Choice Hotels Expands in Asia, Set Sights on Tier 2 and Tier 3 Cities

The latest move of Choice Hotels International to purchase a remaining 50 per cent share in the Choice Hotels Canada reflects the critical change in the company global strategy as it no longer focuses on master franchising model in favour of total direct control. Whereas the intended market of the $112 million deal is basically focusing on the Canadian market, the strategic considerations of the deal are extensive, especially to markets with high growth rates such as Asia and India where the midscale and upper midscale segments are getting traction.

Through concentration of operations in Canada, not only can Choice streamline decision making, but can also unleash its full 22 brand portfolio ready to be rolled out globally.

Key Highlights

• Choice Hotels shifts to direct control, ending master franchise model globally.
• India seen as next frontier for branded midscale hotel expansion.
• $112M Canada deal sets global precedent for asset-light hospitality growth.

The action has established a precedent of how Choice can enter other NATO countries with new markets in Asia developing where there is still an unsatisfied need in the market of affordable hospitality, particularly in Tier 2 and Tier 3 cities.

As India is expected to become one of the high-potential tourism economies in the world, the extensive usage of Choice brand architecture, including Comfort and Quality Inn to luxury Cambria and Radisson brands, places the organization in a position where it will be able to compete effectively by targeting domestic leisure and business tourism, as well as domestic spiritual tourism.

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This look is further fortified by the fact that this group is continuously expanding internationally:

China: Choice reached a distribution agreement with SSAW Hotels & Resorts, which will include more than 9,500 rooms in years 2025 and 10,000 under a long-term franchise agreement.

France: Increased its hotel rooms by almost 3-folds through direct franchise tie-up with Zenitude Hotel-Residences.

Brazil: After signing a 20-years extension with Atlantica Hospitality, the Brazilian signed over 10,000 new rooms.

India in this scenario can be seen as a high-potential next frontier with the same set of basics, large size domestic traveller base, an underpenetrated branded hotel inventory, and an appreciation of asset light franchise model. Its existing partnerships in India may be converted into stricter ownership that would facilitate quicker rollouts, further brand impregnation, and owner support.