Choice Hotels International president Pat Pacious talks:
- Growing Choice's loyalty program
- Deploying technology to enhance efficiency
- Development in the upscale and midscale segments
-
Growth in Europe
Choice Hotels International's board of directors has
appointed Patrick Pacious CEO to succeed Steve Joyce, effective Jan. 1,
2018. Joyce will become vice chairman upon ceding leadership to Pacious, who
also will retain his president title. Joyce has collaborated with the board for
"the past several years" to identify a successor that would maintain
continuity of leadership while "driving new ideas that result in continued
positive business growth now and into the future." Pacious, who joined Choice
in 2005, has helped build out Choice's technology platforms and initiatives
around revenue management, data analytics, branding, marketing, development and
franchise services. BTN lodging editor Julie Sickel spoke with the soon-to-be
CEO prior to the announcement.
BTN: There's so
much talk among hoteliers about growing loyalty programs, and Choice Privileges
has had its own rise in membership since the program was redesigned last year. Beyond
trying to lower channel costs, what are the other drivers to get travelers into
those programs?
Pacious: If you
think about how expensive it is to acquire a customer the first time, you don't
want to have to do that every time. The whole purpose of the loyalty program is
to get customers into a loyalty loop after they stay with us the first time. We
learn a lot when they join our program. They share personal information that [we]
don't get if they come just walking through the door from a third-party
channel. Most of our loyalty members are the ones that are using our mobile
app. Through the app, we're moving toward more experiential transactions.
Things like the ability to do two-way texting to the front desk, to order food,
to get food delivered to the hotel. All that's going to be done through that
app, and that's going to allow us to gather data on the types of things our customers
are interested in, how often they stay with us, what their consumer preferences
are. It's feeding a database that will help us understand how to serve the
customer even better. [A year and three months ago], our loyalty program was 25
million people … and now it's 32 million. So we've added 7 million new guests
as part of the revamp of the loyalty program.
BTN: Are those
app features you mentioned—two-way texting and food delivery—currently
available?
Pacious: We're
getting ready to operationalize all that, but we're going to do it in the right
markets and for the right brand segments where that makes sense. If you're
going to text with the front desk, someone needs to be there at the front desk
to text back. We're working with our owners right now to make sure that when we
do roll out, they can operationalize that.
BTN: In that same
vein, what's Choice's philosophy when it comes to deploying new technology?
Pacious: I listen
to a lot of the innovations that people talk about, and it's all about how can
you make a guest get into their room and the guest do this and the guest do
that. A lot of our technology focuses on the franchisees: SmartRates, our
revenue management tools, our loyalty program. This year, we will roll out a new
central reservation system based in the cloud. That's three years in the
making. We're redoing our data analytics platform, and we've redone our mobile
site. All three of those things are going to help us succeed and actually beat
our competition in this world where you're going to the Internet of Things. When
people can book a room from their watch, their refrigerator, their car or from Alexa,
the sales channels explode. To handle that volume of information and to handle
all that personalized data that [was] captured from our loyalty program, you've
got to be on the right platforms to do that. Everybody else in the industry is
sitting on 30- or 40-year-old technology, and that will make it really hard to
do what we're going to be able to do.
BTN: That data
analytics platform—is that for back-office efficiency, or does it go beyond
that?
Pacious: Our data
analytics team five years ago was a reporting group. We asked them to be much
more proactive in helping us: help our franchisees set their rates, help our
development team figure out where to build that next hotel. There's so much
information out there, third-party information and our own, that we aggregate,
that we run through the data analytics and we come back and say, "This is
going to be your best place to go build a hotel. This is the best rate to set
three weeks from now in Times Square." All of that is being driven by our
data analytics platform and the people in our business who are helping our
decision makers. It's helping us be a heck of a lot more efficient. But it all
starts with getting the data in in the first place, making sure it's true and
being able to get it into the hands of decision makers. And eventually machine
learning is going to essentially automate a lot of that for our owners, for our
guests, for us internally to run our business effectively.
BTN: There's been
some discussion about travelers shifting down segment and some renewed interest
in midscale. How is development going for your upscale and midscale brands?
Pacious: We have about 350 hotels in the upscale
segment. We've been in upscale for many years in international markets: Europe,
Australia. Cambria is our dominant brand for upscale in the U.S., and we're
really seeing significant traction with that brand. We just opened our 31st in Newport,
R.I., we've got two open in Chicago, we've got two in New York City, we opened one
in California at LAX and just added our third in Texas with another nine or 10
in the pipeline for cities there. We've got another 100 hotels in the pipeline.
For Comfort [in the midscale segment], we've really cleaned up the brand. A lot
of our deals have been for new-construction hotels, and I think our goal this
year is 57 Comforts will open—so more than one a week. We exited about 600
hotels over the past five years, opened up a bunch of markets; our development
team's been selling more new-construction and high-end conversion hotels into
the brand. What that's resulted in is 30 consecutive months of RevPAR index
gains against [the brand's] competitive set. You've heard a lot of players
talking about launching midscale brands. They're going to be up against a tough
competitor. "Bring it on" is our point of view.