows.)

The second is through strategic partnerships with tech giants like Amazon and Google. The company’s collaborations with Amazon Web Services have improved its group booking capabilities, and has helped add pre- and post-group stays to drive midweek revenue. Google, meanwhile, has promoted easy booking options, including voice-enabled booking through Google Assistant. “We’re meeting the customer where they are in the voice world,” said Pacious, noting Choice pays a lower commission to Google than other companies do. “Revenue generated by Book on Google jumped 66 percent in the first quarter of this year, with $1 million in revenue in March alone,” he added.

The third is protecting owners’ investments with cyber security. Pacious warned the crowd against granting access to internal systems to anyone who calls.”We will never cold call your hotel to request access to your system,” he stressed. Beginning this summer, the company’s systems will be protected by security firm Crowdstrike, said the CEO.

What’s Next

After several years of the “Bada Book, Bada Boom” marketing/advertising campaign, the company is set to roll out new ads targeting corporate clients with the tagline “Our Business Is You.”  

The company also is launching a new community service platform. Through “Your Community, Your Choice,” hotel owners may apply for $25,000 in grants to support their local communities. The grant program will reward initiatives that benefit the communities that welcome Choice-brand hotels, such as those that:

  • Rebuild a community affected by natural disasters;
  • Care for those less fortunate with food or clothing drives;
  • Mentor community youth or young professionals;
  • Honor local heroes;
  • Support other local businesses or organizations, such as schools, parks, etc.

Choice Hotels' franchisees may apply for the grant through June 30. Five winners will be announced in September.

The company also is working to promote diversity and equality among its ownership ranks, helping minority women to open hotels. Six new-construction hotels are going up across the United States and the Caribbean, Pacious said, all owned by women who are first-time hotel owners.