Stephen Joyce's growth plans include the hunt for an upscale brand.
In 2008, after 26 years at Marriott International, where he rose to EVP, Stephen Joyce joined Choice Hotels International as president and COO, ready to lead the company toward fantastic growth. But then a little obstacle called the Great Recession got in the way. As Joyce, now CEO, recalls, “in September 2008 we were underwriting 40 new Cambria Suites properties in a joint venture with Och-Ziff Real Estate Acquisitions. In October 2008 we were underwriting zero.” Nevertheless, Choice, a franchisor of more than 6,000 hotels, including Clarion, Comfort Inn, Sleep Inn, and Econolodge brands, increased market share during the down year of 2009 and marked the highest-ever year-over-year growth in the company’s customer loyalty program, Choice Privileges, which welcomed its 10 millionth member in April. Now, halfway through 2010, Joyce is again “bullish about our growth story,” which includes a focus on the company’s upscale select-service brand, Cambria Suites; international growth centered in Europe and India; and the hunt for an full-service brand to acquire. MeetingsNet Editor Alison Hall spoke with Joyce when he was just back from the company’s 56th Annual Convention in Las Vegas.
MeetingsNet: What was the mood like at this year’s Choice convention?
Joyce: It’s an intimate little gathering—5,600 attendees, dinners for 4,000. It’s quite the logistical and awe-inspiring kind of event to do. I’ll sum it up this way: By almost everyone’s account, this is the best convention Choice has ever had. Put that in the context of the current economic environment and the situation many of these [franchisees] are in, and that says two things: First, they feel good about Choice and where we are headed. And second, they believe the recovery has started or is coming soon. The value of the convention for the franchisees is they get to hear—and question—first hand the directions of the brands and the company. We ran way over on the Q&A part of the breakout sessions on all the brands. For their money—which hasn’t changed in two years, it’s only $750 to register—they get hundreds of educational sessions. In 2009, we had a lot of overflow and some situations where attendees were shut out. We had underestimated how much those sessions were valued. In 2010 we made sure there was room for everyone.
MeetingsNet: What is the value of the convention for you?
Joyce: This meeting represents an overwhelming input opportunity. I probably heard from 200 franchisees about what we’re doing well and what we could be doing better to support their properties. It happened every time I hit a hallway. They are not shy. And for a lot of people this is their family vacation, so I also got in a lot of family pictures.
MeetingsNet: Why are you going after more group business?
Joyce: Group business is relatively small segment of our overall mix. But it will be a key growth area. We do a lot of business with social groups—family reunions, sports groups, and others. We will be much more proactive with our Cambria and Clarion brands. But we will identify specific customers for specific types of business as opposed to taking a scattershot approach. We believe that because of the enormous shift to value orientation not just among leisure guests but also in the SMERF (social, military, education, religious, and fraternal) market, we are in a good position to start marketing now. We’ve brought on [former Marriott International SVP] Mike Murphy to come in and create a global group sales force.
With every recession I’ve known, the year after the recession everyone goes back to what they were doing. Not this time. I don’t know anybody who doesn’t think about their spending differently: What am I getting for what I’m paying? We’re the only company giving you free Internet and free breakfast. Value is going to be in for a while. And we are value.
MeetingsNet: This year you were named chairman of the U.S. Travel Association, which has worked hard to overcome the negative perception of meetings.
Joyce: My standard line about meetings: People think it’s a bunch of people smoking cigars on the golf course. But the reality is we lock people in a room for 10 hours a day, overload them with information, give them a buffet dinner, and then a bad '80s band. We must change the dialogue to help organizations not do the easy thing instead of the best thing. When companies have to cut costs, the first thing people look at is cutting travel. Because it’s easy. The previous chair, who did an incredible job getting the Travel Promotion Act passed, brought things to the point where we can make a difference. Now we have to execute. This is a critical juncture for U.S. Travel, which needs to be an advocate as well as a marketing arm. U.S. Travel has filled the vacuum as the voice of travel to leaders in Washington, D.C. We need to continue to grow that. We need to regain our share of the international market while we grow, build, and defend the domestic market.
MeetingsNet: You said during a recent investors’ call that you are “bullish” on Choice’s growth story. What is that story?
Joyce: Growth is happening both domestically and internationally. We have invested $10 million to update infrastructure internationally. This will make us very competitive in Europe and India, which are our two biggest targets. Growth in Europe will come through conversion opportunities. We will be successful because we are the only company working with a massively distributed “above property” technology approach. With us, if you have access to the Internet, you have access to all of our systems. That’s a huge cost advantage for someone joining us. Our plan is to aggressively grow over three to five years.
Domestically, Ascend has become one of the real pleasant surprises of our business. We have an enormous amount of unmet demand in urban markets. The independent hotels that are part of the Ascend Collection are buying that demand from us. We are looking for upscale hotels to add to the collection. Properties that are part of Ascend are part of a network, not a brand. We added 10 properties in 2009 [for a total of 30, which range from the Inn of Chicago to the O’Brien Historic Hotel in San Antonio to 74 State in Albany, N.Y.] and the current pipeline is significant.
Also domestically we will continue expansion of all of our brands. We’ve done the refresh of the Sleep Inn brand. Other hotel companies have abandoned the moderate tier, full-service space, so we’ll go strong into that with Clarion and Quality. Construction financing will come back and we’ll see explosive growth in the Cambria brand. And I’ve made no secret that I’m after an upscale, full-service brand.