The Washington Post

Cambria Suites gets a second chance

Five years ago, Choice Hotels — the Silver Spring company behind budget chains such as EconoLodge and Comfort Inn — opened its first upscale hotel, a Cambria Suites in Appleton, Wis. It was meant to be a watershed moment for the company as it transitioned from the familiar to the fancy.

Then the recession hit. The company opened a few more locations in Wisconsin and in towns such as Aurora, Colo., and Maple Grove, Minn., but financing began to dry up and fewer developers and franchisees came calling.

Today, as the economy wobbles back from the brink, Choice Hotels is trying its hand at high-end lodgings again, this time backed by a new chief executive and a plan to target major cities such as New York City and Washington.

“It's a cornerstone moment for this brand,” said Steve Joyce, who became chief executive of Choice Hotels in 2008. “We have been very successful in serving the 99 percent, but Cambria is really much more about the business traveler. It’s focused on inside-the-beltway urban projects.”

Last week, the company broke ground on three Cambria Suites hotels in New York — first in White Plains, and the next day, in Times Square and Chelsea. Locations at O Street Northwest in the Shaw neighborhood and Rockville Town Center, next to the company’s future headquarters building, are also in the works.

Courtesy of Choice Hotels

One of the first things Joyce, a former Marriott executive, did when he took over Choice Hotels in 2008 was talk to developers about Cambria Suites. It was a good brand, they all agreed, but the company needed a new approach.

“At that point, the company was doing pretty well selling lots of franchises, but the markets they were getting into were not the markets I thought they should be in,” Joyce said. “When you start a brand — no offense to anybody from Wisconsin — but that's not usually where you want to start.”

Joyce decided that simply waiting for third-party franchisees to approach the company with ideas wasn’t working. If Cambria Suites was going to make a splash, the company would have to invest its own money — and time — into getting into major cities.

“We said we’re going to have to go into New York, find the best developer and do this proactively,” said Michael Murphy, senior vice president of Cambria Suites.“We just can’t sit back and wait.”

Choice Hotels set aside $250 million to help finance new Cambria Suites and began scooping up coveted new sites, such as the one in Times Square, that it would later sell to developers.

Choice Hotels has emerged from the recession in good shape. Profits during its most recent quarter were up 5 percent since last year to $44.38 million. In July, the company gave shareholders a special cash payment of $10.41 a share, which amounted to about $600 million.

“Choice has a very strong balance sheet,” said David Loeb, an analyst for Robert W. Baird & Co. in Milwaukee. “They are a cash-flow-generating machine.”

Even so, Loeb said he is doubtful that an upscale brand such as Cambria Suites can do well under a company that has built its reputation on low prices. Several Cambria Suites, including one in Pueblo, Colo., have already closed.

“Cambria is an excellent product, it’s a very attractive option for business travelers and their families,” Loeb said. “The problem is, the Cambria brand means nothing to customers. It’s a very small chain, and [Choice Hotels] customers are looking for value rather than product or location.”

That’s not stopping Choice Hotels from making an aggressive push, though. Seven Cambria Suites are currently under construction, and Joyce said the company plans to break ground on at least 20 more locations next year.

In early 2013, Choice Hotels will open its first international Cambria Suites in Canada, but for the most part, Joyce said he plans to focus on large American cities such as San Francisco and Chicago.

“The focus, initially, will be establishing Cambria in the United States,” he said, adding that the company hopes to woo business travelers away from hotels such as Hilton Garden Inn and Courtyard Marriott. “And then we’ll clearly go international.”

Abha Bhattarai covers local retail, hospitality and banking for The Washington Post. She has previously written for The New York Times, The Wall Street Journal, Reuters and the St. Petersburg (Fla.) Times.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments
Most Read



Success! Check your inbox for details.

See all newsletters

Your Three. Videos curated for you.
Play Videos
How to make Sean Brock's 'Heritage' cornbread
New limbs for Pakistani soldiers
The signature dish of Charleston, S.C.
Play Videos
Why seasonal allergies make you miserable
John Lewis, 'Marv the Barb' and the politics of barber shops
What you need to know about filming the police
Play Videos
The Post taste tests Pizza Hut's new hot dog pizza
5 tips for using your thermostat
Michael Bolton's cinematic serenade to Detroit
Play Videos
Full disclosure: 3 bedrooms, 2 baths, 1 ghoul
Pandas, from birth to milk to mom
The signature drink of New Orleans

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.