David Pepper reinforces Choice Hotels’ interest in moving up
chain scales with Radisson and soft brands, and boasts about extended-stay pipeline.
LOS ANGELES – Choice Hotels is looking upscale. That was the
story top-of-mind for Chief Development Officer David Pepper at ALIS last week,
stating the Radisson brand has a pipeline of 25 hotels as of 4Q24 after adding
three in 2024. He added that Choice and opened more than one hotel a week last
year under its upscale soft brand, Ascend Hotel Collection.
The growth numbers for Radisson have a way to go, but Pepper
said Choice has finished the brand integration process, which includes Country
Inn & Suites, and after joining the Choice reservation platform Radisson
ended the year with 7% RevPAR growth. He added that Radisson witnessed a 40%
increase in proprietary contribution through the Choice website, “exactly what
we said to the investors, exactly what we said to the owners, and it’s really
coming through.” Plus, Pepper said owners’ cost went down as well, primarily
through lower OTA commission fees.
He said the focus right now continues to be on stabilizing
the Radisson and Country brands with a relaunch of the Park Inn and Park Plaza
brands to follow. Pepper added that the loyalty program refresh is done,
including dynamic pricing and increased redemption payback to owners, to help
drive more business to those new Choice owners.

In October 2024, Choice Hotels opened the Radisson Angelópolis in Puebla, Mexico.
Pepper was also boastful about Choice’s extended-stay
pipeline when he sat down last week with Hotel Investment Today during ALIS, stating WoodSpring Suites has
250 properties and Everhome Suites has 65 hotels in various stages of
development as of 4Q24.
Hotel Investment Today (HIT): What’s your take on pipeline growth,
in general?
David Pepper: New construction is still pretty muted. It’s
still tough to get a project built and financed and underwritten. What you’re
starting to see, though, is hotels are finally starting to trade hands, and
with transactions you need to have a value-add story. So, we’re making a name
for ourselves in upscale.
As a lot of developers are looking at acquisitions, they
know they have to put some money in because nobody’s done a PIP in a long time,
especially for some of these big, full-service urban hotels. So, they’re
looking for a different brand – something to tell their lenders and investors.
Then, also, let’s face it, some of our competitors kind of
flooded some of these markets with some of their brands. So, we have kind or a
clean palette in a lot of these urban markets, and a lot of demand that’s
looking to go somewhere with it. We just don’t have enough product. So, people
are looking at Radisson.
We have a clean balance sheet over here at Choice. So, when
appropriate, we will put our balance sheet to use. And owners know for good
projects, we will be there for them.

Woodspring has three things any developer is looking for: a proven prototype, a proven operating model that generates 60% margins on average, and it has a proven exit. Woodsprings have traded at very attractive cap rates.
David Pepper
HIT: How else has the Radisson impacted Choice’s business?
Pepper: Radisson has helped our other brands in upscale.
Ascend opened more than one hotel a week last year. So, I think people see Choice
has invested into the upscale value proposition. We’re investing a lot of money
to drive more business during the midweek and more business customer, and
people are starting to recognize us with our success with Cambria, and now our
success with Radisson. So, we’re seeing it as well with the Ascend soft brand,
as well.
HIT: Talk about your extended-stay pipeline.
Pepper: Last year, we had a record year in openings of new
construction Woodspring Suites and Everhome Suites – 25 Woodsprings and seven
Everhomes, which were all new construction projects.
Woodspring has three things any developer is looking for: a
proven prototype, a proven operating model that generates 60% margins on
average, and it has a proven exit. Woodsprings have traded at very attractive
cap rates. Those are three things any developer would want to look at, and Woodspring
has all three. We’ve proven it, and now you’re starting to see it with Everhome,
which is already hitting 60% margins.
HIT: What’s the biggest challenges you're facing for
development?
Pepper: It’s a muted environment for new construction. We’re
all kind of waiting to see if tariffs happen and if that’s going to drive up
construction costs.
We were feeling pretty good towards the end of the year with
the cost cuts, with the interest rate cuts. I think people are still pricing a
bit of cuts, as well, for this year. But look, we just haven’t seen it in
pricing on financing – just a little bit of a dip.
What we are seeing now, because there has been so little new
construction, and not just in our industry, is labor construction cost drops.
We’re seeing, on average, about a 5% to 10% drop.
If we can keep the interest rates dropping a little bit, you’ll
see new construction come back. From a development standpoint, you’re going to
still see this year a lot of focus on conversions. You are also going to see
some transactions happen more in the upscale space and full-service spaces. So,
I think you’ll see some opportunities there.
HIT: What’s Choice’s message right now?
Pepper: Our theme this year is we’re back. We’re focused on
the franchisee. That’s what we want to do – really focused on being in front of
our customers, being in front of our franchisees, being in front of guests. We
want to show that Choice is there to drive your top line and also drive your
bottom line… We’re out there talking to everybody.