ROCKVILLE, MD—Choice Hotels International will be under new leadership on September 12 after its current CEO, Steve Joyce, steps down to head Glendale, CA-based DineEquity Inc. on the same day. The full-service dining company is known for franchising and operating IHOP and Applebee’s restaurants; Joyce had been serving on its board for more than five years.
And while Pat Pacious will become Choice’s CEO next month, he’d been gaining more and more responsibilities over the past few years—and that wasn’t by accident. This is something that has been in the works for a while, as both Joyce and Pacious told Hotel Business. Furthermore, Pacious will also join Choice’s board of directors on the 12th and Joyce will no longer have a seat after the transition, as originally expected.
“I believe succession planning is a key responsibility of boards and CEOs,” Joyce said. “I’ve been working with our board of directors to identify potential successors almost from the time I arrived at Choice, and Pat soon emerged as the clear candidate.”
The succession plan began in January 2014 when the hospitality group tapped him as COO and continued after Choice appointed him as its president in May 2016.
“Great companies are not afraid to change because change is required,” Joyce said. “In fact, it’s too late if you wait until it’s necessary. The formal business term for all this is ‘succession planning’—the notion that great leaders and great companies plan well into the future regarding leadership of the company. They are proactive, not reactive.”
Having always been a supporter of term limits, he didn’t expect to stay as Choice’s CEO for as long as he has; originally, when he joined the company, five years seemed like the right number to him. However after seeing the “remarkable potential in the company and its people,” Joyce said he changed his mind—he’d agree to 10 years if the board concurred.
“Choice has come a long way since I joined in 2008,” Joyce said. “That was a troubled time for the hotel industry, and Choice persevered and outpaced competitors.” Along with him for the ride was Pacious, who worked with Joyce on numerous Choice initiatives.
“Pat has been an integral part of the senior leadership team for many years, and has led many of our key accomplishments—such as the development of our global technology platforms, the company’s significant growth in the upscale segment with both Cambria Hotels and The Ascend Hotel Collection, and the successful transformation of the Comfort brand,” Joyce said. “I have watched him excel as a leader, and I’m thrilled to have him as my successor.”
There are now 31 Cambria hotels open in total—with 70 properties in the pipeline. Compared to Q2 2016, Cambria achieved a 22% increase in new franchise agreements in Q2 2017. Ascend properties globally hit 186 properties this year. Domestically, the Ascend Collection, compared to Q2 2016, experienced a 50% increase in new domestic franchise agreements. As far as Comfort is concerned, there are more than 2,100 properties globally, with more than 56 expected to open in the U.S. alone this year.
“The Comfort brand value proposition has never been stronger as loyalty contribution is at an all-time high and the Choice revenue management services provide incremental RevPAR lift,” Pacious told analysts during Choice’s recent earnings call. “As a result, our development team secured 32 new Comfort domestic franchise agreements in the second quarter, representing a 39% increase over the second quarter of last year.”
Pacious’ leadership has “created significant value for our shareholders and franchisees,” Joyce said. Having worked with Pacious all these years, Joyce has learned a thing or two about his successor’s approach to leadership—one based on “moving faster than the competition, fueled by technology, innovation and embracing digital disruption,” Joyce noted.
Having been recognized as a leader most of his life, Pacious absorbed his leadership framework during his time as a naval officer where he acquired the knowledge to understand the differences between accountability and responsibility early on. He also learned to “inspect what you expect,” he said. Another leadership principle, one he still uses to this day: “You’ve got to get out of your office,” he said. “Be present in front of the folks that you’re leading. They want to know how you’re thinking, and when you are present, then you have a better sense of what’s actually going on in your organization.”
After leaving the United States Navy, he went on to serve as a senior manager at Arthur Andersen Business and Consulting in 1996, where he continued his career in leadership. He moved on to BearingPoint in 2002 before joining Choice in 2005.
“While people like to point out our differences, there is a lot that we have in common,” Joyce said. “We both value people. We both want Choice and our franchisees to be successful. And, we both like to win. Under Pat’s leadership, the future looks bright for the company, our franchisees, developers, industry partners and shareholders.”
Creating focus is another similarity between the two, Pacious pointed out. Both have also been strong believers in company culture wrapped around high performance, respectful of diverse opinions and inclusive of people—whether they’re at the top or bottom of the company’s ladder. “I’m famous around here for using the axiom ‘culture can eat strategy for breakfast,’” Pacious said. “Having been the strategy guy for 12 years in this company, I’ve seen when culture can really be a force multiplier in executing your strategy and when it can be a drag on it.”
The hospitality group’s strategy is expected to remain the same after Pacious takes over as CEO. Choice will continue to focus on three strategic pillars: the strength of the core brands; the company’s momentum in the upscale segment; and a focus on growing international operations. Touching upon the last initiative, Pacious noted during the earnings call that Choice’s international business is focused on “adding larger, more profitable, high-quality hotels in key markets.” During the first half of the year, Choice opened 37 hotels, representing 5,166 rooms across 14 countries outside of the U.S.
“I think from a leadership perspective, I’ve learned a lot from [Joyce] over the years around setting priorities and around driving this culture forward,” Pacious told Hotel Business. “I think we feel pretty good about the continuity of leadership here as we move forward.”
“A lot of it has been underway behind the scenes internally, but now that we’ve announced it to both Wall Street and the media, it’s making sure that I have an opportunity [over the next few weeks]to be that public face of the company on the investor front, with our shareholders,” he said.
When asked what he’ll miss most about being the top exec at Choice, Joyce responded, “The people. We couldn’t have achieved the level of success that we have today without our associates, franchisees, partners and guests. We’ve created a culture at Choice that attracts and retains the best people. I’m very proud of that.”
Pacious’ vision for Choice includes continuing to grow the company’s market share, embracing the digital disruption occurring in the travel industry and leveraging that technology in a way to deliver a higher ROI for franchisees. “We’re going to be in a world where we’re dealing with voice-based text and search,” he said. “We’re going to be dealing with the world where artificial intelligence and cognitive learning and all of that is having an impact, and will allow us, as a company, to drive better business at a lower cost to our franchisees.” He’ll also continue to focus on growing Choice’s global footprint, especially in Europe for direct franchising opportunities.
“While I’ve learned a lot over the past years and have offered Pat advice, most of that is between me and Pat,” Joyce shared. “Most importantly, though, I will say that my best advice is for Pat to follow his own mind and heart. He has what it takes, so if he stays true to himself, both he and Choice will be immensely successful.” HB