Choice says it outperforms peers with RevPAR gains

NORTH BESTHESDA, Maryland — Choice Hotels International increased domestic RevPAR by 2.3% year-over-year in 1Q25, while also cutting its full-year 2025 RevPAR guidance as part of its first-quarter 2025 earnings.

Choice said its domestic RevPAR outperformed the chain scales in which the company competes by 60 basis points.

“Choice Hotels generated another quarter of record financial performance and RevPAR outperformance, demonstrating the successful execution of our growth strategy,” said Choice President and CEO Patrick Pacious. “Our unique positioning has enabled us to outperform our peers, gain market share, and emerge stronger even in periods of economic uncertainty. Today, with our more diversified avenues of growth, a more resilient customer profile, and a meaningfully strengthened brand portfolio, including our larger presence in the cycle-resilient extended-stay segment, we have established an even stronger foundation for near-term stability and long-term growth.”

Choice also increased net global rooms system size by 2.8%, YOY, including 3.9% growth for what it calls its “revenue-intensive portfolio,” including upscale, extended-stay, and midscale rooms.

The company also cut its full-year 2025 guidance to reflect “a more moderate domestic RevPAR growth expectation amidst a changing macro backdrop.” The RevPAR guidance is now -1 % to +1%, a 200 bps cut at the low end and -100 bps at the high end. Adjusted EBITDA guidance was also adjusted down $5-10 million, but global net unit growth was unchanged at approximately 1%.

Choice also reclassified certain revenues into partnership services and fees (they were formerly known as platform and procurement fees). Those numbers increased 28% YOY to $25.4 million in Q1. Franchise and management fees were also reclassified, increasing 2.4% YOY to $150.5 million.

Regarding net unit growth, Choice’s domestic portfolio increased 2.3% YOY while its international portfolio increased 4.4%. Choice’s global upscale net rooms portfolio, which has been an emphasis for the company since its purchase of Radisson Americas, grew by 16.2% YOY, including an 8% in the first quarter alone. The company’s global pipeline was over 95,000 rooms through Q1, of which nearly 79,000 were domestic.

Other Q1 highlights

• Choice’s extended-stay portfolio increased domestic RevPAR by 6.8% YOY in Q1, saying it outperformed the industry by 410 bps
• The company’s increased domestic RevPAR YOY for its midscale (+1.7%) and economy (+7.1%) portfolios in Q1, stating it outperformed their respective chain scales by 30 bps and 440 bps
• Net income increased 44% YOY to $44.5 million for the first quarter of 2025, representing diluted earnings per share (EPS) of $0.94, a 52% increase YOY
• EBITDA for first quarter 2025 grew to $129.6 million, a first quarter record and a 4% increase YOY
• Adjusted diluted EPS for the first quarter of 2025 grew to $1.34, a first-quarter record and a 5% YOY increase
• Through the first quarter, the company had a total available liquidity of $593.8 million
• In Q1, Choice also paid cash dividends totaling $13.5 million and repurchased 456,000 shares of common stock for $64.6 million under its stock repurchase program

What the analysts said

Analyst Michael Bellisario of R.W. Baird said Choice’s Q1 earnings slightly beat Street expectations on better-than-expected domestic RevPAR growth.

“Earnings generally were in line with Baird/Street expectations,” he said. “Full-year guidance is being cut and reflects RevPAR -150 bps (perhaps not as big of a cut as feared, in our opinion) and adjusted EBITDA -120 bps (which now brackets Baird/Street forecasts). Positively, free cash flow improved year-over-year, although capex and investment spending remained elevated... Negatively, system rooms and the pipeline declined sequentially and a bit more than we expected (although 1Q sequential declines are typical given timing/seasonality).”

Analyst Patrick Scholes of Truist Securities said while net rooms growth grew, there was continued room loss versus the fourth quarter with domestic down 1.2% and international flattish slightly down.

“Interestingly, Radisson domestic maintained 57 hotels, but the room count declined by 2,797 rooms. We do not know why,” he said. “There was sequential improvement in emerging brands such as Everhome (nominally impactful to room count with four more hotels open) and WoodSpring rooms at +3.5% [quarter-over-quarter].”