Choice Hotels, the Silver Spring-based lodging franchiser, is updating its flagship brand, Comfort Inn Hotels, offering new amenities and a new logo.
Guests at Comfort Inn, which has 1,400 locations in the United States, will be able to get fresh coffee 24 hours a day, surf the Web in their hotel rooms and bathe under a pulsating shower head.
It's the first makeover of the brand's logo since Comfort Inn was launched in 1981. Instead of the striped orange sun floating over a black background, the new logo is blue and Comfort Inn is spelled out in a crisper font.
The changes, while subtle, are the product of two years of focus-group testing, said Charles A. Ledsinger Jr., the company's chief executive.
The goal of the designers was to project freshness. "For limited-service hotels, newer is better [in the eyes of the consumer]," Ledsinger said. "Cleanliness and freshness are important."
Choice Hotels will be launching a multimedia advertising campaign next year to go with the new look, said Wayne Wielgus, the company's executive vice president and chief marketing officer.
As an economy chain, Comfort Inn has to appeal to many types of people, such as senior citizens, business travelers and young families. To reach all these groups, Choice Hotels is crafting an advertising campaign based around creating memories, Wielgus said.
Choice Hotels's market research revealed that people don't forgo vacations but will forgo a big-ticket item instead, Wielgus said. "It's all because of the hectic life we all lead today. The chance to get away and reconnect is a big family value," he said.
Choice Hotels also targets customers who volunteer information about themselves with direct mail. "We want to make the traveler feel we understand them and what they're trying to get out of the experience," Wielgus said. "Say you're a bird-watcher or an antiquer. Or you love NASCAR or football. We have the ability to communicate to you: 'Here's what's going on and here's a great package.' "
The effort comes at a time when Choice Hotels's growth is slowing. On Oct. 28, it reported earnings of $24.9 million, compared with $24.3 million for the same period a year earlier, short of analysts' expectations. After the announcement, Choice Hotels stock dropped 14 percent.
Harry C. Curtis, hotel industry analyst for J.P. Morgan, downgraded Choice Hotels's stock, saying in an Oct. 29 research note that the company's "longer-term growth rate is moderating."
Citigroup's Michael Rietbrock concurred, citing weak average room revenue per available room (or REVPAR, an industry benchmark for performance) and an increase in expenses compared with the third quarter of 2003. "Though we believe the company should continue benefiting from a recovery in lodging industry fundamentals and new-unit growth, our analysis shows the upside potential to current estimates is limited over the near-term."
Until recently, Choice Hotel stock has done fairly well. The stock rose from $17.92 a month after the Sept. 11, 2001, attacks to close at $58.70 on Oct. 27, right before the company's most recent earnings announcement.
Choice Hotels fared better than many other hotels during the post-Sept. 11 travel industry downturn. The company and its main competitors, Holiday Inn Express and Fairfield, were well positioned to take advantage of the immediate shift in ground travel.
"As people got off planes and got into their cars for shorter trips closer to home, they discovered the 300-mile radius around their home. That's where we're placed. We were a big player in facilitating that. We were very fortunate," Wielgus said.
The company hopes that sprucing up the logo may help reinvigorate Choice Hotels's profits. Three years ago, the company updated the look of its other brands -- Comfort Suites, Quality Inn, Sleep Inn, Clarion, MainStay Suites, Econo Lodge and Rodeway Inn -- which were originally based on the Comfort Inn sign.
The makeover boosted the performance of the brands, but it had one unintended effect: the Comfort Inn sign, by contrast, began to look stale and Comfort Inn's performance began to slip, Ledsinger said.
Choice Hotels waited to revamp Comfort Inn to give all of its franchisees time to completely recover from the post-Sept. 11 slump. Choice Hotels owns the brand and handles marketing, but the owners of the franchises bear most of the cost of any changes, Ledsinger said. "Business was soft in '02-'03. We wanted to wait until they had a good year under their belt," he said.