**The Hotel Industry’s Growth Outlook for 2025: Insights from Choice Hotels CEO Patrick Pacious**
The hotel industry is set for substantial growth in 2025, driven by increasing demand and favorable economic conditions, creating new opportunities for real estate developers and investors. Despite current challenges in financing, Choice Hotels President and CEO Patrick Pacious remains optimistic. He points to factors such as decreasing interest rates, the sustained popularity of road trips, the flexibility of remote work, and the growing number of retirees eager to travel.
In a conversation with SkiftX, Pacious discusses Choice Hotels’ strategic focus on hotel conversions, expansion into the upscale market, and the role of emerging technologies in shaping the future of the hospitality sector.
### Key Trends Shaping the Hospitality Industry
Pacious identifies four major long-term trends driving both business and leisure travel, which he refers to as the “four R’s”:
1. **Road Trips**: Road trips continue to be a favored travel option, with two-thirds of respondents in a recent Deloitte survey planning to take one. Additionally, gas prices are currently 20% lower than they were two years ago, further encouraging this trend.
2. **Remote Work**: The rise of flexible work arrangements allows travelers to blend business and leisure trips, giving them more freedom to decide when and where they travel.
3. **Retirements**: A record 4.1 million Americans are turning 65 this year, and travel is the most desired activity among retirees, fueling demand in the hospitality sector.
4. **Rebuilding of American Manufacturing and Infrastructure**: The resurgence of American manufacturing and infrastructure projects is driving increased blue-collar business travel. One estimate suggests that the infrastructure bill alone could generate between 50 and 100 million room nights over the next decade.
### Economic Landscape and Hotel Financing
Pacious remains optimistic about the U.S. economy, the hospitality industry, and the lending environment in the long term. He notes that hotel demand is expected to outpace supply growth for the next few years, presenting a prime opportunity for investors to expand their hotel portfolios. With interest rates projected to continue falling, developers may find more favorable financing conditions by the time new projects are ready.
Pacious also highlights the benefits of hotel conversions, especially when construction financing is tight. Choice Hotels is leveraging its expertise in conversions to help owners quickly move projects from signing to opening, which has been a key growth driver for the company.
### Technology’s Role in Operational Strategies
Choice Hotels operates at the intersection of hospitality, franchising, and technology, allowing the company to make strategic investments in its brands and franchisee success systems. Pacious outlines several technology-driven initiatives aimed at transforming both the company and its franchisees’ businesses:
– **ChoiceConnect**: This mobile-friendly owner’s portal allows franchisees to manage their hotels from anywhere by providing metrics for all their Choice properties in one place. It also offers single-click access to all Choice apps.
– **Website and Mobile App Refresh**: A major update to the Choice Hotels website and mobile app is in the works, featuring a more contemporary design, richer content, and a simplified booking process. The new platform will also better showcase upscale hotel amenities, such as dining options, pools, and event spaces.
– **Evolving Digital Marketing**: As consumer behavior shifts, particularly with the rise of platforms like TikTok, Choice Hotels is investing heavily in digital marketing to ensure it reaches consumers on the channels they use most, driving traffic to direct booking channels.
### Opportunities in the Upscale Market
With the acquisition of Radisson Americas, Choice Hotels has strengthened its position in the upscale market. The company’s rewards members can now redeem points at 1,000 upscale, upper-upscale, and luxury hotels globally, including Cambria Hotels and the Ascend Hotel Collection. Additionally, Choice has 200 upscale and above hotels in its development pipeline.
Pacious emphasizes that modern upscale travelers seek authenticity over uniformity, and Choice is capitalizing on this by relaunching its Radisson and Radisson Blu brands. These refreshed brands will feature elevated designs and revamped food and beverage offerings, creating a more distinctive guest experience. The company is also relaunching Radisson Individuals, a soft brand focused on full-service, boutique, and independent hotels that offer unique local character and superior guest service.
### Growth Strategies for Choice Hotels
Choice Hotels’ growth strategy is focused on quality over quantity. Rather than pursuing unit growth at all costs, the company is concentrating on adding more revenue-intensive hotels across its portfolio. Over the past several years, new hotels entering the Choice system have generated 20% higher revenue than those exiting, and the domestic development pipeline represents a 30% RevPAR premium compared to the existing portfolio.
This revenue-focused growth strengthens Choice’s value proposition to franchisees by helping drive revenue up and costs down. Over the past five years, the company has increased revenue per available room (RevPAR) for its 12 legacy brands by 14%, grown direct online revenue by 23%, and increased revenue per property by 13%. Since integrating the Radisson Americas brands, Choice has seen a 30% year-over-year increase in reservations through its domestic direct online channels, including a 40% increase for the Country Inn & Suites by Radisson brand.
### Expanding Strategic Partnerships
As Choice Hotels continues to enhance the quality of its portfolio, it has attracted more blue-chip national travel brands. Earlier this year, Choice became AAA’s first new Preferred Hotel Supplier in over a decade, giving its hotels access to AAA and CAA’s combined 64 million members, who account for 31% of all paid room nights across North America.
### Conclusion
Choice Hotels is well-positioned for growth in the coming years, with a focus on leveraging technology, expanding into the upscale market, and driving revenue-intensive growth. By staying ahead of industry trends and making strategic investments, the company aims to continue delivering value to its franchisees and guests alike.
For more information, visit [Choice Hotels](https://info.choicehotelsdevelopment.com/upscalebychoice).
*This content was created in collaboration with Choice Hotels and SkiftX, Skift’s branded content studio.*
Source: skift.com