Choice Hotels International’s third-quarter business travel demand again improved and now is approaching its traditional pre-pandemic share of the hotel company's demand, executive said Monday during an earnings call.
"The business travel component of our guest mix continues to approach historical levels and accounted for approximately 30 percent of stays in the third quarter," Choice Hotels CEO and president Patrick Pacious said during an earnings call. "Furthermore, our strongest occupancy growth during weekdays in September year over year was on Tuesday and Wednesday, illustrating the strength of returning business travel."
The company remains “optimistic” for business transient and group travel segments.
“We expect business travel in our key industry verticals to increase fueled by the additional onshoring of the U.S. supply chain and significant nationwide investments from the infrastructure bill. … We anticipate additional tailwinds from business travelers,” Pacious said.
Q3 Performance
Choice reported third-quarter year-over-year growth across domestic revenue per available room and average daily rate, but with occupancy lagging (again). Total RevPAR for the quarter was at $63.45, a 3.4 percent increase year over year. ADR was $100.07, up 5.8 percent, and occupancy was 63.4 percent, down 1.5 percentage points year over year.
Choice's domestic RevPAR exceeded 2019 levels by 15.2 percent. The company said this trend is continuing though the end of the year as “October RevPAR [is] increasing approximately 20 percent, compared to October of 2019.” Choice attributed the growth “primarily” to an increase in average daily rate, which is up 15.1 percent over 2019 levels.
Choice’s $674 million acquisition of Radisson Hotels Americas, which closed Aug. 11, added more than 73,000 rooms globally to the company’s upscale and upper-midscale portfolio—both open and in its development pipeline—according to the company.
The company reported a total domestic pipeline increase of 16 percent year over year, totaling 1,017 hotels and more than 98,000 rooms. Domestic franchise agreements were also up in Q3 by 38 percent year over year.
As for total revenue, the company reported a year-over-year increase of 28 percent to $414.3 million, which includes $40.2 million from Radisson Hotels Americas. Net income was about $103.1 million, as compared with about $116.7 million in the third quarter of 2021.
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