Group 1 - The hotel industry is experiencing a slowdown, with some companies being more adversely affected than others [1]

Core Insights - Choice Hotels International, Inc. (CHH) is expanding its Everhome Suites brand with six new hotel openings and three groundbreakings in key U.S. markets, reflecting a growing demand for midscale, purpose-built accommodations for longer stays [1][5] Expansion Plans - Currently, there are 14 Everhome Suites open, 19 under construction, and over 60 in the development pipeline, with a target of nearly 25 locations operating by year-end [2] - Texas is a primary focus for this growth, with recent openings in Bastrop, Waco, Brownsville, and El Paso, strategically located near major employers [3] - Additional expansions include a new property in Yuma, AZ, set to open in July, and a Salem, OR location under construction, aimed at serving government and healthcare guests [4] Market Positioning - The expansion of Everhome Suites highlights CHH's strategic positioning in a resilient and underserved market, capitalizing on demand and developer interest [5] - The company has experienced a 17.9% share price increase over the past year, slightly outperforming the industry growth of 17% [6] Financial Performance - CHH is benefiting from domestic RevPAR growth, unit expansion, and franchising efforts, with a 2.8% increase in total worldwide rooms in Q1 2025 [8] - The company has a trailing four-quarter earnings surprise of 30.9% on average, indicating strong financial performance [10]

Core Insights - The Everhome Suites brand is experiencing strong developer interest and demand for midscale extended stay accommodations across various states, indicating a positive market trend for this segment [1][2] - The collaboration between Choice Hotels and Highside Companies is focused on launching new properties that cater to specific market needs, enhancing the brand's operational model and guest experience [2] Development Overview - Everhome Suites is expanding its footprint with several new openings and constructions in Texas, Arizona, Oregon, and Ohio, targeting strategic locations to meet diverse traveler needs [4][5][7][8] - The properties are designed to support various demographics, including military, medical, and corporate travelers, with amenities that cater to long-term stays [4][5][8] Property Details - In Texas, multiple Everhome Suites locations are set to open between February 2025 and June 2025, with properties in Bastrop, Waco, Brownsville, El Paso, and Amarillo, each strategically located near key employers and attractions [5] - The Everhome Suites in Yuma, Arizona, is scheduled to open in July 2025, focusing on military and medical travelers due to its proximity to MCAS Yuma and Yuma Regional Medical Center [4] - The Salem, Oregon location is expected to open in Q3 2026, expanding the brand's presence in the Pacific Northwest and serving local healthcare and government sectors [7] - In Ohio, a new property in Dayton is set to break ground in June 2025, positioned to attract highway travelers and military personnel due to its location near major transport routes and facilities [8] Brand Features - Everhome Suites offers apartment-style suites with fully equipped kitchens, spa-like bathrooms, and modern amenities designed for extended stays, including fitness centers and self-service marketplaces [10] - The brand emphasizes a "Closer to Home" experience, allowing guests to maintain their routines while traveling [10] Company Background - Choice Hotels International is one of the largest lodging franchisors globally, with over 7,500 hotels and a diverse portfolio of 22 brands, catering to various traveler needs [11] - Highside Companies, founded in 2019, is a real estate firm with nearly $1 billion in active projects, focusing on investment and development solutions across multiple asset classes [12]

Financial Data and Key Metrics Changes - Choice Hotels reported a record adjusted EBITDA of $604.1 million, representing a 12% year-over-year growth [24] - Adjusted EPS increased by 13% year-over-year to $6.88, exceeding the top end of earnings guidance [24] Business Line Data and Key Metrics Changes - The global upscale and above portfolio grew by 44% year-over-year, reaching over 110,000 rooms, which constitutes 17% of the overall system [25] - The company opened its 515th extended stay property, reinforcing its leadership in the fast-growing segment [25] Market Data and Key Metrics Changes - International business grew by 4.4% year-over-year, totaling over 142,000 rooms [31] - The new construction rooms pipeline outside the U.S. increased by 14% year-over-year, indicating significant growth potential in international markets [31] Company Strategy and Development Direction - The company relaunched four brands, repositioning Radisson Individuals and Park Inn by Radisson to enhance market presence [25] - The focus remains on revenue-intensive brands, with 98% of the rooms in the global hotel pipeline within these brands, positioning the company for future growth [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of hotel demand outpacing supply through 2026, positioning the company favorably for future expansion [26] - The company highlighted the success of its franchisee success system and hotel conversion capabilities as key drivers of growth [24] Other Important Information - The company celebrated the 85th anniversary of its founding brand, Quality Inn, which expanded to nearly 150,000 global rooms [25] - The loyalty program, Choice Privileges, grew to over 70 million members, with a significant portion of active members having high household incomes [28] Q&A Session Summary Question: What changes have you seen in Choice's customer base in the context of the revenue intense growth strategy? - Management noted that business travelers now represent 40% of the overall guest mix, and the loyalty program has attracted higher value customers with significant household incomes [28] Question: Can you expand on the increase in Choice's international footprint? - Management reported a 4.4% year-over-year growth in international business and a 14% increase in the new construction rooms pipeline outside the U.S., indicating strong potential for future growth [31]

Core Insights - Choice Hotels International, Inc. (CHH) reported first-quarter 2025 results with earnings and revenues missing the Zacks Consensus Estimate, although both metrics increased year-over-year [1][3] - The company has revised its outlook for 2025, leading to a decline in shares by 3.6% following the earnings release [1][8] Financial Performance - Adjusted EPS for Q1 was $1.34, missing the consensus estimate of $1.38 by 2.9%, compared to $1.28 in the prior-year quarter [3] - Quarterly revenues were $332.9 million, falling short of the consensus mark of $347 million by 4.1%, but increased 0.3% from $331.9 million year-over-year [3] - Domestic RevPAR increased by 230 basis points year-over-year to $46.28 [3] Revenue Streams - Franchise and management fees rose 1.2% year-over-year to $145.1 million [4] - Partnership services and fees increased by 27.9% to $25.4 million, while owned hotels revenue grew 11.5% to $27.9 million [4] - Other revenues from reimbursable costs decreased by 24.4% to $11.2 million and by 4.3% to $123.4 million, respectively [4] - The system-wide effective royalty rate increased by 6 basis points year-over-year to 5.11% [4] Operating Results - Total operating expenses decreased by 6.9% year-over-year to $252.9 million [5] - Adjusted EBITDA was $129.6 million, reflecting a 4.2% year-over-year increase [5] Balance Sheet - As of March 31, 2025, cash and cash equivalents were $40.1 million, slightly down from $40.2 million at the end of 2024 [6] - Long-term debt increased to $1.87 billion from $1.77 billion at the end of 2024 [6] Growth Metrics - The domestic net rooms portfolio grew by 2.3% year-over-year, with upscale, extended stay, and midscale units expanding by 3.6% [7] - The global net rooms portfolio rose by 2.8% to 647,587, while the international net rooms portfolio expanded by 4.4% to 141,986 [7] - The global pipeline includes over 95,000 rooms, with approximately 79,000 in the domestic market [7] 2025 Outlook - The company anticipates adjusted net income between $324 million and $339 million, down from a previous estimate of $333 million to $345 million [8] - Adjusted EBITDA is expected to range from $615 million to $635 million, revised from $625 million to $640 million [8] - Adjusted diluted EPS is projected between $6.90 and $7.22, compared to the prior estimate of $6.98 to $7.24 [8] - Domestic RevPAR growth for 2025 is estimated to range from a decline of 1% to an increase of 1%, revised from an earlier estimate of 1% to 2% [9] - The domestic effective royalty rate is expected to increase in the mid-single digits year-over-year, with global net system room growth estimated at approximately 1% compared to 2024 levels [9]

Financial Performance - Net income for the three months ended March 31, 2025, was $44,534 thousand, a significant increase of 43% compared to $31,009 thousand for the same period in 2024[70] - Basic earnings per share increased to $0.95 for the three months ended March 31, 2025, compared to $0.63 in the prior year, representing a growth of approximately 51%[70] - For the three months ended March 31, 2025, consolidated revenues were $332.86 million, a slight increase from $331.95 million in the same period of 2024, representing a growth of 0.27%[75] - Operating income for the Hotel Franchising & Management segment was $103.39 million for Q1 2025, compared to $94.85 million in Q1 2024, reflecting an increase of 9.4%[75] - The Company reported income before income taxes of $59.76 million for Q1 2025, up from $40.21 million in Q1 2024, indicating a year-over-year increase of 48.5%[75] Debt and Financing - Total long-term debt increased to $1,874,821 thousand as of March 31, 2025, compared to $1,768,526 thousand at December 31, 2024, reflecting a growth of approximately 6%[56] - As of March 31, 2025, the Company had $445.5 million in variable interest rate debt instruments with an effective interest rate of 5.73%[148] - A hypothetical 10% change in the effective interest rate would result in an annual interest expense variation of $2.6 million[148] - The maximum unrecorded exposure related to limited payment guarantees was $38.2 million as of March 31, 2025[77] - The Company managed seven hotels under a long-term management arrangement as of March 31, 2025, with a maximum guarantee of $22 million for shortfalls in payments[79] - The Company has committed to provide financing of up to $5.8 million to franchisees for brand development efforts, contingent on certain conditions being met[79] Taxation - The effective income tax rate rose to 25.5% for the three months ended March 31, 2025, up from 22.9% in the same period of 2024, primarily due to state income taxes[65] Compensation and Expenses - Total share-based compensation expense rose to $10,415 thousand for the three months ended March 31, 2025, compared to $9,094 thousand in 2024, indicating an increase of about 14.5%[66] Assets and Investments - The Company held mutual funds valued at $43,434 thousand and money market funds valued at $4,945 thousand as of March 31, 2025, totaling $48,379 thousand in fair value measurements[62] - The Company’s investments in debt securities and common stock had a carrying value of $48.4 million and $49.3 million as of March 31, 2025, and December 31, 2024, respectively[147] - The fair value of the 2019 Senior Notes due 2029 was $377,460 thousand as of March 31, 2025, down from $371,600 thousand at December 31, 2024[64] - The Company reported an accumulated other comprehensive loss of $(6,130) thousand as of March 31, 2025, a slight improvement from $(6,193) thousand at December 31, 2024[57] - The Company’s Level 2 assets included money market funds valued at $4,945 thousand as of March 31, 2025, reflecting observable inputs in an active market[60] Shareholder Information - The weighted average shares of common stock outstanding for diluted earnings per share was 47,123 thousand for the three months ended March 31, 2025, compared to 49,640 thousand in 2024[70]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 4% year over year, reaching a record of $129.6 million in Q1 2025 [21] - Adjusted earnings per share rose by 5% year over year to $1.34 [21] - Global rooms grew by 3.9% year over year across more revenue-intensive segments [22] Business Line Data and Key Metrics Changes - Business travel segment grew by 10% year over year, driven by group and business transient travel [8] - Extended stay portfolio increased by 19% over the past five years, now representing half of the total domestic rooms pipeline [11] - Domestic extended stay segment achieved RevPAR growth of 6.8% year over year, outperforming the industry by over four percentage points [25] Market Data and Key Metrics Changes - Approximately 40% of the overall guest mix is now business travelers, indicating a balanced approach between business and leisure travel [6] - The economy segment achieved RevPAR growth of 7%, outperforming its chain scale by 4% [38] - International rooms portfolio expanded by over 4% year over year, with a 13% increase in the rooms pipeline compared to the prior quarter [19] Company Strategy and Development Direction - The company is focused on expanding its presence in the extended stay and upscale limited service segments, which are more accretive to earnings [16] - A strong global pipeline is expected to generate significantly higher revenue compared to the existing portfolio, driven by a substantial RevPAR premium [9] - The company aims to continue investing in technology and franchisee tools to enhance guest experience and franchisee value [15] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook despite increased macroeconomic uncertainty, highlighting the resilience of the business model [9] - The company anticipates domestic RevPAR performance to range from negative 1% to positive 1% for the full year 2025, reflecting recent trends [31] - Management noted that the consumer profile has shifted to higher income travelers, which is expected to benefit the company in the current economic environment [37] Other Important Information - The rewards program expanded to over 70 million members, an 8% year over year increase, contributing to a 28% increase in global reward night redemptions [12] - The company returned $115 million to shareholders year to date through dividends and share repurchases [27] - The effective royalty rate for the domestic system increased by eight basis points year over year, indicating a positive trend in revenue growth [26] Q&A Session Summary Question: Consumer and macro outlook - Management noted that the company is taking market share despite softness in leisure travel, with business travel showing resilience [39] Question: Net unit growth expectations - Management expressed confidence in achieving about 1% worldwide rooms growth, with a focus on conversion velocity [40][41] Question: Guidance clarification - Management provided insights on expected growth from various revenue streams, including ancillary fees and international business [50] Question: Development feedback from franchisees - Franchisees expressed optimism about performance and development opportunities, particularly in the extended stay segment [56] Question: Performance of economy and midscale segments - Management highlighted strong performance in these segments, driven by road trips and lower gas prices [63] Question: Upscale segment performance - Management clarified that the decline in upscale RevPAR was due to portfolio shifts and not indicative of overall performance [69] Question: Pipeline and unit growth - Management explained the dynamics of their pipeline, emphasizing the quick conversion of hotels [74][78] Question: Length of stay trends - Management noted an increase in average length of stay, particularly in the extended stay segment [88] Question: International expansion opportunities - Management highlighted significant growth potential in international markets, particularly in the Caribbean and Latin America [92]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 4% year over year, reaching a record of $129.6 million [19] - Adjusted earnings per share rose by 5% year over year to a record $1.34 per share [19] - Global rooms grew by 3.9% year over year across more revenue-intensive segments [20] Business Line Data and Key Metrics Changes - Business travel segment grew by 10% year over year, driven by group and business transient travel [6] - Extended stay portfolio increased by 19% over the past five years, now representing half of the total domestic rooms pipeline [9] - Domestic extended stay segment achieved RevPAR growth of 6.8% year over year, outperforming the industry by over four percentage points [23] Market Data and Key Metrics Changes - Approximately 40% of the overall guest mix is now business travelers, indicating a balanced approach between business and leisure travel [5] - The company captured demand across multiple regions, outperforming chain scales in domestic RevPAR performance [5] - International rooms portfolio expanded by over 4% year over year, with a 13% increase in the rooms pipeline compared to the prior quarter [18] Company Strategy and Development Direction - The company is focused on expanding its presence in the extended stay and upscale limited service segments, which are key drivers of future growth [14] - Strategic investments in technology and franchisee tools are enhancing the value proposition for franchise owners [13] - The company aims to leverage its diversified brand portfolio to capture market share during economic uncertainty [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook despite increased macroeconomic uncertainty, citing strong demand from business travelers and infrastructure investments [6][7] - The company anticipates domestic RevPAR performance to be flat to slightly positive for the remainder of the year, adjusting expectations due to recent trends [27][29] - Management highlighted the resilience of the business model and the ability to generate multiple avenues of growth throughout various economic cycles [18][30] Other Important Information - The rewards program expanded to over 70 million members, an 8% year over year increase, contributing to higher direct bookings [10] - The company returned $115 million to shareholders year to date through dividends and share repurchases [25] - The effective royalty rate for the domestic system increased by eight basis points year over year, indicating a positive trend in revenue growth [24] Q&A Session All Questions and Answers Question: What is the company's perspective on consumer behavior and macroeconomic conditions? - Management noted that the company is well-positioned for trade down scenarios, with a higher income consumer profile and strong business travel demand [34][36] Question: Can you elaborate on organic growth expectations moving forward? - Management expressed confidence in achieving about 1% worldwide rooms growth, with international growth expected in the high single digits [37][38] Question: How does the company view the performance of leisure and group business in April? - Management indicated that April's performance was impacted by the Easter shift and eclipse-related travel, making it challenging to draw specific conclusions about leisure travel [90][91] Question: What are the expectations for ancillary fee growth? - Management believes that ancillary fees can continue to grow at an accelerated pace, potentially outpacing core franchising royalty fees [46] Question: What insights were gained from the recent franchisee convention? - Franchisees expressed optimism about their performance relative to peers, attributing success to recent investments in loyalty programs and technology [50][52]

Financial Performance - Choice Hotels reported revenue of $332.86 million for the quarter ended March 2025, reflecting a 0.3% increase year-over-year [1] - Earnings per share (EPS) for the quarter was $1.34, up from $1.28 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $347.14 million, resulting in a surprise of -4.11% [1] - The EPS also missed the consensus estimate of $1.38, with a surprise of -2.90% [1] Key Metrics - RevPAR growth was 2.3%, exceeding the average estimate of 0.5% based on two analysts [4] - Average Daily Rate (ADR) was $90.78, higher than the two-analyst average estimate of $89.17 [4] - Total franchise rooms reached 647,587, surpassing the estimated 645,219 by two analysts [4] - Occupancy rate was 51%, slightly below the average estimate of 51.2% [4] - Domestic franchise rooms totaled 505,601, compared to the average estimate of 512,189 [4] - RevPAR was reported at $46.28, above the average estimate of $45.68 [4] - Revenues from owned hotels were $27.86 million, exceeding the four-analyst average estimate of $26.46 million, representing a year-over-year change of +11.5% [4] Stock Performance - Shares of Choice Hotels have returned -2.4% over the past month, while the Zacks S&P 500 composite increased by +11.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Choice Hotels (CHH) came out with quarterly earnings of $1.34 per share, missing the Zacks Consensus Estimate of $1.38 per share. This compares to earnings of $1.28 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -2.90%. A quarter ago, it was expected that this hotel franchiser would post earnings of $1.50 per share when it actually produced earnings of $1.55, delivering a surprise of 3.33%.Over the last four quarters, the com ...