Choice Details Upscale Brand Plans

Choice Hotels International Inc. this week disclosed details of its launch of an upscale hotel brand, Cambria Suites, which will open its first property in Boise, Idaho, by year-end. The new brand plans to open at more than 50 locations in the next two years, largely at airport and suburban, and in some downtown locations.

The addition of an upscale brand for the longtime purveyor of economic and affordable hotel offerings means that business travelers who book Choice brands will have the opportunity to earn points that can be redeemed at Cambria Suites and will give Choice an opportunity to play in a tier that provides greater returns through higher room rates.

In launching Cambria, Choice enters a growing tier that will soon include such brands as W Hotels' Aloft, and Hyatt's Hyatt Place Hotels. "We're definitely tapping into the Gen-X traveler," said William Edmundson, vice president of brand management & strategy for Cambria Suites. "Today's traveler has changed. They have different expectations when they travel and different amenities they are looking for," he said, adding that each room in Cambria Suites comes replete with two flat-screen televisions.

Robert Mandelbaum, director of research information services at PKF Consulting, echoed Edmundson's claim: "Frequent business travelers tend to be more savvy and aware of cutting-edge new products and tendencies," he said. "They are the group that tends to demand changes in hotel product, so the fact that they want more of a stylized comfortable room is what drives this new lifestyle craze. Business travelers will be the first to upgrade into the new segment as opposed to convention and leisure travelers."

Because Choice is a franchisor, its revenue directly depends on the performance of each property. A new upscale brand enables franchisees to charge higher rates and in turn bolster Choice's profits. "Choice grows its revenue stream by its ability to sell more franchises," said Mandelbaum. "They have a lot of brands in the midmarket and economy segment, but for them to grow as a company they need to have more brands to sell that won't conflict with their existing market representation -- moving into the upscale segment allows them to do this."

While the site of the first Cambria Suites is slated for Boise, where developing a property is cheaper than in a gateway city, building the brand in major cities is not entirely out of the question, according to Mandelbaum. "We're seeing more moderate-priced upscale brands entering the bigger markets because room rates have gotten so high that you can justify the development of these properties. It doesn't only have to be luxury inventory." Edmundson's vision includes the brand migrating into major markets, while still remaining in suburban areas and areas near airports.

"Historically, Choice's brands have been moderately-priced properties that tended to be in suburban, rural locations," said Mandelbaum. "You don't have as many Choice licensees with properties that are in downtown markets because it hasn't been until recently that we've seen this proliferation of economy and midmarket hotels developing in big, urban centers like Manhattan."