By Nicole Di Tomasso
NIAGARA FALLS, Ont. — Choice Hotels Canada’s (CHC) 2022 Fall Conference took place on Sept. 28 and 29 at the Fallsview Casino Resort in Niagara Falls, Ont., bringing together approximately 400 attendees. It was the first time since 2018 that the conference has been held in person. This year’s theme was “GO” and featured guest speakers, breakout sessions and a presentation from CHC’s leadership team, with the goal of providing updates, educating franchisees and networking with peers and qualified vendors.
“The pandemic has made us stronger, more resilient, more adaptable and poised for a new level of success,” said Brian Leon, president and CEO of CHC. “The tough times re-affirmed how closely linked we all are and how we share similar values, concerns, successes and setbacks, and encouraged us to work together within the company, within the industry, with our vendors, with government and with public-health officials. Through the extraordinary efforts of our franchisees, our [hotel property] teams and our Choice Hotels Canada team, we have become collectively stronger. We’ve survived and it’s time to thrive.”
The conference kicked off with a presentation from CHC’s leadership team, along with several CHC subject matter experts, to touch on a variety of topics, including procurement, revenue management, customer acquisition, sales, loyalty and more. Speakers included Brian Leon, president & CEO; Karen Tam, CFO and corporate secretary; Julie Chan-McConnell, senior director of Commercial Strategy & Performance; Rob Alldred, national director of Franchise Services; Steven Gilbert, director of Procurement; Harpreet Kahlon, director of Revenue Management & Distribution; Katie MacDonald-Serna, director of Loyalty & Customer Engagement; Jason Redding, director of Digital Commerce; and Derrick Britt, director of Sales Canada. A short video message was also shared from Pat Pacious, president and CEO of Choice Hotels International, who highlighted the recent acquisition of Radisson Hotels Americas in August 2022. The transaction added nine brands to Choice Hotels International’s portfolio, including Radisson Blue, Radisson, Radisson Individuals, Park Plaza, Radisson RED, Country Inn & Suites by Radisson, Park Inn by Radisson, Radisson Inn & Suites and Radisson Collection.
Overall, Leon said CHC has added 58 new hotels since 2019, and more than 25 new hotels since the beginning of 2021. Additionally, CHC’s portfolio set financial performance records this year in both July and August with regard to Revenue Per Available Room (RevPAR) and total gross room revenue. The company has seen strong RevPAR growth in comparison to its competitors and is outperforming the industry by almost 11 percentage points versus 2019. The company’s national index also gained 180 basis points versus 2019.
“We’ve got a strong pipeline of under-development hotels, including our new prototype Comfort properties that will translate to a continuation of this growth in the coming months and years,” said Leon. “Our new Parafin platform enables us to create preliminary design plans for a new-build hotel to prototype standards on any site in the country in just a few minutes. It’s some incredible technology that saves hotel developers time and money. We’re the only ones in the industry that have it and provide it at no cost to assist in new projects.”
“We’re trying out digital registration tablets at hotels,” said Redding. “We have a pilot that started this summer with a handful of hotels and we’re looking to [collect] feedback generated from our market. That feedback is going to extend into the next phase. We know our friends south of the border are already testing the mobile check in through the Choice mobile app. The next step is mobile keys. We know that’s [what the guest] is looking for. To date, we’ve seen more than 250,000 [app] downloads in Canada and that number is still climbing.”
“To take the fear out of local sales, we created the Local Sales Library,” said Britt. “Just start by completing and submitting the local sales assessment on InTouch. From there, your regional director will [contact] you and provide suggestions on modules that will be most helpful. There’s video tutorials for each of the sales cycles from lead generation and prospecting to connecting and closing the sale.”
“[With regard to Choice Privileges], we’re working on points transfer and bringing online points plus cash to the Canadian members,” said MacDonald-Serna. “We’ve also added 20 new gift card redemptions, [bringing the total to around 50]. On the flip side, we’re partnering with Neil Financial, a digital bank based out west, a spend-and-get app called PayMe and CIBC. We’re excited to see what financial institutions can do, mainly because our CIBC [research indicated] only two per cent of their card holders were staying at our hotels, so being able to acquire new members through their channels is a great benefit for everyone.”
Other highlights included CHC’s new Performance Dashboard to help franchisees stay up to date with property performance, with features such as key performance indicators (KPIs), STR data, geographic information systems (GIS) and global sales efforts, as well as its Commitment to Green program, launched in May 2022, which focuses on how the company can contribute to a more sustainable future for the planet while also being mindful of owners’ bottom lines.
The first day continued with a presentation from Douglas Porter, chief economist at BMO Financial Group. During this session, he provided an overall update on the economy, including the interest-rate environment.
Porter said “a normal year for the global economy, excluding inflation, will experience growth of roughly 3.5 per cent, but we’ve had nothing close to an average year recently. Two big forces that have offset that growth is the rolling lockdowns in China and the inflation backup and interest rates.”
In North America specifically, Porter said the region has already tipped into a recession. “The odds of a no-break downturn in the Canadian/U.S. economy in the next 18 months is slightly above 50 per cent,” he said. “We don’t see an outright decline in 2023 for the full year, but we do see two negative quarters at the start of next year, which qualifies as a mild recession.”
For next year’s average, Porter predicts inflation to average out at 4.5 per cent in Canada and three per cent in the U.S. “That’s uncomfortably high,” he said. “We’re currently at seven per cent, so we’re still a long way from normal levels between one and three per cent.”
There are five factors that have been driving inflation: energy prices, travel prices (hotel rates, car rental prices, airfares, et cetera.), supply-chain issues, global food prices and the housing boom. According to Statistics Canada, hotel/motel rates are up 33 per cent, car rental prices are up 20 per cent and airfares are up 16 per cent over the last year.
After lunch, attendees could choose to sit in on a variety of breakout sessions. The Hotel Valuations: Past, Present and Future panel, moderated by Graham Marsh, director of Franchise Development at CHC, featured Brian Flood, VP, Cushman & Wakefield; Monique Rosszell, senior managing partner, Montreal and Toronto, HVS; and Alam Pirani, executive managing director at Colliers. Together, the panellists discussed the future of hospitality investment.
“Value is really driven by income,” said Flood. “The way we typically approach valuation is to look at the performance of a hotel over time. We’re beginning to see more trades, so our outlook is quite positive, but we recognize there’s still bumps in the road with inflation and rising interest rates.”
Rosszell said valuation is also based on lending parameters. “That’s a big function of where the value is derived from,” she said. “From the cash flow perspective, we’re going back to 2019 performance. That is the benchmark that we expect [owners] to get back to. For [owners] who are afraid because their cash flows in 2020 and 2021 haven’t been there – they don’t play a role. We saw a little bit of compression in terminal cap rates, but now with the increase in inflation and interest rates, we’re seeing [slightly] higher discount rates.”
“In our asset class, there’s no shortage of capital chasing product. It’s really a function of the availability of good product,” said Pirani. “We’ve also got a very mature lending market. There are so many banks, credit unions and financial institutions that are supportive, which helps establish and maintain value.”
Overall, the panellists agreed hotel valuations depend on the product and the market, highlighting that smaller, tertiary markets have been seeing increased demand and opportunities for investment.
Similarly, the Access to Capital: Acquisitions, Renovations and Construction panel, also moderated by Marsh, featured Steve Hedington, president and principal broker at Prime Resource Finance; Cam Woof, AVP, Hotels & Syndication at CWB Franchise Finance; and Mark Kay, president and principal broker at CFO Capital.
“Roughly 75 per cent of institutions across Canada are back to lending for acquisitions, renovations, construction and conversions,” said Kay. “The activity is there, but there’s different underwriting requirements.”
Woof agreed. “The capital is there, but how much capital a bank will dedicate to a specific hotel project is changing. A lot of that has to do with expected returns from the hotel and what NOI margins hotels will be able to operate. Combined with that, our current interest-rate environment is putting pressure on debt service coverage, which limits the amount of mortgage a hotel business can support.”
For those looking for a loan, Hedington said sharing as much information about the transaction with a lender is key. “If you don’t have everything in a complete package, you’re going to get pushed back in the queue. Lenders also need to be realistic with the borrower. Relationships are important. If you want to grow and planning to operate five hotels down the road, the relationship with your lender is key to get equity out of those properties.”
Other breakout sessions covered ChoiceU resources and professional development tools, the insurance landscape and revenue management through ChoiceMAX. The first day wrapped up with a presentation from Kent Hull, regional director of Franchise Services at CHC, who explored how the Digital Call Forwarding program can drive better GIS scores and increase bottom lines through increased Average Daily Rate (ADR) at hotels.
The second day opened with guest speaker Theresa Syer, founding partner of the Syer Hospitality Group Inc. During her presentation, Syer offered a renewed approach to customer-experience management to ultimately earn both customer and employee loyalty.
Up next was guest speaker Emile Gourieux, Hotel Sector Business Development Executive for STR. He provided attendees with a snapshot of where Canada’s hospitality industry is in the recovery, with special attention paid to Choice Hotels and how it has fared in relation to the rest of Canada’s hotels.
Gourieux said at the onset of the pandemic, room demand plummeted to around 300,000 room nights a week in mid-April, but demand has since taken off. “The week ending Jul. 30, 2022 was a landmark week. We finally surpassed 2.4 million room nights, and it was the first time since the beginning of the pandemic that we surpassed 2019 demand levels,” he said. “As we look across Canada’s provinces, there’s still a ways to go before we get back to true occupancy.”
Currently, Newfoundland is the only province that has surpassed its year-to-date occupancy levels over 2019, followed by Alberta and Saskatchewan. Quebec, on the other hand, has the furthest to go for occupancy recovery. Gourieux said the province is almost 19 per cent off its pre-COVID occupancy before this August year-to-date.
Gourieux went on to say that ADR was a completely different story. “Every province across the country is seeing higher ADRs than they were in 2019. Admittedly, we have to take inflation into account when we’re looking at this rate growth. When rate growth is adjusted for inflation, the growth disappears. Labour shortages are playing a big part in this. Many hotels don’t have the staff to turn over all the rooms. [However], we’re definitely moving in the right direction.”
When looking at Choice properties in comparison to Canada’s hotels at large, Gourieux said there are two key takeaways. “First, even though Choice is outclassed in ADR and RevPAR, [referring to a lot of luxury hotel data across Canada], it is experiencing much higher growth in both of these KPIs, which is helping Choice hotels mitigate inflationary pain. Choice hotels are closer to true recovery when adjusted for inflation, with more than 8 per cent RevPAR growth over 2019, while Canada as a whole is still down by nearly three per cent. Second, Choice hotels are much closer to occupancy recovery than the rest of Canada. Pre-COVID, Choice hotels occupancy was about seven points lower than Canada, but now that gap has shrunk to only two and a half points.”
Then, Gourieux broke down the KPIs further by asset class. Choice mid-scale hotels are currently only $8 behind Canadian mid-scale properties in ADR and the difference in RevPAR is only $2. Additionally, Choice economy hotels are only a tenth of a point behind in occupancy and $9 behind in ADR compared to the rest of Canada, but have grown RevPAR over 2019 by more than 20 per cent, which Gourieux said is nearly three times the amount that the rest of Canada’s economy hotels have grown their repertoire.
Shortly after, Derrick Britt, director of Sales Canada at CHC, moderated a sustainability panel with Sandra Piroteala, integrations manager at Spark Power Corp; Fawn Nesbitt-Frei, director of Corporate Sales at Direct Travel; and Steven Gilbert, director of Procurement at CHC. During the discussion, Piroteala and Nesbitt-Frei shared some of their recent sustainability initiatives as key partners of CHC.
Overall, Gilbert said Choice hotels have made big strides with regard to waste management, LED lighting and more. The company has ongoing conversations with its board members and sustainability champions about improving its current initiatives. One of those initiatives could be the installation of electric vehicle (EV) chargers, provided by Spark Power.
“Choice can continue to provide Spark Power with value through EV chargers,” said Piroteala. “I hope that I can push [owners] to install EV chargers on site. It’s a win-win when you look at the cost of fuel. Additionally, the cost of maintenance is close to nothing – less parts, less reasons to break. It costs roughly $2,500 to install a Level 2 EV charger.”
Additionally, Nesbitt-Frei said, “Recently, we partnered with Direct ATPI Halo to assist our clients in measuring the footprint that they’re contributing for their travel, car, air and hotel, but also to offset that in participation of projects worldwide. If travellers are comparing two competing brands, they might be willing to pay a higher cost if there’s better [sustainability] initiatives going on at the property. Price isn’t always the first thought, they’re considering the larger impact.”
Furthermore, the second day of breakout sessions included discussions about staying connected with the digital guest, cultivating a culture of local sales excellence, new Choice Privileges initiatives, energy efficiency and more.
The fall conference wrapped up with CHC’s annual Awards for Property Excellence (APEX) Gala. This year, 11 hotels and individuals across Canada were recognized for performance, commitment to guest service and operational excellence.
The 2022 national APEX winners include:
- Highest Guest Satisfaction (Top LTR): Quality Suites, Drummondville, Que.
- Marketing Star Award: Jordan Lanthier, director of Sales and Marketing, Clarion Hotel & Suites, Winnipeg
- Choice Privileges Ambassador of the Year: Nancy Tudor, general manager, Quality Inn & Suites, Lethbridge, Alta.
- Sales Excellence Award: Carla Carlson, general manager, Comfort Suites, Kelowna, B.C.
- Leader of the Year Award: Dharmesh Patel, general manager, Quality Inn, Leamington, Ont.
- Developer of the Year Award: Stephanie Giannoulis and Peter Giannoulis, owners, Halifax Tower Hotel & Conference Centre, Ascend Hotel Collection and Comfort Hotel Bayer’s Lake, Halifax
- Renovation of the Year Award: Hotel Royal William, Ascend Hotel Collection, Que.
- Best New Entry – New Build Upper Midscale/Midscale Brands: Comfort Inn & Suites, Carleton Place, Ont.
- Best New Entry – Conversion Upper Midscale/Midscale Brands: Clarion Pointe Quebec Airport, Que.
- Best New Entry – Economy Brands: Econo Lodge, Cochrane, Ont.
- Best New Entry – Ascend Hotel Collection: Halifax Tower Hotel & Conference Centre, Ascend Hotel Collection, Halifax.
Additionally, The Hall of Fame Award, presented only in special circumstances, was presented to Nina and Sam Kassam. The duo came to Canada from Tanzania in the 1970s and created The Sterling Group by the 1980s. Over the years, the family-owned company has owned and operated many Choice properties. Currently, the company operates six properties in Canada.
“Every year, we look forward to honouring individuals for their unique contributions and recognizing standout hotel properties – all of which set the bar for hospitality high,” said Leon. “It’s important to spotlight and celebrate industry leaders both nationally and locally in our Choice Hotels communities.”
