Choice Hotels International reports its third quarter 2024 results.
Highlights
- Total revenues reached $428.0 million for third quarter 2024, a quarterly record and a 1 percent increase compared to the same period of 2023.
- Net income increased 15 percent to $105.7 million for third quarter 2024, representing diluted earnings per share of $2.22, a quarterly record and a 23 percent increase compared to the same period of 2023.
- Third quarter 2024 adjusted net income, excluding certain items, increased 15 percent to $106.2 million compared to the same period of 2023, and adjusted diluted EPS increased 23 percent to a record of $2.23 compared to the same period of 2023.
- Adjusted earnings before interest, taxes, depreciation, and amortization for third quarter 2024 grew to a quarterly record of $177.6 million, a 14 percent increase compared to the same period of 2023.
- Global pipeline as of Sept. 30, increased 11 percent to a third quarter record of over 110,000 rooms from Sept. 30, 2023, highlighted by a 54 percent increase for conversion rooms. Domestic rooms pipeline as of Sept. 30, increased by 10 percent since Sept. 30, 2023, including a 68 percent increase for conversion rooms.
- Global hotel openings for third quarter 2024 increased by 75 percent compared to the same period of 2023.
- The company's unit and room growth as of Sep. 30, accelerated across its domestic and international portfolio from June 30. The company's upscale, extended stay, and midscale rooms portfolio, as of Sept. 30, 2024, increased by 1.8 percent globally since Sept. 30, 2023.
- The international portfolio as of Sept. 30, expanded by 3.8 percent in the number of rooms, highlighted by international hotel openings that tripled in third quarter 2024 compared to the same period of 2023.
- The company repurchased 2.9 million shares of common stock for $352.9 million year-to-date through Sept. 30, representing over 6 percent of the company's market capitalization at the beginning of the year.
- The company is increasing midpoint of its guidance for net income, adjusted EBITDA, diluted EPS, and adjusted diluted EPS for full-year 2024.
"Choice Hotels generated another quarter of record financial performance, demonstrating the successful execution of our growth strategy and giving us the confidence to raise our full-year guidance," Patrick Pacious, president and CEO, said in a statement. "We accelerated our unit growth, increased our global pipeline to new levels, expanded our international reach, and significantly grew the size of our rewards program. The positive momentum we have created and the strength of our versatile business model bolsters our ability to continue to deliver sustained top-line and earnings growth while returning significant capital to shareholders."
Financial Performance
Total revenues excluding reimbursable revenue from franchised and managed properties, calculated as total revenues net of reimbursable revenue of $171.8 million, increased 17 percent to $256.1 million for the third quarter 2024 compared to the same period of 2023.
Platform and procurement services fees increased 4 percent to $16.2 million for third quarter 2024 compared to the same period of 2023.
Third quarter 2024 domestic effective royalty rate increased 6 basis points to 5.05 percent compared to the same period of 2023.
Domestic revenue per available room decreased 250 basis points for the three-month period ended Sept. 30, 2024, compared to the same period of 2023. Domestic occupancy levels for the three-month period ended Sept. 30, 2024, improved by 80 basis points from the three months ended June 30.
Development
The company's total domestic system size increased to nearly 6,300 hotels representing over 495,000 rooms as of Sept. 30. The company's domestic upscale, extended stay, and midscale portfolio increased 1.3 percent for hotels and increased 1.1 percent for rooms since Sept. 30, 2023. The domestic extended stay hotels portfolio grew by 11.2 percent since Sept. 30, 2023, driven by increases in each of the company's brands.
The company's international rooms pipeline as of Sept. 30 increased by 21 percent compared to the same period of 2023.
The company opened 190 domestic hotel openings year-to-date through Sept. 30, a 19 percent increase compared to the same period of 2023. Of the domestic franchise agreements executed for conversion hotels over the trailing twelve months ending Sept. 30, 141 opened in the same year, a 17 percent increase over the comparable period of the prior year.
Outlook
The outlook information below includes forward-looking non-GAAP financial measures, which management uses in forecasting performance. The adjusted numbers in the company's outlook below exclude the net surplus or deficit generated from reimbursable revenue from franchised and managed properties, due diligence and transition costs, additional repurchases of company stock, and other items:
Full-Year 2024 | Prior Outlook | |
Net Income | $276 – $284 million | $260 – $272 million |
Adjusted Net Income | $323 – $331 million | $309.5 – $321.5 million |
Adjusted EBITDA | $590 – $600 million | $580 – $600 million |
Diluted EPS | $5.74 – $5.91 | $5.40 – $5.65 |
Adjusted Diluted EPS | $6.70 – $6.87 | $6.40 – $6.65 |
Effective Income Tax Rate | 24.0 % | 24.5 % |
Full-Year 2024 | Prior Outlook | |
vs. Full-Year 2023 | ||
Domestic RevPAR Growth | -2% to -1% | -3.5% to -1.5% |
Domestic Effective Royalty Rate Growth | Mid-single digits | Mid-single digits |
Domestic Net Unit Growth | Approximately 2% | Approximately 2% |
(upscale, extended stay, and midscale brands) |