Sunny Outlook Opens Horizon for Choice Hotels to Invest
Fourth-quarter earnings were upbeat for Choice Hotels, and executives during a Wednesday earnings call said the company is reaping the benefits of a “healthy balance sheet,” giving it what president and CEO Patrick Pacious called “the opportunity right now to leverage these strengths and invest in our brands and our franchise, value proposition and in our platform business.”
Choice’s fourth-quarter net income was $64.1 million for fourth quarter; it reached a company record of $289 million for full-year 2021.
The company’s extended-stay portfolio shone brightest, consistently exceeding 2019 revenue per available room levels since April 2021 and recording fourth-quarter domestic systemwide RevPAR growth of 24.7 percent compared with the same period of 2019. The WoodSpring Suites brand achieved RevPAR growth of nearly 30 percent, driven by an average occupancy level of nearly 79 percent and a 16.6 percent increase in average daily rate.
Pacious said Choice is anticipating an increase in business travel in certain verticals in 2022.
“We expect business travel in our key industry verticals to increase with the additional onshoring of the U.S. supply chain,” said Pacious. “A recent survey indicated that over 80 percent of North American manufacturers are likely to re-shore their production operations. This trend has already contributed to the accelerated recovery of our business travels.”
Pacious also noted business travel bookings and demand overall “are continuing the steady progression back to 2019 levels. We expect our business and group travel demand to further strengthen and serve as a catalyst for our portfolio.”
Another bright spot was the growth in Choice’s upscale portfolio, driven by the Cambria and Ascend brands. “Cambria brand continued its positive unit growth momentum, expanding to 57 units with 17 projects already under active construction at the end of December and four ground breaks in the fourth quarter alone. This is shaping up to be another great year for Cambria, and we expect over 10 additional hotels to open across the country. Once open, these upscale properties are expected to further fuel the revenue intensity of our system.”
Q4 Key Performance Metrics
Choice fourth-quarter RevPAR increased 13.9 percent from the same quarter of 2019 and marked its strongest quarter of the year.
Fourth-quarter occupancy across brands totaled 54.9 percent, while for the full year it reached 57.4 percent.
Choice Hotels achieved domestic systemwide revenue per available growth of 12.3 percent in the fourth quarter compared to the same period of 2019, driven primarily by a 10.1 percent increase in ADR. Since June 2021, the company’s overall midscale portfolio has surpassed 2019 RevPAR levels.
In the fourth quarter of 2021, the company awarded 239 domestic franchise agreements, a 23 percent increase year over year. Domestic franchise agreements for new-construction hotels increased by 58 percent.
The total domestic pipeline of hotels awaiting conversion, under construction or approved for development as of Dec. 31, 2021, increased 2 percent quarter over quarter to nearly 880 hotels, representing over 75,000 rooms.
Terri Hardin www.businesstravelnews.com