97% of domestic hotels remain open; Choice Hotels’ brands experience RevPAR index gains versus competition in Q1 and April
ROCKVILLE, Md., May 11, 2020 — Choice Hotels International, Inc. (NYSE: CHH), one of the world’s largest lodging franchisors, today reported its results for the three months ended March 31, 2020.
“The safety and well-being of guests, franchisees and associates is our top priority during these challenging times. We sincerely thank those who have been working to keep all of us safe through the COVID-19 crisis, particularly healthcare workers and first responders. The strength of our brands and dedication of our franchise owners and their staff, who are taking care of hotel guests in these trying times, have been truly remarkable. These unprecedented times have tested and shown that we possess the expertise, agility and rigor to respond to the challenges presented by the pandemic,” said Patrick Pacious, president and chief executive officer, Choice Hotels.
Towards the latter portion of the first quarter of 2020, the company adopted a number of mitigation measures, including mobilizing its efforts to provide a broad range of support to its franchisees, guests and communities, while preserving the company’s financial flexibility by bolstering liquidity and reducing discretionary spending. Highlights of first quarter 2020 results include:
- Net income was $55.5 million for first quarter 2020, representing diluted earnings per share (EPS) of $0.99.
- First quarter adjusted net income, excluding certain items described in Exhibit 6, decreased 9% to $42.8 million from first quarter 2019.
- Adjusted EPS were $0.76, a 10% decrease from first quarter 2019.
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter were $69.2 million, an 8% decrease from first quarter 2019.
- Domestic systemwide revenue per available room (RevPAR) declined 15% for first quarter 2020 compared to the same period of the prior year, outperforming total industry results by 430 basis points and exceeding growth within the primary chain scale segments in which the company competes, as reported by STR.
- Awarded 42 new conversion franchise agreements in first quarter 2020 compared to 47 in the same period of the prior year.
- Recognized a $30.6 million non-cash tax benefit in first quarter 2020 related to a restructuring of the company’s foreign operations.
Mr. Pacious further stated, “We believe that our resilient, asset-light, franchise-focused business model, strong balance sheet and proven portfolio of well-segmented brands — along with our expertise in the extended-stay and midscale segment — position us to navigate the broad impacts of the pandemic. In addition, our expectation is that our heavier mix of leisure travel and portfolio distribution in domestic drive-to markets will benefit us during the reopening of the economy, as we expect overall industry demand will rebound first in these segments. We believe that our long-term focus, disciplined capital allocation strategy and the targeted actions we have undertaken will help us and our franchisees weather the storm and allow us to capitalize on opportunities as these unprecedented circumstances subside.”
