Choice Hotels(US:CHH)2024-05-08 18:30Financial Data and Key Metrics Changes - Revenues, excluding reimbursable revenue from franchised and managed properties, increased 16% to $203 million year-over-year [48] - Adjusted EBITDA grew 17% to a record $124.3 million, driven by the integration of Radisson Americas and organic growth in revenue-intense segments [48] - Adjusted earnings per share reached a record $1.28, a 14% increase year-over-year [48] Business Line Data and Key Metrics Changes - Domestic unit growth was reported at 1.2% year-over-year, with a target of approximately 2% for the full year [50] - The number of domestic franchise agreements for revenue-intense brands increased by 7% over the prior year [50] - The international rooms portfolio grew by 2.3% year-over-year, contributing over $9 million to international EBITDA [51] Market Data and Key Metrics Changes - Domestic RevPAR increased 8.2% from the same quarter of 2019, but was down 5.9% year-over-year due to timing of the Easter weekend [23] - The domestic upscale portfolio delivered RevPAR growth led by the Radisson upscale brand, which increased by 8.5% year-over-year [23] - The company anticipates full-year domestic RevPAR growth to range between flat and 2% [24] Company Strategy and Development Direction - The strategic focus is on driving revenue-intense growth with a portfolio that now comprises 82% of total domestic hotels [49] - The company aims to increase the velocity of new hotel openings and expand international growth [16] - The relaunch of Park Inn by Radisson is seen as a key opportunity to fill market gaps and attract younger, value-conscious travelers [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the continued upward trajectory of effective royalty rates and overall growth opportunities [22] - The company is confident in capturing a larger share of leisure and business travel demand due to favorable long-term trends [46] - Management noted that family travel is expected to increase, supported by strong employment numbers and rising middle-class wages [60][75] Other Important Information - The company returned approximately $226 million to shareholders year-to-date, including $29 million in cash dividends and $197 million in share repurchases [28] - The board increased the share purchase program authorization by 5 million shares [28] - The integration of Radisson Americas is expected to generate ongoing revenue synergies, contributing approximately $10 million in incremental EBITDA in the first quarter [26] Q&A Session Summary Question: Can you provide insights on cash flow and capital expenditures? - Management expects operating cash flow to increase over 2023 levels, with key money for franchise support expected to be in line with last year's $98 million [7][58] Question: What are the expectations for RevPAR and consumer trends? - Management noted that April showed positive trends, with expectations for RevPAR improvement moving forward, supported by strong employment and wage growth [74][75] Question: Can you clarify the capital allocation priorities and potential acquisitions? - The company maintains a target gross debt to EBITDA ratio of 3x to 4x and is open to tuck-in acquisitions while continuing to invest in brand growth [65][80]