Armed with a new more efficient prototype and a strategy targeting secondary and tertiary markets, Cambria Hotels is poised to not only accelerate its own growth, but also to move Choice Hotels International forward in its efforts to step up its upscale presence.
The Rockville, MD-based franchise company now has some 450 properties in its upscale portfolio between its two higher end brands, Cambria Hotels and The Ascend Hotel Collection. For its part, Cambria has roughly 60 hotels in operation and expects to open 11 this year. In addition, there are 18 properties in the active pipeline and another 75 deals that are signed, according to Mark Shalala, SVP, development, Upscale brands, Choice Hotels.
Janis Cannon, SVP, Upscale brands, Choice Hotels, detailed the company’s point of emphasis.
“For Choice overall we’re really focused on our revenue intensive unit growth strategy and so we’re really focused on upscale with Cambria and Ascend,” she said, adding that the extended stay segment and Choice’s newly launched Everhome Suites brand is a key focus as well.
Shalala pointed out that the company has invested some $715 million from its corporate balance sheet to update the Cambria brand. With a strong presence in some 36 of the top 50 U.S. markets, the company has more recently set its sights on penetrating secondary and tertiary markets with Cambria.
“Meaningful growth we think, true scale for the brand, is going to be in the secondary, leisure markets. That’s where every developer is chasing yield right now and that’s where you can find returns,” said Shalala.
Cannon underscored the point in discussing some of the brand’s recent activity.
“We’ve opened 20 hotels during the pandemic between 2020 and 2021 and those hotels have ramped extremely well. A lot of those hotels are in what have become real like leisure-focused type of destinations. That shows the strength of Choice’s contribution and how we play within that leisure business,” she said.
As an example, Cannon referenced locations like Ocean City, MD; Fort Lauderdale, FL; Madeira Beach, FL; Sonoma and Napa, CA; and most recently Calabasas, which made its debut in late March. The 125-room Cambria Hotel Calabasas marks the brand’s fifth hotel in California. Earlier in the month, the six-story, 128-room Cambria Hotel Louisville Downtown Whiskey Row opened its doors and the 127-room Cambria Hotel Austin Airport debuted in early April.
This past fall, Cambria unveiled the new prototype designed to reduce the footprint of the property by some 25,000 feet and help drive down costs for developers. The company expects to ink some 10 new Cambria prototype deals by the end of the quarter.
“We took a lot of costs out of the building with square footage. We really optimized the lobby and food and beverage operation—which was adding a lot of cost to our developers on the operating model—and really designed it where we can go into the secondary and leisure markets,” said Shalala.
“Guests want it, owners want it, and the lending community and the financial community supports it. It’s a really good story and the brand is performing extremely well,” insisted Cannon.
Shalala also noted the newest iteration of Cambria has helped lower operating costs as well and can ultimately help combat labor challenges.
“With the new prototype just because of the scope of the hotel we’ve taken about 25% of the full-time employees out of the operating model. With labor being an issue having fewer full-time employees is going to help,” he noted.
Cannon, meanwhile, further added that the brand has started offering self-scheduling for many of its employees, as opposed to traditional 8-hour shifts, in an effort to compete with the gig economy. She also noted the brand had been examining new policies and technologies even prior to the outbreak of the pandemic, which is serving it well now.
“We had piloted housekeeping on demand in November of 2019 so when COVID hit we were able to immediately roll that out. There weren’t all the internal conversations about should we do this or how’s the customer going to respond to this? We knew how the customer was going to respond to it and we knew that the text message platform was the communication vehicle that was actually preferred by the guest. So we were able to be first to market with that and I think that those kind of things have also really helped us from the guest satisfaction perspective because we really have done a lot to make sure that the guest is empowered and that they’re in control,” she said.
Choice’s Ascend Collection, meanwhile, now has nearly 400 properties. Cannon touted its growth specifically referencing last year’s strategic agreement with Penn National Gaming Inc, which netted the soft brand another 22 properties.
“We’re seeing a lot of growth with Ascend and when we added Penn National it gave us another category with casinos,” she said.