Choice Hotels International ((CHH)) has held its Q1 earnings call. Read on for the main highlights of the call.
Choice Hotels International’s recent earnings call painted a picture of robust growth tempered by cautious optimism. The company reported a strong first quarter with significant gains in business travel and its extended stay portfolio. However, macroeconomic uncertainties are casting a shadow over future expectations, particularly affecting RevPAR forecasts and the upscale segment’s performance.
Strong First Quarter Financial Performance
Choice Hotels International reported a record-breaking first quarter with adjusted EBITDA climbing by 4% to $129.6 million. Additionally, adjusted earnings per share saw a 5% increase, reaching $1.34 year over year. These figures underscore the company’s strong financial footing as it navigates through economic uncertainties.
Significant Growth in Business Travel Segment
The business travel segment emerged as a standout performer, growing by 10% year over year. Notably, revenue from the group travel business surged by over 50%, highlighting a robust recovery in corporate travel demand and positioning Choice Hotels as a leader in this segment.
Expansion in Extended Stay Portfolio
Choice Hotels has significantly expanded its extended stay portfolio, which has grown by 19% over the past five years. This segment now represents half of the company’s total domestic rooms pipeline, indicating a strategic focus on capturing long-term stays and diversifying its offerings.
Reward Program Expansion
The company’s rewards program has seen impressive growth, expanding to over 70 million members, an 8% increase year over year. There was also a 28% increase in global reward night redemptions, reflecting enhanced customer engagement and loyalty.
Strong International Pipeline
International expansion remains a key focus for Choice Hotels, with the international rooms pipeline increasing by 13% compared to the previous quarter. The international rooms portfolio also expanded by 4% year over year, underscoring the company’s global growth ambitions.
Macroeconomic Uncertainty Impact
Despite strong performance metrics, macroeconomic uncertainties have led Choice Hotels to adopt a more cautious outlook for the remainder of 2025. The company has adjusted its EBITDA guidance to between $615 million and $635 million, reflecting these challenges.
RevPAR Growth Challenges
RevPAR expectations have been adjusted to a range of negative 1% to positive 1% for the year. This revision reflects the uncertain macroeconomic environment and its potential impact on hotel performance.
Decline in Upscale Segment Performance
The upscale segment faced challenges, with RevPAR underperforming relative to Smith Travel results. This was primarily due to properties leaving the portfolio and newer properties still ramping up, highlighting transitional challenges within this segment.
Forward-Looking Guidance
Choice Hotels International remains optimistic about its future prospects, driven by strategic investments and strong performance metrics. The company anticipates continued growth in its extended stay and upscale limited-service segments. Despite macroeconomic uncertainties, Choice Hotels is confident in its ability to capture future demand, with a focus on maintaining a diverse and resilient portfolio. The company expects domestic RevPAR to range between negative 1% and positive 1% for the full year, with adjusted EBITDA projected between $615 million and $635 million.
In conclusion, Choice Hotels International’s earnings call highlighted a strong start to the year, with significant growth in key areas. While macroeconomic uncertainties pose challenges, the company remains focused on strategic growth and capturing future demand. The overall sentiment is one of cautious optimism, with a clear emphasis on leveraging its diverse portfolio to navigate the uncertain economic landscape.