Comfort Inn 2007 Annual Report Download - page 26

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 to 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:
Central Reservation System (“CRS”). On average, approximately one-third of the gross room revenue booked at
franchised properties is reserved through our central reservation system, which consists of our toll-free telephone
reservation system, our proprietary internet site, interfaces with global distribution systems, and other internet reservations
sites. Our reservation system consists of a computer reservation system, three reservation centers in North America and
several international reservation centers. Reservation agents trained on the reservation system can match each caller with a
Choice-branded hotel meeting the caller’ s needs. Our CRS provides a data link to our franchised properties as well as to
airline reservation systems such as Amadeus, Galileo, SABRE and Worldspan that facilitate the reservation process for
travel agents. We also offer our rooms for sale on our own proprietary internet site (www.choicehotels.com) as well as
those of other travel companies.
We continue to implement our integrated reservation strategy to improve reservations delivery, reduce franchisee
costs and improve franchisee satisfaction by enhancing our website, choicehotels.com, and selectively distributing our
inventory with third parties that can drive additional business to the Company and its brands. We have established
agreements with key third party travel intermediaries to gain additional distribution points. These agreements typically
offer our brands preferred placement on these third party sites at reduced transaction fees. We also continue to educate our
individual franchisees about the unfavorable impact to their business of contracting with sites with which we do not have
preferred agreements. We currently have agreements with many but not all major online third party sites.
Property Management Systems. Our proprietary property and yield management systems, Profit Manager by Choice
Hotels and ChoiceADVANTAGE, are designed to help franchisees maximize profitability and compete more effectively
by managing their rooms inventory, rates and reservations. These systems synchronize each hotel’ s inventory with our
system, giving our reservation sales agents last room sell capabilities at every hotel. These systems include a revenue
management feature that calculates and suggests optimum rates based on each hotel’ s past performance and projected
occupancy. These tools are critical to business delivery and yield improvement as they facilitate the franchisee’ s ability to
effectively manage their hotel operations, determine appropriate rates, drive occupancy and participate in our marketing
programs. The Profit Manager system is used primarily by our domestic non-economy brand franchises and
ChoiceADVANTAGE is utilized primarily by our economy brand franchises. The Company is currently in the process of
migrating all franchised hotels from the Profit Manager system to the web-based hotel property management system,
ChoiceADVANTAGE. As a pure web-based solution, the ChoiceAdvantage system allows franchisees greater flexibility
in hardware choices and reduces each hotel’ s investment in on-site computer equipment resulting in a lower total cost of
ownership for property management systems. This process is expected to be completed over the next several years.
Brand Name Marketing and Advertising. 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 midscale and
economy categories. Marketing and advertising efforts include national television, internet and radio advertising, print
advertising in consumer and trade media and promotional events, including joint marketing promotions with vendors and
corporate partners.
Numerous marketing and sales programs are conducted which target specific groups, including business travelers,
senior citizens, automobile club members, families, government and military employees, 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 an annual publication of a travel and vacation directory.
Since 1998, we have operated a loyalty program called Choice Privileges, which includes all of our mid-scale brands
(Comfort, Clarion, Quality, Sleep, MainStay Suites and Suburban Extended Stay Hotel) to attract and retain travelers by
rewarding frequent stays with points towards free hotel stays and other rewards. As of December 31, 2007, the program
had approximately 6.3 million members. In 2001, we launched a similar loyalty program called EA$Y CHOICE® for our
Econo Lodge and Rodeway Inn brands. The EA$Y CHOICE program is a stamp redemption program and has no
membership requirement to participate. Choice Privileges and EA$Y CHOICE participants can earn points/stamps
redeemable for free stays in Choice brand properties. The Company also offers guests the ability to earn airline miles for
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