Despite some continuing challenges, hotel brand companies performed well in 2024. Hotel Business caught up with Matt Campbell, COO, My Place Hotels of America; Dominic Dragisich, EVP, operations & chief global brand officer, Choice Hotels International Inc.; Zack Gharib, president, Red Roof; and Greg Juceam, CEO, Extended Stay America, to discuss what went right and their forecasts for the year ahead.
—Adam Perkowsky
Did 2024 live up to your expectations? Why or why not?
Campbell: It is very difficult to illustrate achievements as met or unmet expectations with a black-or-white answer in a growing company with a dynamic landscape of stakeholders, team members and guests. We routinely set high expectations in every aspect of our company culture, and we focus on maintaining a great environment to meet performance expectations internally. External factors can provide headwinds or tailwinds for our achievements, but I try to avoid having these being the primary determining factor. Our teams did a great job rising to meet challenges and capitalizing on opportunities this year, so internally, I’d say yes, 2024 met and, in many ways, exceeded my expectations. As far as expectations of the world around us and the hospitality industry at large, well, I think we continued to see a rebalancing of market dynamics and a stabilization of economics. At the end of the day, I would certainly say we’ve remained on the right track with expectations.
Matt Campbell, My Place Hotels of America
Dragisich: We’re having another year of strong growth, driven in no small measure by the robust performance of the Radisson Americas brands, which have seen significant improvements in online traffic and booking conversion rates since the digital integration in 2023. We also continue to lead in the extended-stay segment, celebrating the opening of our 500th domestic extended-stay property. We are driving RevPAR growth that is outpacing the industry’s upscale segment and relaunched three of our upscale and upper-upscale brands, all of which offer developers brands that stand out, draw repeat stays from guests and drive more return on their investments. Overall, we’ve accelerated our global unit growth, expanding our hotel pipeline to a record 110,000 rooms as of the end of Q3, with 99% of those rooms in our more revenue-intense brands. Plus, our unique strategy has resulted in new hotels added within a brand that are generating, on average, nearly 20% higher royalty revenues than hotels exiting the brand. We’ve also increased our Choice Privileges membership base to more than 68 million, as of the end of Q3, and expanded our strategic partnerships, becoming AAA’s first new Preferred Hotel Supplier in a decade. Finally, we made major strategic investments in franchisee tools and platform capabilities that we’re confident will help us deliver results across all of our brand segments for years to come.
Gharib: I became president of Red Roof in the second quarter of this year, so by that time, 2024 had already exceeded my expectations. I immediately got to work meeting our team and conferring with our franchise advisory council and owners to assess how we could elevate Red Roof. As the year progressed, we unveiled a prototype for newly built Red Roof hotels, refined our culture and introduced our core values, or HABITS, as we call them—which empower our people to thrive and deliver results. This year, we also completed the rollout of HotelKey’s property management system and our enhanced website design. We forged new partnerships with organizations such as Sojern, bolstered our executive team with new appointments and continued to deliver results to our community of franchisees. Considering those accomplishments, we have shown our franchisees a clearly defined vision of the future and how we will help them remain leaders in the economy and extended-stay segments.
Juceam: The short answer is yes. While the economic environment presented challenges, such as high interest rates and inflationary pressures, it was another successful year at Extended Stay America. We gained market share, expanded our franchise division and achieved nearly all our strategic goals—resulting in one of the strongest performances in our 29-year history. This success reflects the dedication and hard work of our entire team.
What are the biggest challenges facing the industry, and how is your company helping your franchisees to overcome them?
Campbell: Our mission statement is founded on three principles: Welcome, Build & Serve. We are proud to have this presented in the lobby of every hotel. A big element of our value proposition is service at every level, so we stay as engaged as we can with our franchise operators to serve as their support system, innovation facilitator and problem solver. The challenges we’re all facing are broad, from labor and service delivery to capital and risk management, and the complexities of business administration are ever-increasing. If we can simplify and economize operations and administration for our franchise operators, more of their efforts and focus can be placed on the most important elements of hospitality, which need to be guest service and the guest experience.
Dragisich: We’re aware that our franchisees are facing challenges, including high costs for goods, utilities, labor and other items; moderating RevPAR growth across the industry; and dropping but still high interest rates. We are constantly working to help drive our franchisees’ profitability up and their operating costs down, while providing them with the reliable, easy-to-use tools they need to operate their hotels as efficiently as possible. For example, we recently deployed a new, mobile-friendly owner’s portal, ChoiceConnect, and launched a major refresh of our website and mobile app that will allow us to better showcase our hotels and the amenities they offer, helping to drive even more direct bookings to our franchisees.
Dominic Dragisich, Choice Hotels International Inc.
Gharib: Uncertainty is the greatest challenge facing our hoteliers today, and it’s our responsibility as a brand to help ensure our people can compete regardless of the headwinds they may face. Staffing shortages, rising costs of business, high interest rates and increased competition from other hotels with a vested interest in the economy space remain challenges—these challenges are not new for our segment. Red Roof has committed to helping franchisees confront these challenges by incorporating cost and operational efficiencies into our new property prototypes. The Red Roof and HomeTowne Studios by Red Roof prototypes are designed to lower the cost of developing a fantastic hotel product. Across the organization, we provide end-to-end support that all hoteliers need.
Juceam: Despite slowing inflation and a few rate cuts thus far, we continue to see higher interest rates as a primary challenge throughout the industry. ESA remains laser-focused on keeping costs reasonable for owners to ensure affordability for guests. Because Extended Stay America’s largest owner is affiliated with the brand, we “eat our own cooking,” which aligns us with our franchisees because we focus on implementing standards and programs that resonate with guests and hotel investors alike. This structure contrasts sharply with “asset-light” hotel brands, where franchisees are often asked to shoulder the costs of new standards and programs without first seeing clear returns. Additionally, we do not charge hotel owners “loyalty fees” for award miles or individual traveler point programs that often fail to provide value, reducing the financial burdens on franchisees relative to the global brand conglomerates.
What properties are in your pipeline that are expected to open in 2025?
Campbell: We have projects dotting the map from California to Florida, but we have found ourselves with a bit of concentration of growth in the southeastern part of the country. As of now, we’re looking at about a dozen properties that are certain to come online in 2025, which is a great percentage growth for our system, and we’ve got a handful more hotels that are 50-50 on whether they’ll make it by year-end 2025. It’s going to be a great year for new locations for My Place. I’m always wanting more hotels to open, but I’m most excited that we are welcoming a few new states to the roster, and we continue to connect the dots from one location to the next. 2025 will be another exciting year for My Place Hotels.
Dragisich: We have a number of properties in the pipeline that we’re very excited about, including a Cambria hotel in New York City’s iconic Times Square, a Park Inn by Radisson in San Antonio and Radissons in Panama and San Luis Potosi, Mexico, just to name a few. We recently repositioned the Park Inn brand in the premium value space, slotting in just below our Quality Inn brand, and we’re thrilled to see the strong interest from developers as we work to grow that brand. In extended-stay, we ended Q3 with more than 350 properties in the pipeline, including 66 Everhome Suites hotels. We look forward to opening many of them in the new year as we continue to lead from the front in that fast-growing segment.
Gharib: We anticipate the conversion market for economy hotels will remain strong throughout 2025, and we are in conversation with franchisees to discuss opportunities to bring new properties into Red Roof’s portfolio. We expect to grow our portfolio by 6%-8% in the coming year. This is particularly true for our HomeTowne Studios brand. Our industry is beginning to understand the positioning and resilience of extended-stay hotels across chain scales, and HomeTowne Studios remains a priority for growth—both through conversion and development of our new-build prototype. In 2024, we opened the first HomeTowne Studios new-build in Tampa, with more in the pipeline anticipated to open in the coming years.
Greg Juceam, Extended Stay America
Juceam: Extended Stay America has a strong development pipeline, including more than 50 new-build hotels expected to open within the next two years or so. In 2025, 10 of these new hotels will open, primarily as Extended Stay America Premier Suites, alongside the first new-build prototype Extended Stay America Select Suites in Wildwood, FL. Key markets include Chandler, AZ; Charlottesville, VA; Denver and Colorado Springs, CO; and Jacksonville and Bradenton, FL. In addition, we are finalizing dozens of brand or franchise conversions to continue enhancing our footprint.
Campbell: Next year is going to be a great year for new My Place openings. Overall, for the company, I’m enthusiastic about seeing our newest prototypes be implemented. I’ve personally been contacted by many of our top clients about their excitement about the new room types, which adds to the excitement. Getting into the weeds a bit, we’ve developed and will be implementing some new operational support programs and tech platforms to further integrate and increase operational efficiencies and elevate service delivery, which has been a focus of mine. As for the industry, I’m optimistic that we’ll be the beneficiaries of increasing economic stabilization, which should precipitate more balanced revenue metrics and bolster growth in supply implementations. Overall, I think 2025 is going to be partial sunny to sunny, with the occasional chance of showers — not bad a climate if you are looking to do business and play a little golf.
Dragisich: We’re optimistic about what 2025 holds for the industry and for Choice. Hotel demand growth is projected to continue outpacing supply growth in 2025 and into 2026. That’s the type of environment in which our world-class hotel conversion capability really shines. Our ability to efficiently convert existing hotels into Choice hotels, moving those projects quickly through our development pipeline, enables us to grow our portfolio even when construction financing is tight and supply growth is slow. Choice has never been a company that’s pursued growth at all costs, and we’re going to continue to execute our strategy of revenue-intense growth in 2025, ensuring that the hotels we add to our development pipeline drive higher value than those in our existing portfolio. Finally, we’ve always prided ourselves on operating at the intersection of hospitality, franchising and technology. Having become the first hotel company to migrate our entire system infrastructure to the cloud, we’ll continue to explore ways to leverage and drive the adoption of AI in 2025 to help improve efficiency for hotel operations, deliver more personalized messages to our guests and more.
Gharib: As I said before, it is our responsibility to adapt to the changing marketplace and position our franchisees for success. 2025 will be a busy year in the economy segment spurred on by increased construction projects thanks to lower interest rates and the desire to do transactions. We also anticipate a slight increase in demand from the traveling consumer, and the extended-stay segment will continue to thrive. Red Roof is well-positioned to leverage this uptick in activity and has significant goals to grow its core brands: Red Roof Inn, Red Roof PLUS+, HomeTowne Studios by Red Roof and The Red Collection.
Juceam: The greatest benefit of being the leader in the affordable extended-stay hotel segment is that demand is steady, in both robust and challenging economic conditions. Extended Stay America has consistently delivered high occupancies and strong average length of stay metrics, even during COVID-19 pandemic. For 2025, we anticipate continued growth on both the top and bottom lines for our properties, amidst modest growth for the industry overall.
