Choice Hotels seeks to boost franchisees’ profits
Choice Hotels seeks to boost franchisees’ profits
10 MAY 2018 7:53 AM

Executives at Choice Hotels International’s recent 64th annual convention spoke about the continued push to modernize the Comfort brands as well as its expanded extended-stay brand portfolio.

LAS VEGAS—Choice Hotels International executives had mostly praise for attendees of the company’s 64th annual convention, but said they also see some missed opportunities with the brands.

Overall the brands have been performing well, executives said, but in an effort to capitalize on those missed opportunities, Choice Hotels is making some changes.

The company unveiled a new logo for the Comfort brands to entice potential guests to take a second look. Choice is also asking owners of extended-stay properties to boost profitability by increasing the number of guests staying for longer of periods of time.

New logo
Megan Brumagim, head of Comfort brands, said the company heard from guests of all ages that the way a hotel looks and feels influences whether they would stay there, and that includes the logo. The previous logos for the Comfort brands were seen as “dated, economy and generic,” she said, and while most people recognized the blue logo, only about half were familiar with the red version.

“The mission was clear: We had to unite and lift the Comfort family,” she said, adding that the logo is what makes people take another look and see the investments owners have made.

In tests, consumers said they would be willing to spend $8 more per night at a Comfort property displaying the new logo, Brumagim said. Their intent to stay also increased by almost 20%, she said, which makes it a game-changer for reaching those who have stayed at Comfort properties in the past but haven’t been back.

“If we want to grow, we have to get the people we’re not getting today,” she said. “That takes change.”

The logo is the culmination of a brand transformation that began five years ago, said John Seabreeze, Comfort brand leader. The company dropped hundreds of properties from the system because, while they were making money, they dragged down the brand by not meeting standards, he said.

Owners who updated their hotels to the brand’s new “Move to Modern” standard are earning back their share, he said. Those who took advantage of the PIP incentive saw improvements to rates and profits, earning 5% to 10% more revenue per available room compared to those who didn’t adopt the new look.

Franchisees who complete brand updates to public spaces and guestrooms will be eligible to purchase signs with the new Comfort logo, Seabreeze said. Those who are among the first to be in compliance can receive a 50% rebate on the cost of the signs, and any who complete the updates six months ahead of deadline will receive free photography, he said.

In a separate interview, Anne Smith, Choice’s VP of brand management and design, said owners have been on a staggered schedule for the public spaces and guestroom PIPs. The company feels good about the compliance rate for the public spaces portion, she said, and owners have been working on the guestrooms aspect.

The new logo and signage will be an effective incentive for owners, she said.

“This is a tight community,” Smith said. “We know there are people who, when they finish and get the sign, will set the example and others will want to follow their lead. We want the early adopters to drive and accelerate this across the rest of the brand.”

Committed to extended stay
Choice Hotels has had its eye on the extended-stay segment for a while, which is why the company moved to acquire WoodSpring Suites, President and CEO Pat Pacious told franchisees.

“We were floored by their financial results,” he said. “Many are running twice the net operating income as others. They have something going on we wanted to make available to you.”

The biggest question about this acquisition is whether Choice will keep all three of its extended-stay brands or merge them, said Ralph Thiergart, VP and general manager of extended-stay brands. Suburban Extended Stay Hotel, MainStay Suites and WoodSpring each serve different needs for both owners and guests, he said, so the company will keep those brands distinctly positioned.

MainStay is a midscale new-build option that works as a standalone hotel or as part of a dual-branded property, Thiergart said. Suburban is a flexible economy brand that is priced at the heart of the economy segment and is conversion-friendly. WoodSpring is the new-build-only option that is priced at the top of the economy segment, he said.

“These brands serve different needs,” Thiergart said. “We’re not consolidating brands; we’re not combining them or combining brand standards. We’re continuously rethinking what is possible for your brand. There’s so much development room for all three brands.”

The other midscale, legacy, extended-stay brands run the risk of pricing themselves out of the extended-stay market, Thiergart said, because they’re not connecting with the true extended-stay guests the way the brands had before.

Many WoodSpring owners come from the multifamily real estate business, so they have come into the hotel industry knowing a lot about extended stay, he said. The traditional sources of extended-stay guests have been training, relocation and temporary job assignments, he said, but WoodSpring developers uncovered a bigger source: chaos.

“These are decisions you didn’t know you would have to make until you had to make them,” Thiergart said, citing situations such as a tree falling through a house, flooding, family issues or any other situation that forces people to enter a new chapter in their lives.

“They’re staying somewhere,” he said. “Why not your hotel?”

Editor’s note: Choice Hotels International paid for meals and accommodations at the Mandalay Bay Resort and Casino, where the conference is held. Complete editorial control was at the discretion of the Hotel News Now editorial team; Choice had no influence on the coverage provided.

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