Choice continuously strives to deliver more value to its franchisees by providing proven operational "success systems," professional staff support, worldwide reservations and high-impact consumer marketing.

Fulfilling that commitment, in turn, positions Choice for continued prosperity.

The Company's service philosophy is to provide premium franchise support, from the first day the franchise contract is signed through the operating life of every hotel.

   A Strategy for Future Profits

This year Choice undertook a major self-examination to evaluate three key areas: 1) consumer perception of its products, 2) its performance versus the competition and 3) the satisfaction of franchisees.

That effort culminated in the creation of a three-year strategic plan designed to enhance franchisee profitability by sharpening the Company's focus on consumers, realigning corporate resources and implementing new growth and service strategies.

The plan is driven by six specific strategies:

I. Organize for success
II. Optimize the brand portfolio
III. Increase market penetration on a strategic versus an opportunistic basis
IV. Improve margins through increased productivity
V. Profitably grow international operations
VI. Leverage the spinoff of franchise operations from company-owned real estate

   New Organization Emphasizes Support

Choice began the implementation of the strategic plan with the establishment of five regional service groups to bring its support staff even closer to domestic franchisees.

Five regional offices are being established: Northeast, Southeast, North Central, South Central and Pacific. Each will be managed as an independent profit center under a vice president of franchise operations.

Field staff teams will provide expertise in sales and marketing, hotel operations and development. Beginning with the new fiscal year, all field personnel will address both sales and operational issues.

Newly designated franchise service directors will serve as single points of contact for each operator, with the primary role of driving revenue to each individual hotel.

By eliminating the assignment of multiple field staff representatives to each hotel, there will be a ratio of one representative to approximately 45 hotels in comparison to the previous ratio of one to 90.

   Realignment to Improve Customer Satisfaction

The Company's reorganization also is based on the belief that satisfying consumers will make franchisees and Choice more profitable.

For that reason, Choice has combined brand management, new product development and traditional marketing to create more consumer focus and drive demand for Choice's existing and future products.

The Marketing department now is responsible for all consumer-driven activities including setting strategic direction and standards for each Choice brand.

   Making Quality a Consumer Issue

In an effort to align standards for each brand with consumer expectations, Choice is revising its quality assurance review process by emphasizing issues important to guests as determined by periodic guest feedback in every hotel.

Working with the leadership of its franchisee organizations, Choice is developing an entirely new model for evaluating quality and service from the guest's perspective.

Field staff will mobilize to help hotels that demonstrate the need for improvement. Owners will be counseled on the most effective tactics for resolving deficiencies, whether through training or physical plant improvements.

At the same time, the Company will intensify standards enforcement to ensure hotels meet consumer expectations. For example, a revised default process will reduce significantly the length of time required to terminate properties that fail basic standards.

The objective is to expedite the termination of hotels that do not fulfill guest expectations by reducing from 180 days to 90 days the period between initial default notification and termination from the system.

   Year-Round Marketing Drives Revenue

Choice again distinguished itself as one of the industry's most creative and innovative marketers, rolling out a variety of award-winning advertising and publicity campaigns designed to deliver the greatest impact for each franchisee dollar invested.

Suitcase celebrity commercials featuring Ivana Trump, Deion Sanders, Dennis Rodman, Ricardo Montalban, Jimmy Connors, Jonathan Winters, Ed Koch, Victor Kiam, Chi Chi Rodriguez and Brett Favre spurred record increases in reservations, call volume and sales.

Choice this year introduced a special educational advertising campaign designed to help travel agents sell key markets and Choice brands. The year-long program, called A Choice Education, included advertisements in travel agent trade publications and seminars held nationwide.


  A Year of Firsts     Financial Highlights     Letter to Our Stockholders     Focusing on the Franchisees     Optimizing the Brand Portfolio     Increasing Market Penetration     Improving Margins     Growing Overseas Operations     Leveraging the Spinoff of Franchise Operations