The strategic plan seeks to improve the Company's competitive
position through new revenue-generating and productivity programs and by providing
franchisees the tools necessary to improve their RevPAR performance.
Two key action plans for this plank include building immediately on the Company's
success with strategic vendor partnerships and implementing property management systems in
every Quality, Comfort, Clarion, Sleep Inn and MainStay Suites hotel by the year 2000.
The Power of Strategic Partnerships
Choice's franchise system of 3,344 hotels worldwide and the more than 90 million guests
it serves annually provide a powerful attraction to other major consumer organizations
looking to work together for mutual benefit.
Choice enjoys partnerships with a wide spectrum of companies including AT&T, Visa,
American Express, Pizza Hut, Nortel, Lucent Technologies, H&R Block and Kodak, among
Choice this year created a new department, the Partner Services Group, charged with
establishing high-yield partnerships with outside companies to provide products and
services to both Choice and its franchisees.
Operating under a philosophy dubbed "4-Win," the new department seeks to
develop alliances and partnerships that seek benefits for 1) franchisees, 2) corporate
partners, 3) Choice, and 4) guests at Choice-brand hotels.
The 4-Win approach is illustrated in a partnership negotiated this year with Maxwell
House. The deal locked in extremely competitive prices, protecting franchisees from the
explosion in coffee prices during the year.
At the same time, Maxwell House won access to thousands of franchisees as potential new
customers, hotel guests gained a trusted product and Choice benefitted by association with
a major national brand.
Similarly, Choice's partnership with AT&T for in-room long distance telephone
service, Visa for bank card services and Serta for the exclusive Quality Sleeper mattress
each have provided four-way wins.
A Major Partnership With Disney
In the spring of 1997, Choice signed an unprecedented partnership with the Walt Disney
Company to promote the Comfort, Quality and Econo Lodge brands using clips and characters
from Disney's new animated feature film, Hercules.
Choice's partnership with Disney marks the first time the entertainment giant has
entered into an alliance with a hotel company and the first time it has allowed its
characters to perform in another company's commercials.
In another first, Choice entered into an agreement to cross-sell the Walt Disney World
theme park by transferring callers directly to park sales agents from Choice reservations
A Hotel-Level Initiative to Improve Profitability
Following months of intense research and development, the Company launched the most
far-reaching and important technological initiative in its history: a proprietary property
management system named Profit Manager by Choice Hotels.
The state-of-the-art system is designed to help franchisees maximize profitability and
compete more effectively by managing their rooms inventory, rates and reservations.
Among its key benefits, the Profit Manager system synchronizes each hotel's inventory
with the CHOICE 2001 reservation system, giving Choice reservation sales agents the
ability to sell every last room at every hotel.
The system also provides Choice and its franchisees with a sophisticated revenue
management function that calculates and suggests optimum rates and length of stays based
on each hotel's past performance and projected occupancy.
The Profit Manager System's Multiple Benefits
The Profit Manager system also captures important information about each guest, which
will speed registration of frequent travelers and enable Choice to compile a systemwide
database of guest histories and demographic information.
The resulting database will allow Choice and its franchisees to craft highly targeted
marketing campaigns designed to build repeat business. To outside potential partners and
vendors, it will enhance the value of a partnership with Choice.
In addition to its property management functions, the Profit Manager system includes an
automated training component that will teach line-level employees about every aspect of
hotel operations and reduce the need for off-site training.
It is expected that Profit Manager systems will be installed in every Quality, Comfort,
Clarion, Sleep Inn and MainStay Suites hotel by Jan. 1, 2000.
Because the Profit Manager system requires a full-time link with the CHOICE 2001
reservation system, Choice negotiated an agreement on behalf of its franchisees to provide
satellite communications for each hotel at a low monthly cost.
In the long term, every franchisee is expected to reap significant savings from the
satellite system because it eliminates expensive conventional telephone costs for CHOICE
2001 connections and credit card transactions.
Choice Launches New Internet Site
Expanding on the successful operation of its consumer-oriented Internet site, Choice
introduced a new site specifically designed to encourage travel agents to book more rooms
and thereby drive more revenue to franchisees.
The site, named Travel Agent City, automatically calculates commission payments, offers
detailed information on special discounts and provides tips for travel agents to improve
As a measure of their importance to the Choice system, travel agents this year
contributed $358 million to Choice franchises worldwide, a 24 percent increase over fiscal
year 1996. Travel agents account for nearly 38 percent of all bookings made through the
CHOICE 2001 reservation system.
Internet Usage Climbs
Meanwhile, more Internet users than ever visited Choice's World Wide Web consumer site
-- www.cholcehotels.com -- and used it to make online bookings. The Internet site
produced 24,346 room night sales worth $1.5 million in gross room revenue during the year.
Choice christened its home page "On the Road Online" during the year and
introduced lively new graphics featuring suitcase celebrities featured in the Company's
A planned enhancement will allow users to map trips from the front door of their homes
to the front doors of each hotel.