Choice puts full weight behind Europe ramp-up
 
Choice puts full weight behind Europe ramp-up
21 OCTOBER 2015 6:14 AM
Choice Hotels is putting its muscle and expertise honed in the U.S. on its new principal focus for expansion: Europe.
AMSTERDAM—Choice Hotels International has plans to expand its franchise-only model in Europe, a continent it feels is warming to its business model and brands in general.
 
At its biennial European franchisee conference, held in Amsterdam from 18-20 October, the Rockville, Maryland-based company announced three new target markets—Belgium, Germany and Turkey.
 
Under the slogans “Orchestrating the future” and “Together we perform better,” Mark Pearce, senior VP, international division, said the company is adding properties across the world but that its principal market for expansion is Europe.
 
Pearce relocated to Amsterdam in May of last year to set up a regional office, despite the company having no franchisees in the county.
 
Underlining this commitment was the attendance at the conference of some Choice Hotels heavy hitters, including Pat Pacious, COO; Trent Fraser, CEO of Asia/Pacific, who oversees 243 properties; and Jamie Russo, VP of loyalty and customer engagement.
 
Pearce added the full weight of Choice’s global system is being placed behind growth in the continent.
 
“Choice has a big future in Europe, which has a significant pool of unbranded hotels. Half the arrivals and departures in the world are from or to Europe,” he said.
 
Choice Hotels has 11 flags. Four—Clarion, Comfort Inn, Quality and soft-brand Ascend Hotel Collection—are present in Europe. Chain executives made no mention of adding any of the company’s seven other brands to Europe.
 
At its U.S. conference in Las Vegas in May, Choice unveiled its revamped website, logo and loyalty program, all now available for its European partners.
 
Speaking to an audience of 500 or so owners and GMs, Pearce projected an on-screen message from Steve Joyce, Choice’s CEO. “Internationally, many companies are focusing on Asia, and we’re very active there, too,” he said. “But for us, it’s all about Europe.”
 
Robert McDowell, senior VP of marketing and distribution, said the company’s loyalty scheme is now active in 500 locations in seven countries, and its revenue management system is used in 450 locations outside the United States.
 
McDowell said Choice is concentrating on having increased agility and fewer connectivity challenges.
 
Other Choice executives emphasized the company’s European ambitions.
 
Carl Oldsberg, a February 2015 hire as VP of international operations, stressed the company’s need to put in Europe a greater emphasis on digital initiatives and bookings, and on personalized content marketing. Tim Oldfield, VP of global sales, said the company has heard pleas for easier payment systems.
 
“Payment among (our franchises) is a known point of frustration, and where there is seamless check-in online, that’s increased corporate business considerably. There will be new financial incentives to drive more of this business, to capture more market share,” Oldfield said.
 
“Our technology spend is not U.S.-centric but about how we can scale up globally over time,” he added.
 
Adding weight was another two hires, both announced at the European conference: Nicolas Alsterdal, formerly of Nordic Choice, as director of revenue management, Europe; and Tess Mattisson, director of marketing, Europe.
 
A new CEO for the U.K. and Ireland will be announced around the turn of the New Year, Pearce said.
 
Choice is convinced Europe is ripe for a larger franchise landscape, with rate parity recently having been banned in France and Italy and being challenged in several other European countries. Also in Choice’s favor is the fact that its own commission structure, its executives believe, is among the lowest in the industry.

Scaling up
Critical to increasing the overall franchise footprint in Europe is expanding into new countries, Choice executives said.  Gateway cities are the initial target, with secondary locations to follow.
 
Multi-development agreements are key to this expansion. They are the speediest, most economical way of ramping up growth, Pacious told Hotel News Now.
 
“Conversions will remain the company’s development focus, but there will be a handful of new builds, too,” he said.
 
“Choice does one thing and one thing well: franchising. And that gives us an advantage,” Pacious added.
 
In Belgium, Choice will partner with Dema Hotels and Oxford Hospitality to open three converted properties over the next 12 months under the Clarion, Comfort and Quality brands. In Germany, executives will work with BHKV Hospitality GmbH to add two Comfort properties, both to be new builds—in Frankfurt and Monheim am Rhein. Choice also has its sights on the German cities of Berlin, Cologne, Dusseldorf, Munich and Stuttgart.
 
Pearce said that since the last European conference in 2013 in Dublin, more than 80 hotels had been added to Choice’s European portfolio. Plans in Belgium and Turkey could result in 135 hotels with more than 15,000 keys. The German deal was inked later in the day in which that comment was made.
 
Other countries on its radar include: Austria, Hungary, Poland, Spain and The Netherlands.
 
“Never in our history has our future in Europe looked so bright,” Pearce said.
 
Oldsberg added that with a global portfolio of approximately 6,500 hotels, Choice now is expanding in Europe with “a whole different scale of negotiation.”
 
Russo said loyalty has a huge part to play in Choice’s Europe play, too.
 
“We have only 326,000 members in Europe today, so huge opportunity exists,” he said, adding that among Choice’s new initiatives is that members’ points will no longer expire.
 
Upping standards
Choice executives and its properties’ owners are optimistic about the company’s increased and increasing franchise footprint in Europe.
 
David Beers, Choice’s senior director, international operations, said Choice is imposing in Europe minimum standards and hallmarks on the provision of Wi-Fi, breakfast and bedding.
 
“The critical word is consistency to effectively increase loyalty, but it is the guest that is dictating these requirements,” Beers said.
 
Laurent Dupont, owner and GM of the 35-room Comfort Hotel de l’Europe Saint-Nazaire, France, told HNN that he is convinced the franchise model will see further traction in Europe.
 
“It has given (the hotel) that extra push. Guests are finding the hotel, and the strength coming off a brand is increasing in my market,” Dupont said. When he bought the property, it was on its last knees, with occupancy at only 3%.
 
Martin Kemmer, managing director of development and management company Place Value Hotelmanagement, whose parent company is BHKV Hospitality, said the franchise model is credible not just in major cities but also in secondary cities such as Monheim, Germany.
 
“Cities such as Monheim (am Rhein) do not have a lot of industry, but what they do have leads the world, so there is steady, good, corporate demand,” Kemmer said, referencing Bayer CropScience, which has its global headquarters in the city of approximately 40,000.


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