Choice Hotels International, Inc. (CHH)

This company has problems from top to bottom. Legal, Reservations and other divisions have little or no communication between them. There is no accountability from the corporate office and when direction is given it is usually wrong. The company lacks direction and has no undrestanding of its competition. A lot of this has to do with the number of brands it has. The lines between brands is getting blurred to the point that the owners are no longer sure what the differences are. A poorly designed launch of its Sleep Inn brand in the late 90's resulted in a redesign that essentially makes it the same as other existing brands. All the problems with the Sleep brand were pointed out to Choice prior to launch and were dismissed. Will Cambria be better, do not think so...only more expensive.

Advertising has no focus, all brands regardless of ammenities lumped together. Resulting in problems for franchisees and guest complaints. Corporate is merely following Hilton and Marriott in its requirements and is placing the burden on its franchisees with no notable ROI for the property owners. Choice has been padding its bottom line via kickbacks (... marketing fees) on required vendors further squeezing franchisees. To make things even worse, Choice is also undercutting property owners on the reservation side of the business by lowering rates to guests willing to pay a $10/month fee directly to Choice. Who exactly is their customer? Seems a little shortsighted and smells of a contempt for property owners.

The one bright spot in Choice's favor is its property management system. But, now that it has been paid for...you guessed it, it's time to spend vast sums of money to replace it even though most owners like the system. According to those with knowledge of the industry, it is arguably the best out there. Does not sound like something that needs to be scrapped, maybe updated going forward. The proposed new system will take more control of properties from property owners and transfer it to Choice..there's that contempt issue again.

The most telling sign is that at a recent meeting almost 70% of current owners are not considering Choice for new properties they are planning. 7 out of every 10 existing owners are that unhappy with their product. Even franchise owners that agree with the changes corporate is making throughout the brands are extremely angry with the actual implementation and the gouging that is taking place. Though there are mor problems, the issues discussed to now indicate that this company need some new leadership and needs to take a hard look at the direction it is heading or it is one startup away from losing a significant number of its properties as their current agreements expire.