Choice Hotel to put $40 million on brand property improvements

Steve’s breakdown: There are two reasons we think this account could go into review:

1) You don’t spend $40 million on improvements without sprucing up your advertising

2) They are taking a “website experience” survey at right now so we already know that’s getting redesigned – so go get’em.

Bruce Dincin might be a good person to start with.

ROCKVILLE, MD: Choice Hotels International on Monday announced its largest single brand property improvement program – a US$40 million incentive program to build on the ongoing system-wide refresh strategy of its more than 1,900 domestic Comfort Inn and Comfort Suites hotels.

At its annual convention in Los Angeles, Choice Hotels International President and Chief Executive Officer Stephen Joyce unveiled an incentive program to encourage hotels to perform their renovations quickly and completely. All qualifying domestic Comfort branded properties can apply for a piece of the US$40 million, which will be awarded through a forgivable promissory note.

Through the promissory note structure, after a fixed amount of time, hotels receiving incentive funds will not owe anything back to Choice Hotels so long as they have not defaulted under the franchise agreement. To ensure timely implementation, all incentive eligible work must be completed on or before September 30, 2014, and some will be required to complete work this year. The company will pay out incentive funds after property improvement plans (PIPs) have been completed and verified through property inspections and submitted invoices.

While the incentive works through the existing PIP process, even hotels without a current PIP can request one and be eligible for the incentive. Once the improvements are made, franchisees will be able to submit for up to 50% of cost of eligible items for reimbursement.

“Today, we are putting our own balance sheet behind the brand in a monumental way,” Joyce said. “Hotel renovations improve guest satisfaction and through this investment we will accelerate improvement of the brand’s product quality and consistency, guest satisfaction and brand performance.”

The new incentive program builds on the Comfort brands’ Truly Yours brand positioning, which was formally launched through the Comfort Re-Imagined strategy in 2012. The incentive program is concentrated on guest-facing, capital intensive items such as carpet, furniture, and mattresses. Where possible, the program requires the implementation of the Truly Yours design package.

As part of its commitment to drive consistency and quality across the Comfort brand, last year, Choice announced tougher penalty fees for franchisees found not in compliance with their PIPs. Further, raising the bar on the guest experience, franchisees of Comfort branded properties now face an even higher required guest satisfaction score.

“The PIP incentive is only one component of of our reimagine strategy,” said Alex Jaritz, senior vice president of brand strategy and marketing for Choice Hotels. “There are four pieces in place to improve the brand. The first is being more selective with hotels entering the brand; the second is the PIP incentive; we are also mandating brand programs which require adding best breakfast, new bedding and flatscreen TVs (PIP incentives do not apply here); and we are being more aggressive about terminating those who don’t meet standards.”


ACLink: Choice Hotels International, Inc.

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