REPORT FROM THE U.S.—Choice Hotels International is betting a lot of dough on its foray into the upscale segment—$250 million, to be exact—and it appears the growth of the Cambria Suites brand is starting to pay off.
Ground will break on at least six Cambria Suites hotels this year, on top of key openings in highly visible cities such as Miami and White Plains, New York. Steve Joyce, CEO of Choice, said opening hotels in primary urban markets helps the brand self-market itself because it becomes more visible to both guests and developers.
White Plains, Joyce said, has a high number of corporate headquarters and a meeting planner from each one of those corporations will be given a tour of the hotel with the hopes of signing on visitors and corporate meetings.
Joyce said three or four years of “tough sledding” are in Cambria’s rearview mirror and the brand’s growth is beginning to accelerate as initially planned.
“We are really starting to hit our mark,” he said. … “After working for a long time on a number of deals that took a long time to come to fruition, we now believe we’ll have 30 hotels either open or under construction by the end of this year.”
Also, Joyce said there will be 30 Cambria hotels under construction within the next 18 months.
“We’re getting a lot of developer interest with a lot of support from the Choice balance sheet,” he said. Choice promised a cash infusion of $250 million in May 2011, aimed toward growing the Cambria brand.
|
| An artist’s rendering of the public space in the Cambria Suites Chelsea in New York. |
Growth spots
Construction for a Cambria Suites in Washington, D.C., broke ground earlier this year. Construction for hotels in Plano, Texas, and Fargo, North Dakota, will break ground in June. A property in West Orange, New Jersey, will break ground later this summer, as will a Cambria Suites in Scottsdale, Arizona. Construction will begin on a Cambria Suites in Rockville, Maryland—adjacent to the company’s new headquarters—later this year.
The company has signed additional deals for the growth of Cambria Suites but has yet to disclose further locations. Some of the upcoming deals are with development companies that have already built Cambria Suites hotels, such as Concord Hospitality, Meyer Jabara Hotels, O’Reilly Hospitality Management and Sun Hospitality, Joyce said.
As one of the more unique deals, Choice last week announced a multiunit agreement with Fillmore Capital Partners LLC, a large-scale private-equity pension fund manager. The company has identified “two or three” locations where it would like to build Cambria Suites hotels, Joyce said.
Joyce said the importance of signing a deal with institutional investors is it could provide an exit strategy for other developers who don’t want to be long-term holders of the assets.
“As developers look at investing in Cambria, they like the product, they like the energy behind it, they like the fact that we’re committed to it—one of the questions they ask is, ‘What’s our exit?’” he said. “If you’re not attracting institutional capital, they begin to worry about the exit. Fillmore and the major pension funds they represent is sort of a “Good Housekeeping Seal of Approval” that’s there’s money out there that will take me out of my project three to five years from now and be a long-term holder of it.
“The fact that we’re attracting pension money to this brand this early on is a really good sign for other developers,” he continued. “That spurs more confidence and more interest.”
Brand strategy
Michael Murphy, senior VP of upscale brands at Choice—which includes Cambria Suites and the Ascend Collection—said he’s constantly being asked when all the promises of growth for the brand are going to come to fruition.
“It is happening,” he said. “The deals … are beginning to transact. They are signed deals and are moving forward with them.”
Murphy also hears feedback from franchisees about marketing the brand stronger because it’s new and could use more awareness. Many travelers aren’t aware of it, franchisees often say.
But Murphy said he’s confident the marketing strategy of driving consumers to Cambria Suites through ChoiceHotels.com and through the company’s Choice Privileges loyalty program is the way to go.
“Every startup brand is going to want to have a national campaign,” he said. “It’s a dangerous proposition because when you think about the customer in that area, if you don’t have a hotel in (Los Angeles) and you do a national advertising campaign and you make this promise to this guest in LA that you have this brand called Cambria Suites and they never get to see it, you basically wasted that money and you basically wasted that opportunity to connect with that customer really for life.”