Choice Hotels International's third-quarter business travel revenue increased about 2.5 percent year over year, including a "surge" in revenue from small and midsized enterprise customers, Choice CEO Patrick Pacious said on a Wednesday earnings call. Choice's overall Q3 U.S. revenue per available room declined, however.
SME revenue in Q3 increased 18 percent year over year, Pacious said. "Choice's U.S. business traveler base continues to provide steady demand made up of guests whose jobs require travel, representing industries such as construction, utilities, health care staffing, logistics and manufacturing," he added.
Business travelers comprised 40 percent of Choice's third-quarter business, Pacious said, adding the company would continue to target SME travelers.
"We're really leaning in on those types of travelers because of the product that we now have and the locations we now have, and that's where they're going," Pacious said. "They're going to the secondary and tertiary markets where they have to travel."
Pacious also said Choice's growth in the extended-stay segment has attracted additional business travelers, but noted the company was "not yet at our fair share" of the available SME business travel market and said that "we expect that to grow as we get better in our sales tools and we get better in our [request-for-proposals] responses that our owners are doing."
Choice's third-quarter U.S. RevPAR declined 3.2 percent, though, and CFO Scott Oaksmith said the increase in SME business travel was countered by a 20 percent year-over-year decline in government travel and a 30 percent decrease in inbound U.S. travel from Canada.
Choice Q3 Metrics
Choice's third-quarter Global RevPAR increased 0.2 percent year over year, with international RevPAR up 9.5 percent. U.S. RevPAR declined to $60.33.
Choice's Q3 U.S. average daily rate decreased 2 percent year over year to $100.03, and its U.S. occupancy declined 0.8 percentage points to 60.3 percent.
The company projected full-year 2025 RevPAR to decline 2 percent to 3 percent from 2024 levels, compared with a previous projection of flat to a 3 percent decline.
Choice reported third-quarter total revenue of $447 million, up 4.5 percent year over year. Net income increased to $180 million, compared with $106 million in the same period of 2024.
Choice's global net rooms as of Sept. 30 grew 2 percent year over year, driven by a 3 percent increase across upscale, extended-stay and midscale segments. Its global pipeline totaled about 86,000 rooms, down from about 110,000 a year prior, with 98 percent concentrated in those segments.
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