Choice Hotels, which in normal travel environments has a customer
mix of about 70 percent leisure to 30 percent business transient, saw its
leisure portion increase to between 80 percent and 82 percent for the third
quarter, said Choice president and CEO Patrick Pacious during a Thursday
morning earnings call.
The recovery of leisure travel since the trough of the
pandemic's negative effects in April is one of the reasons why the company
reported a domestic revenue per available room decline for the third quarter of
28.8 percent year over year, an improvement from the negative 49.6 percent
reported last quarter. This "outperformed the total industry by nearly 20
percentage points, and exceeded the chain scale segments in which the company
competes," Choice reported in a statement.
Last week Wyndham Hotels & Resorts reported a 35
percent Q3 RevPAR decline, yesterday Hilton reported a 55.9
percent Q3 RevPAR drop, and Thursday morning Hyatt reported a 72 percent Q3
RevPAR decline.
Approximate RevPAR results for October were down about 25
percent year over year, and the company expects its fourth quarter RevPAR
results to sequentially improve over third quarter results, Pacious said,
showing a bit more optimism than other hotel companies that have reported
results to date. They have anticipated a fourth quarter more in line with their
third quarter results.
"We're seeing quarter over quarter and month over month
improvements," he added. "There is more business travel out there in
the fourth quarter historically for us, and we are seeing continued volume
month over month in business travelers out there, in primarily construction,
retail trade and transportation segments. We are seeing an increase on the
business travel side."
The October results and the increase in business travel are
factors that "lead us to believe in November and December, that they will
continue the trend we've seen in RevPAR decline improvements month over
month," Pacious explained.
Pacious also noted trends likely to impact travel long-term,
such as the economic disruption caused by the pandemic pushing consumers to
more moderately priced offerings, and remote work and virtual learning, adding
that this creates more flexibility for leisure travel. In recent years, the
company has seen leisure spreading evenly through the months of the year, and
the past two months, leisure demand has continued into the weekdays, when
business travel is typically more robust.
The occupancy level for the quarter was 52.1 percent, down
11.3 percentage points from a year prior. Average daily rate dropped 13.4
percent, from $86.95 as of Sept. 30, 2019, to $75.30. Net income was $14.5
million, while revenues were down 32 percent year over year to $210.8 million.
Choice year to date has awarded 232 new domestic franchise
agreements, with nearly 70 percent for conversions, Pacious said. This
represents a 38 percent decrease from the same period in 2019. In the third
quarter, it executed more than 80 domestic agreements, with nearly three
quarters conversions. Forty percent were executed in September.
RELATED:Choice
Q2 2020 earnings