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Choice Hotels, the Rockville, Maryland-based company behind such franchise hotel brands as Comfort Inn, Clarion Pointe, WoodSpring Suites, and Cambria Hotels, is investing in technology — and its brands — as it competes with other hotel providers.
On Friday during the company’s fourth quarter 2018 and full year earnings call, Choice Hotels CEO Patrick Pacious noted how the company is committed to “delivering best-in-class franchisee resources,” including new a new central reservations system and distribution platform, called Choice Edge, as well as forming partnerships with companies such as Amazon and Google.
Last month, the company migrated more than 1,000 applications from its legacy systems to the Amazon cloud, also known as Amazon Web Services — which is also utilized by other travel companies such as Airbnb and Expedia.
And earlier this year, Choice became the first hotel company in the U.S. to partner with Google Assistant to launch voice-enabled hotel bookings on the Google mobile app. Using the Google Assistant app, users can search and reserve Choice-branded hotels by voice and the bookings themselves are handled by Choice Hotels directly.
In November, Choice also announced it launched Book on Google, making it easier for Google account users to book directly through Choice when they search for Choice hotels via Google.
In January at the Americas Lodging Investment Summit. Choice Hotels Chief Commercial Officer Robert McDowell confirmed that Choice was piloting the voice-enabled booking via Google Assistant, and he said that Choice was working with Google to enable this feature for all 12 of Choice Hotels’ hotel brands.
It’s these investments in technology, Pacious said, that make Choice an invaluable asset to its franchise owners. And the numbers seem to demonstrate that; Pacious said 60 percent of Choice’s new franchise contracts in 2018 were with existing or returning hotel owners.
Further Investment in Technology and Brands
Looking ahead to other tech investments, McDowell also said that while Choice is working with Google on making it easier to book Choice Hotels, whether using Google or using their voices, the company is taking a wait-and-see approach to launching in-room Internet of Things, or voice-activated hotel rooms, which its peers — Hilton and Marriott included — are either piloting or rolling out.
“We’ve looked at it,” McDowell said, “but we haven’t yet figured out what the consumer benefit of it is, because there’s significant investment required. The other piece of it is that a lot of people are bringing their own technology into the rooms with them, whether it’s their phones, laptops, or other devices, so we’re not sure where the end of that leads.”
Another major investment Choice Hotels is making right now, includes investing in its brands — growing their numbers and also reinventing or refreshing them, as well as looking for potential white spaces for new brand concepts.
“This is a time in a cycle where you want to be refreshing your prototypes,” Pacious said during Friday’s earnings call, which is why the company is paying very close attention, especially, to the “transformation” of its Comfort Inn brand, which included the application of a new logo and elevated brand standards.
Pacious said that the more than 700 Comfort-branded hotels that have undergone renovations have seen revenue per available room (RevPAR) index gains within two quarters of completing their renovations.
Additionally, Pacious said, “We’re doing a lot of research now … and collecting a lot of information from our guests in both the upscale, midscale, and extended stay segments, and translating that information into customer insights that going to lead the brands’ amenities or potentially brand extensions or launches.”
Earnings by the Numbers
Shares of Choice Hotels were trading up at market open, but slightly down following the conclusion of the company’s earnings call, however the company reported solid fourth quarter earnings and modest gains in RevPAR, a popular hotel industry metric.
Fourth quarter revenues were $245 million and domestic systemwide RevPAR was up 0.7 percent. For the full year, revenues were $1 billion, and domestic RevPAR was up 1.2 percent from 2017.
Adjusted earnings before interest, taxes, depreciation, and amortization was $77.5 million for the fourth quarter, and $346.6 million for the full year.