BERLIN—Choice Hotels International is betting big on Europe, where company executives said the hotel industry is rife for growth by conversion.
“We view (Europe) as probably our single biggest opportunity outside of the U.S. because of growth,” said the company’s President and CEO Steve Joyce during a break from last week’s International Hotel Investment Forum in Berlin.
The region’s older hotel stock and breadth of independent owners looking for branded opportunities plays right into the hands of the “pure franchisor,” he added.
That’s especially true with a sovereign debt crisis that has snuffed out debt financing for new development. With construction crews waiting on the sidelines, hotel companies must look for other opportunities to expand.
Choice’s flexible approach to brand architecture makes it a perfect player in the conversion game, Joyce said. The company’s 11 brands don’t require the exact same type of box in the exact same type of locations and are much easier to fit within existing buildings—whether they are hotels, office buildings or something else entirely, he said.
Comfort Inn, Quality and Clarion are the primary focus, accounting for nearly 425 properties and 42,300 rooms in Europe, Joyce said. The company plans to add 100 more within the next few years and has 30 in the pipeline at present.
Recent openings include:
• Clarion Collection Etoile Saint Honore, Paris, France;
• Comfort Inn Hyde Park, London, United Kingdom; and
• Clarion Collection Hotel Frankfurt City, Frankfurt, Germany.
Wooing independents
Choice is focusing much of its attention on the independent segment, in which owners are pressed to manage an increasingly complex distribution landscape, Joyce said. Whereas before the Internet was their friend, the emergence of countless channels and distribution models has made the process overwhelming, he said.
Anticipating this need, Choice executives developed their ChoiceAdvantage property management and central reservations systems, which has been rolled out within the past six months.
The cloud-based platform is particularly attractive because it doesn’t require installation of expensive servers and other hardware during conversion, Joyce said. “As long as you have Internet, you can connect,” he said.
“We think this technology platform is going to spur some interest in some markets that we’re not quite as strong in today,” Joyce said.
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Choice's push into Europe has yielded a number of recent openings, including the Clarion Collection Etoile Saint Honore in Paris (pictured).
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Targets for growth
While Europe is fair game, Choice is placing particular emphasis on the U.K., France and Germany, said Mark Pearce, senior VP of the company’s international division. The company has “people on the ground” serving those regions, which have ample conversion opportunities, he said.
In the U.K., the Choice team is busy improving the overall quality of the group portfolio, said Duncan Berry, chief executive of Choice Hotels Europe. They recently removed a number of properties that were not good representatives of their respective Choice brands and are focusing on bringing in higher quality assets to bolster brand consistency, he said.
Russia is another country that has caught executives’ eyes.
“We weren’t even looking at Russia two years ago, but Russia’s pretty interesting at this point. It seems like it’s coming back in a hurry,” Joyce said.
A flexible approach
While Choice is a pure franchisor, Joyce said the company would consider management opportunities within the context of a larger joint venture or portfolio transaction.
The company largely stays away from leases, which are ubiquitous in countries such as Germany, although they’re “not something we would never consider,” providing the numbers stacked up, Pearce said.
Asked whether he would consider acquiring another brand, Joyce didn’t mince words. “We are actively coveting everyone else’s brands, but we are having very little success,” he said. “It’s a tough market. Everyone’s a buyer, but no one’s a seller.”
