Interview: Choice Hotels International President/CEO Stephen Joyce

Los Angeles – As Choice Hotels International continues to expand its upscale footprint through growth of its Cambria Suites brand and the Ascend Collection, travel buyers are taking sharper notice of the largely midprice hotelier when it comes to creating preferred hotel programs, according to president and CEO Stephen Joyce. Cambria in the past few years has attracted several developers with multi-property deals, most recently a joint venture between Driftwood Hospitality Management and Pacrim Hospitality Services to bring the brand to Canadian urban markets. Ascend, meanwhile, has given Choice a quick foothold in urban markets where it formerly had little presence. Joyce spoke with Business Travel News lodging editor Michael B. Baker at the Americas Lodging Investment Summit here in January about how corporate buyers are responding to the brands as well as updates on renovations of its Comfort Inn and Suites portfolio and Choice's recent decision to market its SkyTouch Technology property management technology to the wider hotel industry.

How is Cambria's growth progressing?

[Driftwood and Pacrim] are a very aggressive group at this point. They're starting mostly in Eastern Canada, then presumably, they'll move westward as well. That follows on another couple of private equity deals we've done. We have a number of multi-unit folks working, so as a result, development for Cambria is really picking up speed. We have nine [properties] under construction and another nine about ready to go under construction, and our sense is by the end of the year, we'll have 30 under construction. We have a number of openings coming up. Miami Airport is open. White Plains, [N.Y.], will follow a couple of weeks after that. The hotel in Washington, D.C., will open in May, and there are a number of other openings staggered through the end of 2014 and early 2015, including the Rockville, [Md.], our office site, which is kind of mid-2015. Chelsea [neighborhood in New York] is late 2014 or early 2015, and then Times Square is mid-2015. We're finally getting some momentum, and they're all in the markets we were aiming for, where we have enormous unmet demand.

How about the Ascend Collection?

In every major metropolitan site, we have very few hotels, and 500,000 rooms generate lots of customers. In New York, it's close to six million that we don't satisfy, so that's where Ascend came in. Ascend has hit 121 hotels. Three and a half years ago, it was 18 or 20. We thought it had some interest, but we just put a group of the owners together, and they are enamored by the revenues, obviously, and we're generating an enormous level of their revenue. It is our highest contribution brand. Of all the brands we have, it drives more customers into their hotels than any other, including Comfort. This goes to show the level of unmet demand and our ability to channel it. That's why we're so confident that the Cambrias will open up strong and be very strong performers very quickly, like we're seeing in the Ascend Collection.

Has the growth of these brands boosted corporate business?

We're up significantly on the business side, which we can monitor through the [global distribution systems]. We're also up with the number of accounts that have asked us to participate in their process. It was a good fall for us, both from the standpoint of expanding the universe of companies interested in using our product and the rates they're willing to pay and the expected delivery we get from them.

We've heard some buyers say their directive this year is to do more travel on the same budget. Has that been a selling point on the corporate side?

That's in our favor. The idea of charging for Wi-Fi for us is odd. You get it free in a coffee shop, so you should expect it in a hotel. Our scenario of free Wi-Fi and free breakfast and, for the most part, free parking, that's a big focus area for a lot of these folks that are getting back on the road, who are expected to do the same or more nights for a lot less than they're used to. It's one of the reasons we wanted to move Comfort so fast, because of those folks trying the brand, so they can see what Comfort is and is going to be, which is why we put out the $40 million.

What progress have you made on the Comfort Inn renovation project?

We got 900 applications, which is almost half the system, and we awarded the incentive capital to close to 400 hotels, so they need to be done in order to earn that incentive by the end of the year. That will be 400 completely reimaged Comforts, which for a brand that's 2,000, is a really good start. We have people naturally doing it because it's their cycle anyway, and we will figure out something after that. We want to get the whole system done in two or three years, which nobody has ever done before. With Sleep Inn's Designed to Dream [redesign] program, which is in a third of hotels—the rest will be done within the next 18 months—the consumer happily paid an extra $10 as soon as it was done. The consumer got a much better product and they paid more, so the owner got a return for the capital they invested. It worked the way it was supposed to work. It's early, but we think we'll have the same reaction from Comfort, which will encourage a lot of the owners. When they see there's a payback, they'll start doing it, and that will speed up the process.

Is Europe still Choice's main area of growth outside North America?

The deals we announced last year in France and the United Kingdom are working very well. Those are both seven or eight properties at this point, and we're expecting to get more from those. There are several other multi[-property] deals in the works, and if they work, you'll hear about them in the not-too-distant future. We are actively looking at multiple portfolios over there, potential conversion candidates, including brands of capital. We think 2014 will be a transition year for us, and 2015 should be a pretty big year. We're having a good year in Mexico, and we had a good year last year, but Europe is first, second and third for us.

How is the SkyTouch business faring?

We started selling with pretty much a full press in the late fall, and the pipeline has several thousand customers in it: everything from single independent hotels to multi-unit independent guys to short chains to portfolio brand companies. We'll have some sense of when this will generate revenue and whether we have a good business on our hands in a couple of quarters, but all the conversations are very positive. We've heard from several of them in the brand business who say it's a little problematic to buy from Choice. We get it, and that's why that's its own division and building, and if you went to see them, you wouldn't see anything from Choice. It's actually pretty encouraging to date. The market I think has figured out this isn't a new business for us. It's a $30 million business we already have, and if we have 4,000 customers, it's not hard to see us getting to another 4,000 customers in a relatively short amount of time if we were successful in closing on the pipeline. If it doesn't work, we'll just fold it back in, but at this point, we're pretty confident that we have something interesting. Nobody's got this. It is a [software-as-a-service]-based environment, and not only is it a fraction of the cost, it's better on [payment card industry] compliance, on flexibility. Our guys who go to India for three months to visit their family can run their hotels on their laptops in India.

What else do you have planned for this year?

Everybody's putting consumer reviews on their site. We believe that's a good idea. There's an enormous amount of credibility lacking in the review process. If you talk to consumers, they want to know the reviews, but they also want to know that they're genuine. We're one of the first that is, if you're going to make comments, which we welcome, you have to tell us when and where you stayed, and we verify the stay. If you're a consumer looking on our site and reading the good, bad and ugly of what consumers had to say, you know they experienced the hotel.