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The hospitality industry is poised for significant growth in 2025, with increasing hotel demand and favorable economic conditions creating new opportunities for real estate developers and investors. Despite current financing challenges, Choice Hotels President and CEO Patrick Pacious is optimistic, pointing to factors such as falling interest rates, the continued popularity of road trips and remote working , as well as the growing number of retirees wanting to travel.

In an interview with SkiftX, Pacious discusses Choice’s focus on hotel conversions, the expansion of the high-end market and the role of emerging technologies in the future growth of the hotel sector.

SkiftX: What current trends are shaping the hospitality industry today?

Pat Pacious: We’ve been tracking four major long-term trends that are driving business and leisure travel toward our brands – we call them the “four R’s.”

Number one is road trips. They remain extremely popular, as two-thirds of respondents in a recent Deloitte survey said they planned to take one. Additionally, the price of gas is currently 20% lower than it was two years ago.

Number two is remote work. More flexible working arrangements clearly give travelers more discretion over when they can travel and allow them to combine their business and leisure trips.

The third point concerns retirements. The number of retirees in the United States is increasing, with a record 4.1 million Americans turning 65 this year, and travel is by far the most sought-after retirement activity among Americans.

The fourth point is the rebuilding of America’s manufacturing industry and infrastructure, which is leading to increased blue-collar business travel. According to one estimate, the number of nights generated by the infrastructure bill alone would be between 50 and 100 million over a ten-year period.

SkiftX: How do you view the current economic landscape and how do you think it will affect financing for new hotel developments?

Peaceful: We are optimistic about the health of the U.S. economy, industry and credit environment over the long term. With growth in hotel demand expected to outpace growth in supply for at least the next two years, smart investors have a real opportunity now to expand their hotel portfolio. Here’s one of the main reasons: Interest rates are expected to continue to fall, so in the time it takes to prepare a new project for financing, there’s a good chance the rate environment will improve even further. Developers continue to be interested in our new midscale and extended stay construction brands.

Additionally, when construction financing is tight, as it has been, supply growth is limited. So now is the perfect time to convert an existing property, and we’re really leveraging our world-class conversion capability, leveraging our ability to work closely with owners attracted to the performance of our brand to make advance these projects quickly through our opening signing pipeline. This has always been a key differentiator for Choice, and it continues to drive growth for us and our owners.

SkiftX: How does technology impact Choice Hotels’ operational strategies?

Peaceful: We pride ourselves on operating at the intersection of hospitality, franchising and technology. This allows us to look around us and make smart investments in our brands and our world-class franchisee success system. We are leveraging our technological know-how and previous strategic investments in a number of exciting technology initiatives that we believe will have a transformational impact on our business and our franchisees’ businesses.

We are currently rolling out ChoiceConnect, our proprietary mobile-friendly portal. The new platform makes it even easier for our franchisees to manage their hotels from anywhere in the world by providing statistics for all of their Choice properties in one place and allowing them to access all of their Choice apps in one place click.

We’re also preparing to launch a major refresh of the Choice Hotels website and mobile app. Based on extensive customer research and feedback from our franchisees, the new version of the site will have a much more contemporary look with richer, more comprehensive content, a simplified booking process for our customers and an improved ability to present our high-end hotels. amenities including dining options, pools and spas, and wedding and event capabilities.

Finally, we know that today’s consumers are more selective. They have more shopping options across more channels than ever before, and their online search behavior has changed and will continue to change. For example, TikTok, which only existed seven years ago, is now a major marketing platform, with 41% of Americans using it for search, including 49% of millennials and 64% of Gen Z. With consumer habits changing rapidly, we are investing heavily to continue to evolve our digital marketing strategies to ensure we are reaching consumers on the channels they use most and driving them to our direct booking channels.

SkiftX: What opportunities do you currently see in the premium market segment?

Peaceful: Our association with Radisson Americas has helped make Choice the upscale property to watch. Our Rewards members now have the ability to redeem points for stays at 1,000 upscale, upscale and luxury hotels around the world, including Cambria Hotels, which now has more than 75 hotels open, an Ascend Hotel Collection, the first global soft brand in the sector. . Additionally, we currently have an additional 200+ premium hotels in our development pipeline.

Demand for premium travel experiences is growing, and the modern premium traveler seeks authenticity, not uniformity. We are determined to seize this opportunity by ensuring our premium brands stand out in what has become a sea of ​​sameness in the segment.

This is why we have relaunched our Radisson and Radisson Blu brands. From new and improved designs to reimagined food and beverages, we are reinventing these two great brands to create a more distinctive and refined customer experience. We are also relaunching Radisson Individuals as a premium soft brand focused on full-service, boutique and independent hotels that stand out for their distinctive local character and superior customer service. This is all part of our overall effort to truly “up the game” in premium by redefining our portfolio of premium brands.

SkiftX: What key strategies is Choice Hotels implementing to drive growth?

Peaceful: Choice’s growth strategy is distinct. We are not looking for unit growth at all costs. Instead, we are focused on growing our portfolio with more revenue-intensive hotels across all of our categories and ensuring that properties coming into our system are more valuable than those coming out. As a result, on average, new hotels entering each Choice brand generate 20% more revenue than hotels that have left the brand in recent years. And we hope to maintain this momentum. In fact, hotels in our National Development portfolio represent a 30% RevPAR premium over our existing portfolio.

Fueling this revenue-intensive growth will help further strengthen Choice’s value proposition to our franchisees. We strive to help them increase revenue and reduce costs and continue to provide them with the reliable, easy-to-use, cutting-edge tools they need to run their business.

Over the past five years, we have increased revenue per available room (RevPAR) for the 12 legacy Choice brands by 14%, increased direct online revenue by 23% and increased revenue per property by 13%. And since our digital integration of the Radisson Americas brands last August through this June, we have generated more than a 30% year-over-year increase in bookings through our domestic direct online channels, including an increase more than 40% for the Country Inn & Suites. of the Radisson brand.

As our portfolio has grown, so has the size of our rewards program. Since 2019, we have added more than 25 million new Choice Privileges members, bringing the number of members to 67 million. Because members are more likely to book direct, are more likely to book a new stay, and require less marketing dollars to attract, this program is a tremendous driver of value for our franchisees and growth for our entire system.

The same goes for our strategic partnerships, which we are also looking to expand. One of the many benefits of our premium hotel portfolio is that it allows us to attract more premier national travel brands. Earlier this year, we became AAA’s first new preferred hotel provider in more than a decade, giving our hotels increased appeal and increased access to AAA and its Canadian counterpart, CAA, which has a combined 64 million members, who account for 31 percent of all paid room nights in North America.

Learn more about Choice Hotels.

This content was created in collaboration by Choice Hotels and branded content studio Skift, SkiftX.