Choice Hotels is investing in a new reservations system that could improve revenues. Pictured is a Sleep Inn in Jasper, Alabama. Choice Hotels
Choice Hotels will be much more “nimble” next year when it introduces what new CEO Patrick Pacious calls “the first new central reservation system from a major hotel company in over 30 years.”
Pacious, previously the company’s president and COO, made the comment Monday on his first earnings call as CEO, saying Choice’s current system reminds him of a crumbling bridge that costs more money than it should to maintain, has been updated many times, and is not up to modern standards.
The new system, he said, will allow the chain to more closely monitor customer preferences and make offers accordingly. Pacious said he expects the company to start using it in the first quarter of 2018.
“What it’s going to help us do is really reduce the amount of cost every time we introduce a new capability and also reduce the amount of time it takes to get that capability in the hands of our customers and then hands of our franchisees,” he said.
Choice Hotels, which owns 11 brands, ranging from Ascend Hotels on the high end to Rodeway Inn on the low, claims it is already seeing improved sales from earlier investments in technology.
Pacious told analysts reservations and revenue from the company’s website each increased 18 percent for the third quarter, year-over-year. Meanwhile, he said, Choice Hotels reservations via mobile apps rose 50 percent, resulting in 59 percent more revenue than in the third quarter of 2016. Mobile apps repeatedly has said new daily and monthly revenue records this year, he said.
The new platform, which is costing “tens of millions of dollars” to build, according to the company’s chief financial officer, will help Choice implement strategies for using artificial intelligence and voice-activated search, Pacious said. That should help the company better know its customers.
“We have a lot of access to our customers data and our franchisee data, and we use that data to make business decisions on how to price our hotels,” Pacious said. He added that the data could even help the company decide where to place future hotels.
Strong Leisure Demand
For the third quarter, Choice reported net income of $47.6 million, on total revenues of $295.1 million. In last year’s third quarter, it also earned roughly $47.6 million in net income, though in 2016, it did so on total revenues of $267.6 million.
For domestic operations, revenue per available room for all 11 brands increased 2.1 percent, year-over year. The Suburban Extended Stay Hotel brand showed the biggest increase at 3.6 percent. The upscale Ascend Hotel Collection was the only brand to report a decrease, off 4.7 percent, year-over year.
On the call, Pacious said leisure travel remains strong and is “outpacing” business demand, though he noted business demand is heathy.
He said he expects the trend of strong leisure demand to continue. “Consumer confidence is at its highest level since December of 2000 and consumers continue to seek experiences like travel over material items,” he said.
Plus, he said, “Baby Boomers are beginning to retire. They are living longer and are maintaining a robust share of future demand.”