NORTH BETHESDA, Maryland—Choice Hotels International, Inc. reported its second quarter 2024 results.
Highlights include:
- Total revenues reached $435.2 million for second quarter 2024, a quarterly record and a 2 percent increase compared to the same period of 2023.
- Net income increased 3 percent to $87.1 million for the second quarter of 2024, representing diluted earnings per share (EPS) of $1.80, a 9 percent increase compared to the same period of 2023.
- Second quarter 2024 adjusted net income, excluding certain items described in Exhibit 7, decreased 0.4 percent to $88.8 million compared to the same period of 2023, and adjusted diluted EPS increased 5 percent to a record of $1.84 compared to the same period of 2023.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for second quarter 2024 grew to a quarterly record of $161.7 million, a 6 percent increase compared to the same period of 2023.
- Global pipeline as of June 30, 2024, increased 22 percent to a second quarter record of over 114,000 rooms from June 30, 2023, highlighted by a doubling of the global pipeline for conversion rooms. Domestic rooms pipeline as of June 30, 2024, increased by 11 percent since June 30, 2023, including a 65 percent increase for conversion rooms.
- Global hotel openings for second quarter 2024 increased by 20 percent compared to the same period of 2023.
- Domestic franchise agreements for the company’s upscale, extended stay, and midscale brands executed year-to-date through June 30, 2024, increased by 8 percent compared to the same period of 2023.
- The international portfolio as of June 30, 2024, expanded by 1.6 percent in the number of rooms, highlighted by international hotel openings that doubled in the second quarter compared to the same period of 2023.
- The company repurchased 2.4 million shares of common stock for $296.2 million year-to-date through June 30, 2024, representing over 5 percent of the company’s market capitalization at the beginning of the year.
“Choice Hotels generated another quarter of record financial performance amid a normalizing domestic RevPAR environment, demonstrating the strength of our versatile business model and proven growth strategy,” said Patrick Pacious, president and CEO. “We increased our global pipeline to new levels propelled by robust demand for our brands, accelerated the velocity of our global hotel openings, expanded our international reach, and significantly grew the size of our rewards program. With our meaningfully enhanced hotel portfolio profile, we are confident in the company’s ability to continue to deliver sustained earnings growth, invest in profitable long-term growth initiatives, and return 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 $176.3 million, increased 14 percent to $258.9 million for the second quarter 2024 compared to the same period of 2023.
- Royalty, licensing, and management fees increased 1 percent to $141.8 million for second quarter 2024 compared to $140.5 million for the same period of 2023.
- Second quarter 2024 domestic effective royalty rate increased 5 basis points to 5.04 percent compared to the same period of 2023.
- Domestic revenue per available room (RevPAR) increased 540 basis points sequentially for the three-month period ended June 30, 2024, and decreased 50 basis points compared to the same period of 2023.
- Domestic occupancy increased 10 basis points compared to the same period of 2023, representing 96 percent of 2019 domestic occupancy levels. Domestic RevPAR for the three months ended June 30, 2024, remains 11.0 percent higher than the same period of 2019.
Development
- The company’s domestic upscale, extended stay, and midscale portfolio increased 1.0 percent for hotels and increased 0.7 percent for rooms since June 30, 2023. The domestic extended stay hotels portfolio grew by 14.0 percent since June 30, 2023, driven by increases in each of the segment’s brands. The company’s total domestic system size increased to over 6,200 hotels representing over 494,000 rooms as of June 30, 2024.
- The international pipeline for conversion rooms increased by 8 percent from March 31, 2024, and the company nearly tripled the number of international rooms in the pipeline since June 30, 2023.
- The company opened an average of over four domestic hotels per week for a total of 118 domestic hotel openings year-to-date through June 30, 2024, a 10 percent increase compared to the same period of 2023. Of the domestic franchise agreements executed for conversion hotels over the trailing twelve months ending June 30, 2024, 134 opened in the same year, a 14 percent increase over the comparable period of the prior year.
- Of the total domestic franchise agreements awarded year-to-date through June 30, 2024, 82 percent were for conversion hotels and 89 percent were for the company’s upscale, extended stay, and midscale brands.
- The company’s WoodSpring Suites brand grew by 10 percent to 246 hotels since June 30, 2023.
Balance Sheet and Liquidity
On June 28, 2024, the company amended its revolving credit facility, increasing total commitments from $850 million to $1 billion and extending maturity from 2026 to 2029. On July 2, 2024, the company issued $600 million aggregate principal amount of new 5.85 percent unsecured senior notes due 2034. The net proceeds from the offering were used to repay the company’s $500 million unsecured term loan maturing at the end of 2024 and a portion to repay borrowings under the company’s revolving credit facility, reducing the company’s effective borrowing costs.
As of June 30, 2024, the company had a total available liquidity of approximately $530 million, including available borrowing capacity and cash and equivalents. In July 2024, the company fully divested the remaining shares owned in Wyndham Hotels and Resorts Inc. for approximately $91 million.
Shareholder Returns
During the six months ended June 30, 2024, the company paid cash dividends totaling $28.9 million.
During the six months ended June 30, 2024, the company repurchased 2.4 million shares of common stock for $296.2 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 June 30, 2024, the company had 4.4 million shares of common stock remaining under the current share repurchase authorization.
