Choice Hotels execs talk up reform, regulations, seek to marginalize OTAs

Choice Hotels President Pat Pacious (left) opens the company's convention alongside Choice CEO Steve Joyce.

LAS VEGAS — Rules and regulations were clearly on Choice Hotels CEO Steve Joyce’s mind when he opened the 63rd Annual Choice Hotels Convention here at Mandalay Bay Resort, as he launched into a discussion on the Trump administration in Washington and what new policies could mean for hotel franchisees. 

“As employers and as taxpayers, as leaders in the business community, we have a special responsibility to advocate for policies that will help the economy grow and provide security and prosperity for everyone,” Joyce said, adding that the company as a whole hopes that the new president will promote a pro-business agenda. “This includes promoting a fair business environment to encourage the growth of franchise businesses and supporting an improved travel infrastructure that includes airports, roads and bridges.

"We are looking for the new administration to be a champion for travel, not a limiter, and to promote a secure, efficient but welcoming customs process that attracts more international visitors, not less,” he added, before muttering, “Don’t get me started,” directed at Trump's now two travel directives via Executive Order.

(Choice released a statement after President Trump's visitor ban was introduced in January calling for a balanced approach that promotes travel: "We ask the administration to welcome international visitors and immigrants who travel to our country to enjoy our sights and landmarks, conduct business, visit family, and to live and work, while providing appropriate travel security solutions that protect all Americans," it read.)

Beyond travel and immigration policies, Joyce continued, other public policy issues should be on hoteliers’ radar. For example, federal income tax reform is expected to happen soon, and one of the potential changes to the plan is the ability to expense the total cost of a hotel as a developer is building it. 

The National Labor Relations Board’s controversial joint employer rule, which Joyce called “a major offensive against the franchise industry” that could have “destroyed franchising as we know it,” is also changing. “Right now, the current administration is in the process of rolling back some of the regulations that had become a burden to small businesses, and a number of agency rulings that never should have happened are now not being enforced, including Joint Employer Rule,” he said. “That being said, we still need to ensure that Congress enacts legislation that prevents the new Joint Employer Rule from ever coming back.”

And then there’s health care, and the ongoing debate over how responsible a small franchise company is for providing support for its employees. “Choice has always supported a health-care system that makes quality affordable care available and accessible to all who need it,” Joyce said, and noted that the American Health Care Act, recently passed by the House of Representatives, will be moving on to the Senate soon. “We will work with Congress to get the best results on a health-care system for franchisees, all employees in the lodging sector and for the country,” he told the crowd. 

Choice vs. the OTAs

Pointing to “modest but steady growth” for the overall economy and job market, Choice President Pat Pacious said that consumers are more optimistic, which equates to more people traveling. “The long-term trends for leisure travel are positive,” he said. “People are paying more attention to their health, which means they’re living longer. That means they’re going to be more active travelers in their retirement years.”

But while Choice may have a larger pool of leisure travelers to attract, the company still has an ongoing scrum with online travel agencies, which Joyce said are “becoming much more aggressive.” Last year, he said, some OTAs “dimmed” various hotels on their sites to make them harder for potential guests to find. “We made them stop,” Pacious said. 

“In the past, OTAs have benefitted by fueling the misconception that the best rates are found on their websites,” Joyce said. To prevent this, Choice’s new campaign emphasizes that the company’s official website and app offer the best prices. 

“We will educate consumers so they know who they book with,” Pacious said, noting that Expedia and Priceline own most of the OTAs, but consumers aren’t aware of the monopolies. OTA growth rates have slowed significantly in recent months, he said, while bookings on Choice’s official platforms have improved. “Expanding our book-direct strategy is key to moving forward. Direct channels are your lowest cost and highest profit.”