Choice Hotels Ready to Capture More Spontaneous Vacationers This Summer

Skift grip

Choice may boast strong first-quarter results, but the hotel group believes the best is yet to come with a summer of impromptu road trips ahead.

Matthew Parson

Choice Hotels is preparing for a busy summer, with its extended stays and roadside properties likely to benefit if American tourists avoid Europe this year.

There’s even a marketing campaign that “will take advantage of spontaneous travel,” President and CEO Patrick Pacious said in a conference call Tuesday.

“More domestic road trips will be made by people than before the pandemic,” he added. “We have 4,000 hotels within a mile of a freeway exit, we have 2,000 near beaches and national parks. Our hotels are ideally located for customers looking for wide open spaces »

Pacious also ambitiously played down inflation and rising gas prices, saying they would have “little or no impact” on customers. They’re just changing the way they spend their money, which could mean fewer restaurants.

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

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

The CEO believes that the strength of this market is behind the relatively high number of new signings – the first quarter saw a 46% increase in new applications for national franchise contracts.

The number of new national franchise agreements awarded for the company’s extended stay portfolio more than tripled in the first quarter, compared to the same period of 2021.

For its upscale Cambria brand, 68 domestic properties are under development, with 19 under active construction. “We plan to open 10 this year,” Pacious said.

Meanwhile, he added business travel trends that were “favorable” for his brands, with demand from small groups a catalyst for the portfolio, as he was poised to take advantage of more workers needed housing while work related to the $1 trillion infrastructure bill.

No figures were given, but demand was on track to reach 2019 levels.

In numbers

For the three months ended March 31, the national RevPAR exceeded 2019 levels by 10.4%. Choice even claimed to have outperformed the overall industry by 13 percentage points.

Overall, revenue increased 41% 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, up 53% from the same period in 2021.

As of March 31, 2022, the Company’s total available liquidity, comprised of cash and borrowing capacity available through the revolving credit facility, increased 37% 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 buybacks during the quarter.