One-On-One: Ledsinger Voices Choice's Agenda

By BTN / May 16, 1999

One-On-One: Ledsinger Voices Choice's Agenda

More than half a year at the reins of Choice Hotels International, CEO and president Chuck Ledsinger spoke to BTN hotel editor Maria Vallejo about his company's future plans and most recent accomplishments. Silver Springs, Md.-based Choice owns Clarion, Comfort, Econo Lodge, MainStay Suites, Quality, Rodeway Inn and Sleep brands, representing more than 3,600 hotels.

BTN: What are the benefits to business travel managers and travel management companies from Choice growing its hotel brands through franchising?

Ledsinger: Obviously, having more locations is a plus. The more choices you can give someone with a brand, the more you create brand loyalty. We cover a pretty large amount of the hotel industry with our seven brands not only in the U.S., but around the world. The 100 percent satisfaction guarantee plays real well with corporate travel managers. Although business and the economy have been good, travel costs are always under everybody's watchful eye, so being able to offer affordable alternatives is always a plus. I like our segment right now because of that. I've spoken to a lot of people who have said they have to find more efficient ways to travel--either they're cutting per diem costs or travel budgets.

We have preferred lodging agreements with travel agents and travel managers that are rates put in writing. It allows them to forecast what their lodging expenses will be a year in advance. It's the VIP Rate Program and it's given to high volume corporate travel managers and their consortia. If they give us specific locations, we do negotiated rates.

BTN: What are some new programs you have implemented and plan to implement next year for your business travel guests?

Ledsinger: The biggest is the Guest Privileges. We have 235,000 members already. It offers travelers a way for a free stay. It's particularly important to business travelers. They get enough points for a free stay after just 10 nights at any Quality, Comfort and Sleep hotels. We partnered with Diner's Club and AAA. We'll try to continue with it and enhance it. We have the business class rooms. We're constantly looking to add those kinds of amenities where there's demand for them.

BTN: Did you do anything different to further address the needs of corporate travel buyers this year?

Ledsinger: There's a quality improvement control team that monitors and streamlines the RFP process. We've doubled the size of our internal RFP support team from three to six people. That just expedites the process and makes things easier on the other side. The number of people on our internal RFP support team tripled in 1999 versus the number last year. We've seen a large increase in our number of reservations in 1999 driven by programs like that. The quality improvement team includes people from sales, GDS support and reservations, who really focused on ease of service for travel managers and their travel agents.

BTN: What are you main goals for this year and into 2000?

Ledsinger: On the technology side we are rolling out our Profit Managers on the front desk side. That's just a tool that helps hotels manage their room inventory better. Once you have the basic platform that's consistent with all the properties, you can add more enhancements to that anytime. We've done enhancements on our res system.

We also have an interesting program called Choicebuy.com. It's a purchasing program where our licensees log into a proprietary system and buy anything on the Internet. We're just rolling it out, so we've got a lot of interest in it. It's a first step in using the Internet to add value to the licensees. We could expand that Choicebuy system to where guests could go in and buy items. We have some testing right now.

BTN: What other back office and in-room tech advancements are in store?

Ledsinger: Part of it is amenities and services that you offer within the hotels driven by technology. The other part is the labor saving side. Can you operate your property more efficiently through smarter use of technology, using a yield management system, a front office system with guest history? In Mainstay we have a kiosk where you could check in without seeing a person. Some people don't care about seeing a person at a front desk. That works great with extended stay properties along with someone at the front desk. It's a standard now. We've had this since 1996.

BTN: What are your plans to globalize each brand?

Ledsinger: We have almost 1,000 hotels outside the U.S. now. We're definitely a global player. As we move forward there are opportunities in looking at the sales force in a global way and delivering services to the intermediaries and travel buyers on a coordinated global basis. The brand goals are similar. We are building Sleep Inns internationally. We're concentrating in Europe, Scandinavia, Austral-Asia, Canada, Mexico and South America. That's where bulk of the international properties are located. We want properties in the U.S. properly situated in the right places so we can capture some of that international inbound travel into the U.S.

BTN: Are any acquisitions pending?

Ledsinger: We're opportunistic about that. We have seven brands and we see a lot of growth in those brands now. Sometimes the acquisitions are in the form of conversions. It's possible that we could have acquisitions. We look around a lot. It's a matter of finding something in a niche where we don't currently operate or a segment we are in that we could give a lot of mass to by acquisition. There are some opportunities internationally to make some investments in management license companies and minority type investments to give a leg up where we don't have properties today and would like to be.

We don't have an upscale brand. There are potentially some opportunities in the lower end, down in the economy segment. When we look at things, it's more a matter of converting something into our properties rather than acquiring a full standing brand.

BTN: How do you differentiate each of the brands?

Ledsinger: We developed specific brand standards and attributes for each brand. Where do we want these brands three years from now and how do we go forward? Some are physical attributes and some service levels. They're different for each brand. Our Quality hotels gives business travelers free local calls, we have coffee. Clarion and Quality offer special rooms specifically for business travelers. In Quality, we have a little business area, so when you sit at your desk it looks like you're at your office desk. Those are specific business rooms.

The other thing is the satisfaction guarantee that we have in five of the brands: Sleep, Comfort, Quality, Clarion and Mainstay. That's important for the travel agents who book the rooms and have to stand behind them and also the people who stay in them.

BTN: What are your goals for each brand?

Ledsinger: Generally the goals are to deliver a consistent message to consumers so that their expectations are met. That's a brand message. We have goals in terms of the product standards, and brand standards have increased in terms of inspections. We're continually raising the bar on the quality standards and inspection scores and those kinds of things. We are more aggressive in removing the properties that don't meet the standards going forward and replacing those with newer, fresher properties. We removed about 200 hotels last year and added about 350.

BTN: What are your franchise agreements for each brand? How much do you want to grow them for each brand?

Ledsinger: We have some development agreements in place including Mainstay. We want to get more Mainstay agreements with development. We've put out new incentives for developers, $125,000 for a new Mainstay to develop. We've done similar things for Clarion and Sleep. There are 200 Sleep Inns and we think that's a brand that could grow pretty substantially. There's no reason why there couldn't be 1,000 Sleep Inns.

Mainstay is growing because it's coming off a small base and there's no reason why there couldn't be several hundred Mainstays. We have aggressive growth plans in those brands. Comfort is still the number one brand for our developers. We'll continue to grow the brand. Comfort brand has some properties that are going out as well so you won't see the same amount of net unit growth. But it will still grow. There's room to grow Comfort internationally. Quality is the same. Quality is a very good brand internationally. Comfort Suites will show some really nice growth. There's about 200 Comfort Suites and I'd like to double that.

Clarion is another one we think we can double fairly easy. There are about 125 Clarions. As we better define that product, we'll be adding more units. We have some initiative behind Clarion. We need to position Clarion in more downtown, gateway markets to help our international exposure as well.

BTN: What were your major areas of focus when you walked into office in August? What of those have you tackled and completed?

Ledsinger: I looked at Choice from the outside. I spent a number of years in the hotel industry, almost 20 years, originally in Holiday Inn. Choice was always viewed from a competitive standpoint as a very strong competitor in the segments where they played. Comfort was obviously a great brand and a great competitor. What originally attracted me to the company was the size, as one of the largest franchising companies in the world. What went with size was distribution. We've got a worldwide network of hotels to offer guests and we have a large number of hotels that we can use to drive value to our franchisees. I thought they were strong brands, but brands that could be better differentiated in the minds of the consumer. I thought that was an opportunity. I saw those as some of the things that were intriguing to me.

We put a big emphasis on a regional structure with our franchise service directors to the properties. We have qualified people out there everyday with the licensees and their problems, and the hotels operate better. We started a first-time learning center and some core training for new licensees coming into the system and a quality program for the GMs to help them better understand what Choice is all about. That's really helpful on the consistency side.

We are continuing to market brands separately instead of what was traditionally done under the Choice banner. It was great because it raised awareness in the consumer's mind of these Choice brands, but the consumer identified more with Choice than the individual brands. We think there's continued opportunities there.

BTN: What is the purpose of these new training classes?

Ledsinger: The first classes of licensees will begin in mid-May. It's two different aspects. One, called CORE, is really geared toward general managers. That's skill-based training. The other training program is an orientation to the way Choice works.

It's a way of bringing people on board who perhaps haven't been in the hotel business before or are new to Choice. It's to get more consistency to product and guest delivery. We felt like this was something we needed to put more emphasis behind. It hopefully helps our hotel operators be better operators.

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