Executive Conversations: Building Resiliency with Pat Pacious, President and Chief Executive Officer, Choice Hotels International

Pat Pacious, President and Chief Executive Officer, Choice Hotels International joins Joanna Todd, AWS’ Head of Worldwide Accommodations and Lodging, for a broad-ranging discussion about the recent disruption faced by travel and hospitality companies – and his company’s response to that disruption. Choice Hotels International is one of the largest and most successful lodging franchisors in the world. Choice Hotels currently franchises more than 7,000 hotels, representing nearly 570,000 rooms, in more than 40 countries and territories. Choice Hotels is all-in on AWS.

This Executive Conversation is one of a series of discussions held with industry leaders, where we seek to learn more about their resiliency, tenacity and capacity for innovation. The series follows the publication of the AWS Travel & Hospitality E-book: “Building Resilience For The Long Run”. Filled with strategic observations, hints and tips, the E-book provides guidance for building a more resilient organization, potentially serving as a useful resource as travel and hospitality companies address both current challenges and those yet to come.

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Joanna Todd: While your business is recognized publicly by many, what’s one unique characteristic or feature that is either lesser known or understood about your company?

Pat Pacious: There are two lesser known characteristics about Choice Hotels I want to highlight. The first is what sets us apart: it’s who our owners are – 90% of our hotels are small businesses. I meet regularly with these entrepreneurs, many of whom have overcome a lot to build a legacy for their families. For them, their Choice-brand hotel is more than an investment; it’s their livelihood. Their commitment to the success of their business is unparalleled and our partnership is something that differentiates us. Our promise is to help small business owners be in business for themselves, but never by themselves.

The other aspect many do not know about Choice Hotels is we really are three companies in one. First, we are a hospitality company, representing one in 10 hotels in the United States and located in over 40 countries across the globe. Second, we are a franchise company, representing a powerful network of small business owners who franchise over 7,100 hotels. Third, Choice is a proud technology company with a cloud-first strategy dating all the way back to 2005. We provide proprietary technology, tools, and services to help bring guests to those 7,100 hotels and to help hotel owners run more profitable businesses.

JT: Many companies across travel and hospitality have been managing through a period of unprecedented disruption. What have been the biggest challenges you’ve faced during this recent period and how have you managed through them?

PP: It is no secret this is a challenging time for the hospitality industry, especially our franchisees who are facing unprecedented events, and the velocity of change has never been greater. However, I continue to be impressed by their resolve and our collective response. Our company’s purpose puts our franchisees at the center of what we do and, when this crisis began, Choice moved with incredible speed to support our owners. At the beginning of the pandemic, we ramped up our advocacy efforts at the federal level to support our franchisee’s small businesses and their employees, which are the backbone of our industry. I spoke directly to the Speaker of the House, Senate leadership, and senior Administration officials including the President and Treasury Secretary. I used these opportunities to call for expanded eligibility for relief from the Small Business Administration so franchisees could retain their dedicated workers and meet their debt service. We continue to meet with officials to advance priorities important to our franchisees.

JT: As we all prepare for the next phase of traveler or guest demand, what are some of the changes your company has taken (or plans on taking) to adjust to the current operating environment?

PP: We know the COVID-19 pandemic has dramatically changed consumer behavior, especially cleanliness expectations. That’s why we launched the Commitment to Clean initiative early on, which is aimed at boosting consumer confidence by building on our existing dedication to cleanliness. The program leverages Choice’s long-standing relationship with Ecolab and bolsters current best practice guidance related to deep cleaning, disinfecting, hygiene, and social distancing. Guests will experience a growing variety of new and improved protocols, products, and communications at our hotels, including housekeeping services being available on demand, contactless check-in and check-out, hand sanitizing stations located throughout hotels, furniture arrangements to encourage social distancing, and changes in food offerings from buffets to pre-packaged options, among several others. As part of the initiative, we also made the decision to require guests to wear face coverings in hotel common areas as an important and simple step everyone can take to help protect the safety of guests and franchised hotel employees by slowing the transmission of COVID-19. In addition, as a member of the American Hotel and Lodging Association’s (AHLA) Safe Stay Advisory Council, Choice Hotels stands united with the industry in adopting the guidelines outlined in the Safe Stay Guest Checklist, including the required use of face coverings in common areas.

JT: In the face of the current disruption to the travel and hospitality industry, we’ve observed incredible innovations coming from across the industry. How has your company innovated through these challenging times and what are you most proud of?

PP: One thing I am especially proud of during these trying times is the sheer number of people in the Choice family who lent a helping hand. We redeployed hundreds of associates from across the company to assist our franchisees. These associates helped contact owners from every hotel in the system through more than 25,000 individual consultations. When facing this adversity, we did not shut down – we stepped up to help. As a result, an incredible 90% of our hotels kept their businesses running even in the worst week of the crisis. And today, that number is nearly 100%. It’s through our commitment and efforts like this why we maintain an industry-leading voluntary franchisee retention rate of 98%.

While helping owners improve the operating efficiency of their hotels has been our focus for years, the pandemic has been a catalyst to help accelerate some of our efforts. For example, we’re aiming to lower owners’ total cost of ownership and responding to shifts in guest expectations around offerings like grab-and-go breakfast, housekeeping on demand, and contactless check-in – reflecting the reality of operating a hotel amid a pandemic. These efforts will lead to tens of thousands of dollars in savings a year for the average Choice-brand hotel.

JT: The travel and hospitality industry is incredibly resilient. As you look toward recovery, what role does technology play for your company moving forward? How do you see technology enhancing the customer experience and improving operational efficiency?

PP: Technology certainly plays a major role in the recovery, both for guests and franchisees, and we continue to explore different technologies to implement. One example of how we’re using technology to aid in the recovery is by altering the hotel arrival experience, which will have a positive impact for everyone. Guests can use an Amazon Fire tablet to view and confirm the details of their stay, meaning no one will have to share a pen or pass a paper back and forth. We’re piloting this system right now. Another example, at our upscale Cambria Hotels brand, guests can limit their interactions with hotel staff by using the Cambria Contactless Concierge Service, a text messaging service for housekeeping requests, to-go food orders, meeting room requests, and more.

For franchisees, we leveraged our Choice University online learning platform to educate our owners on the various federal programs as they came online and shared best practices around reducing their operating expenses. These efforts contributed to Choice Hotels recently being ranked the #1 organization for excellence in learning development by the Learning! 100 Awards. We’re honored to have been the only lodging company on the list.

JT: There’s much talk at the moment about how the staying experience has changed and there will be a “new normal” going forward. What does this “new normal” look like to you and how do you think the travel experience will look three years from now?

PP: While it’s hard to predict the future, I believe the road forward is paved with opportunity. That’s not to say there won’t be challenges, but we have proved these last several months we are up to the task. We believe the recovery will continue to be sporadic and regional, and there are three areas we are closely monitoring that will impact the industry:

• First is the duration and scope of any travel restrictions, which seems to be getting geographically narrower and localized as the pandemic wears on. Choice is in a great position to withstand these restrictions since 96% of our portfolio is comprised of select-service hotels that do not have bars or restaurants, which have been a particular focus of restrictions across the country.
• Second is consumer behavior. Our Commitment to Clean initiative is aimed at boosting consumer confidence to travel, while potential additional government assistance and stimulus programs can help give more Americans the means to travel.
• Finally, the national COVID-19 case count is important. The degree to which the virus spreads will depend, in part, on our collective adoption of best practices around hand hygiene, social distancing, and personal protective equipment. We believe our Commitment to Clean initiative and role on AHLA’s Safe Stay Advisory Council will help contribute to lessening the spread.

While the recent travel environment has been unprecedented, we always take a long-term view as a company. We’re not just trying to get through the next quarter or the next year – we’ve been in business for over 80 years and we’re building for the next 80.

JT: What makes you excited for the future of travel and hospitality? As a traveler or guest, where are you looking forward to visiting next?

PP: As leisure travel continues to lead the recovery, one area that excites me is the revival of family road trips. There is something to be said for the quality time you get with your family when packing your car to the brim and hitting the road. As we have seen in previous down cycles, guests are replacing lavish trips with lower-cost getaways, favoring cars instead of air travel. Choice’s strength is in leisure travel, which represents over fourth-fifths of all our room nights. In fact, the percentage of arrivals from our leisure guests in June increased by more than one-third since late March. This was largely a result of more than 2,000 of our domestic hotels being near beaches and National Parks, which are an attractive getaway for travelers looking to practice outdoor social distancing. We’re proud of our reputation as the hotel company families turn to for vacations and road trips.

As far as my own travel, my family and I just took a trip to the beach. It’s an annual tradition for us to go there in the summer to disconnect and relax. But what I’m looking forward to the most is visiting our franchisees when it’s safe. Seeing them in person and hearing their stories is one of the great joys I get in my role.

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Learn more about the new Travel and Hospitality E-book: “Building Resilience For The Long Run.”

See more Executive Conversations and industry insights on the AWS Travel and Hospitality Blog

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Pat Pacious is President and Chief Executive Officer of Choice Hotels International, Inc. (NYSE: CHH), one of the largest and most successful lodging franchisors in the world. Throughout his 15 years of leadership in increasingly senior roles at Choice, Pacious has revitalized legacy brands, launched new brands, and acquired a brand that is the fastest growing in its segment, as well as led enterprise-wide technology transformation initiatives. He has improved business delivery to hotel owners and advanced an inclusive and performance-based culture for Choice associates. Before becoming CEO in 2017, Pacious was the company’s president and chief operating officer.