Choice Hotels International will upgrade the company’s Comfort Inn and Comfort Suites brands, and may deflag many as 10% of the brand’s lesser-performing hotels.
Choice Hotels, which franchises more than 6,100 hotels worldwide, will work with owners and franchisees at implementing the design upgrades and expects about 70% of the company’s approximately 2,000 Comfort Inn and Comfort Suites hotels to complete the improvements by 2015.
The company is working with New York-based Gensler, which has done work for chains such as Ritz-Carlton, on a cleaner design for the chain’s bedrooms, bathrooms and public spaces.
“It’s one of the better-known brands in the industry, and it’s been quite a while since we refreshed and rejuvenated the look and feel of it,” said Choice Hotels CEO Stephen Joyce in an interview at the Americas Lodging Investment Summit in Los Angeles this week, adding that the company may offer franchisees financing in order to speed up the improvements.
“We’re going to combine that with a very active incentive program and other positive movements for the franchisees who invest in it.”
With the upgrades, Choice appears to be trying to move the Comfort brands closer to the select-service sector that has recently gained favor by both investors and hotel companies specializing in upscale operations such as Marriott, Hyatt and Hilton.
With as many as 200 hotels expected to not go along with the upgrades, Joyce said the company would work with many of those owners at moving the hotels into Choice’s economy brands, which include Econo Lodge and Rodeway Inn.
As of last September, Choice franchised 1,413 Comfort Inns and 616 Comfort Suites hotels totaling more than 158,000 rooms, compared with about 1,000 Quality hotels and about 1,100 Econo Lodges and Rodeways combined.
Choice is looking to hotel owners to invest in a midscale sector that has lagged the higher-end hotels when it comes to recovery in U.S. travel spending.
Midscale was the only sector of the six tracked by Smith Travel Research (STR) to experience a drop in average room rates last year, while midscale room demand fell 5.5% from a year earlier, compared with a 5% increase in room demand across all sectors.
Still, Joyce pointed to an uptick in employment and a drop in midscale hotel supply as reasons why the brand upgrade makes financial sense.
Joyce estimated that a typical 75-room Comfort Inn would require “about a couple hundred thousand dollars” to meet the new standards, and will generate room-rate increases of between $5 and $10 a night, giving investing franchisees a “strong” return on investment.
For the first nine months of 2011, Comfort Inn and Comfort Suites had an average daily room rate of about $77 and $83, respectively, while revenue per available room (RevPAR) was up 5.8% and 7.3% from a year earlier.
“Folks that are employed feel secure in their jobs because the companies are very profitable,” said Joyce. Companies are “sitting on a ton of cash, and their bosses are telling them to get back on the road and sell.”
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