Choice Hotels International, 1995. Case Report

2387 words - 10 pages

Executive SummaryChoice Hotels International, Inc., was the second-largest hotel franchising company based in the United States in the year of 1995. It had gained much reputation in the budget market and in its franchising system for quick penetration of the market. In 1995, the group was managing 7 brands, namely Clarion, Quality, Comfort and Sleep under the Sunburst Group; and Econo Lodge, Rodeway and Friendship under the Economy Group. Choice nearly doubled its net income from 1990 to 1994 and the growth was predicted to continue after the downturn in the early 1990s.However, along with its rapid growth, the group was faced with a number of challenges, both internally and externally. Competition in the budget market grew much fiercer and more conflicts with franchisees arose. Choice top management, therefore, were to decide whether to continue or change its current strategy in franchise and portfolio management so as to sustain future prosperous growth.In this paper, we are to discuss possible options for Choice's strategy on mainly two aspects, i.e. franchisee relationship management and brand portfolio management. First, the current situation as of Choice and the industry as a whole will be studied. Then we will analyze its current achievements and pinpoint its success factors. Following with that, we will comment on different options, namely individual brand focus; and corporate brand focus. The benefits and drawbacks of each option will be investigated and their respective feasibility will also be reviewed, both financially and managerially.According to our findings, a corporate-brand-focused strategy along with the enhancement of franchisee relationship is the best among all. On one hand, it helps create a more consistent corporate image, A HOTEL GROUP FOR EVERYONE. On the other hand, it improves the effectiveness of the current marketing campaign, leverages synergy among each brand, differentiates clearly with its major competitor, HSF, thus generating more prosperous and sustainable income growth in the long run. Along with the evaluation of options, respective financial projections and the action plan for the selected option are also provided in the exhibits for readers' reference.With our selected option, if perfectly executed, the Choice brand will be promoted as a choice for every traveler around the world. By the time of 2000, Choice will become the most profitable hotel group in the world. At that time, we would suggest a thorough study on the possibility to expand Choice's business into the market for luxury resorts.Situation AssessmentSWOT AnalysisStrengths* Brand Portfolio Diversification- Enabling cross sales- Enabling trading down the aged hotels to the lower segments without losing business* Steady/growing revenue streamTechnology (state-of-the-art reservation system)Relationship with other leading companies in different businessesFranchise nature: Ability to expand the business with relatively low...

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