ROCKVILLE, Maryland—Choice Hotels International, Inc. provided an update on its business, including the integration of the Radisson Hotels Americas portfolio into its franchisee system.
Growth Strategy
The company continues to execute its strategy of expanding the reach of its franchise business in more revenue intense segments in 2023, with new hotels added within a brand generating, on a comparable basis, an average of 20 percent higher royalty revenue than hotels exiting the brand. In 2024, the company expects to generate more than 10 percent adjusted EBITDA growth at the midpoint, year-over-year, driven by approximately $20 million in contribution from Radisson Hotels Americas as well as growth in more revenue intense segments and markets, effective royalty rate growth, and other factors.
Openings Momentum
The company executed an average of more than four hotel openings per week, for a total of 107 hotel openings year-to-date through June 30, 2023, a 39 percent increase compared to the same period of 2022. This growth was driven by an increase in conversion hotel openings of 45% and a 24% increase in new construction hotel openings.
- For the first half of 2023, the company grew hotel openings across all segments, year-over-year, increasing openings in the upscale segment by 83 percent, the midscale segment by 42 percent, the extended-stay segment by 50 percent, and the economy segment by 11 percent.
- During the month of May, the company executed the highest number of hotel openings within the extended-stay segment since 2020, including a record number of hotels opened for the WoodSpring Suites brand in a single month. The company remains optimistic about extended-stay franchise business growth and expects the number of its extended-stay units to increase at an average annual growth rate of more than 15 percent over the next five years.
Radisson Hotels Americas Integration
Due to the company’s integration knowledge and its investments in technology, Choice Hotels has achieved approximately $80 million of annual recurring synergies, exceeding the company’s original synergy target. The company anticipates additional cost and revenue opportunities for future synergies.
- Choice Hotels, its guests, and its franchisees across the entire portfolio of brands see benefits from the integration. The company is ahead of its schedule to complete integration milestones, including onboarding the nearly 600 Radisson Americas hotels onto its reservation delivery engine and merging the two loyalty programs by the end of the third quarter—within just a year of the acquisition. Complete integration by the end of 2023 is expected to help further drive the Radisson Hotels Americas franchisees’ performance and profitability.
- The company drove a turnaround of Radisson Hotels Americas’ results in 2022 and remains ahead of schedule in delivering expected Radisson Hotels Americas adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) contribution of over $60 million in 2023, which is expected to grow to over $80 million in 2024.
Share Repurchase Activity
During the six months ended June 30, 2023, the company repurchased approximately 1.8 million shares of common stock for over $220 million under its stock repurchase program. As of June 30, 2023, the company had 2.8 million shares of common stock remaining under the current share repurchase authorization.
