Choice hits upper end of guidance with 2024 numbers

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.”