Brand Conversions Amount to 70% of New Franchise Contracts
Strong demand from leisure travelers and extended-stay guests has driven Choice Hotels International’s revenue per available room beyond 2019 levels for the past several months, President and CEO Pat Pacious said.
During a video interview with HNN at the NYU International Hospitality Industry Investment Conference, Pacious credited the company’s new revenue management system with helping owners take advantage of the pent-up leisure demand over the summer.
Choice worked on its new revenue management system for years and accelerated the project due to the pandemic to get it in the hands of franchisees, he said.
As a mobile app, it allows franchise owners, many of whom are not on-property all the time, to manage their revenue strategy remotely, he said.
“It does dynamic pricing and repricing multiple times a day, so it's really a step change function for our franchisees having a tool, a piece of technology that's helping them really react to what's going on in the marketplace,” he said.
Over the past five months, Choice’s hotels have been back to or exceeding 2019 revenue per available room levels, he said.
That success is helping drive owner interest in Choice’s brands. Currently, about 70% of new contracts are for hotel conversions, Pacious said. Lending has been difficult, so new development is scarce, but Choice has many brands that offer conversion opportunities for hotel owners.
During the Great Recession, the company didn’t have as many brands in its portfolio, he said. It launched the Ascend Collection before soft-brand collections became widespread in the industry. The company now has Clarion Pointe, a lifestyle brand in the midscale segment. Its extended-stay brands offer both new-build and conversion options.
“We have a lot of opportunity in our portfolio to take advantage of the interest level that franchisees and developers have in converting their hotels to one of our brands,” he said.
In terms of future hotel demand, Pacious said he expects the U.S. infrastructure bill will benefit his company and franchisees. Both houses of Congress passed the $1 trillion infrastructure bill, which includes $550 billion in new spending, the week before the NYU conference began. Choice’s brands, particularly its midscale and extended-stay brands, book a lot of business from the logistics, construction and utilities industries, which will be active in the infrastructure projects funded by the bill.
“Those are all sort of key industry verticals that stay in our hotels today,” he said. “We think the jobs and the projects that will be a part of the infrastructure investment will benefit our hotels because that infrastructure needs to get built.”
As a result of all the infrastructure projects, more travelers will have new opportunities to see different parts of the U.S., he said. That includes international in-bound travelers arriving by plane as well as by car at the land borders with Canada and Mexico that will benefit from the infrastructure investment.
During a video interview with HNN at the NYU International Hospitality Industry Investment Conference, Pacious credited the company’s new revenue management system with helping owners take advantage of the pent-up leisure demand over the summer.
Choice worked on its new revenue management system for years and accelerated the project due to the pandemic to get it in the hands of franchisees, he said.
As a mobile app, it allows franchise owners, many of whom are not on-property all the time, to manage their revenue strategy remotely, he said.
“It does dynamic pricing and repricing multiple times a day, so it's really a step change function for our franchisees having a tool, a piece of technology that's helping them really react to what's going on in the marketplace,” he said.
Over the past five months, Choice’s hotels have been back to or exceeding 2019 revenue per available room levels, he said.
That success is helping drive owner interest in Choice’s brands. Currently, about 70% of new contracts are for hotel conversions, Pacious said. Lending has been difficult, so new development is scarce, but Choice has many brands that offer conversion opportunities for hotel owners.
During the Great Recession, the company didn’t have as many brands in its portfolio, he said. It launched the Ascend Collection before soft-brand collections became widespread in the industry. The company now has Clarion Pointe, a lifestyle brand in the midscale segment. Its extended-stay brands offer both new-build and conversion options.
“We have a lot of opportunity in our portfolio to take advantage of the interest level that franchisees and developers have in converting their hotels to one of our brands,” he said.
In terms of future hotel demand, Pacious said he expects the U.S. infrastructure bill will benefit his company and franchisees. Both houses of Congress passed the $1 trillion infrastructure bill, which includes $550 billion in new spending, the week before the NYU conference began. Choice’s brands, particularly its midscale and extended-stay brands, book a lot of business from the logistics, construction and utilities industries, which will be active in the infrastructure projects funded by the bill.
“Those are all sort of key industry verticals that stay in our hotels today,” he said. “We think the jobs and the projects that will be a part of the infrastructure investment will benefit our hotels because that infrastructure needs to get built.”
As a result of all the infrastructure projects, more travelers will have new opportunities to see different parts of the U.S., he said. That includes international in-bound travelers arriving by plane as well as by car at the land borders with Canada and Mexico that will benefit from the infrastructure investment.