Patrick Pacious - Chief Operating Officer

Tell us about yourself, what brought you here, and why you chose Choice?

I had been an industry consultant for about eight years, and I loved the industry, primarily because it's a growing industry and while there's plenty of competition, it's fairly friendly. The hospitality business model that is most attractive to me is the franchise model. Choice Hotels was a franchise only company, which means the predictability and transparency of the business is right there. It's an industry where I got to know a lot of the players, and particularly, the executives at Choice, and that's what ultimately made me decide to come in-house. I worked on eight different projects- the CFO, the IT area, the procurement area, the brands- across the company during that consulting time frame. They had reached out to me for a recommendation on someone to run their corporate strategy and development team.

You have great brands, and if you take care of them, they're going to be sought after by people who want to invest their money with Choice to grow the total enterprise.

When you came to work for Choice you started in Corporate Strategy- how did you evolve?

The CFO at the time wanted to reconstitute the corporate strategy team, which he had seeded into the brands organization. He wanted to grow the business beyond the core franchising business, and was looking to me to do that first through a strategic perspective and then ultimately through a corporate development one, to go out and actually launch or acquire business in our sector or in adjacent businesses.

You don't normally have a company that has the long term investment horizon that Choice Hotels has. Because of the ownership- the concentrated shareholder ownership of a public company- we have patient capital that is provided by impatient capitalists! They have high demands on us, but they're also willing to invest for the long term and that's what required of the technology business and to build a brand. They've owned business for years so they understand it and they know how long it takes to do those things. They're patient, but they're impatient from the standpoint of 'make it happen today'. We're only all getting older, so, why put off to tomorrow what you can accomplish today?

Today your title is COO- Operating means a lot- what are the operations you oversee?

Operations is all the business delivery to our hotels, whether it's coming through our website, our call centers, our direct connects with third parties, our loyalty program, or our Global Sales team that's out selling room nights. All of those are delivering business to Choice branded hotels.

Second, it involves all of our support functions; the technology folks who build all those systems, the service people who service our hotels, help our hoteliers make more money, run all of our training, and open new hotels. That all reports up to me- that's sort of the business delivery side of the house.

I also have a lot of staff functions that report to me- corporate strategy and business analytics. Then there are the things I started out with- corporate development, corporate strategy, and the entire international business which we run as a separate PNL, so everything from brands and marketing to services on that front. On the brands side of the house, we have marketing, advertising, and ownership of the brands from Cambria® down to Rodeway Inn®.

What you do as a COO? Is it different than what you'd expected?

When you have this span of responsibility as a COO, you're constantly in a position to connect the dots between multiple parts of the organization, to see patterns and trends. Those can be both positive trends that allow you to make some changes to take advantage of an opportunity, and they can also be negative trends; risks that you see for the business that you need to head off. The most challenging part is making sure that all parts of the organization are all rowing in the same direction and that they're all rowing at the same speed. That's the most interesting part of the job- coordinating all the various parts of the company and putting out a singular strategy for both your franchisees and your guests, so that the experience they have working with us is a positive one.

What do you think has set you apart as a leader?

When I was in the Navy, I was 22 and I had 150 people working for me, the vast majority were older than I was. You learn early on how to adapt and work with a large organization and how to keep people aligned and moving in the same direction. One of the key focuses I have is on building consensus. A leader can't lead if he doesn't have his followers understanding what direction they're going in. Leaders make the uncertain certain, and so to do that you need to be able to communicate to people in ways that they understand, and set priorities in a way that they understand the thinking behind it.

Anyone in their first job is learning more than leading, and understanding that difference and understanding the role you're playing is what's going to define your success. You recognize early on you have to partner with people. You learn how to communicate back up to your boss on the things that your experts who work for you are concerned about. You're a conduit, and learning how to play that role is a difficult one, and many people fail at it. They walk in and say I'm your boss, you must do everything I say, and they don't listen. The most successful people are the ones who listen to the folks who work for them. They're usually closer to the problems, which means they are closer to the solution, and they'll tell you what it is if you ask and listen. If you don't it's at your own peril.

So you work for a public company, you have a very high position within that organization...how do you maintain your confidence and not stress out?

You have to learn to compartmentalize things, and look at the things you know you've got some control over. Don't sit on problems, address them. If there is bad news to be delivered to your boss or to the folks who work for you, don't be afraid of doing it. You're better off getting it out there and getting everyone working on the solution, even if you don't have the answers.

The second thing is you surround yourself with good people. You need to have confidence that the people working around you can carry out what the company is trying to do, and that they're resilient. You have to sort of expect the unexpected. You can never be complacent or resting on your laurels, saying, "We've fixed every problem today and we've reached the end of all of our problems," you just know that there's always going to be more, and I think you have to set a tone with your direct reports and boss, so that you can sleep at night. You just know that whatever comes at you, you're going to be able to approach it and resolve it.

What is it about Choice that you just can't wait to share?

It's exciting to work at a company that is not afraid to change. This company has been around since the 30s, and most companies don't last that long. We've survived that long because we've adapted to change. As a company we started out as a single brand, managing hotels. Now we franchise 11 different brands, and we have 3,500 franchisees. The reason for that is the courage to change.

The first exciting piece is our pushing into the upscale segment, which is where consumers want to stay and developers want to develop. The second piece is the push we've made into technology. We have decided not to outsource everything, but to be an innovative company, and we're recognized for that. Other companies look to us and what we're doing, and it's great to be a leader on that front. That part of the business is becoming more and more important, and not just to the hotel industry, but to American and global industry as a whole. It's very fascinating and wonderful to be working with a great team of people, and we will attract great talent because of the tools and technologies we're working with.

What advice would you give someone who would be coming to work at Choice?

You can't be afraid to swim against the tide. When I was in my first private sector consultant job, everyone wanted to work in the telecom industry because it was sexy, it was cool... my first job there, I was doing billing codes. Great industry, but the work you're doing is boring. I went over to the hotel side of the house, not exactly an exciting industry back then, but the type of work; e-business, branding, marketing... you were able to get the opportunity to do some really interesting work in a less-than-interesting industry at the time.

Working in an industry that wasn't as high profile, you got to do more interesting work. For me, that was a much better career move because it gave me an opportunity to see things others don't see. Following the herd is not always a good thing. You should do what you like and what you find more interesting.

Don't do it just because you're working for a company with a name that people know. We talked to plenty of people who work at high-tech companies, but the work they're doing there? It's pretty mundane.

Good point. What are key ingredients for success at Choice?

Find what drives value in the company. In our organization, I identified IT. Now, 10 years ago, our IT organization was not viewed as a potential value driver. I made a decision to go work in that part of the organization because I saw the value that could be created there. That's true of any company, regardless of industry. Go look at what drives sales, value, and the stock price. See what the analysts are telling investors about why this company is something to invest in, what's creating value today and what expectations they have.

The other way to look at it is go look at where the biggest threats to the company are, and then figure that out. What threat can you mitigate and flip around into an opportunity? If you're still doing the same things you were doing two years ago, you should be asking yourself, 'what else could I add to my plate?' You keep driving the success of things you've had in the past but you're adding additional responsibilities which help you grow as a leader and manager, as opposed to lateral moves.

Describe what you'd like to see from folks in tech and e-commerce.

There's a lot of overlaps there. What you want are intellectually curious people who not only know their professional skill set, but are also the ones that can put one plus one together and have it equal more than two. Technological evolution is occurring so rapidly, that today if you're highly skilled in one piece of technology or one programming language, you can be obsolete in 5 years. You have to be aware of change, and always looking at what's going where. You're going to be happier in your role if you adapt to change over time.

How does Choice stay current?

We're always looking at best practices. For example, the way we're organized in the technology space. We're moving to agile software development, away from a waterfall traditional model that has been around the industry for many, many years.

It's hard to adapt to change, and people often resist change because they fear it. I think we as a company have been pretty fearless on that front. That's something that gets embedded in your culture, and if you do it every couple of years, you can look back at the last change you made and say, "We all survived it. We have a few scars but those scars have made us better at our trade, better professionals, made us better at serving our customers," and that's something that we're always asking.