Choice Hotels Ready to Capture More Spontaneous Vacationers This Summer

Choice Hotels is gearing up for a busy summer, with its extended stay and roadside properties likely to benefit if American tourists shun Europe this year.

There’s even a marketing campaign that will “take advantage of spontaneous trips,” said president and CEO Patrick Pacious during an earnings call on Tuesday.

“More domestic road trips will be taken by people than pre-pandemic,” he added. “We have 4,000 hotels within a mile of an interstate exit, we have 2,000 near beaches and national parks. Our hotels are in the right location for guests wanting the great outdoors”

Pacious also ambitiously played down inflation and rising gas prices, saying they would have “little to no impact” on guests. They simply change how they spend their money, so that could mean fewer restaurants.

The company’s extended-stay portfolio has meanwhile been beating 2019 RevPAR levels since April 2021, and domestically it saw growth in RevPAR — or revenue per available room, a key industry metric —of 19.2 percent in the first quarter 2022, compared to the same period in 2019. Its WoodSpring Suites brand saw RevPAR growth of 27.2 percent in the quarter, compared to the same period of 2019.

Its midscale portfolio has also fared well, surpassing 2019 RevPAR levels since June 2021, and it achieved domestic RevPAR growth of 7.5 percent in the first quarter of 2022 compared to the same period of 2019.

The CEO believes the strength of this market is behind the relatively high number of new signings — with the first quarter seeing a 46 percent increase in new applications for domestic franchise agreements.

The number of new domestic franchise agreements awarded for the company’s extended-stay portfolio increased more than threefold for the first quarter, compared to the same period of 2021.

For its upscale Cambria brand, there are 68 domestic properties in the pipeline, including 19 under active construction. “We expect to open 10 this year,” Pacious said.

Meanwhile, he added business travel trends were “favorable” for its brands, with small group demand a catalyst for portfolio, while it was set to take advantage of more workers needing a place to stay during works linked to the $1 trillion infrastructure bill.

No figures given, but demand was on its way to 2019 levels.

By the Numbers

For the three months ended March 31, domestic RevPAR exceeded 2019 levels by 10.4 percent. Choice has even claimed it outperformed the total industry by 13 percentage points.

Overall, revenue increased 41 percent to $257.7 million for this quarter, compared to the same quarter in 2021. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $96.6 million, 53 percent up on the same period in 2021.

As of March 31, 2022, the company’s total available liquidity consisting of cash and available borrowing capacity through the revolving credit facility increased 37 percent to $1.13 billion, compared to March 31, 2021.

The company also returned $28 million to shareholders in the form of cash dividends and share repurchases during the quarter.