Skift Take
Choice Hotels is shrugging off concerns about softening travel demand.
Choice Hotels International said Wednesday that its global pipeline grew in the first months of the year, particularly for the development of conversion hotels.
The Rockville, MD-based hotel franchisor — whose nearly 7,500 hotels span 22 brands, such as Comfort and Quality Inn — said its global pipeline of rooms increased by 10% in the first quarter to a company record of more than 115,000. The pipeline for conversion rooms climbed 36% worldwide and surged 59% in the U.S. during the same period.
The hotel group has been focusing on increasing its presence in the higher-revenue-generating upscale, extended-stay, and midscale segments.
“What’s in that pipeline is worth double what’s in our existing system,” said CEO Patrick Pacious.
Adjusted EBITDA, a measure of profit, climbed 17% from a year earlier to $124 million — a company record for the first quarter.
Executives touted the performance of the roughly 600 Radisson Americas hotels it bought for $655 million in 2022.
“We’re unlocking the revenue synergies from the Radisson Americas acquisition, which has meaningfully enhanced our growth profile and opened new incremental earnings streams,” Pacious said.
To further capitalize on travel demand, Choice Hotels redesigned and relaunched its Park Inn by Radisson brand in April to target value-conscious guests. The first hotel under the flag is expected to open in the third quarter. Pacious called the brand “sort of gap filler between Quality Inn and Econo Lodge.”
Choice’s first quarter
Given that context, executives said they’ve been seeing demand for the group’s brands hold up against a backdrop of broader economic uncertainty.
Choice Hotels’ domestic revenue per available room, a key hotel sector metric, was 8.2% above pre-pandemic levels. But U.S. inflation has risen 22% since March 2022, so that performance suggested a softening. Compared with a year earlier, the revenue-per-available room was down 5.9%.
Despite a possible softening in the pace of travel growth, Choice Hotels left unchanged its full-year guidance for adjusted EBITDA between $580 and $600 million. This steadiness suggested that executives believe overall profitability metrics will remain consistent with prior forecasts.
Accommodations Sector Stock Index Performance Year-to-Date
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