This sponsored content was created in collaboration with a Skift partner.
The hotel industry is poised for significant growth in 2025, with rising hotel demand and favorable economic conditions creating new opportunities for real estate developers and investors. Despite current financing challenges, Choice Hotels President and CEO Patrick Pacious is optimistic, highlighting factors such as falling interest rates, the continued popularity of road trips and remote work, and the rising number of retirees who are keen on traveling.
In an interview with SkiftX, Pacious discusses Choice’s focus on hotel conversions, upscale market expansion, and the role of emerging technologies in driving future growth across the hospitality sector.
SkiftX: What current trends are shaping the hospitality industry today?
President and CEO
Pat Pacious: We’ve been tracking four major long-term trends driving business and leisure travel to our brands — we call them the ‘four R’s.’
Number one is road trips. They remain extremely popular, with two-thirds of people in a recent survey by Deloitte saying that they planned to take one. Plus, the price of gas is currently 20 percent less than it was two years ago.
Number two is remote work. More flexible work arrangements clearly give travelers more discretion on when they can travel and allow them to blend their business and leisure trips.
Number three is retirements. The number of retirees in the U.S. is rising, with a record 4.1 million Americans turning 65 this year, and travel is by far the most desired retirement activity for Americans.
Number four is the rebuilding of American manufacturing and infrastructure, which is driving an increase in blue-collar business travel. One estimate puts the number of room nights generated by the infrastructure bill alone at between 50 and 100 million over a ten-year period.
SkiftX: How do you view the current economic landscape, and how do you expect it to affect financing for new hotel developments?
Pacious: We’re optimistic about the health of the U.S. economy, the industry, and the lending environment in the long term. With the growth in hotel demand projected to outpace supply growth for at least the next couple of years, there’s a real opportunity for smart investors to expand their hotel portfolios right now. Here’s a key reason why: interest rates are expected to continue falling, so in the time it takes to ready a new project for financing, there’s a good chance the rate environment will improve even more. Developers continue to be interested in our new construction midscale and extended-stay brands.
Additionally, when construction financing is tight, as it has been, supply growth is limited. That makes it a great time to convert an existing property, and we’re really leaning into our world-class conversion capability, leveraging our ability to work closely with owners who are attracted by our brand performance to move those projects quickly through our pipeline from signing to opening. It’s always been a key differentiator for Choice, and it’s continuing to drive growth for us and our owners.
SkiftX: How is technology impacting operational strategies at Choice Hotels?
Pacious: We pride ourselves on operating at the intersection of hospitality, franchising, and technology. This enables us to see around corners and make smart investments in our brands and our world-class franchisee success system. We’re leveraging our technological know-how and previous strategic investments on a number of exciting technology-forward initiatives that we believe will have a transformational impact on our company and our franchisees’ businesses.
We are currently deploying ChoiceConnect, our mobile-friendly owner’s portal. The new platform makes it even easier for our franchisees to manage their hotels from anywhere in the world by providing metrics for all their Choice properties in one place and enabling them to access all their Choice apps with a single click.
We’re also preparing to launch a major refresh of the Choice Hotels website and mobile app. Based on extensive customer research and feedback from our franchisees, the new version of the site will have a much more contemporary look and feel with richer, fuller content, a simplified booking process for our guests, and an enhanced ability to showcase our upscale hotels’ amenities, including dining options, pools, and spas, as well as wedding and event capabilities.
And finally, we know today’s consumers are more selective. They have more shopping options across more channels than ever before, and their online search behavior has and will continue to change. For example, TikTok, which didn’t exist until seven years ago, is now a major marketing platform, with 41 percent of Americans using it for search, including 49 percent of millennials and 64 percent of Gen Zers. With consumer habits rapidly evolving, we’re investing heavily in continuing to evolve our digital marketing strategies to help ensure that we reach consumers on the channels they use most and drive them to our direct booking channels.
SkiftX: What opportunities do you see in the upscale market segment right now?
Pacious: Our combination with Radisson Americas helped make Choice the one to watch in upscale. Our rewards members now have the ability to redeem points for stays at 1,000 upscale, upper-upscale, and luxury hotels around the world, including Cambria Hotels, now with more than 75 hotels open, an Ascend Hotel Collection, the industry’s first global soft brand. Plus, we currently have an additional 200 upscale and above hotels in our development pipeline.
The demand for upscale travel experiences is growing, and the modern upscale traveler wants authenticity, not uniformity. We’re determined to seize that opportunity by ensuring that our upscale brands stand out in what has become a sea of sameness in the segment.
That’s why we’ve relaunched our Radisson and Radisson Blu brands. From new, elevated designs to revamped food and beverage, we’re reimagining these two great brands to create a more distinctive and refined guest experience. We’re also relaunching Radisson Individuals as an upper upscale soft brand focused on full-service, boutique, and independent hotels that stand apart for their distinctive local character and superior guest service. It’s all part of our overall effort to really “up the game” in upscale by redefining our portfolio of upscale brands.
SkiftX: What key strategies is Choice Hotels implementing to drive growth?
Pacious: Choice’s growth strategy is distinct. We are not pursuing unit growth at all costs. Rather, we’re focused on growing our portfolio with more revenue-intense hotels across all of our categories and ensuring that the properties entering our system are more valuable than the ones that leave. As a result, on average, new hotels entering each Choice brand generate more than 20 percent higher revenue than hotels exiting the brand for the past several years. And we expect to keep this momentum going. In fact, the hotels in our domestic development pipeline represent a RevPAR premium of 30 percent compared to our existing portfolio.
Fueling that revenue-intense growth will help further strengthen Choice’s value proposition to our franchisees. We work to help drive their revenue up and their costs down and continue to provide them with the reliable, easy-to-use, and state-of-the-art tools they need to run their businesses.
Over the past five years, we’ve increased revenue per available room (RevPAR) for the 12 legacy Choice brands by 14 percent, grown direct online revenue by 23 percent, and increased revenue per property by 13 percent. And since our digital integration of the Radisson Americas brands last August through this June, we drove an over 30 percent year-over-year increase in reservations through our domestic direct online channels, including a more than 40 percent increase for the Country Inn & Suites by Radisson brand.
As our portfolio has grown, so has the size of our rewards program. Since 2019, we’ve added more than 25 million new Choice Privileges members, expanding the membership base to 67 million. Because members are more likely to book direct, are more likely to book a repeat stay, and require less marketing dollars to attract, that program is a tremendous driver of value for our franchisees and growth for our entire system.
So, too, are our strategic partnerships, which we’re also focused on expanding. One of the many benefits of our higher-quality portfolio of hotels is that it enables us to attract more blue-chip national travel brands. Earlier this year, we became AAA’s first new Preferred Hotel Supplier in over a decade, giving our hotels enhanced appeal and access to AAA and its Canadian Counterpart CAA’s combined 64 million members, who account for 31 percent of all paid room nights across North America.
Learn more about Choice Hotels.
This content was created collaboratively by Choice Hotels and Skift’s branded content studio, SkiftX.
