Choice Hotels’ interim CEO Dominic Dragisich has a clear mission: close the revenue gap that has left the company trailing its rivals. Eleven weeks into the top job, Dragisich addressed the issue head-on during Wednesday’s earnings call, acknowledging that the company’s U.S. business underperformed in the second quarter.

According to data from CoStar, revenue per available room (RevPAR) at Choice’s upscale-and-above hotels in the U.S. rose just 1.3% year over year, compared with an industry average of roughly 5% for those chain scales. Midscale and upper midscale properties grew 1.1%, against an industry average of about 4%. Budget hotels actually declined 0.7%, while the segment overall managed a modest gain of about 1%.

‘This result implies to us that they again continue to lose market share,’ wrote Patrick Scholes, analyst at Truist Securities, in a report on Choice. The numbers paint a clear picture of a company that, while adding rooms again, is not keeping pace with its competitors on revenue.

Dragisich, who inherited a franchise machine that is expanding its footprint, is making the pitch that he can turn things around. ‘My job is to close the gap between where we are today and where I believe this business can perform,’ he told analysts. His confidence is notable, but the challenge is substantial.

The revenue gap is not just a financial metric; it reflects broader trends in the hospitality industry. As travelers return in force, major hotel groups are seeing strong RevPAR growth, driven by higher rates and occupancy. Choice’s lag suggests that its brands, particularly in the upscale segment, may be struggling to command the same pricing power as competitors.

For travelers, this could mean more attractive deals at Choice properties, but it also raises questions about the long-term competitiveness of the brand. Dragisich’s strategy will be closely watched by investors and industry observers alike.

The interim CEO’s first task is clear: fix the revenue gap. Whether he can do so remains to be seen, but his early statements suggest a focused approach. ‘My job is to close the gap,’ he reiterated, signaling that he is under no illusions about the scale of the task.

As the hospitality sector continues to recover, Choice Hotels’ performance will be a key indicator of its ability to compete. The company’s franchise model, which has been a growth engine, may need adjustments to align with revenue goals. Dragisich’s leadership will be tested in the coming quarters.

For now, the numbers are sobering. With RevPAR growth trailing industry averages across all segments, Choice has its work cut out. But Dragisich’s determination, expressed in his first public remarks as CEO, offers a glimmer of hope for the company’s future.

As reported by Skift, the interim CEO’s focus on closing the revenue gap is the right priority. The coming months will reveal whether his strategies can translate into improved performance. For the travel industry, Choice’s trajectory is one to watch, as it reflects broader dynamics in the hotel market.

In the meantime, travelers may benefit from competitive pricing at Choice properties, even as the company works to strengthen its position. The road ahead is challenging, but Dragisich’s leadership marks a new chapter for the franchise giant.