The transformation of CHE Hotel Group into a branded hotel operator focused on premium limited service and full-service mid market hotels is hurting perhaps more than expected.
But the company is making progress and has appointed a new CEO, Michael Prager, who is committed to continuing the transition “from defensive survivor to aggressive brand builder”.
The first six months of this year saw CHE more than double its loss to £4m from the previous £1.8m. It blamed having to accelerate its refurbishment and remodelling programme and rising costs.
The main platform for future growth is its limited service, new build, Sleep Inn product which it wants to grow to 60 units within five years in the UK and Germany.
Growth is also to come from the repositioning of existing Quality hotels and winning of management contracts on properties that can take this brand, the more downscale Comfort moniker or more upscale Clarion.
CHE is currently negotiating an exit from its continental European master franchise agreement with Choice Hotels International which it hopes to complete by the autumn, leaving it with just the UK franchise business which encompasses 93 franchised properties.
The exit of CHE from continental Europe as the master franchise holder will prove a headache for the US-based Choice Hotels International. It has only just begun receiving royalties from CHE after a five-year moratorium.
And now the world’s second biggest franchiser of hotels – after Wyndham – has to have yet another reassessment of its international strategy.
At its own half-year results presentation it was clear that international growth is being all but ignored. The US pipeline was 687 hotels with 53,765 rooms but internationally it was just 65 hotels with 5,993 rooms.