Choice Hotels Boasts New Identity, Strong First Quarter

A new picture for Choice Hotels is taking shape, President and CEO Steve Joyce said during the company’s first quarter 2015 earnings call. This week, Choice unveiled a new brand identity, which includes a new look and feel and an integrated advertising campaign that spans TV, radio, digital, and mobile. The company also reported a strong quarter, with growth in a number of key areas.

“We’re very optimistic about our business in both the short and long term based on our strong lodging results in the first quarter, including RevPAR gains that outpaced our competitive set and development numbers that exceeded last year’s first quarter results,” Joyce said on the call.

Revenues for the first quarter totaled $175.2 million, an increase of 10 percent from the same period of 2014. Domestic system-wide RevPAR increased 9.6 percent, as occupancy and average daily rates increased 300 basis points and 3.7 percent, respectively. Choice executed 99 new domestic hotel franchise agreements, a 68 percent increase compared with the first quarter of 2014. “This is a result of both strong conversion and new construction volumes,” Joyce said.

The company’s domestic pipeline of hotels under construction or approved for development increased 36 percent, and the total pipeline increased 30 percent. The Comfort Inn and Suites brands led the increase in new construction pipeline, jumping 40 percent compared to the same period last year.

Overall net unit growth rates are being offset as Choice refreshes the Comfort brand and removes properties that don’t meet the new brand standards—domestic hotel supply increased only 0.2 percent and room supply dipped 1.1. percent. But Joyce said the company is seeing strong unit and room growth momentum in its upscale segments and other moderate-tier and economy brands, and expects unit growth to accelerate, particularly for Comfort.

“We believe our growing development pipeline positions us well for an accelerated organic net unit growth in the near term at a pace at least a couple of hundred basis points higher than current level,” Joyce said.

Although domestic RevPAR growth for the first quarter was slightly lower than Choice’s previous outlook, the company still expects RevPAR to increase between 6.5 and 8 percent for the full-year 2015. “We attribute our slight underperformance in RevPAR for the quarter primarily due to strong winter weather, which impacted travel for several weeks during the quarter, as well as some weakness in the energy-related markets compared to our expectations,” said CFO David L. White.

Choice’s new branding effort includes a redesigned website, which is intended to make it easier to book hotel reservations from any device. ChoiceHotels.com revenue increased more than 20 percent for the quarter, and bookings via Choice’s mobile applications yielded an increase of 58 percent. “The campaign is designed to accelerate the growth of Choice’s brand awareness,” Joyce said, “and celebrate connecting people face-to-face via our hotels and our brands.”

Stay tuned for more details on Choice’s refreshed brand positioning, new identity, and growth plans from the 61st annual convention in Las Vegas next week.