Choice Hotels' first-quarter revenue per available room declined 15 percent year over year, but its extended-stay segment has proven resilient, with RevPAR and occupancy results that far exceed other segments, the company announced Monday.
Choice's overall first-quarter occupancy declined 610 basis points to 52.2 percent, while average daily rate declined 3.8 percent to $74.22. But the company's extended-stay WoodSpring Suites brand and its overall extended-stay portfolio reported March occupancy levels of 72 percent and 69 percent, respectively, and quarterly WoodSpring Suites RevPAR decreased just 2.9 percent year over year. These trends have continued into April and May, the company reported in a U.S. Securities and Exchange Commission filing.
The company's room-night mix is about two-thirds leisure and one-third corporate business, said Choice president and CEO Patrick Pacious during a Monday earnings call. "We expect the leisure rebound to be faster than business travel," he said. About 90 percent of Choice's domestic hotels are in suburban, small-town and interstate locations, he said, "that according to STR had higher demand than urban or resort destinations. … We expect Americans will choose to drive when the ability and appetite for travel returns. We have a strong presence in drive-to locations, which will allow us to capture a large share of pent-up demand."
As of March 31, Choice's first-quarter room count increased 2.7 percent year over year, and its international room count increased 15.2 percent. The company's domestic pipeline of hotels awaiting conversion, under construction or approved for development reached 1,000 hotels and more than 80,000 rooms, with the Comfort brand representing more than one-quarter of the total domestic unit pipeline. As of May 6, 97 percent of the company's more than 5,920 domestic locations remained open. In addition, fewer than 20 percent of the company's 1,210 international hotels were temporarily closed.
To preserve liquidity during the crisis, Choice obtained a 364-day $250 million term loan with the possibility of a one-year extension subject to lender consent. As a result, the company has more than $725 million in cash and available borrowing capacity. Without providing any future guidance, the company expects the effects of Covid-19 to be more significant in the second quarter than in the first.
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