Choice Hotels International’s 1Q21 earnings reported was highlighted by domestic systemwide RevPAR outperforming its competitive set by 750 basis points compared to the same period of 2019.
All Choice Hotels’ brands achieved domestic systemwide RevPAR index gains versus their local competitors with portfolio average share gains of 640 basis points for first quarter 2021, compared to the same period of 2019.
For the month of April 2021, the company’s RevPAR declined by approximately 4.2% versus April 2019 while occupancy levels increased by 80 basis points from April 2019, marking near returns to 2019 RevPAR levels. The company currently expects RevPAR change for the remainder of 2021, as compared to both 2019 and 2020, to outperform first quarter 2021 results as compared to both 2019 and 2020.
Choice’s extended-stay portfolio continued to outperform the industry throughout the first quarter, with an average domestic systemwide occupancy rate of 70%. Specifically, the WoodSpring Suites brand achieved RevPAR growth of 3.2% in first quarter 2021, compared to the same period of 2019, driven by an increase in average daily rate of 4.3% and occupancy levels of over 74%.
The company’s upscale portfolio continued to achieve domestic systemwide RevPAR share gains versus its local competitors for first quarter 2021, compared to first quarter 2019, with the Cambria Hotels brand achieving gains of 16 percentage points. In addition, the Ascend Hotel Collection’s domestic systemwide RevPAR change surpassed the upscale segment by nearly 20 percentage points in first quarter 2021, compared to the same period of 2019.
Choice’s midscale portfolio continued to achieve RevPAR share gains versus its local competitors for first quarter 2021, compared to the same period of 2019. Specifically, the Comfort brand family’s domestic systemwide RevPAR change outperformed the upper-midscale chain scale by nearly 11 percentage points, and the brand gained nearly 10 percentage points in RevPAR share from its local competitors in first quarter 2021, compared to the same period in 2019.
However, Choice Hotels quarterly earnings of US$0.57 per share missed Zacks Consensus Estimate of US$0.63 per share. This compares to earnings of US$0.76 per share a year ago.
Choice posted revenues of US$182.95 million for the quarter, again missing the Zacks Consensus Estimate by 9.11%. This compares to year-ago revenues of US$218.18 million.
Other highlights of first quarter and year-to-date 2021 results include:
- Domestic systemwide revenue per available room (RevPAR) change outperformed the total industry by 23 percentage points, declining 18.7% and 4.4% for first quarter 2021 compared to the same periods of 2019 and 2020, respectively.
- The company’s performance has continued the trend of sequential domestic systemwide RevPAR change improvement, with April 2021 RevPAR declining approximately 4.2% versus April 2019 and increasing 140% from April 2020.
- The company’s Board of Directors reinstated the dividend at the pre-pandemic rate and declared a cash dividend on the company’s common stock of $0.225 per share. The dividend is payable on July 16, 2021 to stockholders of record on July 1, 2021. The Board has also approved the resumption of the company’s share repurchase program.
- The company awarded 89 domestic franchise agreements in first quarter 2021, a 53% increase compared to the same period of the prior year. Over 80% of the agreements awarded in the first quarter were for conversion hotels. Of the total domestic franchise agreements awarded in the first quarter, over half were executed in the month of March.
- Net income was US$22.3 million for first quarter 2021, representing diluted earnings per share (EPS) of US$0.40.
- First quarter adjusted net income, excluding certain items, decreased 26% to US$31.6 million from first quarter 2020.
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter were US$63.1 million, an 11% decrease from first quarter 2020. First quarter adjusted EBITDA margin increased 330 basis points to 69% from first quarter 2020.