Comfort Inn 2013 Annual Report Download - page 20

Table of Contents
As previously noted, the Company’s franchise agreements are individually negotiated and therefore actual fees may differ from those noted above. From
time to time, the Company may discount the standard royalty fees in the initial years of the agreement as a franchisee acquisition tactic. Typically, these
discounts expire as the contract matures until the contractual royalty fees reach the standard franchise fee in effect at the time the agreement was executed.
Franchise Operations
Our operations are designed to improve RevPAR and lower operating and development costs for our franchisees, as these are the measures of
performance that most directly impact franchisee profitability. We believe that by helping our franchisees become more profitable we will enhance our ability to
both retain our existing franchisees and attract new franchisees. The key aspects of our franchise operations are:
Brand Name Marketing and Advertising. Our hotels are typically located in areas conveniently accessible to business and leisure travelers and
therefore approximately two-thirds of our hotel room nights are sold to guests who either walk-in or contact the hotel directly. As a result, we believe that brand
name recognition and the strength of the brand reputation are important factors in influencing business and leisure traveler hotel accommodation choices.
Our marketing and advertising programs are designed to heighten consumer awareness and preference for our brands as offering the greatest value and
convenience in the lodging categories in which we compete. Marketing and advertising efforts include national television, internet and radio advertising, on-line
advertising, print advertising in consumer and trade media and promotional events, including joint marketing promotions with qualified vendors and
corporate partners. We also actively seek to maximize our presence on the internet by purchasing key search related terms from the various search engine
providers to ensure that our hotels are prominently displayed to all potential guests.
Numerous marketing and sales programs are conducted which target specific groups, including business travelers, senior citizens, automobile club
members, families, government and military employees, educational organizations and meeting planners. Other marketing efforts include domestic and
international trade show programs, publication of group and tour rate directories, direct-mail programs, electronic direct marketing e-mail programs,
centralized commissions for travel agents, fly-drive programs in conjunction with major airlines, and the publication of electronic travel and vacation
directories.
We operate a loyalty program, Choice Privileges, for all of the Choice brands to attract and retain travelers by rewarding frequent stays with points
towards free hotel stays and other rewards. Choice Privileges participants earn points redeemable for free stays in Choice brand properties. The Company also
offers guests the ability to earn airline miles for qualifying stays redeemable for flights with various airline partners as well as redeem points for gift certificates
at participating retailers. These programs allow us to conduct lower cost, more targeted marketing campaigns to our consumers, deliver incremental business
to our franchised hotels and are an important selling point for our franchise sales personnel. Choice Privileges members contribute approximately a third of the
Company’s domestic gross room revenues and the program had more than 19 million members worldwide as of December 31, 2013. Growing the membership
of the Choice Privileges program will continue to be a focus of the Company.
Marketing and advertising programs are directed by our marketing department, which utilizes the services of independent advertising agencies. We also
employ home-based sales personnel geographically located across the United States using personal sales calls, telemarketing and other techniques to target
specific customer groups, such as potential corporate clients in areas where our franchised hotels are located, the motor coach market, and meeting planners.
Our field based brand performance consultants work with franchisees to maximize RevPAR. These coordinators advise franchisees on topics such as
marketing their hotels, improving quality and maximizing the benefits offered by the Choice reservations system. Our proprietary property management
system includes a rate and selling management tool to help our franchisees better manage rates and inventory which should help them improve RevPAR by
optimizing ADR and occupancy. In addition, we have recently added revenue management services to our service offerings to assist franchisees in maximizing
their room rates.
Central Reservation System ("CRS") . On average, approximately one-third of the gross room revenue booked at domestic franchised properties is
reserved through our central reservation system, which consists of our toll-free telephone reservation system, our proprietary internet site, mobile phone and
tablet reservation applications, interfaces with global distribution systems, and other internet reservations sites. We strive to improve the percentage of business
delivered by our CRS as room nights reserved through these channels are typically at higher average daily rates than reservations booked directly through the
property. In addition, increasing the percentage of business delivered through the CRS improves our value proposition to a hotel owner and therefore assists in
retention of existing and acquisition of new franchisees.
20