Choice reports Q2 2024 results

Highlights 

• Total revenues reached $435.2 million for second quarter 2024, a quarterly record and a 2 per cent increase compared to the same period of 2023.
• Net income increased 3 per cent to $87.1 million for the second quarter of 2024, representing diluted earnings per share (EPS) of $1.80, a 9 per cent increase compared to the same period of 2023.
• Second quarter 2024 adjusted net income, excluding certain items described in Exhibit 7, decreased 0.4 per cent to $88.8 million compared to the same period of 2023, and adjusted diluted EPS increased 5 per cent to a record of $1.84 compared to the same period of 2023.
• Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for second quarter 2024 grew to a quarterly record of $161.7 million, a 6 per cent increase compared to the same period of 2023.
• Global pipeline as of June 30, 2024, increased 22 per cent to a second quarter record of over 114,000 rooms from June 30, 2023, highlighted by a doubling of the global pipeline for conversion rooms. Domestic rooms pipeline as of June 30, 2024 increased by 11 per cent since June 30, 2023, including a 65 per cent increase for conversion rooms.
• Global hotel openings for second quarter 2024 increased by 20 per cent compared to the same period of 2023.
• Domestic franchise agreements for the company's upscale, extended stay, and midscale brands executed year-to-date through June 30, 2024, increased by 8 per cent compared to the same period of 2023.
• The international portfolio as of June 30, 2024, expanded by 1.6 per cent in the number of rooms, highlighted by international hotel openings that doubled in the second quarter compared to the same period of 2023.
• The company repurchased 2.4 million shares of common stock for $296.2 million year-to-date through June 30, 2024, representing over 5 per cent of the company's market capitalization at the beginning of the year.

"Choice Hotels generated another quarter of record financial performance amid a normalizing domestic RevPAR environment, demonstrating the strength of our versatile business model and proven growth strategy," said Patrick Pacious, president and chief executive officer. "We increased our global pipeline to new levels propelled by robust demand for our brands, accelerated the velocity of our global hotel openings, expanded our international reach, and significantly grew the size of our rewards program. With our meaningfully enhanced hotel portfolio profile, we are confident in the company's ability to continue to deliver sustained earnings growth, invest in profitable long-term growth initiatives, and return significant capital to shareholders."

Financial Performance

Total revenues excluding reimbursable revenue from franchised and managed properties, calculated as total revenues net of reimbursable revenue of $176.3 million, increased 14 per cent to $258.9 million for The second quarter 2024 compared to the same period of 2023.

Royalty, licensing, and management fees increased 1 per cent to $141.8 million for second quarter 2024 compared to $140.5 million for the same period of 2023.

Second quarter 2024 domestic effective royalty rate increased 5 basis points to 5.04% compared to the same period of 2023.

Domestic revenue per available room (RevPAR) increased 540 basis points sequentially for the three-month period ended June 30, 2024, and decreased 50 basis points compared to the same period of 2023.

Domestic occupancy increased 10 basis points compared to the same period of 2023, representing 96 per cent of 2019 domestic occupancy levels. Domestic RevPAR for the three months ended June 30, 2024 remains 11.0 per cent higher than the same period of 2019.

Development

The company's domestic upscale, extended stay, and midscale portfolio increased 1.0 per cent for hotels and increased 0.7 per cent for rooms since June 30, 2023. The domestic extended stay hotels portfolio grew by 14.0 per cent since June 30, 2023, driven by increases in each of the segment's brands. The company's total domestic system size increased to over 6,200 hotels representing over 494,000 rooms as of June 30, 2024.

The international pipeline for conversion rooms increased by 8 per cent from March 31, 2024, and the company nearly tripled the number of international rooms in the pipeline since June 30, 2023.

The company opened an average of over four domestic hotels per week for a total of 118 domestic hotel openings year-to-date through June 30, 2024, a 10 per cent increase compared to the same period of 2023. Of the domestic franchise agreements executed for conversion hotels over the trailing twelve months ending June 30, 2024, 134 opened in the same year, a 14 per cent increase over the comparable period of the prior year.

Of the total domestic franchise agreements awarded year-to-date through June 30, 2024, 82 per cent were for conversion hotels and 89 per cent were for the company's upscale, extended stay, and midscale brands.

The company's WoodSpring Suites brand grew by 10 per cent to 246 hotels since June 30, 2023, and was ranked number one for the second year in a row in guest satisfaction among economy extended stay hotel brands in the J.D. Power 2024 North America Hotel Guest Satisfaction Index Study.