Choice Hotels International continued to see strong results and outperformance among the industry during the second quarter.
Choice President and CEO Pat Pacious said the goal is not to meet 2019 performance levels; rather, it's to "drive performance to new levels."
Domestic systemwide revenue-per-available-room change outperformed the industry by 20 percentage points, which is a decline of 1.1% compared to the same period in 2019, according to the company's earnings release. Occupancy increased by 20 basis points from the second quarter of 2019, the release states.
On a call with analysts to report earnings, Pacious said the company sees "an outsized opportunity to continue or even accelerate strategic investments to capture a greater share of travel demand."
"What gives us optimism is that the bold investments we continue to make are paying off," he said. "These include launching and enhancing brands in each of our strategic segments. Namely, expanding our upscale positioning, strengthening our midscale leadership role and rapidly growing our extended-stay portfolio."
Extended-Stay Performance
Choice's extended-stay portfolio saw domestic systemwide RevPAR growth of 9.9% in the second quarter compared to the same period in 2019. This was driven by an occupancy level of 82% and a 2% increase in average daily rate, according to the earnings release.
The WoodSpring Suites brand achieved RevPAR growth of 16% during the quarter compared to the second quarter of 2019.
Choice has quadrupled the size of its extended-stay portfolio in the last five years, and its most recent brand opening in the space last year was the midscale, extended-stay brand Everhome Suites, Pacious said.
He added that the Everhome Suites brand has high developer interest similar to WoodSpring.
Upscale Brands
Choice has seen rapid growth in the upscale segment for its Ascend Hotels Collection and Cambria brands, Pacious said.
According to the earnings release, Choice's upscale portfolio continued gain share in domestic systemwide RevPAR versus its competitors for second quarter of 2021 compared to second quarter of 2019. Cambria Hotels achieved gains of 14 percentage points.
Ascend's June RevPAR growth was 4.7%, driven by ADR growth of 12.2%.
Choice "increased the number of domestic upscale rooms by 25% since the end of 2019," Pacious said.
Share Repurchase Program
Chief Financial Officer Dominic Dragisich said the company had approximately $908 million in cash and available borrowing capacity through its revolving credit facility at the end of the second quarter.
Choice also saw cash flow from operations of $102.3 million for the quarter, which is a 28% increase versus the second quarter of 2019, he said.
Dragisich added that the company's "profit results, combined with our confidence in continuing to generate strong levels of cash and our optimism for the future led us to reinstate the quarterly dividend at the pre-pandemic level and resume our share repurchase program."
Choice returned more than $14 million back to shareholders in July 2021 in the form of cash dividends and repurchases of common stock, he said.
As of press time, Choice's stock was trading at $119.93 a share, up 12.4% year to date. The New York Stock Exchange Composite was up 14.7% for the same period.