Character Matters as Much as Cash Flow

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April 16, 2013

Bob Coleman: We’re with Azim Saju and Rocky Pintozzi at the Choice Owners Council in Phoenix, Arizona. Gentlemen, thank you for inviting me; wonderful day.

Financing is key for your members. What is the main take away that the attendees are going to take with them back to their locations?

Azim Saju: The main take away I heard was character matters as much as cash flow; meaning being responsive to your lender; having regular financial statements; sharing those with the lender; creating a partnership with your lender so that you’re not connecting with them only during circumstances when you have a need, but you’re consistently connecting with them and sharing your financial information.

Bob: Now we need to get the regulators to view you as Main Street employers and Main Street Small Businesses, and out of that commercial real estate bucket.

Azim: Absolutely.

Bob: Tell us about the Choice Owners Council. What should bankers know about your brand?

Rocky Pintozzi: Well we represent the core brands of Choice Hotels. Choice Hotels itself has ten different brands. We represent the core brands, the Comfort family – The Comfort Inns, Comfort Suites, Quality, Sleep Inn, and about 3,000/4,000 members on any given day. So we represent them as advocates to the Brand. We’re elected to our positions in our different regions and we meet with them locally; and then we represent them when we go . . .

Bob: A lot of more professional management coming down the line. I mean your group here are survivors and they’ve learned how to manage this recession; and I imagine a lot more financial data benchmarking their better operators.

Rocky: Yes, and I find that being involved with CHOC is that I come away as a better operator, too. I learn from the franchisor; I learn from our peers; we learn from each other. And we do become a better operator.

Bob: Rocky, in this congress right now, SBA 504 Refinance – it looks like it has bi-partisan support; we’re hoping it goes through. How important is that for your members?

Rocky: Incredible. I did one myself and

Bob: And you’re out of . . .

Rocky: Chicago. And it was tough; it was tough to get it done. It wasn’t our first SBA loan either, but you had that 11 month wheelhouse where they didn’t have the program set, so we were watching the clock very closely. And a lot of money didn’t get put in play, which is very disappointing.

Bob: Yeah, a lot of money was left on the table.

Rocky: Absolutely. And because we are, unfortunately, put in the same bucket as a lot of restaurant owners that have gone under; you know that holds us back I think. I would hope that not only our leaders, but the eventual banks that would lend us the money, would look at us differently. And the default rate, this is not as high as other brands or other companies.

Bob: Azim, you’re out of Ocala, Florida. How many years do you have, and here you have a choice to talk to the bankers out there. What do you want to tell them?

Azim: We have 9 units; and what I want to tell the bankers, especially as it relates to Choice Brands, is that the franchisor is putting their money where their mouth is; meaning that Sleep Inn had a refresh, or is going through a refresh as a Brand. And Choice has financially participated with that refresh, which is a big deal; because not only does it raise the value of the Brand, but it shows that they believe in what they are rolling out so much that they are ready to put money there. And in turn, our individual Sleep Inn properties have seen huge jumps in index resulting in, I believe, from those refreshes.

Rocky: Absolutely.

Bob: Great. Azim, Rocky; Phoenix, Arizona. Thank you for joining us gentlemen.

Rocky: Thank you Bob. Thank you for coming.

Azim: Thank you Bob.

Watch the 3:47 Interview