Comfort Inn City Centre Armidale has helped boost the regional network for Choice Hotels.

Choice Hotels Asia-Pac Director of Development, Scott Armstrong, discusses development trends and current market opportunities in midscale and upper midscale brands.

A slow couple of years in the accommodation industry has opened opportunities for investors eager to build property portfolios, but not actively engage in the day-to-day hotel operation.

This creates the perfect storm for a pure-play franchise group like Choice Hotels and our tried and tested partnerships with hotel management groups. We are expanding our development team in Australia to capture more of these emerging opportunities.

There are a number of these opportunities in the pipeline this year. Property owners favour a franchise and hotel management agreement model where they have access to brand recognition, and regional and global marketing initiatives, alongside professional management of day-to-day operations.

We currently have a new property in development under this model and in partnership with 1834 Hotels to announce in the coming months for the Melbourne CBD market.

Choice Hotels has also seen strong interest in our upper midscale segments around the Ascend Hotel Collection, which offers a soft brand option for owners and developers. This brand empowers owners and developers to create or retain a unique hotel identity reflective of the nature of the asset or the local community while benefiting from the power of a global hotel group with a collection identified with stylish hotels and resorts around the world.

Inflationary pressures are impacting independent hotel owners, who have struggled through the COVID recovery and are often working in the business. As the dust settles, we see an opening of opportunities for engagement with us with particular interest in revenue distribution and procurement savings.

Driving bookings is a key driver right now, and we are proud to see payoff through the website and our Choice Privilege App. Direct online booking for the Asia-Pac group has climbed steadily through the first half of 2022, with year-to-date online bookings already exceeding the full year for 2019.

As we settle into winter months, we continue to focus on our five core brands – Ascend, Clarion, Quality, Comfort and Econo Lodge – which accommodate all market segments from Economy to Upscale. Strong brand awareness and the increasing importance of brand stability, trust, and transparency among travellers, particularly in the midscale segment, drives interest and new opportunities. 

The midscale and upper midscale segments account for over 50% of hotel supply in Australia and there is strong demand as Australians continue to holiday here. They are looking for the best value for money and want superior service and facilities. Loyalty plays a growing role, with our Choice Privileges program growing rapidly month on month to now over 500,000 members across Australia and New Zealand.

These segments are vital for both corporate and leisure guests, particularly during economic headwinds and with much uncertainty still ahead. Where guests will have a reduced spending capacity, they become a more rate conscious traveller.

As owners emerge from recovery mode, optimising their business models and finding the best opportunities on costs becomes front of mind in what will continue to be a tight segment for some time.