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Choice looks to technology as differentiator
May 16 2013

Choice’s technology team has identified three trends it hopes to capitalize on during the next few years: cloud-based technology, mobile and big data.

Highlights
  • While many brands are choosing to outsource technology solutions, Choice dedicated a significant portion of its capital to building those solutions in house.
  • Choice announced Wednesday the hire of Eben Hewitt as chief technology officer to help oversee development of applications, technology architecture and data.
  • Choice’s mobile booking business was up 200% in 2012 and now represents 13% of total online revenue.
By Jason Q. Freed
News Editor
jfreed@HotelNewsNow.com
Patrick Pacious of Choice describes how technology can help hoteliers be more profitable.

LOS ANGELES—Steve Joyce, CEO of Choice Hotels International, knows today’s hotel owners have more options when it comes to partnering with a brand or, for that matter, remaining independent.

So Joyce has empowered Choice to embark on a multipronged approach to find a differentiator—something his company can become a leader in; something Choice can offer to help drive revenue that hotels can’t get anywhere else.

The company a few years ago identified technology—from infrastructure to hardware to software to connectivity—as that niche. Today, Choice considers itself a leader in the hotel technology space and continues to pour money, resources and talent into scaling the company’s innovation platform.

“Six or seven years ago we talked about the consumer, we talked about real estate cycles, (capitalization) rates, where’s financing,” Joyce said Wednesday in an interview with HotelNewsNow.com during the company’s annual convention in Los Angeles. “Today I spend 60% to 70% of my time talking about distribution.

“It is an environment fraught with peril but ripe with opportunity,” he continued. “In the next five years this environment is going to look very different, and we don’t know what it’s going to look like but you better be on your toes trying to figure it out.”

Choice, at the direction of Joyce, is taking a different approach to providing its franchisees with the technology and connectivity they need to drive more revenue at lower costs. While many brands are choosing to outsource technology solutions, Choice has dedicated a significant portion of its capital to building those solutions in house. And making them scalable to account for future curveballs is a priority.

The company recently completed a three-year technology roadmap that laid out the infrastructure, including designing and moving into a data center in Phoenix. Choice announced Wednesday the hire of Eben Hewitt as chief technology officer to help Chief Information Officer Todd Davis oversee Choice’s development of applications, technology architecture and data.

Hewitt told HotelNewsNow.com on Wednesday the Choice systems are being written to accommodate new capabilities in the future.

“It sets the table so we can begin to execute moving forward on big leaps we want to make,” he said. “I don’t think you can outsource innovation. You’ve got to have subject matter experts in house.”

“Technology helps you manage your business and be more profitable,” added Patrick Pacious, executive VP of global strategy and operations for Choice.

Next steps
Choice’s technology team has identified three technology trends it hopes to capitalize on in the next few years: cloud-based technology, mobile and big data.

Having Choice’s property management system housed in the cloud—which Joyce says is the first of its kind—means owners and managers can access a property’s performance data from anywhere at any time. Many Choice franchisees are from India and when they go back to visit their homeland they can keep an eye on their hotel’s performance over the Web, Pacious said.

“We were the first in the industry to build a PMS in the cloud,” Pacious said. “Now you can check how your hotels did last night from your pajamas this morning.”

Many franchisees who also operate independent hotels and other branded hotels have requested the ability to use the cloud-based PMS at their other non-Choice-branded hotels. This led Choice to recently launch a division called SkyTouch, where other hotels outside the Choice system can purchase the cloud-based technology platform.

The next phase of that operating system is a Web-based revenue management tool, launched this week at the conference that helps franchisees who can’t afford to hire a revenue manager set optimal rates and inventory.

The cloud-based rate management tool, called Rate Center, sends alerts to GMs when their hotels aren’t optimizing their pricing strategy. For example, if the hotel has a high occupancy but hasn’t adjusted its rate upward, the GM will get an alert suggesting he or she raise rates.

The fee-based system is “for hotels that want to manage revenue but can’t afford to hire a dedicated revenue manager,” said Sharon Paine, senior director of pricing and revenue management for Choice.

“You no longer have to do all of this yourself. It’s as if you’re driving the car on autopilot and we’re watching the dashboard for you,” Paine said.

The system is designed for hoteliers who “are in a competitive market and need to know when to change your rates and, more importantly, what to change them to,” she said.

Mobile booking and big data
On the mobile front, Choice set the stage when it was the first hotel brand to roll out a smartphone app. Joyce said Choice’s smartphone app had 1 million downloads before the next hotel brand unveiled a similar app.

Mobile booking business was up 200% in 2012 and now represents 13% of Choice’s total online revenue, Pacious said. Three years ago, mobile revenue was only about 1% of the total business, he said.

“It’s important to be smart about devices and what is necessary,” Hewitt said because that’s  where “we’ll realize the best returns on our investment.”

“This is not about technology art projects; we want to support the global distribution strategy and put money into franchisees’ pockets,” he added.

Pacious said big data is about finding new insights about the guest, drawing conclusions instantly and then creating action items based on those findings.
 
“We’re operating in the complex middle of a data storm,” he said.

Hewitt said the most important aspect to harnessing big data is determining what data is going to provide the best return on investment for hoteliers. Instead of just collecting enormous amounts of data and then processing it all, he said the critical factor is determining what data is applicable and what data sets will help drive revenue.

“You have to know what you’re looking for or you’re going to lose,” he said.

“Choice uses big data to help you be more profitable,” Pacious added. “Our success depends on your ability to embrace the technology of today. If you’re not using all we have to offer, you’re competitor is going to leave you in the dust.”

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