Comfort Inn 2007 Annual Report Download - page 27

qualifying stays redeemable for flights with various airline partners as well as redeem points for gift certificates at
participating retailers such as Wal-Mart. These programs allow us to conduct lower cost, more targeted marketing
campaigns to our consumers. During 2007, the Company announced that effective January 1, 2008 the Choice Privileges
program will begin to include the Econo Lodge and Rodeway brands. Beginning January 1, 2008, EA$Y CHOICE stamps
will no longer be distributed and members will have until March 31, 2008 to redeem their stamps or convert them into
Choice Privileges points.
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. All sales
personnel sell business for all of our brands.
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.
Quality Assurance Programs. Consistent quality standards are critical to the success of a hotel franchise. We have
established quality standards for all of our franchised brands that cover housekeeping, maintenance, brand identification
and minimum service offerings. We inspect properties for compliance with our quality standards when application is
made for admission to the franchise system. The compliance of existing franchisees with quality standards is monitored
through scheduled and unannounced quality assurance reviews conducted periodically at each property. Properties that
fail to maintain a minimum score are reinspected on a more frequent basis until deficiencies are cured, or until such
properties are terminated. To encourage compliance with quality standards, various brand-specific incentives and awards
are used to reward franchisees that maintain consistent quality standards. We identify franchisees whose properties
operate below minimum quality standards and assist them in complying with brand specifications. Franchisees who fail to
improve on identified quality matters may be subject to consequences ranging from written warnings to termination of the
franchisee’ s franchise agreement.
Training. We maintain a training department that conducts mandatory training programs for all franchisees and their
employees. Regularly scheduled regional and national training meetings are also conducted for both property-level staff
and managers. Training programs teach franchisees how to best use the Choice reservation system and marketing
programs and fundamental hotel operations such as housekeeping, maintenance and inventory yield management.
Training is conducted by a variety of methods, including group instruction seminars and video programs. We have
also developed an interactive computer-based training system that will train hotel employees at their own pace.
Opening Services. We maintain an opening services department with field based employees who ensure that
incoming hotels meet or exceed brand standards and to ensure that each incoming hotel opens successfully. We also
maintain a design and construction department to assist franchisees in refurbishing, renovating, or constructing their
properties prior to or after joining the system. Department personnel assist franchisees in meeting our brand specifications
by providing technical expertise and cost-savings suggestions.
Competition
Competition among franchise lodging chains is intense in attracting potential franchisees to the system, retaining
existing franchisees and in generating reservations for franchisees. Franchise contracts are typically long-term in nature,
but most allow the hotel owner to opt-out of the agreement at mutually agreed upon anniversary dates.
We believe that hotel operators choose lodging franchisors based primarily on the value and quality of each
franchisor’ s brand and services and the extent to which affiliation with that franchisor may increase the franchisee’ s
reservations and profits. We also believe that hotel operators select a franchisor in part based on the franchisor’ s
reputation among other franchisees and the success of its existing franchisees.
Since our franchise system revenues are based on franchisees’ gross room revenues, our prospects for growth are
largely dependent upon the ability of our franchisees to compete in the lodging market, our ability to convert competitor
franchises and independent hotels to our brands and the ability of existing and potential franchisees to obtain financing to
construct new hotels.
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