Brand Portfolio Management Case Study: Choice Hotels International

2393 Words Sep 13th, 2006 10 Pages
Executive Summary

Choice Hotels International, Inc., was the second-largest hotel franchising company based in the United States in the year of 1995. It had gained much reputation in the budget market and in its franchising system for quick penetration of the market. In 1995, the group was managing 7 brands, namely Clarion, Quality, Comfort and Sleep under the Sunburst Group; and Econo Lodge, Rodeway and Friendship under the Economy Group. Choice nearly doubled its net income from 1990 to 1994 and the growth was predicted to continue after the downturn in the early 1990s.

However, along with its rapid growth, the group was faced with a number of challenges, both internally and externally. Competition in the budget market grew much
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Having multiple brands for a hotel company was not uncommon, and the market was generally segmented using price range and degree of luxury/economy.

There observed an increasing demand for limited-service hotels from budget travelers. The demand in general was also in the rise after the downturn in the early 1990s. According to a survey conducted in the same year, customers preferred brands affiliated with hotel chains over independent hotel operators. It was also found that to create a fresh brand would incur less cost and be more readily preferred by the customers than reinventing the existing brands.

Choice Hotels International in 1995 was moving towards expansion both domestically and internationally, while the key issue here involved selling themselves both to franchisees (direct impact on the company's bottom line) and to the end-customers. Having the efficient and effective brand management in the portfolio was also the key point that should be understood and carefully planned out.

The group's strategy was to have 7 different segments/brands of the hotel properties; however, the attempt had been to focus on 7 distinct brand identity but not customer target segments. Furthermore, according to the case fact, the current customer identity was homogenous for all brand segments (portion of business travelers, gender, and level household income). The customer segment had not been clearly
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