NORTH BETHESDA, Maryland—Choice Hotels International, Inc. reported its third quarter 2024 results. Highlights include:
- Total revenues reached $428.0 million for third quarter 2024, a quarterly record and a 1 percent increase compared to the same period of 2023.
- Net income increased 15 percent to $105.7 million for third quarter 2024, representing diluted earnings per share (EPS) of $2.22, a quarterly record and a 23 percent increase compared to the same period of 2023.
- Third quarter 2024 adjusted net income, excluding certain items described in Exhibit 7, increased 15 percent to $106.2 million compared to the same period of 2023, and adjusted diluted EPS increased 23 percent to a record of $2.23 compared to the same period of 2023.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for third quarter 2024 grew to a quarterly record of $177.6 million, a 14 percent increase compared to the same period of 2023.
- Global pipeline as of September 30, 2024, increased 11 percent to a third-quarter record of over 110,000 rooms from September 30, 2023, highlighted by a 54 percent increase for conversion rooms. Domestic rooms pipeline as of September 30, 2024, increased by 10 percent since September 30, 2023, including a 68 percent increase for conversion rooms.
- Global hotel openings for third quarter 2024 increased by 75 percent compared to the same period of 2023.
- The company’s unit and room growth as of September 30, 2024, accelerated across its domestic and international portfolio from June 30, 2024. The company’s upscale, extended stay, and midscale rooms portfolio, as of September 30, 2024, increased by 1.8 percent globally since September 30, 2023.
- The international portfolio as of September 30, 2024, expanded by 3.8 percent in the number of rooms, highlighted by international hotel openings that tripled in third quarter 2024 compared to the same period of 2023.
- The company repurchased 2.9 million shares of common stock for $352.9 million year-to-date through September 30, 2024, representing over 6 percent of the company’s market capitalization at the beginning of the year.
- The company is increasing midpoint of its guidance for net income, adjusted EBITDA, diluted EPS, and adjusted diluted EPS for the full-year 2024.
“Choice Hotels generated another quarter of record financial performance, demonstrating the successful execution of our growth strategy and giving us the confidence to raise our full-year guidance,” said Patrick Pacious, president and CEO. “We accelerated our unit growth, increased our global pipeline to new levels, expanded our international reach, and significantly grew the size of our rewards program. The positive momentum we have created and the strength of our versatile business model bolsters our ability to continue to deliver sustained top-line and earnings growth while returning 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 $171.8 million, increased 17 percent to $256.1 million for the third quarter 2024 compared to the same period in 2023.
- Platform and procurement services fees increased 4 percent to $16.2 million for third quarter 2024 compared to the same period in 2023.
- Third quarter 2024 domestic effective royalty rate increased 6 basis points to 5.05 percent compared to the same period in 2023.
- Domestic revenue per available room (RevPAR) decreased 250 basis points for the three-month period ended September 30, 2024, compared to the same period in 2023. Domestic occupancy levels for the three months ended September 30, 2024, improved by 80 basis points from the three months ended June 30, 2024.
Development
- The company’s total domestic system size increased to nearly 6,300 hotels representing over 495,000 rooms as of September 30, 2024. The company’s domestic upscale, extended stay, and midscale portfolio increased 1.3 percent for hotels and increased 1.1 percent for rooms since September 30, 2023. The domestic extended stay hotels portfolio grew by 11.2 percent since September 30, 2023, driven by increases in each of the company’s brands.
- The company’s international rooms pipeline as of September 30, 2024 increased by 21 percent compared to the same period of 2023.
- The company opened 190 domestic hotel openings year-to-date through September 30, 2024, a 19 percent increase compared to the same period of 2023. Of the domestic franchise agreements executed for conversion hotels over the trailing twelve months ending September 30, 2024, 141 opened in the same year, a 17 percent increase over the comparable period of the prior year.
Balance Sheet and Liquidity
As of September 30, 2024, the company had a total available liquidity of $675.6 million, including available borrowing capacity and cash and equivalents. During the three and nine months ended September 30, 2024, the company generated cash flows from operating activities of $122.9 million and $236.5 million, respectively.
Shareholder Returns
During the nine months ended September 30, 2024, the company paid cash dividends totaling $42.5 million.
During the nine months ended September 30, 2024, the company repurchased 2.9 million shares of common stock for $352.9 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.
As of September 30, 2024, the company had 4.0 million shares of common stock remaining under the current share repurchase authorization.
