Choice
Hotels International reported systemwide net room growth of 3.3% and a net
income increase of 16% for 2024 as part of its fourth quarter and full-year
2024 earnings.
NORTH BETHESDA, Maryland — Choice Hotel International
reported net global rooms systems growth of 3.3%, including 4.3% growth for
domestic upscale, extended-stay and midscale rooms portfolio as part of its
fourth quarter and full-year 2024 earnings.
Choice reported its net income increased 16% to $299.7
million for the full year 2024, representing diluted earnings per share (EPS)
of $6.20, a 22% increase compared to 2023, both of which exceeded the top end
of the company’s full-year 2024 guidance. EBITDA for full-year 2024 also
increased 12% to a company record of $604.1 million, which also exceeded the
top end of its 2024 guidance.
“Choice Hotels generated another year of strong results in
2024, exceeding the top end of our earnings guidance and delivering a 4.3%
year-over-year net increase in our more revenue-intense domestic rooms
portfolio, a testament to the success of our growth strategy,” said Choice President and CEO Patrick
Pacious. “In 2024, we also successfully relaunched four
brands, substantially expanded our partnerships business, significantly
increased our international footprint, achieved record organic rewards program
growth, and unlocked new value through additional ancillary revenue
opportunities. As we enter 2025, we will continue to realize the earnings
growth from our past investments, meaningfully expand the scale of our
business, and accelerate our growth in the coming years.”
Domestic RevPAR increased by 4.5% year-over-year for Q4 for
Choice, outperforming the industry and the respective chain scales in which the
company competes by 90 and 30 basis points, respectively. Domestic ADR grew by
3.1% and occupancy levels increased by 80 basis points YOY in Q4. Choice’s
domestic extended-stay segment achieved RevPAR growth of 5.9% for the fourth
quarter YOY.
Choice opened 407 hotels globally, a 21% increase for
full-year 2024 year-over-year, which included opening the 515th extended-stay
hotel domestically in the fourth quarter. It also entered into a strategic
partnership with Westgate Resorts, which added 21 hotels and 14,471 rooms to
its domestic portfolio in Q4.
For its full-year guidance for 2025, Choice expects net
income between $288 to $300 million and full-year 2025 adjusted EBITDA to be
between $625 and $640 million. It expects domestic RevPAR growth to be between
1-2% and global net systems room growth to be approximately 1%.
Other Q4 and FY2024 results
- Choice repurchased 3.1 million shares of common stock for
$382.1 million during full-year 2024. The company had 3.8 million shares of
common stock remaining under the current share repurchase authorization.
-
Platform and procurement services fees increased 5% YOY to
$17.7 million In Q4.
-
Through the end of 2024, the company had a total
liquidity of $699.5 million, including available borrowing capacity and
cash and equivalents. Choice’s net debt leverage ratio was 2.9 times.
-
During 2024, the company generated cash flows from
operating activities of $319.4 million, an 8% increase YOY.
What the analysts said
Analyst Michael Bellisario of R.W. Baird said Choice’s earnings
topped expectations as RevPAR growth was better than forecast.
“The earnings upside drivers were higher other revenues and
lower SG&A expense; total gross fees were light of our estimate,” he said. “The
incremental focus likely will be on 2025 guidance and the embedded assumptions
to get to the company's ~3.5%-6% adjusted EBITDA growth forecast, which is
modestly ahead of expectations. Investment spending remains elevated (a known
known, in our opinion), but earnings estimates for 2025-2026 should continue to
move higher while most investors remain negatively biased (although less so
than 90-180 days ago), which we believe should support [Choice] shares over the
near term.”