Choice Hotels(CHH) - 2023 Q4 - Annual Report

Financial Performance - Total revenues for 2023 reached $1,544,165, an increase of 10.1$1,401,949 in 2022[173]. - Net income for 2023 was $258,507, down 22.2$332,152 in 2022[174]. - Basic earnings per share decreased to $5.11 in 2023 from$6.05 in 2022, representing a decline of 15.5%[173]. - Total operating expenses increased to $1,165,401, up 24$939,597 in 2022[173]. - Cash provided by operating activities was $296,554, a decrease of 19.2$367,061 in 2022[177]. - The company experienced a foreign currency translation adjustment loss of $460 in 2023, compared to a loss of$637 in 2022[174]. Investments and Acquisitions - The Company acquired 100% of Radisson Hotels Americas for an accounting purchase price of approximately $673.9 million, netting to$550.4 million after cash acquired[129]. - The Company invested $38.9 million in equity method investments to support the development of Cambria Hotels and Everhome Suites in 2023, up from$3.1 million in 2022[128]. - The Company finalized the purchase price allocation for the acquisition of Radisson Hotels Americas during the third quarter of 2023[213]. - The company completed the acquisition of Radisson Hotels Americas on August 11, 2022, expanding its brand portfolio significantly[287]. Debt and Interest - The Company recognized $63.8 million of interest expense for the year ended December 31, 2023, an increase of$20.0 million from 2022 due to higher borrowings and interest rates[122]. - The Company paid off a mortgage loan principal of $56.0 million in connection with the Radisson Hotels Americas acquisition[157]. - As of December 31, 2023, the Company had$728.5 million in variable interest rate debt instruments with an effective interest rate of 6.74%[196]. - The total interest capitalized as a cost of property and equipment was $5.8 million in 2023, compared to$2.0 million in 2022, indicating a significant increase in capitalized interest[273]. Dividends and Shareholder Returns - The Company declared aggregate annual cash dividends of $1.15 per share for 2023, totaling approximately$56.5 million in aggregate payments[139]. - The Company declared a quarterly cash dividend of $0.2875 per share in March 2023, reflecting a 21$14.2 million during the year ended December 31, 2023[159]. Financial Position - Total assets increased to $2,394.8 million as of December 31, 2023, compared to$2,102.2 million as of December 31, 2022[206]. - Total liabilities rose to $2,359.2 million as of December 31, 2023, up from$1,947.5 million in the previous year[206]. - The Company reported a current portion of long-term debt of $499.3 million as of December 31, 2023, compared to$2.976 million in the previous year[206]. - The total amount of unrecognized tax positions, including interest and penalties, was $13.5 million as of December 31, 2023[190]. Revenue Generation - The Company’s principal source of revenue is franchise fees, which are based on gross room revenues or the number of rooms at franchised properties[111]. - The company generates revenue primarily from franchise fees, which are based on gross room revenues or the number of rooms at franchised properties, reflecting the seasonal nature of the hotel industry[288]. - The company recognizes revenues from owned hotels on a daily basis as services are rendered and rooms are occupied[253]. - The company recognizes marketing and reservation system fees as revenue, which are used to provide marketing services to franchisees[242]. Operational Insights - The company manages 14 hotels, including four owned hotels, generating revenue through management agreements based on a percentage of the hotel's monthly gross revenue and operating profits[228]. - Key performance indicators include the number of hotel rooms, occupancy rates, and average daily room rates (ADR), with revenue per available room (RevPAR) being a critical measure of hotel performance[296]. - The company aims to improve profitability by expanding its franchise system, enhancing the effective royalty rate, and maintaining a disciplined cost structure[299]. - The company has a total of 1,032 hotels under construction or awaiting conversion, indicating ongoing expansion efforts[287]. Risk Factors - The Company’s international operations are subject to greater economic and political risks, with franchised hotels operating in 46 countries and territories outside the United States[119]. - The company is subject to various risks, including economic conditions, consumer demand, and potential impacts from global health crises[285]. Taxation - The effective income tax rates for the years ended December 31, 2023, and 2022 were 23.3$67.3 million and $30.9 million, respectively[246].