Core Insights - Choice Hotels has seen a year-over-year increase in booking conversion rates due to the relaunch of its website and mobile app, benefiting hotel owners [1] - The Country Inn & Suites brand has exceeded performance goals since joining Choice Hotels, with a focus on enhancing guest satisfaction and revenue growth [2] - A refreshed guestroom design introduced in 2023 has led to 84% of guests indicating they would likely stay at a Country Inn & Suites hotel [2] - Choice Hotels maintains a high franchisee retention rate and invests in technological solutions to streamline hotel operations and maximize revenue opportunities for owners [4] - The ChoiceROCS system has helped hotel owners dynamically adjust pricing and promotions, resulting in an average 2% increase in RevPAR Index for participating upper midscale hotels in 2024 [6] - The ChoiceMAX revenue management solution has proven effective for owners by adapting hotel rates to market changes, allowing them to focus on daily operations [7][8] - Choice Hotels has partnered with Bridge to provide affordable financing solutions for prospective and existing hotel owners [8] Company Overview - Choice Hotels International, Inc. is one of the largest lodging franchisors globally, with over 7,500 hotels and more than 650,000 rooms across 46 countries [10] - The company offers a diverse portfolio of 22 brands, catering to various traveler needs and enhancing value for franchise owners and shareholders [10][11] - Country Inn & Suites by Radisson is a leading upper midscale brand under Choice Hotels, known for its hospitality and guest experience [12]

Core Insights - Choice Privileges members can bid on exclusive NASCAR race day experiences, enhancing customer engagement and loyalty [1][2][3] - The partnership with Trackhouse Racing allows Choice Privileges to offer unique experiences at all 38 NASCAR Cup Series races in 2024 [3] - The Choice Privileges rewards program enables members to earn points through hotel stays and credit card usage, with significant bonuses available [4][8] Group 1: Customer Engagement and Experiences - In 2024, millions of points were redeemed by customers for VIP experiences during the NASCAR Cup Series, with nearly 90% of participants using points earned through Choice Hotels [2] - Nearly 80% of participants were Choice Hotels Elite members, who can achieve Elite status with just 10 nights a year [2] - The adrenaline rush of pit road experiences and meeting drivers contributed to the popularity of the Trackhouse Racing offer [3] Group 2: Sponsorship and Brand Visibility - Choice Privileges will be prominently featured as the primary paint scheme on Trackhouse Racing cars, with branded apparel at select races [3] - The partnership aims to tap into the fast-growing member base of Choice Privileges, enhancing brand visibility in the motorsports arena [3][9] Group 3: Rewards Program and Credit Card Benefits - The Choice Privileges® Mastercard® offers 40,000 bonus points for spending $1,000 in the first three months, while the Select Mastercard® offers 60,000 bonus points for $3,000 in spending [4] - Cardholders can earn 5X points on stays at participating Choice Hotels and 10X points with the Select Mastercard® [4] - The rewards program allows members to redeem points for stays at over 7,100 hotels and various partner services [8]

Core Viewpoint - Choice Hotels International, Inc. has declared a cash dividend of $0.2875 per share on its common stock, payable on April 16, 2025, to shareholders of record on April 1, 2025 [1] Company Overview - Choice Hotels International, Inc. is one of the largest lodging franchisors globally, with over 7,500 hotels and more than 650,000 rooms across 46 countries and territories [2] - The company operates a diverse portfolio of 22 brands, catering to various market segments from upper upscale to economy, enhancing value for franchise owners and shareholders [2] - The Choice Privileges rewards program offers members a streamlined way to earn rewards and personalized perks [2]

Choice Hotels International, Inc. (CHH) delivered impressive fourth-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, both metrics increased on a year-over-year basis.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Shares of the company gained 3.1% during yesterday’s trading session, post the earnings release.The company delivered strong results in 2024, surpassing the top end of its earnings guidance. The revenue-intense domestic rooms por ...

Choice Hotels International, Inc. (NYSE:CHH) Q4 2024 Results Conference Call February 20, 2025 8:30 AM ET Company Participants Allie Summers - Senior Director of Investor Relations Pat Pacious - President, Chief Executive Officer & Director Scott Oaksmith - Chief Financial Officer Conference Call Participants David Katz - Jefferies Dany Asad - Bank of America Michael Bellisario - Baird Robin Farley - UBS Stephen Grambling - Morgan Stanley Patrick Scholes - Truist Securities Brandt Montour - Barclays Meredit ...

Hotel Development and Operations - The company has developed or acquired eight Cambria hotels, one Everhome Suites, one Radisson RED, one Radisson Blu, and one Country Inn & Suites, aiming to strategically increase brand presence in the U.S.[25] - The company currently operates 7,586 opened hotels, including ownership of 12 hotels and management of 13 hotels, positioning itself well in various lodging cycles[34] - The company focuses on maximizing revenues and managing costs for owned hotels, utilizing third-party management companies for most of its properties[26] - The company allocates capital to incentivize franchise development in strategic markets, with growth investments expected to enhance profitability and shareholder value[27] - The company’s hotel development strategy focuses on key markets with strong growth potential, aiming to drive guest satisfaction and brand preference[25] - The company anticipates targeting dispositions of owned hotels to franchisees under long-term franchise agreements in the future[25] - The company plans to strategically develop and manage hotels to enhance brand presence and guest satisfaction, aiming to increase franchise agreements awarded[79] - The company reported a total of 1,258 international properties with 142,071 rooms as of December 31, 2024, indicating growth in international markets[84] Franchise Operations and Revenue - The company benefits from significant operating leverage, as variable operating costs associated with franchise system growth have historically been less than the incremental fees generated from new franchises[41] - The company aims to improve franchisee profitability by enhancing RevPAR, reducing operating costs, and increasing guest satisfaction through various services and technologies[43] - The company’s strategy includes building strong brands and delivering exceptional services to increase gross room revenues and improve effective royalty rates[45] - The domestic franchise agreements typically range from 10 to 30 years, allowing franchisees to operate under one of 22 brands[74] - Franchise fees typically consist of a royalty fee ranging from 5% to 6% of gross room revenues and marketing fees ranging from 3% to 4%[95] - The company aims to improve revenue per available room (RevPAR) and reduce operating costs for franchisees, which directly impacts franchisee profitability[96] - The effective royalty rate increased to 5.06% in 2024 from 4.99% in 2023, indicating a positive trend in revenue generation[75] - Franchise fee revenues reflect the seasonality of the lodging industry, typically lower in the first and fourth quarters compared to the second and third quarters[118] Brand and Marketing Strategy - The company’s family of brands includes 22 brands and brand extensions, catering to various price points and market needs, which supports both new construction and conversion opportunities[39] - The company aims to enhance brand awareness through national marketing campaigns and loyalty program promotions, targeting both leisure and business travelers[50] - The central reservations system is crucial for delivering guests to franchisees via multiple channels, including call centers and online travel agents, which helps reduce costs and operational complexity[51] - The Ascend Hotel Collection allows upscale hotels to maintain their brand identity while benefiting from Choice Hotels' global distribution and loyalty programs[55] - The Comfort brand family offers a welcoming experience with modern amenities and a signature free hot breakfast, catering to both leisure and business travelers[60] - Everhome Suites provides a "Closer to Home" experience for longer-staying guests, featuring fully equipped kitchens and dedicated workspaces[69] - Marketing and advertising programs are aimed at increasing consumer awareness and preference, utilizing various channels including national television and digital advertising[97] Technology and Innovation - The central reservation system (CRS) is designed to deliver higher average daily room rates (ADR) compared to direct bookings, enhancing the value proposition for hotel owners[102] - The proprietary property management system, ChoiceADVANTAGE, helps franchisees optimize rates and inventory, contributing to improved RevPAR[108] - The company is focused on enhancing technology to support digital communications and guest experience personalization through initiatives like choiceEDGE[107] - The company continues to implement an integrated reservation and distribution strategy to reduce franchisee costs and improve satisfaction[105] Human Capital and Corporate Culture - The company had approximately 1,700 associates globally, with 1,570 domestic and 125 international associates as of December 31, 2024[129] - Nearly 81% of associates participated in the 2024 engagement survey, achieving a high engagement score five points above the benchmark[138] - The company offers a comprehensive benefits package, including a 401(k) matching program, paid family leave, and wellbeing days[137] - The company has 12 Choice Resource Groups (CRGs) that support personal and career development for associates[132] - The company emphasizes a culture of respect and belonging, with initiatives focused on inclusion and diversity[133] - The Board of Directors conducts semi-annual talent reviews focusing on senior leadership levels[131] - The company is committed to fair and competitive pay, conducting annual fair pay analyses for all U.S. based roles[135] Risks and Challenges - The company is subject to various operational risks common in the lodging and franchising industries, impacting revenue derived from hotel franchising and management fees[155] - The company faces risks related to its indebtedness, including the potential inability to generate sufficient cash flow to meet debt service obligations, which could necessitate refinancing on unfavorable terms[159] - A portion of the company's borrowings are at variable interest rates, exposing it to market risk from adverse changes in interest rates, which could significantly increase debt service obligations[160] - Labor shortages could restrict the company's ability and that of its franchisees to operate hotel properties or grow the business, potentially leading to increased labor costs[167] - The company is subject to compliance with anti-corruption and anti-bribery laws, and violations could result in significant liabilities that adversely affect financial results and reputation[165] - The company may face challenges in growing its franchise system due to competition and changing market conditions, which could impact cash flows and margins negatively[171] - The company is exposed to risks associated with climate change, which could lead to increased operating costs and affect demand for its services[168] - The company relies on third-party operators for significant services, and failures by these operators could result in material adverse consequences for the business[158] - The company may not achieve its objectives for growth in the number of franchised hotels, which significantly affects its results and is subject to numerous risks[175] - Franchise agreements typically have an initial term of 10 to 30 years, and termination risks may negatively impact revenues[179] - Deterioration in franchisees' financial conditions can lead to occupancy declines, adversely affecting their operating results and financial stability[180] - The hotel industry is highly competitive, with franchisees facing competition from properties with greater marketing and financial resources[182] - The company may incur losses related to financial support provided to franchisees, which could affect overall revenues[183] - Franchisees are contractually obligated to pay system service fees, but declines in their revenue generation may hinder the company's ability to recover these advances[185] - Franchisees' failure to invest in property maintenance could harm brand reputation and lead to potential terminations of franchise agreements[186] - The company is exposed to risks from technology disruptions, which could impact revenue and franchisee relationships[188] - The increasing use of AI by online travel intermediaries may shift consumer loyalty away from the company's brands, affecting direct bookings[200] Financial Performance - Royalty fees for 2024 were reported at $454,723,000, a decrease of 0.8% from $458,077,000 in 2023[75] - Average occupancy percentage for 2024 was 56.4%, a slight decline from 56.9% in 2023[75] - Average daily room rate (ADR) for 2024 was $96.67, showing a marginal decrease from $96.92 in 2023[75] - Revenue per available room (RevPAR) for 2024 was $54.54, down from $55.19 in 2023, reflecting challenges in occupancy rates[75] Corporate Governance and Recognition - The company received multiple accolades in 2024, including recognition from Newsweek for being one of the "World's Most Trustworthy Companies" and "America's Best Mid-Size Companies"[139]

Core Insights - Choice Hotels reported revenue of $389.77 million for the quarter ended December 2024, reflecting an 8.8% increase year-over-year and a surprise of +3.12% over the Zacks Consensus Estimate of $377.97 million [1] - The earnings per share (EPS) for the quarter was $1.55, up from $1.44 in the same quarter last year, with an EPS surprise of +3.33% compared to the consensus estimate of $1.50 [1] Financial Performance Metrics - RevPAR (Revenue per Available Room) grew by 4.5%, exceeding the average estimate of 1.8% based on three analysts, with a reported RevPAR of $50.51 compared to the estimated $49.48 [4] - Domestic franchise rooms totaled 511,739, surpassing the average estimate of 496,427 [4] - Occupancy rate was reported at 53.6%, slightly below the average estimate of 54.1% [4] - Total franchise rooms reached 653,810, exceeding the estimated 641,044 [4] - Average Daily Rate (ADR) was $94.32, higher than the estimated $92.04 [4] Revenue Breakdown - Other revenues from franchised and managed properties amounted to $200.80 million, exceeding the average estimate of $190.37 million, representing a year-over-year change of +10.6% [4] - Royalty, licensing, and management fees generated $120.14 million, slightly below the average estimate of $121.07 million, with a year-over-year increase of +2.8% [4] - Revenues from owned hotels were $28.11 million, surpassing the average estimate of $26.87 million, reflecting a +19.3% year-over-year change [4] - Initial franchise fees were reported at $6.47 million, slightly below the average estimate of $6.67 million, indicating a -1.1% year-over-year change [4] - Platform and procurement services fees totaled $17.69 million, close to the estimated $17.72 million, with a +4.5% change year-over-year [4] - Other revenues reached $16.55 million, exceeding the average estimate of $14.58 million, representing a significant year-over-year change of +28.9% [4]

Core Viewpoint - Choice Hotels reported quarterly earnings of $1.55 per share, exceeding the Zacks Consensus Estimate of $1.50 per share, and showing an increase from $1.44 per share a year ago, indicating a 3.33% earnings surprise [1] - The company posted revenues of $389.77 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 3.12% and up from $358.4 million year-over-year [2] Earnings Performance - Over the last four quarters, Choice Hotels has surpassed consensus EPS estimates three times [2] - The company had a significant earnings surprise of 16.75% in the previous quarter, where it reported earnings of $2.23 per share against an expectation of $1.91 per share [1][2] Stock Performance and Outlook - Choice Hotels shares have increased approximately 4% since the beginning of the year, compared to a 4.5% gain in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.40 on revenues of $344.37 million, and for the current fiscal year, it is $7.01 on revenues of $1.62 billion [7] Industry Context - The Hotels and Motels industry is currently ranked in the bottom 32% of over 250 Zacks industries, which may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the outlook for the industry can materially affect stock performance [5][8]

Financial Performance - Net income for full-year 2024 increased 16% to $299.7 million, with diluted EPS of $6.20, a 22% increase compared to 2023[1] - Adjusted EBITDA for full-year 2024 reached a record $604.1 million, up 12% from the previous year[1] - Total revenues for Q4 2024 reached $389.77 million, a 8.7% increase from $358.40 million in Q4 2023[27] - Adjusted net income for Q4 2024 was $75.80 million, compared to $28.95 million in Q4 2023, reflecting a significant increase[27] - Adjusted earnings per share (EPS) for Q4 2024 was $1.62, up from $0.58 in Q4 2023[27] - EBITDA for the year ended December 31, 2024, was $463.77 million, compared to $375.03 million for the previous year, indicating a strong operational performance[27] - Net income for the year ended December 31, 2024, increased to $299,665,000, up from $258,507,000 in 2023, representing a growth of 15.9%[31] - For the full year 2024, Adjusted Net Income reached $332,359,000, compared to $311,541,000 in 2023, marking a 6.7% growth[43] Revenue Metrics - Domestic revenue per available room (RevPAR) grew by 4.5% for Q4 2024, outperforming the industry by 90 basis points[1] - Domestic average daily rate (ADR) increased by 3.1% and occupancy levels rose by 80 basis points in Q4 2024[5] - Average Daily Rate (ADR) for the total domestic hotel system increased to $96.67 for the year ended December 31, 2024, compared to $96.92 in 2023, a decrease of 0.3%[34] - Revenue per available room (RevPAR) for the total domestic hotel system increased to $54.54 for the year ended December 31, 2024, compared to $55.19 in 2023, a decrease of 1.2%[34] Growth and Expansion - The global net rooms system size increased by 3.3%, with a 4.3% growth in the domestic upscale, extended stay, and midscale portfolio[1] - The company opened 407 hotels globally in 2024, a 21% increase compared to 2023[1] - The global pipeline as of December 31, 2024, was over 97,000 rooms, with nearly 83,000 rooms being domestic[9] - Total number of hotels increased to 7,586 with 653,810 rooms as of December 31, 2024, compared to 7,527 hotels and 632,986 rooms in 2023, reflecting a growth of 0.8% in hotels and 3.3% in rooms[39] Future Projections - Full-year 2025 net income is projected to be between $288 million and $300 million[4] - Adjusted diluted EPS for full-year 2025 is expected to range from $6.98 to $7.24[10] - The company projects Adjusted EBITDA for 2025 to be between $625,000,000 and $640,000,000[46] - The estimated Adjusted Net Income for 2025 is projected to be between $333,000,000 and $345,000,000[46] - The projected Diluted EPS for 2025 is expected to range from $6.04 to $6.29[46] Shareholder Actions - The company repurchased 3.1 million shares for $382.1 million during full-year 2024, representing 6% of its market capitalization[4] Assets and Liabilities - The company reported a total of 2,530.53 million in total assets as of December 31, 2024, an increase from 2,394.80 million in 2023[29] - The company’s long-term debt increased to $1.77 billion in 2024 from $1.07 billion in 2023, reflecting strategic investments and expansions[29] - Cash and cash equivalents at the end of the period increased to $40,177,000 as of December 31, 2024, from $26,754,000 in 2023[31] - Net cash provided by operating activities for the year ended December 31, 2024, was $319,403,000, compared to $296,554,000 in 2023, an increase of 7.7%[31] - Investments in owned hotel properties for the year ended December 31, 2024, totaled $106,750,000, up from $68,560,000 in 2023, representing a significant increase of 55.7%[31] - Net cash used in investing activities decreased to $84,571,000 for the year ended December 31, 2024, from $265,626,000 in 2023, indicating a reduction of 68.2%[31] Operational Costs - The company reported a net reimbursable deficit from franchised and managed properties of $13,559,000 for the year ended December 31, 2024[43] - Operational restructuring charges for the full year 2024 amounted to $4,296,000, slightly up from $4,216,000 in 2023[43] - The company incurred global ERP system implementation costs of $1,041,000 for the year ended December 31, 2024[43] - The company anticipates interest expense for 2025 to be between $87,200,000 and $88,200,000[46]

Core Insights - Choice Hotels International, Inc. reported strong financial performance in 2024, exceeding the top end of its earnings guidance and achieving a 4.3% year-over-year increase in its domestic rooms portfolio, indicating the effectiveness of its growth strategy [3][10] - The company successfully relaunched four brands, expanded its partnerships, increased its international presence, and achieved record growth in its rewards program, positioning itself for continued growth in 2025 [3][10] Financial Performance - Total revenues for Q4 2024 were $390 million, up from $358 million in Q4 2023, while full-year revenues reached $1.585 billion, compared to $1.544 billion in 2023 [4] - Net income for full-year 2024 increased by 16% to $299.7 million, with diluted earnings per share (EPS) rising by 22% to $6.20 [10] - Adjusted EBITDA for full-year 2024 was a record $604 million, a 12% increase from the previous year [10] System Size and Development - The global net rooms system size grew by 3.3% to 653,810 rooms, with domestic upscale, extended stay, and midscale rooms increasing by 4.3% [6][10] - The domestic extended stay net rooms portfolio grew by 9.8%, with a pipeline of nearly 43,000 rooms, while the global upscale net rooms portfolio grew by 43.9% [7][12] Balance Sheet and Liquidity - As of December 31, 2024, the company had total available liquidity of $699.5 million and a net debt leverage ratio of 2.9 times [8] - Cash flows from operating activities for full-year 2024 were $319.4 million, an 8% increase compared to 2023 [8] Shareholder Returns - The company repurchased 3.1 million shares for $382.1 million during 2024, representing 6% of its market capitalization at the beginning of the year [10][13] - Cash dividends paid totaled $55.5 million in 2024 [13] Outlook - For full-year 2025, the company expects net income to range between $288 million and $300 million, with adjusted EBITDA projected between $625 million and $640 million [14] - Domestic revenue per available room (RevPAR) growth is anticipated to be 1% to 2% for 2025 [16]