Choice: ‘Steady Progression’ of Q1 Corp. Travel Demand

Choice Hotels International on Tuesday reported its first-quarter revenue per available room, average daily rate and average occupancy all exceeded first-quarter 2019 levels, for which executives credited not only powerful leisure demand but also steadily growing business transient and group.

“In the first quarter, we witness sequential quarter-over-quarter increases in our business travel bookings with demand continuing the steady progression back to 2019 levels,” president and CEO Patrick Pacious said Tuesday during an earnings call with analysts. “We expect business travel in our key industry verticals to increase, fueled by the additional onshoring of the US supply chain and investments from the infrastructure build.”

Choice’s first-quarter RevPAR and occupancy totaled $44.50 and 52.8 percent, respectively, up from $40.29 and 52.2 percent in the first quarter of 2019. Pacious also pointed to group demand as a driver of first-quarter performance and beyond.

“The strengthening of group travel demand we expect this year will also serve as a catalyst for our portfolio,” he said. “By establishing our strong foundation within the small group travel segment, we positioned the choice to benefit from the recent demand shift towards smaller-size meetings.”

Choice’s first-quarter ADR was $84.31, up 9.4 percent from the first quarter of 2019. Hotels particularly in North America have reported successfully increasing rates after the Covid-19 omicron variant outbreak faded, and Choice is no different, but Pacious also pointed to new Revenue-management technology most of the company’s properties installed last year as another driver of higher rates.

“A lot of the rate gain that we’re seeing is just more effective pricing,” he said. “We rolled out our revenue management tool last summer, at the beginning of the summer. [With] the effectiveness of that and helping them price their rooms multiple times a day, that system is getting a significant amount of input on what’s going on in the marketplace.” He added the company still sees a “significant runway” for further rate growth.

Leisure travel remains Choice’s bread-and-butter, but Pacious noted current business travel trends are affecting leisure demand. “We believe that remote work, which affords Americans greater flexibility as to when, where and for how long they travel, will continue to fuel the strong performance of our brands,” he said. “We expect these trends to continue to be strong tailwinds for our company’s long-term growth.”

Choice Q1 Performance

Choice’s first-quarter revenue increased 41 percent year over year to $257.7 million, and adjusted earnings before interest, taxes, depreciation and amortization increased 53 percent to $96.6 million. The company posted net income of $67.4 million, up from $22.3 million one year prior.

Choice at the end of the first quarter had in its development pipeline 864 hotels totaling about 75,000 rooms, the latter figure up about 3.5 percent from the fourth quarter of 2021, according to Choice.

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