Choice Hotels International Reports First Quarter 2023 Results

ROCKVILLE, Md., May 9, 2023— Choice Hotels International, Inc. (NYSE: CHH), one of the world’s largest lodging franchisors, today reported its first quarter 2023 results.

Highlights of first quarter 2023 results include:

• Total revenues reached $332.8 million for first quarter 2023, a first-quarter record and a 29% increase compared to the same period of 2022.
• Net income exceeded the top end of the company’s guidance and reached $52.8 million for first quarter 2023, representing diluted earnings per share (EPS) of $1.02. As a result of one-time items, including Radisson Hotels Americas integration costs, and the timing of net reimbursable expenses, net income and diluted EPS were 22% and 15% lower respectively for first quarter 2023, compared to the same period of 2022.
• First quarter 2023 adjusted net income, excluding certain items described in Exhibit 6, reached a first-quarter record of $58.2 million, and the company’s adjusted diluted EPS increased 9% to a first-quarter record of $1.12, compared to the same period of 2022.
• Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for first quarter 2023 reached $106.4 million, a first-quarter record and a 10% increase compared to the same period of 2022, and exceeded the top end of the company’s guidance by $1.4 million.
• Domestic revenue per available room (RevPAR) increased 5.9% for first quarter 2023 compared to the same period of 2022, driven by an increase in average daily rate (ADR) of 5.2% and a 34-basis-point increase in occupancy levels.
• First quarter 2023 domestic effective royalty rate increased 6 basis points to 4.99%, compared to the same period of 2022.
• During first quarter 2023, the company returned over $173 million to shareholders in the form of cash dividends and share repurchases and announced a 21% increase in its quarterly dividend rate beginning in April 2023.
• In February 2023, the company signed a multi-year agreement with Wells Fargo and Mastercard to launch a new co-branded credit card, which is expected to drive incremental adjusted EBITDA in 2023 and thereafter.

“Building on our record 2022 earnings results, our distinct growth strategy and best-in-class franchising business engine drove first quarter performance to new levels, with adjusted EBITDA increasing by 10% year-over-year,” said Patrick Pacious, president and chief executive officer. “At the same time, we are ahead of plan integrating the Radisson Hotels Americas business unit, which we expect will further accelerate our transformative growth.”

Financial Performance 

• Total revenues, excluding reimbursable revenue from franchised and managed properties, increased 34% to $175 million for first quarter 2023, compared to the same period of 2022.
• Platform and procurement services fees increased 18% to $13.8 million for first quarter 2023, compared to the same period of 2022.
• Royalty, licensing, and management fees increased 18% to $107.5 million for first quarter 2023, compared to the same period of 2022.
• Domestic royalties increased 13% to $98.2 million for first quarter 2023, compared to the same period of 2022.

Development

• The company’s upscale, extended-stay, and midscale segments reported a 9.5% increase in hotels and an 11% increase in rooms since March 31, 2022. The total number of domestic hotels and rooms, as of March 31, 2023, increased 6.5% and 8.2%, respectively, from March 31, 2022.
• The total number of international hotels and rooms, as of March 31, 2023, increased 8.2% and 9.6%, respectively, from March 31, 2022.
• As of March 31, 2023, the domestic system size for the company’s upscale and upper-midscale segments grew by approximately 29% and 24%, respectively, since March 31, 2022, driven by an increase in the number of hotels due to the acquisition of Radisson Hotels Americas and the growth of Cambria Hotels and the Comfort family of brands.
• Of the total domestic franchise agreements awarded in first quarter 2023, 88% were for the company’s upscale, extended-stay, and midscale brands, and 75% were for conversion hotels. The number of domestic franchise agreements awarded for the company’s upscale segment for first quarter 2023 increased 13%, compared to the same period of 2022.
• The company’s domestic pipeline as of March 31, 2023 increased 11% to approximately 89,000 rooms, representing 925 hotels, from March 31, 2022. The company’s extended-stay domestic pipeline reached 475 hotels as of March 31, 2023, a 28% increase versus March 31, 2022. The company’s upscale domestic pipeline as of March 31, 2023 increased 16% from March 31, 2022. The company’s global pipeline as of March 31, 2023 increased 14% to over 96,000 rooms, representing 988 hotels, from March 31, 2022.

View Complete Results.