Choice Hotels International reaped the rewards of its growing scale in both the fourth quarter and full-year 2024.
Choice President and CEO Pat Pacious said during the company's fourth-quarter and full-year 2024 earnings call with investors that the brand's scale is "significantly larger" than what it was three years ago, as it now sits at 22 hotel brands. The success of its growing portfolio extends to all of its hotels, he said.
"2024 was the year we began to realize the benefits of our larger scale, which enabled us to make additional investments given our significantly enhanced growth profile," Pacious said.
In 2024, Choice grew its global rooms portfolio by 3.3% to a total of 653,810 rooms. Domestic net rooms grew 3% year over year, driven primarily by its upscale, extended stay and midscale portfolios growing 4.3%. Its international net rooms portfolio grew 4.4% year over year in 2024, including a 58% increase in hotel openings in the fourth quarter.
Choice entered into a strategic partnership with Westgate Resorts in the fourth quarter, adding 21 hotels and 14,471 rooms to its domestic portfolio.
Pacious said Choice has invested in capturing more group and business-transient demand in order to better position its upscale portfolio. The brand increased its upscale and above global room system size by 44% year over year in 2024. The segment now represents 17% of Choice's overall system, nearly doubling its economy portfolio.
Last year, Choice redesigned its group sales team, which led to a revenue increase of 45% year over year from group accounts in the fourth quarter. Business-transient revenues were up 20% year over year in the fourth quarter, Pacious said.
Business travel represented about 40% of the brand's overall mix in 2024, with year-over-year growth of 14% in the business-transient segment in the fourth quarter.
Expectations for 2025
Choice's full-year 2025 outlook shows projected domestic revenue per available room growth from 1% to 2% and a global net system rooms growth of about 1%.
Chief Financial Officer Scott Oaksmith said Choice is expecting to grow its international rooms by about 3%, while its domestic rooms will be slightly positive.
"You should expect the revenue-intense units to be similar to what they were in 2024, so given that the international is still a relatively smaller part of our business, the overall unit room growth will be around 1%," he said.
Pacious said business travel is trending up so far in the first quarter of 2025, fueled by both group and business-transient travel. In 2025, Choice will concentrate its investments on strengthening its rewards program, improving franchisees' profitability and developing better tools for customers of small- and medium-sized businesses.
"With a strong foundation and a clear direction for our repositioned company, we are focused on to continuing to invest in key areas that offer the greatest opportunity to further enhance our value proposition and accelerate our growth in the coming years," he said.
By the numbers
Choice's hotels achieved revenue per available room of $50.51 in the fourth quarter, a 4.5% increase compared to the fourth quarter of 2023. Its average daily rate was $94.32, up 3.1% over 2023 levels, and occupancy was 53.6%, up 80 basis points compared to the same quarter in 2023.
For full-year 2024, RevPAR was $54.54, down 1.2% from last year’s levels. ADR was $96.67, down 0.3% compared to full-year 2023, and occupancy was 56.4%, down from 56.9% in 2023.
Choice’s adjusted earnings before interest, taxes, depreciation and amortization was $140.4 million in the fourth quarter, up from $125 million last year. Its total revenues for the quarter were $389.8 million, up from $358.4 million last year.
Adjusted EBITDA for full-year 2024 was $604 million, up from $540 million in 2023. Total revenues hit a record $1.58 billion for the year, up from $1.54 billion in 2023.
The company’s net income for the fourth quarter was $75.8 million, up from $29 million in 2023. Its full-year 2024 net income was $299.7 million, an increase of 22% compared to the prior year.
As of publication time, Choice’s stock price was trading at $147.03 per share, up 29% year over year. The New York Stock Exchange Composite Index was up 16% for the same time period.