Choice Hotels International, Inc. ( CHH Quick Quote CHH - Free Report) reported first-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate, but revenues missed the same. The top and bottom lines, however, increased on a year-over-year basis. Earnings beat the Zacks Consensus Estimate for the fourth straight quarter. Following the results, the company’s shares appreciated 4% on May 10.
Patrick Pacious, president and CEO of Choice Hotels, stated, “We are confident that our long-term investments, compelling franchisee value proposition, and strong financial health, combined with underlying consumer trends that favor leisure travel, limited-service hotels and longer stay occasions, will allow us to drive sustainable growth in 2022 and beyond.”
Q1 Earnings and Revenues
Choice Hotels reported adjusted earnings of $1.03 per share, which beat the consensus mark of 93 cents by 10.8%. The bottom line improved 81% from the prior-year quarter’s figure of 50 cents.
In the quarter under review, total revenues were $257.7 million, which marginally missed the consensus mark of $258 million by 0.2%. However, the metric rose 41% from the year-ago quarter’s levels.
Franchising & Royalties
During the first quarter, domestic royalty fees totaled $87 million, up 38% compared with the same period of 2021. Domestic system-wide revenue per available room (RevPAR) increased 10.4% from the first-quarter 2019 levels. The uptick was driven by a 9.3% growth in average daily rate (ADR) and a 60 basis-point increase in occupancy levels.
In the first quarter, the company awarded 93 domestic franchise agreements, up 4% year over year. The company's extended-stay portfolio continues to expand its presence.
As of Mar 31, 2022, the number of domestic hotels and rooms declined 1.2% and 2.8% year over year, respectively.
Total operating expenses during first-quarter 2022 increased 14% year over year to $158.4 million. Adjusted EBITDA rose 53.2% from the prior-year quarter’s figure to $96.6 million.
As of Mar 31, 2022, Choice Hotels had cash and cash equivalents of $527.2 million compared with $511.6 million on Dec 31, 2021.
Long-term debt at the end of the first quarter was $844.4 million compared with $844.1 million reported in the fourth-quarter 2021-end. Goodwill, as a percentage of total assets, came in at 8.1% compared with 8.2% at the fourth-quarter 2021-end.
For 2022, the company expects to witness adjusted EBITDA and RevPAR growth compared to 2021. In 2022, the company expects RevPAR to increase in the range of 10% and 13% as compared to the full-year 2019.
Coming to the extended-stay portfolio, the company witnessed rapid expansion, thereby reaching 478 domestic hotels as of Mar 31, 2022. This highlighted an increase of 5.3% on a year-over-year basis. The domestic extended-stay pipeline comprised 350 hotels awaiting conversion, under construction or approved for development.
As of Mar 31, 2022, the company’s total domestic pipeline of hotels awaiting conversion, under construction or approved for development, reached 864 hotels, thereby reflecting nearly 78,000 rooms.
The company currently carries a Zacks Rank #3 (Hold). You can see
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