REPORT FROM THE U.S.—The Asian American Hotel Owners Association is threatening to not renew Choice Hotels International’s membership as a result of alleged “unfair business policies and practices.”
In a letter addressed to Stewart Bainum Jr., Choice’s chairman of the board, AAHOA outlined its charges and requested an immediate meeting with Choice President and CEO Steve Joyce and other executives to resolve the matters.
“Over the past years, we have been identifying what we believe to be a host of unfair business practices by Choice, and sharing them with your Choice executive team, namely Steve Joyce, Bruce Haase and Tim Shuy. Despite the numerous letters, emails, discussions and meetings, we feel that very few of our concerns have been addressed, or much less resolved,” the letter reads.
The letter was signed by Hemant Patel, AAHOA’s chairman; Alkesh Patel, vice chairman; Mehul Patel, treasurer; Pratik Patel, secretary; and Fred Schwartz, president.
The AAHOA board members identified three unfair practices in particular, which they claimed were the most “egregious and unfair”:
1. Choice’s Impact Policy: “It is our opinion that Choice's Impact Policy offers little or no protection to Choice's franchisees. The Impact Policy includes, for example, unworkable mandates that many believe operate as ‘gotcha’ clauses, such as the ‘good standing’ qualifier and the (80 % revenue-per-available-room) requirements that in our opinion should never preclude a franchisee from protection against encroachment.”
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2. Inflammatory statements of then-CHOC Chairman Todd Winkler against AAHOA and Asian Indian hoteliers: “As you are undoubtedly aware, during the Choice Hotels Owners Council (CHOC) Summit on March 21-23, 2010, it has been reported that the then-CHOC Chairman Todd Winkler made inflammatory and derogatory remarks against AAHOA members and Asian Indian hoteliers serving on the CHOC Board. These discriminatory statements raise concerns that Asian Indian franchisees are considered to be unqualified to serve as leaders, and incapable of being good operators, of the Choice brands.
“Even though Mr. Winkler resigned a few days after making his statements, this matter remains unsettled for many AAHOA members.”
3. The current relationship between Choice and CHOC, and the impact on Asian Indian franchisees who wish to serve on the CHOC board: “It has been reported that Choice is one of the only (and, in fact, might be the only) franchisor(s) that requires all of its franchisees who own Comfort Inn, Comfort Suites and Quality Inn brands to be dues-paying members of the advisory council known CHOC. It is our opinion and belief that Choice controls all activities of CHOC through the Bylaws and election process, and is seeking to preclude AAHOA from educating and encouraging our member franchisees to participate and actively serve on the CHOC Board.”
Choice responds
In the letter, the AAHOA board members report that they voted unanimously to not renew Choice’s membership in the organization unless these issues are resolved within the next 90 days.
“This means that AAHOA would not accept any membership, sponsorship or related funds from Choice, and would not invite or authorize your Choice representatives to appear on any panels, exhibit at our Trade Shows, or otherwise have access to our AAHOA members through our Annual Convention, Regionals or any other AAHOA-related events or periodicals, including advertising in our AAHOA Lodging Business (ALB) magazine,” the letter states.
Steve Joyce responded with the following statement:
“Choice Hotels has had a long standing relationship with AAHOA and was one of the organization’s founding members. We have worked with AAHOA over the years though different leadership and changing economic environments with the same goal of maintaining a fruitful relationship with the organization. In many cases, we have been able to work with AAHOA on specific issues and come to mutually beneficial agreements. We have a responsibility to our franchisees and guests to make sure that we are always doing the right thing for our business. We appreciate and respect AAHOAs as a business organization, it is our hope that we will be able to work out the current issues through our leadership and continue to work together in the future without public debate.”