Mission and Vision Statement of Choice Hotels International - Term Paper Example

Choice Hotels International INTRODUCTION Choice Hotels International, Inc. which is also known as Choice is specialized in providing hospitality services and is based at Rockville, Maryland which is located in the United States (US). It functions as a hotel franchiser in the entire world. The company is specialized in franchising its lodging properties under brand names that include Comfort Suites, Sleep Inn, Comfort Inn, Econo Lodge, Quality, Mainstay Suites, Cambria Suites, Clarion, Rodeway Inn, Ascend Collection and Suburban Extended Stay Hotel. The company actually initiated its business in Maryland and came into existence in the year 1939 and was known as Quality Courts United. In the initial phase of its business, the company was operating only in the US and some parts of Canada. In the year 1972, the organization came to be known as Quality International and started its business of franchising wherein the company independently owned 300 hotels and gained market success. Subsequently, the company bought Rodeway Inn, Friendship Inns and Econo Lodge that were regarded as economy-focused chains in 1990s and thus the company finally changed its name to Choice Hotels International. In the year 2005, Choice Hotels introduced an all-suite design of hotel which is known as Cambaria Suites that has a modern style. In the year 2010, the county officials of Maryland and Montgomery declared that Choice Hotels would shift its headquarter establishment from Silver Spring to Rockville (SpatialPoint, LLC, “Choice Hotels International”). Correspondingly, the paper intends to identify the existing mission and vision of the company along with the risk associated in its business. Moreover, the way in which the company is responding to the determined risks will also be evaluated. MISSION AND VISION STATEMENT OF CHOICE HOTELS INTERNATIONAL Choice Hotels International has a mission to embrace the entire world and stimulate transformation for the future by giving back commitment towards to the society in which the foundation is established and functioning. The foundation is focused towards efforts that offer food, clothes and shelter to those people who actually require them. The mission is also focused towards improving and elevating the educational programs that cater the promotion of growth and overall improvement of tourism. The foundation commences these efforts through volunteerism and commitment to the programs wherein the foundation is actively affianced. Moreover, Choice Hotels International is committed towards providing a better service in the hospitality industry and mark their presence on the communities in which it is operating (Choice Hotels International Foundation, “Annual Report”). The foundation has set its vision to create a strong relationship in the societies by providing financial support through the contribution of associates that belong to Choice Hotels International. It also has a vision to generate an optimum return on investment (ROI) that can be obtained from its franchises (Choice Hotels International, Inc, “Our Mission, Our Vision, Our Passion”). It has been revealed that there is an item missing from the mission and vision statement of Choice Hotels that is serving according to the cultural beliefs and understanding their values. Enhancement in the lifestyle of people in the community has also been missing from the mission and vision statement (Choice Hotels International, Inc, “Our Mission, Our Vision, Our Passion”). The most effective elements that must be included in a vision statement involve core ideology, proposed future and realization of service to the shareholders. These elements are considered to be most effective because a core ideology provides an understanding regarding the foundations value and its reason for existence. Conversely, proposed future describes how the foundation would appear once its objectives are attained. Realization of service describes how business serves its shareholders. These aspects provide a clear understanding about why these elements are most effective. On the other hand, the most important elements that must be included in the mission statement are that the mission should outline regarding ‘who is the foundation’, ‘what does it do’ and ‘for whom it has been done’. These elements are significant as they provide an in-depth understanding regarding the purpose of the business (Purdue University, “Developing Vision and Mission Statements”). From the aforesaid mission and vision statement, it can be derived that there are some shortcomings in these statements of Choice Hotels International. These shortcomings involve that the mission of the foundation does not serve the cultural values and beliefs of the people in the society and it is considered that these values must be served effectively. Improvement of lifestyle in the society also can be regarded as a shortcoming in the mission and vision statement of Choice Hotels International. Therefore, in order to make the mission and vision statement more effective, it is considered that there should be certain changes in its mission and vision statement including a clear description of the foundation strategy and an understanding regarding where the foundation would be heading in the future. Furthermore, it must be well-crafted that would reflect its business focus and operations (Pandolfi, “How to Create an Effective Non-Profit Mission Statement”). BUSINESS AND ASSOCIATED RISKS OF CHOICE HOTELS INTERNATIONAL Business and the revenue earned. Choice Hotels International is one of the biggest franchisers of hotels in the world which includes in excess of 6500 hotels. The company along with its business in the US functions in 35 other countries that include a solitary reportable segment of its franchising business. The company in its domestic market directly functions through franchising relationship and in the global market it functions through master franchising and direct franchising. As the company is focused towards hotel franchising instead of ownership, therefore the company earns revenue through economies of scale that is intrinsic in its franchising business. The cost structure being followed is a prospective aspect for improving the operating performance through franchising hotels and royalty rates being offered in the franchising contacts. This in turn results in increased revenue for the international hotel business of the company as it has the scope of obtaining revenue from reservation system and marketing that requires to be provided in the franchising system. The company functions as a business unit with a mix of contracted hotel rooms in various price categories that caters the specific requirements of the customers. This has resulted in the company obtaining revenue from the franchised hotels which facilitates in attaining royalty fees through the level of sales and relicensing function (Choice Hotels International, Inc, “Annual Report”). Choice Hotels in its business operation offers the hotel owners to use its brand license which gives these owners the right to use the brand image, practices and other facilities of the international hotel. In exchange, these owners pay a certain amount fees to the company in order to operate with its brand image and standards. These fees include the initial startup fees, royalty fees along with marketing and reservation fees that directly act as an aspect of earning revenue for the company. However, these fees or revenue are directly dependent on the number of rooms available in the hotel facility along with its existing performance (Choice Hotels International, Inc, “Annual Report”). Performance. It has been revealed that there has been a significant improvement in the performance of Choice Hotels International. As per the statistics in the year 2013, the quarterly revenue earned by the company was 180.695 million US Dollars as equated to 178.306 million US Dollars revenue earned in the last quarter of 2012. Moreover, the operating income of the company also increased to 47.157 million US Dollars along with net income of 27.332 million US Dollars. In relation to the Earnings Before Interest and Tax (EBIT), it is witnessed that the company’s EBIT was 49.552 million US Dollars as equated to 47.471 in the last quarter of 2012. Overall in the year 2013, the total revenue obtained by the company was 724.307 million US Dollars as compared to 691.509 million US Dollars in 2012 which makes it evident that the company had a good performance in the global market (Bloomberg, “Choice Hotels Intl Inc (CHH: New York”). According to the Chief Executive Officer Stephen P. Joyce, there has been a significant increase in the company’s Revenue Per Available Room (RevPAR) and has still been increasing in 2014. The company has been able to attain long-term growth and portfolio profitability due to its performance which has been ever improving (Choice Hotels International, “Annual Review”). Risks. Choice Hotels International and its businesses are subjected to different types of risks which might negatively impact the financial condition of the company. These risks are related to operating risks which is quite commonplace in the hotel industry. As witnessed substantial portion of the revenue generated is obtained from the franchising brands through fees from room revenue, therefore the risks associated with these subsidiaries can have a direct impact on the entire business. Henceforth, the risks for the Choice Hotels International with respect to the franchising and lodging industry include frequent variations in the number of these hotels functioning under the franchised brands, variations in the mix related to franchised hotels in the price categories of numerous lodging industries, variations in the room rates and use of these hotels, desirability in the geographic location of the hotel and variations in the overall economic and market situations that can have a negative impact on the level of business along with leisure related travel. Thus, these can result in fall of demand in the services being availed in the hotel industry that can have a negative consequence on the entire business establishment. Moreover, the level of unemployment for the customers can also result in decline of demand in the hotel industry. Similarly, balancing the increased cost of operations with the increase in room rates poses a major threat to the hotel industry. Increase in the cost of operations at the corporate level can result in decrease of profit margin. And, the hotel franchisee has been built to such an extent that there has been more supply in hotel services as compared to the demand of these services along with decrease in the room rates of these hotels. Furthermore, changes in the pattern of travelling of the customers along with changes in government policies act as a risk and pose a huge threat to the company (Choice Hotels International, Inc, “Annual Report”). Response to the Risks. It has been revealed that Choice Hotels International has been facing a huge competition as there has been an increase in the number of hotels franchisee. Therefore, in order to respond to this competition, the company can introduce innovative services so that the customers get attracted to the Choice Hotels International franchises due to its service. Moreover, risk related to the difference in price categories of the hotel industry can be effectively mitigated therefore it is considered that the company must have more flexible pricing strategies in the franchisee hotels. Room rates must be classified according to the specific requirements of the customers that should be segmented to lower level, middle level and top level so that all the categories of customers can avail the service provided by the company. Additionally, service differentiation strategy must be developed so that the services provided to the customers are unique in nature. As has been observed there is a change in the travelling pattern of the customers, thus in order to understand this pattern the company must derive feedback from the customers regarding the travelling pattern desired by them. In this regard, if the responses provided are effectively implemented in the company’s strategies and policies, it is considered that the company can mitigate the risks associated to its business by a considerable extent. CONCLUSION Choice Hotels International, Inc. is headquartered at Rockville, Maryland that is based at the US. The company is specialized in providing hospitality services with franchises that functions across the world. The company’s mission is to provide commitment towards the community for offering food, clothes and shelter to the general public who has necessity of such basic amenities. On the other hand, its vision is to attain a good ROI from the franchises and building trust and relationship in the community it operates. However, certain effective elements must be included in the mission and vision statement of the company that include core ideology, proposed future and realization of service to the shareholders along with the purpose of the business. In addition, there are certain shortcomings in the mission and vision statement of the company which include lack of clear description regarding the company’s strategy and its commitment in the future. The core business of the company involves providing accommodation services to the customers through its hotel and lodging industry that is scattered into franchises worldwide and act as a major source of revenue for the company. Responsively, the company has been facing certain associated risks in its business functioning that are mainly interrelated to the operating risks and that are relatively common in the hotel industry. Subsequently, certain recommendations have been provided to mitigate the determined risks associated with challenges for the company in the future perspective. Works Cited “Choice Hotels Intl Inc (CHH: New York).” Bloomberg. 2014. Web. 20 Mar. 2014. “Our Mission, Our Vision, Our Passion.” Choice Hotels International, Inc. 2014. Web. 20 Mar. 2014. “Annual Review.” Choice Hotels International. 2010. Web. 20 Mar. 2014. “Annual Report.” Choice Hotels International, Inc. 2011. Web. 20 Mar. 2014. “Annual Report.” Choice Hotels International Foundation. 2007. Web. 20 Mar. 2014. Pandolfi, Francis. How to Create an Effective Non-Profit Mission Statement. 2011. Web. 20 Mar. 2014. “Developing Vision and Mission Statements.” Purdue University. n.d. Web. 20 Mar. 2014. “Choice Hotels International.” SpatialPoint, LLC. n.d. Web. 20 Mar. 2014. Read More