Though fourth-quarter and full-year key performance metrics for Choice Hotels not surprisingly were down year over year, the company pointed to its extended-stay portfolio as a bright spot during its Wednesday earnings call.
Choice's extended-stay brands reported a 2020 average occupancy rate of 69 percent. The company continued to expand that portfolio, reaching 447 domestic extended-stay hotels as of Dec. 31, 2020, an 11 percent year-over-year increase.
The WoodSpring Suites brand reported 72 percent average occupancy for 2020 and year-over-year revenue per available room growth in December of 2 percent. Its room supply grew by nearly 8 percent during 2020. The Suburban extended-stay brand's domestic franchise agreements awarded during 2020 increased by 40 percent year over year. The MainStay Suites midscale extended-stay brand in 2020 grew its number of open domestic hotels by 23 percent and rooms by nearly 38 percent compared with 2019 and had the highest number of hotel openings in a year in the brand's history.
"For 2020, Choice awarded nearly 110 extended-stay franchise agreements, validating our strategic focus on this segment for both new construction and conversion opportunities," said Choice president and CEO Patrick Pacious. "Given these results we had in 2020, we remain optimistic about the growth potential of our extended-stay portfolio."
Choice's total domestic midscale hotels increased 1.3 percent year over year in 2020, with the Comfort brand reversing a trend of losing rooms with 2 percent growth each in hotels and rooms. The Cambria upscale brand increased hotels by 8 percent and rooms by 6 percent in 2020.
Overall, Choice's total number of domestic hotels and rooms as of Dec. 31 increased 0.2 percent and 0.4 percent year over year, respectively, with Choice's domestic upscale, midscale and extended-stay segments reporting aggregate annual increases of 1.8 percent in hotels and 1.6 percent in rooms. The company awarded 195 domestic franchise agreements in the fourth quarter, a 36 percent decrease year over year, and 427 for the full year, a 38 percent decrease. More than 70 percent were for conversions.
Key Performance Metrics
Fourth-quarter systemwide domestic RevPAR declined 25.1 percent year over year to $30.72. Average daily rate declined 12 percent to $68.37. The average occupancy level was 44.8 percent, a 7.9 percentage-point drop. For the full year, RevPAR was down 30.7 percent to $32.70, ADR dropped 12.5 percent to $71.63, and the average occupancy rate was 45.6 percent, a decline of 12.1 percentage points.
Net income for the fourth quarter was $7.9 million, an 81 percent year-over-year drop. For the year, net income declined 66 percent to $75.4 million.
Choice expects to see a sequential quarter-over-quarter improvement in RevPAR change for the first quarter of 2021 compared with the same period in 2019 and 2020. Through mid-February, the company year-to-date RevPAR had declined by approximately 18 percent from the same period of 2020.
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