BOSTON—Choice Hotels International’s youngest brand received a promise of cash infusion from the company last week at the company’s annual convention.
Cambria Suites by Choice Hotels has a US$250-million fund to fuel growth, according to company executives who spoke during a brand session.
Both New York locations will have broken ground by third quarter of this year, said Brad LeBlanc, VP franchise development.
An agreement was announced for a primary urban location in Boston during the convention.
Choice’s investment plans are flexible at this point, but it has an aggressive growth goal of 150 properties by 2017 or 2018. The brand has 19 properties open as of 31 March 2011 and the pipeline has 32 properties. Total guestrooms open and under development is 6,395.
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Steve Stoycos |
“It’s an open slate,” said Steve Stoycos, managing director, capital markets, for Choice Hotels. “It’s not just going to be (mezzanine) loans. It could be joint-venture equity, guarantees, whatever the franchisee needs in the capital stack.”
There is already US$60 million committed to projects, but the “bucket is still quite available,” he said. “We’ll deploy the rest in the next 30 to 36 months, but it depends on the speed at which capital markets come back.”
The goal for Cambria Suites remains to be a 100% new-build brand, according to LeBlanc, but the development team has looked at a few possible adaptive reuse opportunities during the past three months.
“Our ownership and board understands the value and our ability to own real estate, but ideally it’s not our model to own with regard to building a Cambria on our own,” LeBlanc said. “Most likely, we’d get a development partner.”
Encouraging sign
Montu Patel, regional director of the Choice Hotels Owners Council and owner of four Comfort Inn and Comfort Suites properties, said Choice’s backing of Cambria Suites is encouraging. “All development deals could use this opportunity,” he said via email.
Stoycos said the Choice board of directors put a US$25-million threshold on the company’s annual investment. “It may be perceived as land risk so we’re not closing on land until it’s fully entitled,” he said.
The newest project in Boston was made through full entitlement, LeBlanc said. Other locations where this is possible include El Segundo, California, and six to eight other sites, he added.
While a full-scale update of the brand is at least two years out, Cambria Suites is modifying its look to enter urban markets, Murphy said.
• Read “Cambria Suites prepares for upturn.”
Renderings for urban public spaces were released during the convention, which depict a more contemporary feel for the brand.
According to consumer research, 40% of Choice customers are staying at Hilton Garden Inn and Courtyard by Marriott properties when Choice doesn’t have a product, particularly in an urban market, LeBlanc said.