Choice Hotels International, Inc. ( CHH Quick Quote CHH - Free Report) reported second-quarter 2022 results, with earnings missing the Zacks Consensus Estimate, but revenues beating the same. The top and the bottom line increased on a year-over-year basis. Earnings lagged the Zacks Consensus Estimate after beating in the trailing four quarters. Following the results, the company’s shares increased 4.4% on Aug 5.
Patrick Pacious, president and chief executive officer of Choice Hotels, stated, “The acquisition of Radisson Hotels Americas, which is expected to close this month, will mark the next chapter in Choice's well-established asset-light strategy of investing in higher revenue segments and locations, and build on our strong track record of growing the brands of tomorrow. We are confident in our ability to accelerate the growth of Radisson Hotels Americas' brands by leveraging Choice's scale, network of owner relationships and strong digital platforms.”
Q2 Earnings and Revenues
Choice Hotels reported adjusted earnings of $1.43 per share, which missed the consensus mark of $1.47 by 2.7%. The bottom line increased 17.2% from the prior-year quarter’s figure of $1.22.
In the quarter under review, total revenues came in at $368 million, which surpassed the consensus mark of $327 million by 12.4%. However, the metric rose 32% from the year-ago quarter’s levels.
Franchising & Royalties
During the second quarter, domestic royalty fees totaled $121.4 million, up 14% compared to the same period in 2021. Domestic revenue per available room (RevPAR) increased 13% from second-quarter 2019 levels. The uptick was driven by 13.7% growth in average daily rate (ADR).
In the second quarter, the company awarded 122 domestic franchise agreements, up 4% year over year. The company's extended-stay portfolio continues to expand its footprint.
As of Jun 30, 2022, the number of domestic hotels and rooms declined 1.4% and 2.9% year over year, respectively.
Total operating expenses during second-quarter 2022 increased 34% year over year to $213.9 million. Adjusted EBITDA rose 15.9% from the prior-year quarter’s figure to $129.6 million.
As of Jun 30, 2022, Choice Hotels had cash and cash equivalents of $607.2 million compared with $511.6 million as of Dec 31, 2021.
Long-term debt at the end of the second quarter was $844.7 million compared with $844.1 million reported in the fourth-quarter 2021-end. Goodwill, as a percentage of total assets, came in at 7.6% compared with 8.1% at the first-quarter 2022-end.
In 2022, the company expects RevPAR to increase in the range of 11-13% as compared to the full year of 2019.
Coming to the extended-stay portfolio, the company witnessed rapid expansion, thereby reaching 489 domestic hotels as of Jun 30, 2022. This highlighted an increase of 6.3% on a year-over-year basis. The domestic extended-stay pipeline comprised 362 hotels awaiting conversion, under construction or approved for development.
As of Jun 30, 2022, the company’s total domestic pipeline of hotels awaiting conversion, under construction or approved for development reached 910 hotels, thereby reflecting nearly 84,000 rooms.
The company currently has a Zacks Rank #2 (Buy). You can see
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