Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest lodging franchisors, reported its results today for the three months ended June 30, 2022.
"Once again, Choice Hotels drove impressive quarterly results that outperformed the industry, while announcing the most significant acquisition in our company's history and recycling over $140 million of capital through July," said Patrick Pacious, president and chief executive officer, Choice Hotels. "The acquisition of Radisson Hotels Americas, which is expected to close this month, will mark the next chapter in Choice's well-established asset-light strategy of investing in higher revenue segments and locations, and build on our strong track record of growing the brands of tomorrow. We are confident in our ability to accelerate the growth of Radisson Hotels Americas' brands by leveraging Choice's scale, network of owner relationships and strong digital platforms."
Highlights of second quarter 2022 results include (note that RevPAR metrics are compared to 20191):
- Domestic revenue per available room (RevPAR) growth accelerated quarter-over-quarter, increasing by 13% for second quarter 2022, compared to the same period of 2019, and outperformed the total industry by 360 basis points.
- Domestic RevPAR growth has surpassed 2019 levels for 13 consecutive months through June 30, 2022, a trend that has continued in the third quarter of 2022 with July RevPAR increasing approximately 14%, compared to July of 2019. RevPAR for full-year 2022 is expected to increase between 11% and 13%, compared to full-year 2019.2
- The company awarded 122 domestic franchise agreements in second quarter 2022, a 10% increase compared to the same period of the prior year.
- The company's domestic effective royalty rate was 5.04% for the three months ended June 30, 2022 and 5.05% for the six months ended June 30, 2022, an increase of 3 basis points and 4 basis points over the comparable 2021 periods, respectively. For full-year 2022, the company's domestic effective royalty rate is expected to increase by approximately 5 basis points, compared to full-year 2021.3
- Total revenues increased 32% to $368 million for second quarter 2022, compared to the same period of 2021. Total revenues excluding marketing and reservation system fees increased 25% to $178.6 million for second quarter 2022, compared to the same period of 2021.
- Net income increased 24% to $106.2 million for second quarter 2022, representing diluted earnings per share (EPS) of $1.89, a 24% increase over second quarter 2021.
- Second quarter adjusted net income, excluding certain items described in Exhibit 7, increased 17% to $79.9 million from second quarter 2021, representing adjusted diluted EPS of $1.43, a 17% increase from second quarter 2021.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for second quarter 2022 was $129.6 million, a 16% increase from the same period of 2021.
- The company signed an agreement to acquire Radisson Hospitality, Inc. ("Radisson Hotels Americas") on June 12, 2022, for a purchase price of approximately $675 million. The transaction would add approximately 67,000 rooms to the company's portfolio and is expected to close in August 2022.
- The company sold the Cambria Hotel Southlake DFW North, Texas property in June 2022 for $24 million and secured a long-term franchise agreement with the buyer. The sale of this hotel increases the recycling of prior investments in Cambria Hotels development projects for the six months ended June 30, 2022 to over $30 million.4
- During the first six months of 2022, the company returned $41.6 million to shareholders in the form of cash dividends and share repurchases.
RevPAR Performance Trends
- RevPAR growth for second quarter 2022 was driven by an increase in average daily rate (ADR) of 13.7%, compared to second quarter 2019.
- The company's extended-stay portfolio has consistently exceeded 2019 RevPAR levels since April 2021 and achieved domestic RevPAR growth of 21.4% in second quarter 2022, compared to the same period of 2019. The WoodSpring Suites brand achieved RevPAR growth of 28.1% in second quarter 2022, compared to the same period of 2019, driven by occupancy levels of 82% and a 22% increase in ADR.
- The company's overall midscale portfolio has consistently surpassed 2019 RevPAR levels since June 2021 and achieved domestic RevPAR growth of 10.1% in second quarter 2022 compared to the same period of 2019. In second quarter 2022, the Comfort brand continued to achieve RevPAR share gains versus its local competitors, and the brand's domestic RevPAR growth continued to outperform the upper-midscale chain scale, compared to the same period of 2019.
- The company's upscale portfolio achieved domestic RevPAR growth of 10.1% for second quarter 2022, compared to the same period of 2019, and outperformed the upscale chain scale by 880 basis points.
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About Choice Hotels®
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world. With nearly 7,000 hotels, representing nearly 600,000 rooms, in 35 countries and territories as of March 31, 2022, the Choice® family of hotel brands provides business and leisure travelers with a range of high-quality lodging options from limited service to full-service hotels in the upscale, midscale, extended-stay and economy segments. The award-winning Choice Privileges® loyalty program offers members benefits ranging from everyday rewards to exceptional experiences. For more information, visit www.choicehotels.com.
© 2022 Choice Hotels International, Inc. All rights reserved.
SOURCE Choice Hotels International, Inc.
This communication includes "forward-looking statements" about future events, including anticipated hotel openings. Such statements are subject to numerous risks and uncertainties, including construction delays, availability and cost of financing and the other "Risk Factors" described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, any of which could cause actual results to be materially different from our expectations.
This is not an offering. No offer or sale of a franchise will be made except by a Franchise Disclosure Document first filed and registered with applicable state authorities. A copy of the Franchise Disclosure Document can be obtained through contacting Choice Hotels International at 1 Choice Hotels Circle, Suite 400, Rockville, MD 20850, [email protected].
© 2022 Choice Hotels International, Inc. All Rights Reserved