There were hints at Choice Hotels International’s convention in Las Vegas earlier this year. As CEO Steve Joyce talked about the new administration in Washington, D.C., there were whispers that the company would soon have new leadership of its own.
By July, it was official: After nearly 10 years, Joyce would be stepping down and President and COO Pat Pacious would take over as the new CEO in the new year. Less than a month later, the ascension was accelerated and Pacious was scheduled to become CEO in mid-September.
The succession was an obvious one, but Pacious’ journey in the hospitality industry was less predictable. Hospitality is an itinerant industry, but Pacious, since 2005, has only worked for one hotel company: Choice. It’s possibly why that after 10-plus years with the company Choice’s board felt comfortable placing Pacious at the helm.
And while Pacious has been with Choice now for 12 years, even before joining the company he had a hand in its direction. As a consultant with Arthur Andersen Business Consulting, he worked with several major hospitality companies as clients—including Choice.
“The very first project I did was figuring out how to help the company sell more franchise agreements and get those franchise agreements from an executed contract to an open hotel,” he said. He also worked with the company on its very first e-commerce strategy, which proved valuable as hospitality-related technology took off. “I had the opportunity over the last nine years to be leading our technology and our online distribution teams,” he said.
Pacious estimates that he was involved with seven different projects for Choice when he worked at Arthur Andersen, and counts several reasons for why he’s so drawn to the hospitality industry. First, the industry is constantly growing, and Pacious cited the most recent jobs report as evidence. “Hotel and leisure and travel jobs continue to grow,” he said. “It’s a pretty big piece of the economy.” Second, hospitality is appealing as an industry. “As a consultant that’s worked in a lot of different industries, people in this industry are just very friendly and I think that’s because of the type of business that we’re in,” he said.
When Pacious left Andersen to join Choice, he said he was attracted to the company in particular because of the company’s franchising business model.
“I love the fact that small business owners can start out with one hotel and grow their business over time,” he said. “A lot of our franchisees are family-owned businesses and are passing that business down to the next generation. I love the sort of small-business aspect that we get to work with as part of a larger company.”
The First 12 Years
Once in, Pacious rose up the ranks quickly. He became VP of corporate development and innovation by 2006 and was named president and COO in May 2016.
In those years, Choice has grown, launched new brands and—perhaps most importantly—improved its value proposition. When Pacious started with the company, he recalled, he estimates that Choice’s direct channels were delivering two or three reservations out of every 10 that were coming in. In the first half of 2017, the company delivered about six out of every 10 reservations coming in through its proprietary direct channels.
“That value proposition, what we’re delivering to our franchisees, has really grown during that time,” he said. “We’ve got into the upscale segment, which has really started to change the company from a profile perspective in terms of the types of consumers that we’re attracting.”
Over the past 10 years, Pacious said, the hospitality industry has been bombarded by digital disruption. “The iPhone was launched 10 years ago. Airbnb was launched 10 years ago. And we launched Cambria 10 years ago,” Pacious said of Choice’s upscale brand. “I just look at what we’re doing to influence the return on investment for each one of our hotel owners, and that return on investment has increased significantly over the last 10 years.”
Protecting the Future
Part of Joyce’s industry fame stemmed from being outspoken on issues that he cared about. Pacious plans to preserve that legacy. “The same issues that Steve was very adamant about, I will continue to be adamant about,” he said. “We have to protect the midscale and upscale franchise owner. As the cost of distribution is going up, we’re going to continue to fight to make sure that that’s not having a negative impact on our franchisee.
“On the regulatory front, there is a lot of potential change coming our way via tax reform and infrastructure investment,” he continued. “There’s a lot of things in the tax reform discussion that can impact small-business owners and impact real estate owners.”
Pacious said he’s already been down to the House and met with the Speaker’s office on some of those issues.”
Choice is extremely active from an advocacy perspective and makes sure that these issues get talked about on the Hill, or that they are talked about in the regulatory agency. “That’s going to continue as well,” Pacious said. “You’ve heard a lot of the issues—be it joint employer, overtime issues... those are issues that we’re going to continue to speak out upon, because we want to make sure that we preserve the franchising model and that we also help our owners, , as small business owners, continue to be profitable.”