A week after the company held its first owners conference in three years, Choice Hotels International shared its Q1 2022 earnings with investors. On the company’s earnings call, President and CEO Patrick Pacious said that the company generated $96.6 million of adjusted earnings before interest, taxes, depreciation or amortization in the first quarter, a 53 percent year-over-year increase and a 28 percent increase when compared to the same quarter in 2019. “At the same time, we expanded our adjusted EBITDA margins to 74 percent year over year,” he said.
The company’s domestic systemwide revenue per available room growth increased 10.4 percent for first quarter 2022, compared to the same period of 2019. “Even with the omicron variant, demand during the first quarter surpassed 2019 levels,” Pacious said. “Combined with our hotels’ ability to drive room rates, we have now exceeded our 2019 RevPAR levels for 11 consecutive months, and we expect our momentum to continue into the second quarter.” The company credits this RevPAR growth to an average daily rate increase of 9.3 percent and a 60-basis-point increase in occupancy levels compared to the first quarter of 2019.
Domestic systemwide RevPAR growth has surpassed 2019 levels for 10 consecutive months through March 31, a trend that has continued in the second quarter of the year with April RevPAR increasing approximately 16 percent compared to April of 2019. The company expects RevPAR for full-year 2022 to increase between 10 percent and 13 percent compared to full-year 2019.
Total revenues increased 41 percent to $257.7 million for first quarter 2022, compared to the same period of 2021, and net income increased $45.1 million to $67.4 million for first quarter 2022, a 200 percent increase over the first quarter of 2021.
Development
The company signed 93 domestic franchise agreements over the quarter, a 4 percent increase compared to the same period of 2021. Excluding the multiunit transaction for 22 properties as part of the company's alliance with Penn National Gaming in 2021, domestic franchise agreements increased 39 percent in Q1 2022 compared to the same quarter in 2021. The number of domestic franchise agreements awarded for new construction hotels more than doubled during the quarter compared to the same period of 2021. Of the total domestic agreements awarded in Q1, 88 percent were for the company's upscale, midscale and extended-stay brands.
The number of domestic hotels and rooms, as of March 31, decreased 1.2 percent and 2.8 percent, respectively, from the same day in 2021. Excluding the impact from the departure of 17 AMResorts-branded properties and the exit of 41 underperforming assets from the portfolio in Q4 2021, the company's domestic upscale, midscale and extended-stay segments reported a 0.7 percent increase in units compared to March 31, 2021.
Looking Ahead
For full-year 2022, Choice expects the number of domestic upscale, midscale and extended-stay units to grow between 1 percent and 2 percent compared to full-year 2021.
The company's total domestic pipeline of hotels awaiting conversion, under construction or approved for development, as of March 31, reached 864 hotels, representing nearly 78,000 rooms, a 3.5 percent increase in rooms from Dec. 31. (This pipeline does not include applications received or master development agreements that commit to future franchise development.)
Even with rising inflation in gas prices, Choice also expects strong consumer demand going forward, especially for the summer. “Based on our focus group research and current projections, we do not expect to see an impact on aggregate travel demand through the summer travel season,” Pacious said during the call.