"The growth of Everhome Suites is a direct result of our strong collaboration with developers and owners to continuously value-engineer the brand so that it is well positioned for growth within the new construction midscale extended stay segment," said Ron Burgett, Senior Vice President, Extended Stay Development, Choice Hotels. "For the combined economy and midscale extended stay segments, our brands including Everhome Suites represent about half of all hotels that opened in 2024 or are currently under con ...

Core Insights - Clarion Pointe has shown remarkable growth, appealing to both travelers and hotel owners in the midscale segment, with a focus on cost-effective and affordable travel experiences [1] - Launched in 2018, Clarion Pointe targets economically savvy customers seeking select-service hotels with modern essentials [1] - The brand benefits from Choice Hotels' strong brand awareness and franchise success system, enhancing its attractiveness to hotel owners [1] Product Offerings - Clarion Pointe hotels feature modern design, curated food and beverage options, fitness essentials, and on-demand TV casting [2] - The brand participates in the Choice Privileges rewards program, which has over 68 million members, and offers a co-branded Mastercard with bonus points for new users [2] Franchise Support - Choice Hotels provides advanced technological tools to franchise owners, including the choiceEDGE guest reservation platform and choiceADVANTAGE property management system, to optimize operations and returns [3] - The company has partnered with Bridge to offer affordable financing solutions for prospective hotel owners [4] Company Overview - Choice Hotels International, Inc. is one of the largest lodging franchisors globally, with over 7,500 hotels and nearly 635,000 rooms across 45 countries [5] - The company has a diverse portfolio of 22 brands, catering to various traveler needs and enhancing value for franchise owners and shareholders [5]

"Choice Hotels is committed to growing and strengthening both Comfort and Country Inn & Suites by Radisson by ensuring we are providing incredible value and return for both owners and guests," said Judd Wadholm, Senior Vice President and General Manager of Choice Hotels' Core Brands, which include upper midscale, midscale and economy brands. "With an average 90 percent brand recognition for both brands, deep expertise in the upper midscale segment, and newly refined brand identities—combined with the power ...

Core Insights - The article discusses the performance and outlook of Choice Hotels International (NYSE: CHH) in light of recent earnings reports and external factors such as the tariff war affecting Canadian markets [1]. Group 1: Company Performance - The earnings report for Choice Hotels International may appear satisfactory, but there are underlying concerns regarding the impact of the ongoing tariff war on the company's operations and market sentiment [1]. Group 2: Analyst Background - The analyst, Nikola, has over three years of experience in finance and consulting, focusing on identifying value in North American public equities with less market hype [1]. - Nikola's professional background includes corporate credit risk analysis, government consulting, and venture capital analysis in the med-tech sector [1]. Group 3: Disclosure Information - The analyst has no current stock or derivative positions in any of the companies mentioned and does not plan to initiate any positions in the near future [2]. - The article reflects the analyst's personal opinions and is not influenced by any business relationships with the companies discussed [2].

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]

Core Viewpoint - Choice Hotels International, Inc. (CHH) reported strong fourth-quarter 2024 results, with earnings and revenues exceeding expectations and showing year-over-year growth [1][4]. Financial Performance - Adjusted EPS for Q4 was $1.55, beating the Zacks Consensus Estimate of $1.50 by 3.3%, and up from $1.44 in the prior-year quarter [4]. - Quarterly revenues reached $389.8 million, surpassing the consensus mark of $378 million by 3.1%, and grew 8.8% from $358.4 million in the previous year [4]. - Total operating expenses decreased by 14.6% year over year to $270.6 million [6]. - Adjusted EBITDA was $140.4 million, reflecting a 12.3% year-over-year increase [6]. Business Growth and Strategy - The domestic rooms portfolio saw a 4.3% year-over-year revenue increase, indicating effective growth strategies [3]. - The company relaunched four brands, expanded partnerships, and strengthened its international presence [3]. - Domestic RevPAR increased by 450 basis points year over year, and the effective royalty rate rose by 6 basis points to 5.09% [5]. 2024 Highlights - Total revenues for 2024 were $1.59 billion, up from $1.54 billion in 2023 [8]. - Adjusted EBITDA for 2024 was $604.1 million, compared to $504.5 million in 2023 [8]. - Adjusted diluted EPS for 2024 was $6.88, an increase from $6.11 in the previous year [8]. Room Portfolio Expansion - The domestic net rooms portfolio increased by 3% year over year, with significant growth in the extended stay segment at 9.8% [10]. - The global upscale net rooms portfolio rose by 43.9%, with a pipeline of nearly 25,000 rooms [10]. - As of December 31, 2024, the global pipeline exceeded 97,000 rooms, with around 83,000 in the domestic market [11]. 2025 Outlook - For 2025, the company anticipates adjusted net income between $333 million and $345 million, with adjusted EBITDA expected to be between $625 million and $640 million [12]. - Adjusted diluted EPS is projected to range from $6.98 to $7.24 [12]. - Domestic RevPAR growth for 2025 is estimated at 1% to 2% compared to 2024 levels [13].

Financial Data and Key Metrics Changes - Choice Hotels reported a 12% year-over-year increase in adjusted EBITDA, reaching $604.1 million, and a 13% increase in adjusted earnings per share to $6.88 per share for the full year 2024 [7][34] - For Q4 2024, revenues excluding reimbursable revenue increased by 7% to $229 million, with adjusted EBITDA growing 12% to $140 million and adjusted earnings per share increasing by 8% to $1.55 [35] Business Line Data and Key Metrics Changes - The company achieved a 3.3% year-over-year net increase in global rooms, with a 4.3% net increase in domestic rooms, and opened 305 new domestic hotels, a 16% year-over-year increase [7][36] - The domestic extended stay segment saw a RevPAR growth of 5.9% year-over-year in Q4, while the business transient segment grew by 14% [41][12] Market Data and Key Metrics Changes - In the EMEA region, RevPAR performance increased by 5% year-over-year, with a 58% increase in hotel openings [29] - The rewards program expanded to 69 million members, an 8% increase compared to the prior year, marking the highest number of organic enrollments in a single year [30] Company Strategy and Development Direction - The company is focused on enhancing its value proposition for franchisees, with significant investments in technology and brand portfolio expansion [15][19] - Future growth is expected to be driven by the upscale and extended stay segments, which are more accretive to earnings [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the 2025 outlook, expecting adjusted EBITDA to range between $625 million and $640 million, driven by organic growth and effective royalty rate growth [48] - The company anticipates a muted new construction environment due to high interest rates, impacting overall growth projections [108] Other Important Information - The company returned over $435 million to shareholders in 2024, including $56 million in cash dividends and over $380 million in share repurchases [46] - The Radisson Americas acquisition has led to significant improvements in digital traffic and booking conversion rates, driving RevPAR index gains [25] Q&A Session Summary Question: Can you help us unpack the line items related to other revenues from franchised and managed properties? - The CFO provided a reconciliation of the line item, noting $161 million in reimbursable revenues and just under $40 million in non-reimbursables, which generated about $14.5 million, up 16% year-over-year [54][55] Question: What was the benefit to Q4 from the hurricane in the 4.5% RevPAR? - The CFO estimated that the hurricane contributed about 125 basis points to the Q4 RevPAR increase, translating to roughly 30 basis points for the full year [66] Question: How should we think about investment spending levels in 2025 compared to 2024? - Management indicated that significant investments in 2025 will focus on enhancing franchisee profitability and dynamic pricing capabilities [68] Question: What are the assumptions for U.S. and international growth in the 1% global guide? - The company expects international growth to be slightly above 3% and domestic growth to be slightly positive, with overall unit growth around 1% [77][78] Question: How should we think about the economics from the Westgate deal? - The CFO explained that the Westgate partnership involves higher fees based on reservations delivered, significantly above the average royalty fees [86]

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]