Choice Hotels(US:CHH)2022-02-23 16:00Hotel Operations - As of December 31, 2021, the company operates 7,030 hotels with 579,746 rooms and has 924 hotels under construction, representing 79,915 rooms[21] - The company operates a total of 5,920 properties with 459,182 rooms as of December 31, 2021, showing a slight decrease in properties from 2020[65] - International operations had 1,110 properties and 120,564 rooms, with royalty fees of $14,829,000[92] Revenue Sources - The hotel franchising business accounts for approximately 96% of the company's total revenues, highlighting its primary revenue source[21] - The effective royalty rate achieved on franchise agreements is a key factor influencing the company's financial results, alongside occupancy and room rates[23] - Royalty fees for the year ended December 31, 2021, amounted to $391.336 million, reflecting an increase from $258.151 million in 2020[65] Performance Metrics - The average occupancy percentage for 2021 was 57.4%, recovering from a low of 45.6% in 2020[65] - The average daily room rate (ADR) rose to $84.04 in 2021, compared to $71.63 in 2020[65] - Revenue per available room (RevPAR) improved to $48.21 in 2021, up from $32.70 in 2020[65] Franchisee Support and Development - The company emphasizes franchisee profitability by providing services that enhance RevPAR and reduce operating costs[52] - The company aims to leverage its brand strength and marketing capabilities to increase market share and franchisee returns[52] - The company is focusing on strategic growth through franchise agreements, particularly in revenue-intense markets[96] Brand Portfolio - The company has a diversified brand portfolio that caters to various market segments, including economy, midscale, and upscale hotels[67] - As of December 31, 2021, the Comfort brand had 1,668 properties and 131,302 rooms, with royalty fees of $155,575,000 and an average occupancy rate of 60.1%[83] - The Quality brand had 1,652 properties and 123,549 rooms, generating royalty fees of $97,855,000, with an average occupancy rate of 53.5%[83] Technology and Systems - The proprietary property management system, choiceADVANTAGE, helps franchisees optimize rates and inventory, contributing to improved revenue per available room (RevPAR)[121] - The company implements a centralized reservation system (CRS) to enhance reservation delivery, with a focus on increasing business through proprietary channels at higher average daily rates[114] - The company continues to upgrade technology to support digital channels and enhance guest experience personalization, transitioning to a cloud-based software for distribution management[120] Financial Management - The company’s capital allocation decisions are designed to maximize returns on invested capital and create shareholder value through share repurchases and dividends[28] - The company expects to benefit from increased franchise fees due to future growth in consumer demand for hotel rooms, provided it does not lead to excess capacity in the lodging industry[138] - The Company has a carrying value of $36.1 million in debt securities and common stock as of December 31, 2021, classified as trading securities[460] Diversity and Inclusion - As of December 31, 2021, the company's domestic workforce was 34% diverse and 43.5% female, with leadership at 13% diverse and 38% female[150] - The company conducts annual gender and diversity pay parity studies to ensure equitable compensation across all U.S. based roles[151] - The company has been recognized by Forbes in 2021 as one of the "Best Employers for Diversity" and "Best Midsize Employers"[154] Market Challenges - The company anticipates some negative impacts from the COVID-19 pandemic to persist into 2022, affecting overall profitability[39] - The company anticipates continued impacts from the COVID-19 pandemic on international operating results into 2022[90] - The impact of inflation and external factors, such as economic slowdowns, could negatively affect demand for hotel rooms and franchise fees[140]