LAS VEGAS—After three years of difficult times across the board, executives at Choice Hotels International are letting out a collective sigh of relief that the worst is behind them. It was all smiles at the 2012 convention at Mandalay Bay in Las Vegas this week as business appears poised for strong gains over at least the near term.
“With every passing month, the recession is further back in our rearview mirror,” CEO Steve Joyce said. “We can tell from the franchisees—most of them are feeling good about where things are headed. We’re not back to 2007 levels but we’re getting closer. We’re in for a pretty good run for at least 3 1/2 years.”
Building on this momentum, Choice announced new initiatives for its family of brands during the show. Most noteworthy, the franchisor introduced a new core food-and-beverage program that will be installed at each of the 19 Cambria Suites properties and unveiled a dual-brand prototype that will combine the Sleep Inn and MainStay Suites brands under one roof.
Cambria’s new F&B offering is a direct response to feedback from owners who asked for more ways to make the hotels profitable. The program will utilize the current kitchen structure but will introduce an American comfort cuisine menu. It has been rolled out at a handful of properties already and all properties are expected to have it installed within a few months.
The program will cut food costs from more than 45% to approximately 35%, executives said.
“We did not want to bring in additional team members and just add another dimension of talent because that talent might not know how to make money, so we went out on the street and partnered with M Culinary,” said Michael Murphy, senior VP of the Cambria Suites and Ascend Collection brands. “This is not just a concept, it’s a core program.”
Choice executives said the launch of a Mainstay Suites and Sleep Inn dual-brand hotel also was a response to developer demand. Having both brands under one roof will offer the ability to capture a mix of transient and extended-stay demand, said Alexandra Jaritz, senior VP of brand strategy and marketing.
David Pepper, senior VP of global development, said the dual-brand was requested particularly in markets that are tapping into oil demand, such as Pennsylvania, North Dakota, South Dakota and Texas. The Sleep Inn product is a good fit for oil workers who are looking for value, and MainStay is a good fit for workers who will be on site for an extended period of time, he said.
Choice already has executed “one or two” contracts for the dual-branded hotels in Pennsylvania and is seeing a lot of interest from Texas and North Dakota, Pepper said. Rather than a rigid prototype, the design of these new-build hotels will be rather flexible. One standard is they share a lobby—and other back-of-house spaces—for the purpose of efficiency.
Joyce said first-quarter earnings were indicative of the direction the company is headed in 2012. Revenues were up and earnings were up much more than forecasted, he said. Occupancy increased across all of Choice’s brands. Choice’s revenue per available room increased 8% during the first quarter over the first quarter of 2011.
“As we head into the summer travel season, things are looking promising,” Joyce said. “People are traveling—especially for leisure—and that’s a good thing for us. People plan to travel primarily by car and that’s another good thing for us.”
He said the U.S. economic outlook is slow but steady and heading in the right direction. While consumer confidence is up, most travelers are “demanding value for their dollar,” Joyce said, which is “what Choice is all about.”
“We’ve got powerful value-oriented brands,” he said. “It positions us perfectly to capture this renewed consumer demand.”
Joyce said the two indicators he relies on—employment and consumer confidence—are trending favorably. He said companies might not be hiring, but executives have told him they’re very well situated financially and therefore they’ll be taking their vacations.
He said a strong return of business travel has led to companies looking at Choice brands for the first time because they’re operating on smaller budgets and looking to spend less.
Joyce told the audience of nearly 6,000 franchisees they must continue to do what hoteliers do best: Listen to the voice of the guest and deliver what they value most.
“I’ve got a pretty good understanding of what makes a great hotel and great hotel company,” he said. “When I came to Choice, it was the right time, the right brands, the right team and most importantly the right franchisees.
“We can make a serious impact here. This is where I want to be,” he continued. “I’m not done yet. None of us are even close to done. All together, there is so much more that we can and we will accomplish.”