Editor's note: As part of our year-in-review coverage, HotelNewsNow.com from 21-30 December will revisit and update the most-read articles from the site’s most popular categories. Today’s entry looks back at the 30 March article “11 Choice-branded hotels lose franchise licenses,” which was the year’s most-read article from the Deals category.
REPORT FROM THE U.S.—Choice Hotels International and Summit Hotel Properties have each moved on since Summit was stripped of nearly a dozen franchises licenses by Choice in March.
The franchises covered four Cambria Suites hotels, three Comfort Inn hotels, three Comfort Suites hotels and a Comfort Inn & Suites hotel in a region stretching from West Virginia to Idaho.
Choice executives were angered over a relationship struck between Summit and InterContinental Hotels Group that gave IHG an exclusive right for five years of first offer to franchise or manage any unbranded hotel bought by Summit that the real-estate investment trust decides it wants to brand.
During an earnings conference call on 1 May, Choice CEO and president Steve Joyce was asked to elaborate on the termination of the franchise agreements.
He said Choice felt compelled to terminate the contracts because of contractual breaches “and material misrepresentations and omissions.”
“We had a long relationship with Summit, and we'll remain open and committed to resolving the issue in a conclusive and productive manner,” he said.
The hotels that lost their franchise agreements were eventually rebranded. While 11 properties lost agreements, there were a total 12 franchises that changed because the company’s two-building, dual-branded, 111-room property in Twin Falls, Idaho, was converted to an AmericInn & Suites and Fairfield Inn & Suites on 15 April. Summit has entered into arbitration with Choice to settle outstanding claims from the loss of the franchise agreements.
The rebranded hotels are:
| New brand | Former Choice brand | Location | Rooms | Completion |
| Holiday Inn | Cambria Suites | Boise, Idaho | 119 | Q2 2011 |
| SpringHill Suites by Marriott | Cambria Suites | Bloomington, Minnesota | 113 | Q2 2011 |
| DoubleTree by Hilton | Cambria Suites | Baton Rouge, Louisiana | 127 | Q4 2011 (est.) |
| Country Inn and Suites | Cambria Suites | San Antonio | 126 | Q2 2011 |
| Fairfield Inn & Suites by Marriott | Comfort Suites | Fort Worth, Texas | 70 | Q2 2012 (est.) |
| Holiday Inn Express | Comfort Suites | Charleston, West Virginia | 67 | Q4 2011 (est.) |
| AmericInn & Suites | Comfort Inn & Suites | Twin Falls, Idaho | 52 | Q2 2011 |
| Fairfield Inn & Suites by Marriott | Comfort Inn & Suites | Twin Falls, Idaho | 58 | Q2 2012 (est.) |
| AmericInn & Suites | Comfort Suites | Lakewood, Colorado | 62 | Q2 2011 |
| AmericInn & Suites | Comfort Inn | Salina, Kansas | 60 | Q2 2011 |
| AmericInn & Suites | Comfort Inn | Missoula, Montana | 52 | Q2 2011 |
| AmericInn & Suites | Comfort Inn | Fort Smith, Arkansas | 89 | Q2 2011 |
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Moving on
Since the dust up, Choice has moved forward with its growth strategy, particularly as it pertains to Cambria, one of the brands involved in the Choice-Summit dispute.
During an interview in October, Brad LeBlanc, VP of franchise development for Choice, said the company’s goal is to have 150 Cambria’s properties open by 2017. Choice earmarked a US$250-million fund to fuel growth of the brand earlier this year, a move similar to ones made by Marriott International to help grow the Courtyard brand and Hilton Worldwide to help grow the Hampton Inn and Suites brand when each of those brands were launched.
As of 30 September, Choice had 19 Cambria hotels in its system representing 2,215 rooms.
“We’re continuing to look for growth opportunities for the brand,” Choice CFO David White said during the company’s third-quarter earnings conference call in October.
Summit acquisitions
Summit is looking for growth, too. The REIT has acquired five properties since going public in February 2011.
Most recently, since being stripped of the franchise agreements, Summit acquired the 90-room Courtyard by Marriott, El Paso, Texas for US$142,000 per room.
“We continue to work closely with our hotel management company to recover as quickly as possible from the unforeseen disruptions at the 11 rebranded hotels,” president and CEO Dan Hansen said in a news release in November when the REIT announced third-quarter results.
“The effects of the transition of hotel management that negatively affected hotel margins and earnings during the second quarter continued to affect the third quarter but at a significantly reduced rate,” he said. “We expect this to diminish in the fourth quarter. We’re encouraged that occupancy has remained stable as room rate increases. Our management companies are pushing rate as aggressively as they can in this difficult economic environment. Margins remain a primary focus, and we expect to see improvement as we continue our transition from a private to a public company.”