As hotel development faces rising construction costs and ongoing supply chain disruptions, Choice Hotels International, Inc. (NYSE: CHH) is proactively adapting to the changing landscape. The company has unveiled new value-engineered prototypes for its Comfort and Country Inn & Suites by Radisson brands, designed to reduce construction costs by 10 to 15 percent while enhancing guest experience and maximizing revenue potential.
The hotel industry has been grappling with significant increases in labor and material costs since the COVID-19 pandemic, with inflation and supply chain bottlenecks making hotel construction more expensive and time-consuming. Lumber, steel, and furniture costs have risen, while product and material delays continue to challenge developers. These economic factors make value engineering (a method of designing with cost efficiency and material availability in mind) more crucial than ever in the franchise model.
“Choice Hotels is committed to growing and strengthening both Comfort and Country Inn & Suites by Radisson by ensuring we are providing incredible value and return for both owners and guests,” said Judd Wadholm, Senior Vice President and General Manager of Choice Hotels’ Core Brands. “With an average 90 percent brand recognition for both brands, deep expertise in the upper midscale segment, and newly refined brand identities—combined with the power of Choice Hotels’ franchisee support system—we’re creating an environment to help drive hotel performance.”
Tackling Inflation and Supply Chain Disruptions with Smarter Design
Choice Hotels sought extensive franchisee feedback and conducted in-depth studies on what travelers value most. The result? Refreshed brand identities and prototypes that deliver a premium experience at a lower operational cost—while ensuring materials and furnishings are more accessible in today’s market.
Comfort: A Smart Approach to Cost-Effective Development
Comfort, a leading U.S. hotel brand with more than 2,100 locations and 122 in the pipeline, is reinforcing its reputation for joyful, hassle-free stays with an updated prototype that:
- Adds three additional rooms (keys) without expanding the property footprint, increasing revenue-generating potential.
- Reduces the time needed to open a hotel by cutting furniture, fixtures, and equipment (FF&E) SKUs by 30%, streamlining ordering and delivery processes.
- Optimizes the successful Rise & Shine prototype (introduced in 2023), lowering FF&E costs by 16% on average by sourcing materials more efficiently.
Comfort’s open lobby concept has also been refined, offering a more intuitive layout with durable, easy-to-source furniture and finishes. The use of bright, inviting colors helps elevate the guest experience while maintaining cost efficiency for franchisees.
Country Inn & Suites: Balancing Luxury with Affordability
Country Inn & Suites by Radisson, known for its “residential charm and warm hospitality”, has also evolved to meet market challenges with a design that:
- Gains 18 additional keys while reducing the land footprint, lowering real estate and construction expenses.
- Reduces FF&E implementation costs by using durable, readily available materials without sacrificing brand legacy or guest expectations.
- Offers an in-person prototype showcase at Choice Hotels’ annual convention in April, allowing franchisees to experience firsthand the design and operational efficiencies.
Why Value Engineering is Critical in Franchising
The hospitality industry has been hit hard by inflation, interest rate hikes, and labor shortages, making traditional hotel development models less viable. Franchisees depend on predictable costs, quick openings, and strong returns on investment. With all three of these factors being under pressure post-pandemic.
Supply chain disruptions are still affecting key materials like wood, fabric, and electronics, and this is further compounded by the uncertain future of trade tariffs and their impacts. Franchisors who keep this in mind and plan ahead to build a bridge to where they want to be will be those who win customers and have thriving franchisees in the future. These new prototypes are designed to be adaptable and scalable, ensuring that franchisees can move forward with development projects even in uncertain economic conditions.
By value-engineering its new prototypes, Choice Hotels is ensuring that:
- Owners can build faster and more affordably, avoiding costly delays from unavailable materials.
- Properties can remain competitive with modern, guest-focused designs while maintaining an optimized cost structure.
- Franchisees can achieve higher profitability, thanks to increased room count and more revenue-generating spaces within the same footprint.
Proven Success in a Challenging Market
Despite industry-wide challenges, Choice Hotels’ upper midscale brands continue to show resilience. Since acquiring Radisson Hotels Americas in 2022, Choice Hotels has strengthened the Country Inn & Suites brand. Most recently sharing in a press release the following stats:
- A 19-point increase in RevPAR Index (Revenue Per Available Room).
- A 20% increase in direct online bookings.
- Higher revenue from business and group travelers year-over-year.
Franchisees also benefit from Choice Hotels’ technology and revenue management tools, including:
- ChoiceMAX, a mobile-first system that adjusts rates in real time to maximize revenue.
- ChoiceConnect, which enables seamless remote property management.
- ChoiceHotels.com and the Choice Hotels mobile app, which have seen higher conversion rates following recent enhancements.
In many ways, it’s not just about how you build, design, and implement. It’s also about engineering an experience that can be enjoyed seamlessly, predictably, and profitably both for the franchise owner and hotel guest. Choice Hotels’ tech strategy showcases how technology can often be a platform to achieve this.
Lessons for Other Industries: The Power of Value Engineering
Choice Hotels’ value-engineering approach is a blueprint for success that can be applied to a variety of industries facing similar challenges in construction costs, supply chain issues, and evolving consumer demands. Other franchise-based and real estate-driven businesses can take inspiration from these innovations, particularly in industries that require efficient yet welcoming spaces.
Pet Care Facilities
Pet care franchises, such as boarding, grooming, and daycare centers, are also impacted by rising construction and material costs. A value-engineered approach could entail reducing the footprint while increasing pet capacity and optimizing durable, easy-to-clean materials. This can help maximize profits while maintaining a high-quality guest experience (for both pets and their owners).
Childcare Centers
Daycare and early learning centers require functional, safety-compliant spaces that are both cost-effective and welcoming for children and parents. A model that reduces construction costs while maintaining bright, engaging environments could help childcare franchises expand more rapidly, especially in communities experiencing growing demand.
Senior Living Facilities
Senior care and assisted living facilities require an efficient use of space and resources, similar to hotels. By focusing on modular, flexible designs and cost-effective materials, these facilities could lower costs while maintaining comfort, accessibility, and quality of care.
Co-Working Spaces
As remote and hybrid work models persist, co-working spaces are evolving rapidly. Cost-efficient layouts, smart use of space, and durable, modern design choices—like those seen in Choice Hotels’ updated lobbies—could inspire more efficient office space solutions that cater to flexible work environments.
Fitness Centers & Wellness Spas
Gyms, boutique fitness studios, and wellness spas also face rising development costs. Value engineering could help optimize square footage, reduce construction waste, and create inviting atmospheres without driving up expenses.
A Future-Proof Strategy for Franchise Growth
Choice Hotels’ strategic focus on value engineering and brand refinement puts its franchisees in a stronger position to succeed in a post-pandemic world. By balancing cost efficiencies, streamlined construction, and elevated guest experiences, the company is ensuring that Comfort and Country Inn & Suites remain leading… choices (pun kind-of intended).
As construction costs and supply chain challenges persist, Choice Hotels’ proactive approach provides a blueprint for franchise success. A blueprint that embraces innovation, efficiency, and long-term profitability across multiple industries.
