Exclusive: A “perfect storm” for pure-play franchise group Choice

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Choice Hotels Asia-Pac Director of Development Scott Armstrong discusses current development trends and market opportunities in midscale and upper-midscale brands.

A few slow years in the lodging industry have opened up opportunities for investors who are keen to build property portfolios, but who are not actively engaging in day-to-day hotel operations.

This creates the perfect storm for a pure franchise group like Choice Hotels and our proven partnerships with hotel management groups. We are expanding our development team in Australia to capture more of these emerging opportunities.

There are a number of such opportunities in the pipeline this year. The owners favor a franchise contract and hotel management model where they have access to brand recognition and regional and global marketing initiatives, as well as professional management of day-to-day operations.

We currently have a new property in development under this model and in partnership with 1834 Hotels to be announced in the coming months for the Melbourne CBD market.

Choice Hotels has also seen strong interest in our upper-midscale segments around the Ascend Hotel Collection, which offers a soft-brand option for owners and developers. This brand allows owners and developers to create or maintain a unique hotel identity that reflects the nature of the asset or local community while benefiting from the power of a global hotel group with a collection identified with hotels and elegant resorts around the world.

Inflationary pressures are impacting independent hotel owners, who have struggled during the COVID recovery and are often working in the business. As the dust settles, we see opportunities opening up for engagement with us with a particular focus on revenue distribution and procurement economies.

Generating reservations is a key driver right now, and we’re proud to see the benefits through the ChoiceHotels.com website and our Choice Privilege app. Direct online bookings for the Asia-Pacific group grew steadily in the first half of 2022, with year-to-date online bookings already exceeding the full year for 2019.

As we settle into the winter months, we continue to focus on our five core brands – Ascend, Clarion, Quality, Comfort and Econo Lodge – which cater to all market segments from economy to premium. . Strong brand awareness and the growing importance of brand stability, trust and transparency among travellers, especially in the midscale segment, are driving interest and new opportunities.

The midscale and upper midscale segments make up over 50% of hotel supply in Australia and demand is strong as Australians continue to vacation here. They are looking for the best value for money and want top quality service and facilities. Loyalty is playing a growing role, with our Choice Privileges program growing rapidly month after month to now reach over 500,000 members in Australia and New Zealand.

These segments are vital for business and leisure travelers, especially in times of economic headwinds and with much uncertainty yet to come. Where customers will have reduced spending capacity, they will become more fare-conscious travelers.

As owners exit recovery mode, optimizing their business models and finding the best cost opportunities becomes a priority in what will remain a tight segment for some time.


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