Choice Hotels(CHH)2025-02-20 19:35Financial 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]