LAS VEGAS — For years, the bread and butter for Choice Hotels International has been in the midscale and economy hotel segments, but three years after the acquisition of Radisson Hotel Group Americas, the company is gaining ground in the upscale segment. As noted during the opening general session during the company’s annual convention at Mandalay Bay this week, Choice’s upscale and above brands grew 44 percent by room count last year to more than 110,000 rooms, or 17 percent of the company's total rooms. A full 180,000 upscale rooms have become available for booking through the company’s platform through Choice’s partnerships with Westgate Resorts and Preferred Hotels & Resorts.
“It's not just growth for growth purposes,” CEO Patrick Pacious said during a roundtable with media attending the convention. “It's growth with the intent of bringing in the much higher-income traveler.” Household income in the U.S. has reached $80,000 a year, he said, and 60 percent of Choice Privileges members have a household income of $100,000 or more. A full 20 percent earn $200,000 and up.
In addition to guests with more disposable income, Chief Marketing Officer Noha Abdalla noted that the company’s mix of business and leisure guests has shifted to 40 percent business, which can change what those guests expect in their stays.
“We're the ones to watch in upscale,” Chief Development Officer David Pepper said, noting that the company’s Ascend Collection soft brand already has more than 400 properties while Radisson has another 125 and the Cambria brand is at 75 hotels with another 18 under construction. And while other hotel companies have more upscale properties in key markets, Choice has a popular loyalty program that can capture interest in those destinations as more hotels become available. “It's a real opportunity for us to grow in the upscale space,” he said.
Owner-Centricity
Dominic Dragisich, executive vice president of operations and chief global brand officer, said that as the company’s upscale footprint grows, the team is working with owners to make sure everyone is on the same page. “How do we want to rethink the Radisson brands? How do we really want to rethink the Cambria prototype and whatnot?” he said. “I think taking the secret sauce that has made us so successful in mid-scale—that owner-centricity—and applying it in upscale [is how] we really differentiate ourselves.”
Last year, the company announced plans to update five of the eight brands across its upscale and upper-upscale portfolio and launched new visual identities—including new logos—for the Radisson, Radisson Blu and Radisson Individuals brands earlier this year. This repositioning, Pacious said, will give Choice “a great opportunity” in the segment.
Pacious would not say if the company was planning any new brand launches or acquisitions in the upscale space, but he emphasized that the leaders are “really happy” with the growth they are seeing in the portfolio. And while the all-inclusive Sandals brand may be up for grabs, Pacious expressed wariness at expanding into a new segment. “All-inclusive and resort is a [complex and] really capital-intensive business,” he said. “There may be a way for us to do all-inclusive in a different way that's less capital intensive.”
Choice “introduced a lot of things to the industry last year" and received “a lot of really positive feedback,” Pacious continued. “At this point, [we are] really sticking to optimizing the brands that we have, because we’ve got a huge opportunity there.”