Choice Privileges - WashingtonPost:Choice Hotels chief bets future on technology and one heck of a waffle

There was an fascinating article about Choice Hotels in the July 8, 2012 Washington Post... here is the link:

Washington Post
Value Added: Choice Hotels chief bets future on technology and one heck of a waffle
July 8, 2012 (http://www.washingtonpost.com/business/economy/value-added-choice-hotels-chief-bets-future-on-technology-and-one-heck-of-a-waffle/2012/07/08/gJQAomTkWW_story.html)

Interesting to read about Choice management because it's a company that's almost NEVER in the media!

I think Choice would be an interesting company to manage because it's pretty obvious that there's PLENTY of room for improvement. Certainly the Choice Privileges program is bizarrely (and inefficiently) run. And while I do applaud the "standardization" at their hotels in recent years (generally upgrading the standard), there is still a wide disparity in quality among their properties.

I would have liked to ask the CEO about the importance of TripAdvisor to his business. I suspect it is HUGELY important, because anyone who stays at Choice hotels and doesn't read the TripAdvisor reviews first is foolish. I suspect maintaining a good review there is the single most important factor in running a successful Choice hotel (the well reviewed hotels will have happy return guests, the poorly reviewed ones won't). I'm not convinced that other "social media" (Twitter, Facebook) matter much.

I think they're taking a shotgun approach on social media--not knowing what's going to work but knowing it's all relatively inexpensive to set up in comparison with the production of TV commercials and then the purchase of TV time, they're going to hit FB, Twitter, and virtually any other social media outlet that rears its head in the next few years. Although I know I use TripAdvisor frequently in evaluating unfamiliar Choice properties, I'm uncertain how much it fits into their overall plans.

As Joyce notes and as we know, the target is the consumer looking for $80-90/night hotel rooms--with the understanding that in certain markets, like NYC, that level is unrealistic. Money can be made at that level, but it's really hard to make your margin if your remaining costs don't stay under control, including promotion and maintaining standards.

Compare the Choice target with IHG or Hilton--where in any market Choice is offering properties across the board from $69-109, I'm likely to find several HIE or Hampton Inns, with one within the chain charging $89 while another charges $199. Choice's target seems better defined, a quality I like in management that makes me more likely to buy their stock.

And Choice, for me anyways, continues to be light years ahead of Wyndham in managing their rewards program (explain to me again why I have a Wyndham Rewards number and a Wyndham By Request number) and properties (some of the worst Rodeways I've ever seen would still be just barely below some of the best Knights Inns out there).

One thing I liked about Joyce after reading the interview--where he addressed the question about the 55% rise in the stock price by noting that the stock initially fell after he took over and that the actual increase from his start was more like $4 (or about 12%). I don't know many CEOs who would have gone out of their way to make that revision--they would have been happy to sit on the laurels implied by the interviewer's question.

That kind of honesty gives me another reason to buy some Choice stock.

Interesting to read about Choice management because it's a company that's almost NEVER in the media!

I think Choice would be an interesting company to manage because it's pretty obvious that there's PLENTY of room for improvement. Certainly the Choice Privileges program is bizarrely (and inefficiently) run. And while I do applaud the "standardization" at their hotels in recent years (generally upgrading the standard), there is still a wide disparity in quality among their properties.

I would have liked to ask the CEO about the importance of TripAdvisor to his business. I suspect it is HUGELY important, because anyone who stays at Choice hotels and doesn't read the TripAdvisor reviews first is foolish. I suspect maintaining a good review there is the single most important factor in running a successful Choice hotel (the well reviewed hotels will have happy return guests, the poorly reviewed ones won't). I'm not convinced that other "social media" (Twitter, Facebook) matter much.

I completely agree with your post iahphx. Good thoughts on Choice Hotels. Hopefully they only go up from here.