Given the recovery of the business and the strength of the brand's balance sheet, Choice Hotels International is looking to further invest in its business while keeping an eye on opportunities for mergers and acquisitions, President and CEO Pat Pacious said on a call Monday to discuss first quarter 2021 earnings with analysts.

According to the company's earnings release, Choice, which is heavily focused on extended-stay and upscale hotel offerings, had "total available liquidity consisting of cash and available borrowing capacity through the revolving credit facility" of approximately $823 million at the end of the quarter. The company is expected to pay $25 million in dividends this year.

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The company also reinstated quarterly cash dividend payments at pre-pandemic levels at the approval of its Board of Directors and resumed its stock repurchase program.

Choice had 3.4 million shares remaining under the current repurchase program at the end of the first quarter and "repurchased less than 0.1 million shares of common stock for $5.1 million through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company's equity incentive plans," according to the release.

Choice is investing for the long term through new prototypes such as the Comfort Rise and Shine prototype announced in March while also looking for possible mergers and acquisitions and returning capital to shareholders, Pacious said.

"We have the ability to return to what we were doing back in February of last year," he said. "We're not prioritizing one [strategy] over the other ... [but] they move in tandem with each other and we're saying we're in a place today where we can return all four of those to where we were prior to the pandemic."

With its 2018 acquisition of the WoodSpring Suites brand and other strategic investments in the extended-stay segment, Choice has "nearly quadrupled" the size of its portfolio, and extended stay represented 10% of total domestic rooms as of the end of the quarter, Pacious said.

Choice's extended-stay segments increased by 44 hotels during the first quarter year-over-year from the first quarter of 2020 and now has approximately 455 domestic hotels with a domestic pipeline of 310 hotels, he said.

"We expect this extended-stay unit growth rate to further accelerate in the future," he said.

Pacious added that the "WoodSpring Suites brand is our first brand to experience [revenue per available room] levels that exceeded our 2019 results."

For the first quarter of 2021 compared to the first quarter of 2019, the brand reported over 3% RevPAR growth, which was driven by an average daily rate increase of over 4% and an average occupancy rate of 74%, he said.

Developer interest in Choice's upscale brands remains high, Pacious said, adding that the company "more than quadrupled the number of domestic franchise contracts in the first quarter year over year."

Choice's Ascend Collection soft brand grew domestic room count by approximately 26% year over year and has nearly 380 hotels open around the globe, he said.

Pacious added that Choice onboarded 22 casino-resort properties through a partnership with Penn National Gaming, which represented "nearly 7,000 rooms joining our Ascend hotel collection."

The Cambria brand grew its portfolio size by 14% to 57 units with 18 projects "under active construction at the end of March," he said.

Despite construction cost pressures and labor challenges, Pacious said owner interest remains strong for Choice brands, especially for WoodSpring Suites and its newest extended-stay brand Everhome Suites.

Construction issues are around lumber costs and other transitory material costs, but Pacious said vendors expect that to normalize in three to four months.

"That's the same working hypothesis most of our developers have," he said. "So getting your application and getting a contract executed, getting your land acquired and then getting your financing, that takes time. I think a lot of owners are expecting to get the ball rolling and then as things move forward hopefully three to four months from now, most construction costs come down."

Choice reported occupancy of 47.1%, average daily rate of $69.49 and RevPAR of $32.73 during the first quarter, according to the earnings release.

Total revenue decreased 16% to $182.9 million compared to the first quarter of 2020.

As of press time, Choice's stock was trading at $114.37 per share, up 9.5% year to date. The Nasdaq Composite was 5.5% for the same period.