Much of Choice Hotels International's focus in the past year was its pursuit of Wyndham Hotels & Resorts, which ultimately fell apart. Now, executives are turning their focus to opening new hotels and expanding the company's international footprint.
During the company's first-quarter 2024 earnings call, President and CEO Pat Pacious said development projects are moving quickly through the pipeline. Through March, Choice averaged more than four openings per week, resulting in a 20% increase in openings year over year.
"Of the domestic franchise agreements we executed for conversion hotels over the trailing 12 months, we opened 113 during the same period, a 43% increase over the same period of the prior year," he said.
As of the end of March, Choice grew its global rooms pipeline for conversion hotels by 36% quarter over quarter, including a 9% increase in its Radisson upscale brand. Choice's domestic rooms pipeline rose 11% during the same period thanks to a 59% increase for conversion rooms.
The company's current global pipeline sits at more than 115,000 rooms, representing 10% growth year over year.
"Our strategic focus on more revenue-intense hotels means that the pipeline continues to be a significantly higher value than the current hotel portfolio," Pacious said. "The hotels in our domestic pipeline now represent a more than 30% [revenue per available room] premium compared to our existing portfolio. And they have, on average, a 40% higher room count per hotel as compared to our current domestic system."
Choice recently relaunched the Park Inn by Radisson brand as a premium value conversion brand.
"The brand delivers a premium lodging option aimed at the younger, value-conscious traveler, which we know is a growing segment. We expect our first Park Inn by Radisson to open next quarter," Pacious said.
Choice has also grown its extended-stay brand portfolio. In the first quarter, it grew its domestic extended-stay unit system size by 17% year over year, highlighted by more than 10 new hotel openings.
"We are seeing particularly strong traction with our newest extended-stay brand, Everhome Suites. With four hotels now opened and nearly 70 domestic projects in the pipeline, including 20 under construction, we continue to be optimistic about our extended-stay franchise business. Last year we communicated an anticipated 15% average annual extended-stay unit growth through 2027, and we are pleased that we remain on track to achieve this growth rate," Pacious said.
Performance Highlights
In the first quarter, Choice reported net income of $31 million. Adjusted earnings before interest, taxes, depreciation and amortization grew to $124.3 million, marking a first-quarter record and a 17% increase year over year. Total revenue reached $331.9 million in the quarter, which was a 0.3% decrease year over year, according to a company earnings release.
Domestic total revenue per available room for the quarter fell 5.9% to $45.24 compared to the same period in 2023, average daily rate dropped 2.1% to $89.23 and occupancy declined 200 basis points to 50.7%.
During the quarter, Choice's board of directors approved an increase in the number of shares allowed under its share repurchase program by 5 million shares.
At quarter end, Choice still owned about 1.3 million shares of the Wyndham stock that's valued around $110 million. Executives said the company is not a long-term holder of the stock, and the proceeds of those sales will be available to execute Choice's share repurchase program.
"We'll be unwinding those shares over time," said Choice Chief Financial Officer Scott Oaksmith.
As of publication time, Choice’s stock price was trading at $115.69 per share, up 2.1% year to date. The New York Stock Exchange Composite Index was up 7% for the same time period.