As Choice Hotels hosted its 62nd annual Convention dedicated to franchisees, its top management rejoiced about revenue growth delivered to partner hotels (+6% RevPAR growth in 2015; in a strong growth environment in North America), but one could also sense a feeling that current "tailwinds" should be capitalized on now before they pass away.
David Pepper, Chief Development Officer, said "the current [hotel] cycle is nearing its peak" in North America; indeed the continent has experienced 7 consecutive years of RevPAR growth and uncertainties tied to the current US election cycle are significant. In addition, current development pipelines are strong, and the impact of collaborative platforms on most secondary markets is yet to come. Hotel demand should still be poised to rise thanks to growth in consumer spending and consumer confidence tied to "wages going up, [...] more jobs and relatively lower gas prices" according to Steve Joyce, CEO Choice Hotels.
As a consequence, American franchisees are urged to invest in order to modernise an hotel supply that is sometimes ageing. For example, the "Truly Yours" program at Comfort Hotels urges franchisees to renovate the public areas / lobby by 2017 and guestrooms by 2019, which means 3.5 years to get a full renovation programme done.
As Europe is currently in a different phase of the hotel cycle, Steve Joyce sees "tremendous opportunities" to invest on the Old Continent, as well as in the Middle East and in Cuba, a current investment hot spot for US hotel groups. The Ascend Hotel Collection brand in particular is bound to expand in Europe, as it is about to enter the UK market. The group also seeks to cash in on the strong current trend for private rentals and therefore recently launched Choice Vacations, its own platform, available only in North America so far.
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