Choice Hotels

Choice Hotels International Inc., a subsidiary of Manor Care, Inc., is the world's second largest franchise hotel chain, overseeing more than 3,400 hotels and 400,000 rooms in 34 countries. Choice is also the fastest-growing hotel chain, adding nearly one hotel each day in 1994. Hotels in the Choice chain operate under seven market-segmented brand names (Clarion, Quality, Comfort, Sleep, Econo Lodge, Rodeway, and Friendship), ranging from economy to luxury, with special attention to business travelers and senior citizens. While Choice, through Manor Care, owns a number of hotels, its business primarily provides marketing, reservations, and quality assurance programs to its franchisees in return for a three to eight percent licensing fee. Although Choice Hotels International was formally incorporated in 1981, its origins reach back to 1941, when a group of independent motel owners and operators in Florida formed the nonprofit Quality Courts United membership corporation in response to a negative perception of motels that was prevalent at the time. The rise of the automobile and the development of the first highways had brought growing numbers of roadside tourist camps, later known as motels, to serve the increasingly mobile American population. By the 1930s, however, motels had already gained a reputation as hideouts for criminals and other undesirables, prompting J. Edgar Hoover to write in American magazine that "a majority of the 35,000 tourist camps in the U.S. threaten the peace and welfare of the communities upon which these camps have fastened themselves and all of us who form the motoring public." The members of Quality Courts United sought to improve their image--and protect their businesses--by establishing and maintaining quality standards. The corporation also provided promotion and advertising services for its members. In 1963 Quality Courts United incorporated as Quality Courts Motels, Inc., and began a more formal, franchise-based relationship with its members. One of these members was Stewart Bainum, a former plumbing contractor, who had entered the construction business in the 1950s and built a nursing home in 1960. In 1963 Bainum franchised his first motel with Quality Courts Motels. By 1968 Bainum operated eight nursing homes, incorporating them as Manor Care, Inc., while grouping five motels, franchised with Quality Courts Motels, under the name Park Consolidated Motels, Inc. In that year, Bainum merged Park Consolidated with Quality Courts, becoming president and chief financial officer of a company which by then represented 410 franchised and 12 company-owned motels. With most of its motels concentrated in the eastern United States, Quality Courts moved to expand into the rest of the country and Canada. Within two years, Quality Courts operated franchised motels in 33 states, and began its first international operations, opening an International Division in Brussels and its first hotel in Bonn. At the same time, Quality broadened its business with the purchase of Revere Furniture and Equipment company, a seller of motel furnishings, and Contempo Associates, which focused on motel interior design. With plans to expand throughout Europe, Quality changed its name in 1972 to Quality Inns International. The oil embargo of 1973, however, disrupted these plans. The effects of the gas shortage were particularly severe on the motel business, as the numbers of automobile travelers dropped dramatically, to the point that Quality saw its survival threatened. In response, Quality put international expansion on hold, halted new construction, dropped its unprofitable properties, and concentrated instead on developing its franchising business. Several years would pass before the company fully recovered from the embargo and resulting recession. By 1977 Quality counted itself as the tenth-largest motel chain in the United States. The purchase in the following year of the Royale Inns of America chain, as well as a joint v