Choice Hotels' Upscale Gamble: How Cambria Found Its Footing

04.10.2024 - 18:15 / skift.com / Sean Oneill

Choice Hotels began to push upmarket when it debuted the Cambria brand in 2005. The hotel franchisor lacked upscale expertise, as it had been best known for midscale brands, such as Quality Inn and Comfort Inn, and economy brands, like Rodeway Inn.

Today, 74 Cambrias are open, with 62 in the pipeline. “About 25% of the brand opened in the past two years,” said Indy Adenaw, a senior vice president at Choice Hotels.

Cambria stumbled at first, and the brand’s recent traction speaks to broader hotel trends.

Cambria launched as an all-suites brand for all new construction, partly to differentiate it as a premium product. Yet this design wasn’t popular. The first hotel opened in Boise, Idaho, in 2007, and developers’ uptake after that was slow.

One reason: The brand’s target audience was young, higher-income urban professionals, and they were easiest to attract in big cities.

However, big city developers found it relatively more difficult to build hotels with suites 25% larger than average rooms. They gravitated instead to other brands with a traditional mix of room formats.

Fast-forward to 2014, and Cambria got a makeover to make it more palatable to guests. Out went the one-size-fits-all approach, in came a mix of room types.

Lobbies were redesigned to make the bar the focal point and to add more local influences to the decor. For music, the brand swapped Top 40 for an indie sound.

In the guest rooms, bathroom vanities became larger and more “spa-like” in response to focus group research. Nightstands got ample power outlets. However, other parts of the room received a minimalist look, as the brand sought a sweet spot between guest satisfaction and operational efficiency.

Choice Hotels heard from developers that getting banks to finance new-construction projects was harder for Cambria than its rival brands.

So the hotel group created a design that let developers take existing hotels, reflag them, and renovate them under a new brand.

Developers found it easier to get a bank loan for a building that already exists.

To perfect this conversion concept, Choice Hotels supported hotel financing. Between 2017 and 2021, it deployed over $400 million in capital to open Cambrias in several markets.

Today, Choice Hotels owns seven Cambrias, even though it is otherwise an asset-light company at its core. Executives see deploying a mix of joint venture investing, some small mezzanine lending, and self-developing of assets as enabling them to be faster and more hands-on in perfecting brands.

The new conversion concept has gained traction. Several developers signed on for projects in urban areas that are magnets for Cambria’s target customers. One reused a landmark office building in Dallas to create a Cambria. Rooftop