SWOT analysis of Choice Hotels
This is a detailed SWOT analysis of Choice Hotels. It aims to examine the strengths and the weaknesses of Choice Hotels. It also aims to explore some of the opportunities and the threats concerning the company. Choice Hotels International, Inc. is an American company and is considered to be the first hotel chain as we know it nowadays and, has this status since 1941.
Choice Hotels is present in more than 40 countries with a total of 6,800 hotels with new ones opening very frequently. Its portfolio consists of hotel and motel brands such as Comfort Inn, Comfort Suites, Quality Inn, Sleep Inn, Clarion, Cambria Hotel & Suites, Mainstay Suites, Suburban Extended Stay, Econo Lodge, Rodeway Inn, and Ascend Hotel Collection (upscale brand).
Strengths of Choice Hotels
2017 has been the best year for Choice Hotels in terms of growth since 2007, opening nearly one hotel per day in the U.S., increasing its pipeline, and hosting more than 200 million guests in more than 500,000 rooms. The company signed 704 franchise agreements in 2017.
Patrick Pacious has been at the company since 2005 and will replace the very successful CEO, Steve Joyce who also has been at the top of the company since 2008. The leadership adopted by the two is viewed as charismatic and inspirational by both employees and shareholders.
Latest Satellite TV, and data centre infrastructure management software, high speed wifi throughout the hotels have been very useful for the company. Extensive use of social media and consumer interaction through a strategy which the hotel calls ‘social play’ has also been very effective.
Choice Hotels has a very diverse portfolio already. The group has established a strong brand image in overseas marketing. This is a highly appropriate strategy when developing a niche approach (Camilleri, 2018).
Profitability is an important strength to consider. The full-year net income in 2018 is projected to range between $190 million and $196 million. Income before income taxes was $46.7 million for the 2017 fourth quarter, a 7 percent increase from the 2016 fourth quarter (Choice Hotels International, Inc. 2018).
Weaknesses of Choice Hotels
Bad customer reviews
Bad customer reviews have been an issue where Choice Hotels needs to bring about significant improvement. Numerous customers have expressed their bad experience on a number of sites e.g. Trustpilot.
Choice Hotels has not been highly successful at integrating firms with different work culture. Moreover, the sales team of the hotel has been accused of being too aggressive leading to a loss in credibility (Trustpilot, 2018).
Opportunities for choice hotels
New geographical markets
Strategic alliance was announced on April 11, 2018 with Sercotel Hotels, a leading hotel operator and franchisor based in Spain. The alliance establishes the framework for the extension of Choice Hotels’ global footprint into Spain and other markets, as well as the creation of new opportunities for additional hotel development across Europe and Latin America.
New product development
Cambria and Ascend (upscale brands) have started to grow and produce dividends. The strong performance of Cambria Hotels & Suites and the Ascend Hotel Collection is due mainly to the adoption by two demographics: baby boomers and millennials (Wroten, 2018).
Threats to Choice Hotels
The competition for Choice Hotels comes from an array of big players such as Marriott International, Carlson Hotels, and Wyndham Worldwide.
While it is not specific to Choice Hotels only, a growing trend towards isolationism in the American economy can lead to similar reaction from other governments worldwide which may negatively impact on the international sales of the hotel.
The above SWOT analysis of Choice Hotels shows a number of very good strengths as well as weaknesses. The company has not suffered from the financial crises and from natural calamities in the US like flooding because they were not present in those delicate regions at the time.
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Last update: 16 September 2018
Camilleri, M.A. (2018) The Tourism Industry: An Overview. In Travel Marketing, Tourism Economics and the Airline Product, Tourism, Hospitality & Event Management, Springer, Cham
Choice Hotels International, Inc. (2018) Choice Hotels International Reports Fourth Quarter And Full Year Results And 2018 Outlook, available at: http://media.choicehotels.com/2018-02-20-Choice-Hotels-International-Reports-Fourth-Quarter-And-Full-Year-Results-And-2018-Outlook (Accessed 12 September 2018)
Wroten, B (2018) “Choice Hotels makes strategic push for upscale brands” http://www.hotelnewsnow.com/Articles/140398/Choice-Hotels-makes-strategic-push-for-upscale-brands (Accessed 12 August 2018)
Photo credit: Choice Hotels/Facebook
Author: Veeren Gowrea
Veeren Gowrea is a lecturer in Tourism & Hospitality management. He holds an MBA in Strategic Management and MSc in Human Resource Management from the University of Wales, UK. He also holds a Postgraduate Certificate in Higher Education (PgceHE) from Birkbeck, the University of London. He works as a visiting lecturer at a number of institutes in London.