Three Big Questions With Choice Hotels CEO Stephen Joyce

New York City – On Tuesday, Choice Hotels International celebrated the grand opening of its newest Cambria Hotel & Suites, located in Manhattan's Chelsea neighborhood. It's the first in New York City for the upscale, contemporary brand, and a second Cambria is slated to open near Times Square in the fall. Though New York consistently enjoys high occupancy—an average 78.3 percent so far in 2015, according to STR—local hoteliers have struggled to raise rates during the industry’s recent up cycle.

According to May STR figures, the year-to-date average daily rate at New York City hotels has declined 3.4 percent compared with the same time last year. That’s less than ideal when measured against other markets like San Francisco, where year-to-date ADR grew 10.2 percent since 2014, and Chicago, where it grew 5.8 percent.High development and operational costs and competition, new supply and disruptors, namely Airbnb, present yet more challenges to hotels coming into the market. BTN lodging editor Julie Sickel spoke with Choice president and CEO Stephen Joyce about Cambria’s New York City debut and the company’s long-term goals in Europe, where Choice recently opened a Netherlands office.

Why did New York City seem like a good fit for Cambria, and are you concerned about market conditions?

[Choice doesn't] have many hotels in New York, basically about 1,500 rooms. But we have 8.3 million calls every year for New York. This hotel opened full, and it's been full ever since. We’re not going to have any issue pushing rate. We're not immune to a softening of the city, but really, we've got so many folks that want to be here with us, because of the value we provide, that we're going to do well. Our website has 180 million unique visitors a year, and New York is their No. 1 destination.

We should have 10,000 rooms here, and we could fill them all every night. We've got a number of properties here that are in our Ascend Collection, and they're full.

What’s keeping you from having more of a presence in the market?

It's tough to develop here. It takes time. We broke ground on this hotel, Times Square and White Plains, N.Y., three years ago, and we're just opening this now. White Plains opened late last fall. It's very expensive. You have to know what you're doing, you need the right partners and you've got to find the land. There's still a lot of competition for air rights and for the land, and so we were fortunate to find a couple good places. The land in Times Square we bought five years ago. It took us two years to put the deal together and start the construction. Manhattan is probably the toughest hotel market in the U.S. to develop in because everybody knows what they're doing, construction costs are expensive, people are competing for talent. But once you're here, then you're good forever.

What can you tell us about Choice’s plans for Europe?

Unlike most companies, I've said Europe is our total focus. We're developing in China, of course, but our biggest focus is Europe. We think we can be as big in Europe as we are here. Now, that's a 20-year vision, but depending on how you look at it, it's the largest hotel market in the world. It's mostly conversion. It's mostly difficult buildings to build or convert, and we're really good at that. Other companies do a lot of things well, but one thing we do really well is conversions. We also have a value proposition that's compelling because we have a technology platform [SkyTouch Technology] that’s 100 percent cloud based, so all hoteliers need to do is have access to the Internet and they’ll have all our systems. That makes it a lot less expensive to convert. In Europe, the distribution environment is getting really dangerous for an independent hotel. It's mostly unbranded properties, but now the owners want to be branded because they can't fight the distribution channels and the [online travel agencies] on their own. That's a clear opportunity. We put more resources over there, we're starting to have more activity there and we're putting some money into some of the deals. So we think long-term it's going to be our biggest growth opportunity.