SILVER SPRING, Maryland—Choice Hotels International’s Cambria Suites brand and Ascend Collection hotels continued to gain their respective footholds during the third quarter.
In discussing third-quarter results during a conference call Thursday, Choice’s president and CEO Steve Joyce said the company finalized two Cambria contracts in Washington, D.C. and White Plains, New York, with another fledgling Cambria project underway in Houston. Going forward, Joyce said, Choice will seek to develop Cambrias in “high-value markets with institutional-quality developers.”
The company plans to spend between US$5 million and US$8 million during the fourth quarter, and possibly the early part of 2012, to build out its Cambria network, Choice’s CFO David White said. During 2012, that dollar figure will grow into the “mid teens,” he said.
During a previous interview with HotelNewsNow.com, Brad LeBlanc, Choice’s VP of franchise development, said the company wants 150 Cambria’s open by 2017.
As of 30 September, Choice had 19 Cambria Suites properties in its system representing 2,215 rooms.
“We’re continuing to look for growth opportunities for the brand,” White said Thursday.
Choice executives have said previously that urban locations will be a focus for Cambria. “One of the pleasant surprises (recently) is that for urban construction projects, the financing environment is favorable,” Joyce said.
Company executives declined to identify specific returns for Cambria. The brand is outperforming its competitive set, though Joyce cautioned it can be misleading to compare stabilized hotels to hotels that are ramping up, such as the Cambria properties.
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“The ramp up of the Cambria hotels is proceeding nicely, and we are encouraged by their performance,” Joyce said.
Franchise sales
Ascend Collection inked a half dozen franchise sales agreements during the third quarter, up from three signed during the same period a year ago. The Ascend portfolio is comprised of 66 properties, 61 of which are in the United States.
Overall, the company executed 79 new domestic hotel franchise contracts during the quarter, the same number executed during the third quarter of 2010.
Joyce said the company is “happy” with its level of franchise sales.
“Our hotel franchising business remains strong,” he said.
Conversions/acquisitions
In response to an analyst’s question, however, Joyce said the company is still not seeing companies terminating hotels from their systems, which is the primary conversion source for Choice. The company executed 65 conversions during the quarter, down slightly from 68 a year ago.
“We believe that’s coming,” Joyce said of property terminations that could yield conversions for Choice. He later added, “The next few years will be dominated by conversions.”
Joyce said the company also might consider a brand acquisition if the right fit can be found.
“We’ve been scouring the brands available, and there’s just not a lot out there for sale,” he said.