NORTH BETHESDA, Maryland—Choice Hotels International, Inc. reported its first quarter 2024 results. Highlights include:
- Net income was $31.0 million for the first quarter of 2024, representing diluted earnings per share (EPS) of $0.62. As a result of one-time items, including due diligence and transaction pursuit costs, and the timing of net reimbursable expenses, net income, and diluted EPS were 41 percent and 39 percent lower, respectively, for the first quarter of 2024 compared to the same period of 2023.
- First quarter 2024 adjusted net income, excluding certain items, increased 9 percent to $63.7 million compared to the same period of 2023, and adjusted diluted EPS increased 14 percent to a first-quarter record of $1.28 compared to the same period of 2023.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first quarter of 2024 grew to $124.3 million, a first-quarter record and a 17 percent increase compared to the same period of 2023.
- Global pipeline as of March 31, 2024, increased 10 percent to a company record of over 115,000 rooms from December 31, 2023, including a 36 percent increase in the global pipeline for conversion rooms. Domestic rooms pipeline as of March 31, 2024, increased by 11 percent since December 31, 2023, highlighted by a 59 percent increase for conversion rooms.
- In March 2024, the company’s Board of Directors approved an increase in the number of shares authorized under its share repurchase program by 5 million shares. The company has repurchased 1.5 million shares of common stock for $196.6 million year-to-date through April 30, 2024.
- In April 2024, the company furthered its portfolio by relaunching Park Inn by Radisson, a conversion brand for the value-conscious traveler positioned just below the Quality Inn brand, with the brand’s first opening expected in the third quarter of 2024.
- The company increased its guidance for diluted EPS and reiterated its guidance for net income, adjusted EBITDA, and adjusted diluted EPS for full year 2024.
“Building on our record 2023 financial results, we drove first quarter performance to new levels, with adjusted EBITDA and EPS increasing by 17 percent and 14 percent, year-over-year, respectively,” said Patrick Pacious, president and CEO. “These impressive results demonstrate that we are unlocking the revenue synergies from the Radisson Americas acquisition, which has meaningfully enhanced our growth profile and opened new incremental earnings streams. Looking ahead, we are confident that our versatile business model with multiple drivers positions us well to deliver continued earnings growth and create shareholder value.”
Financial Performance
Total revenues were $331.9 million for the first quarter of 2024, a 0.3 percent decrease compared to the same period of 2023. For the first quarter of 2024, compared to the same period of 2023, revenues, excluding reimbursable revenue from franchised and managed properties, calculated as total revenues net of reimbursable revenue of $129 million, increased 16 percent to $203 million.
Royalty, licensing, and management fees totaled $105.5 million for the first quarter of 2024 compared to $107.5 million for the same period of 2023.
First quarter of 2024 domestic effective royalty rate increased 4 basis points to 5.03 percent compared to the same period of 2023.
Domestic revenue per available room (RevPAR) decreased 590 basis points for the three-month period ended March 31, 2024, compared to the same period of 2023, in part reflecting the timing of Easter weekend and tougher year-over-year comparisons. Domestic RevPAR increased 8.2 percent for the three-month period ended March 31, 2024, compared to the same period of 2019.
Development
The company’s domestic upscale, extended-stay, and midscale portfolio reported a 1.2 percent increase for hotels and 0.9 percent increase for rooms since March 31, 2023. The domestic extended-stay hotels portfolio grew by 17.4 percent since March 31, 2023, driven by increases in each of the segment’s brands. The company’s total domestic system size increased to over 6,200 hotels and over 494,000 rooms as of March 31, 2024.
The international portfolio, as of March 31, 2024, expanded by 1.3 percent in the number of hotels and by 2.3 percent in the number of rooms from March 31, 2023. As of March 31, 2024, the international rooms pipeline increased by 3 percent from December 31, 2023, and the company more than doubled the number of international rooms in the pipeline since March 31, 2023.
The company opened an average of over four hotels per week for a total of 55 hotel openings in the first quarter of 2024, a 20 percent increase compared to the same period of 2023. Of the domestic franchise agreements executed for conversion hotels over the trailing twelve months ending March 31, 2024, 113 opened in the same year, a 43 percent increase over the comparable period of the prior year.
Total domestic franchise agreements for the company’s upscale, extended-stay, and midscale brands executed in the first quarter increased by 7 percent compared to the same period of 2023 and constituted 92 percent of total domestic franchise agreements awarded in 2024. Of the total domestic franchise agreements awarded in the first quarter of 2024, 80 percent were for conversion hotels.
Shareholder Returns
During the three months ended March 31, 2024, the company paid cash dividends totaling $14.7 million.
During the three months ended March 31, 2024, the company repurchased approximately 0.4 million shares of common stock for $60.6 million under its stock repurchase program and through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company’s equity incentive plans. An additional 1.1 million shares of common stock have been repurchased year-to-date through April 30, 2024, for $136.0 million.
As of April 30, 2024, the company had 5.3 million shares of common stock remaining under the current share repurchase authorization.
