Choice Hotels International Inc., for the third quarter ended Sept. 30, reported total revenues reached a quarterly record $428 million, a 1% increase compared to the same period last year.

“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,” said Patrick Pacious, president/CEO. “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.”

Third-quarter highlights include:

• Net income increased 15% to $105.7 million, representing diluted earnings per share (EPS) of $2.22, a quarterly record and a 23% increase compared to the same period of 2023.
• Adjusted net income, excluding certain items, increased 15% to $106.2 million compared to the same period of 2023, and adjusted diluted EPS increased 23% to a record of $2.23 compared to the same period of 2023.
• Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew to a quarterly record of $177.6 million, a 14% increase compared to the same period of 2023.
• Global pipeline as of Sept. 30 increased 11% to a third-quarter record of more than 110,000 rooms from Sept. 30, 2023, highlighted by a 54% increase for conversion rooms. Domestic rooms pipeline as of Sept. 30 increased by 10% since Sept. 30, 2023, including a 68% increase for conversion rooms.
• Global hotel openings increased by 75% compared to the same period of 2023.
• The company’s unit and room growth as of Sept. 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 increased by 1.8% globally since Sept. 30, 2023.
• The international portfolio as of Sept. 30 expanded by 3.8% in the number of rooms, highlighted by international hotel openings that tripled during the quarter compared to the same period of 2023.
• The company is increasing midpoint of its guidance for net income, adjusted EBITDA, diluted EPS and adjusted diluted EPS for full-year 2024.

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% to $256.1 million for the third quarter compared to the same period of 2023.
• Platform and procurement services fees increased 4% to $16.2 million for the quarter compared to the same period of 2023.
  Third-quarter domestic effective royalty rate increased 6 basis points to 5.05% compared to the same period of 2023.
• Domestic RevPAR decreased 250 basis points for the three-month period ended Sept. 30, compared to the same period of 2023. Domestic occupancy levels for the three-month period ended Sept. 30 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 more than 495,000 rooms as of Sept. 30. The company’s domestic upscale, extended-stay and midscale portfolio increased 1.3% for hotels and increased 1.1% for rooms since Sept. 30, 2023. The domestic extended-stay hotels portfolio grew by 11.2% 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% compared to the
  same period of 2023.
• The company opened 190 domestic hotel openings year-to-date through Sept, 30, a 19% increase compared to the same period of 2023. Of the domestic franchise agreements executed for conversion hotels over the trailing 12 months ending Sept. 30, 141 opened in the same year, a 17% increase over the comparable period of the prior year.

Outlook

The company has adjusted its full-year outlook:

• Net income increased to between $276 million and $284 million
• Adjusted net income rose to between $323 million and $331 million
• Adjusted EBITDA rose to between $590 million and $600 million
• Domestic RevPAR Growth between -2% and -1%
• Domestic net unit growth of approximately 2%

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