The Road Forward

By Dennis Nessler | June 22, 2020

With its annual conference converted to a virtual event as a result of the Coronavirus, Choice Hotels highlighted to its members the company’s performance relative to its competitive set in recent weeks as well as its continued commitment to adding franchises to the portfolio.

During “The Road Forward: A Leadership Update,” Pat Pacious, president and CEO, Choice Hotels International, Inc., pointed out that some 90 percent of the company’s more than 7,000 properties remained open during the peak of the pandemic and today that number is nearly 100 percent.

Pacious noted that as of May 31 system-wide occupancy for Choice was nearly 45 percent, and it has been higher than the industry average every week since March 15. In addition, the company has seen week-over-week RevPAR increases every week since April 5.

“Over the past 14 weeks you’ve not only gotten through what I hope is the worst of it, but you are outperforming the competition. These positive trends have continued through the month of May,” he said, adding last week saw the highest system-wide RevPAR since March.

In addition, Pacious emphasized the pandemic has not curtailed the company’s development as he referenced its accelerated growth during the Great Recession more than a decade ago. “Back then we continued to grow at a faster pace than the overall industry supply through increased conversions…We’ve already seen this starting to happen again. Since the beginning of the pandemic in March we’ve awarded 70 new hotel franchises,” he said.

Pacious pointed out that three-quarters of the new properties are conversions with the remainder being new construction. He commented, “Even during the worst days of our industry hotel developers continue to seek out our strong brands.”

The CEO further touted the strength of those brands as a reason why the company will “keep lapping the competition” as he highlighted the Comfort Inn brand, which has a new prototype in development. “This is certainly true for the newly transformed Comfort brand, which is well positioned for the expected recovery in demand. Your recently renovated Comfort Hotels have taken share from local competitors for the past four consecutive quarters. Looking ahead the new Comfort prototype marks the next chapter in the brand’s exciting transformation journey,” he said.

With a large percentage of its portfolio in the midscale categories accommodating leisure guests, Pacious feels the company is well positioned for any recovery. “Leisure is leading the recovery and bouncing back faster than business travel. That’s good news for you, because historically two-thirds of the guests staying with you are traveling for leisure,” he said.

Pacious noted that even the company’s upscale Cambria Hotels brand, despite being designed for modern business travelers, expects to benefit from a leisure surge. “Cambria over-indexes on leisure travel demand as a result of being affiliated with our system,” he said.

The brand—which has 51 properties—continues to grow with four more set to open this summer and 25 more “going vertical as we speak,” according to Pacious.

He also was bullish about the company’s extended stay brands, which include some 410 properties under WoodSpring Suites, MainStay Suites, Suburban Extended Stay and the newly launched Everhome Suites brand. “System-wide occupancy rates were significantly higher there than the overall industry. This is particularly true for WoodSpring. The brand’s occupancy was above 70 percent for the month of May making it one of, if not the, best performing brands in the industry,” said Pacious.

He further added, “We launched our newest brand, Everhome Suites, in January to provide developers another opportunity to capitalize on this cycle resistant extended-stay segment.”

Pacious emphasized that the company further invested in its franchise partners during the pandemic as it not only retained area directors and revenue manager associates, but also redeployed nearly 100 additional corporate associates to add to support teams for franchisees.

Pacious elaborated on how the company supported its franchise partners since mid-March when the pandemic began. “We have contacted owners from every hotel in the system and held 20,000 individual consultations with you. Not unlike a pit crew we assessed your individual situation on these calls and immediately got to work,” he said.

Pacious further added, “I’ve heard from many of you about how much you appreciate the personal outreach and assistance the Choice team continues to provide. Thank you for taking the time to share your feedback with me, we truly care about you and the health of your business.”

He also noted that the company is poised to debut the first national television ad campaign from a major hotel company following the Coronavirus in the coming weeks.