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Choice Hotels International, Inc. (CHH - Free Report) delivered impressive fourth-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Patrick Pacious, president and CEO of Choice Hotels, stated, "Our distinct strategy of growing our brand portfolio with hotels that generate higher royalties per unit is driving impressive results. The new capabilities we have built to improve the profitability of each franchisee have resulted in three straight years of RevPAR growth that exceeded the industry, strengthening our competitive position and creating additional runway for growth in 2023 and beyond."
Q4 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (EPS) of $1.26, surpassing the Zacks Consensus Estimate of $1.08. In the prior-year quarter, the company reported an adjusted EPS of 99 cents.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Quarterly revenues of $362 million surpassed the consensus mark of $352 million by 2.9%. Moreover, the metric rose 27% from the year-ago quarter’s level.
Franchising & Royalties
During the fourth quarter, domestic royalty fees increased 18% year over year to $115.6 million. Domestic revenues per available room (RevPAR) increased 20.4% from fourth-quarter 2019 levels. The uptick was driven by a 17.4% increase in the average daily rate.
In 2022, domestic franchise agreements awarded increased by 11% year over year. The company's extended-stay portfolio continues to expand its footprint. As of Dec 31, 2022, the number of domestic pipelines increased 14% year over year to 1,029 hotels.
Operating Results
Total operating expenses during fourth-quarter 2022 increased 60% year over year to $284.7 million. During the quarter, adjusted EBITDA rose 17.8% year over year to $112.5 million.
Balance Sheet
As of Dec 31, 2022, Choice Hotels had cash and cash equivalents of $41.6 million compared with $52.5 million as of Sep 30, 2022.
Long-term debt at the end of the fourth quarter was $1,200.5 million compared with $1,155.1 million reported in the previous quarter.
Goodwill, as a percentage of total assets, came in at 10.4% compared with 8.2% in fourth-quarter 2021 end.
2022 Highlights
Total revenues in 2022 came in at $1,401.9 million compared with $1,069.3 million in 2021.
Adjusted EBITDA in 2022 came in at $478.6 million compared with $403.6 million in 2021.
In 2022, adjusted diluted EPS came in at $5.27 compared with $4.29 reported in the previous year.
Other Updates
The domestic extended-stay pipeline reached 496 hotels as of Dec 31, 2022. At the end of fourth-quarter 2022, the number of domestic hotels and rooms increased 6.5% and 7.9%, respectively, from Dec 31, 2021.
Outlook
For first-quarter 2023, the company anticipates net income in the range of $28-$32 million. Adjusted EBITDA is expected to be between $100 million and $105 million.
In 2023, the company expects adjusted EBITDA in the range of $520-$540 million (including a $60 million adjusted EBITDA contribution from the Radisson Hotels Americas business unit). This represents an 11% growth (at the mid-point) compared with 2022 levels.
Domestic RevPAR growth in 2023 is estimated at approximately 2% compared with 2022.
In 2023, the company’s domestic effective royalty rate (excluding the impact of Radisson Hotels Americas) is anticipated to increase in the mid-single digits compared with 2022 levels.
OneSpaWorld currently sports a Zacks Rank #1. OSW has a trailing four-quarter earnings surprise of 84.2%, on average. Shares of the company have increased 2.9% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.
Las Vegas Sands sports a Zacks Rank #1. LVS has a long-term earnings growth rate of 4.9%. The stock has increased 18.8% in the past year.
The Zacks Consensus Estimate for LVS’ 2023 sales and EPS indicates a rise of 100.8% and 217.5%, respectively, from the year-ago period’s estimated levels.
Playa Hotels carries a Zacks Rank #2 (Buy). PLYA has a trailing four-quarter earnings surprise of 19.4%, on average. Shares of the company have declined 8.3% in the past year.
The Zacks Consensus Estimate for PLYA’s 2023 sales and EPS indicates a rise of 7.9% and 26.3%, respectively, from the year-ago levels.
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Choice Hotels (CHH) Q4 Earnings & Revenues Beat Estimates
Choice Hotels International, Inc. (CHH - Free Report) delivered impressive fourth-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Patrick Pacious, president and CEO of Choice Hotels, stated, "Our distinct strategy of growing our brand portfolio with hotels that generate higher royalties per unit is driving impressive results. The new capabilities we have built to improve the profitability of each franchisee have resulted in three straight years of RevPAR growth that exceeded the industry, strengthening our competitive position and creating additional runway for growth in 2023 and beyond."
Q4 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (EPS) of $1.26, surpassing the Zacks Consensus Estimate of $1.08. In the prior-year quarter, the company reported an adjusted EPS of 99 cents.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Choice Hotels International, Inc. price-consensus-eps-surprise-chart | Choice Hotels International, Inc. Quote
Quarterly revenues of $362 million surpassed the consensus mark of $352 million by 2.9%. Moreover, the metric rose 27% from the year-ago quarter’s level.
Franchising & Royalties
During the fourth quarter, domestic royalty fees increased 18% year over year to $115.6 million. Domestic revenues per available room (RevPAR) increased 20.4% from fourth-quarter 2019 levels. The uptick was driven by a 17.4% increase in the average daily rate.
In 2022, domestic franchise agreements awarded increased by 11% year over year. The company's extended-stay portfolio continues to expand its footprint. As of Dec 31, 2022, the number of domestic pipelines increased 14% year over year to 1,029 hotels.
Operating Results
Total operating expenses during fourth-quarter 2022 increased 60% year over year to $284.7 million. During the quarter, adjusted EBITDA rose 17.8% year over year to $112.5 million.
Balance Sheet
As of Dec 31, 2022, Choice Hotels had cash and cash equivalents of $41.6 million compared with $52.5 million as of Sep 30, 2022.
Long-term debt at the end of the fourth quarter was $1,200.5 million compared with $1,155.1 million reported in the previous quarter.
Goodwill, as a percentage of total assets, came in at 10.4% compared with 8.2% in fourth-quarter 2021 end.
2022 Highlights
Total revenues in 2022 came in at $1,401.9 million compared with $1,069.3 million in 2021.
Adjusted EBITDA in 2022 came in at $478.6 million compared with $403.6 million in 2021.
In 2022, adjusted diluted EPS came in at $5.27 compared with $4.29 reported in the previous year.
Other Updates
The domestic extended-stay pipeline reached 496 hotels as of Dec 31, 2022. At the end of fourth-quarter 2022, the number of domestic hotels and rooms increased 6.5% and 7.9%, respectively, from Dec 31, 2021.
Outlook
For first-quarter 2023, the company anticipates net income in the range of $28-$32 million. Adjusted EBITDA is expected to be between $100 million and $105 million.
In 2023, the company expects adjusted EBITDA in the range of $520-$540 million (including a $60 million adjusted EBITDA contribution from the Radisson Hotels Americas business unit). This represents an 11% growth (at the mid-point) compared with 2022 levels.
Domestic RevPAR growth in 2023 is estimated at approximately 2% compared with 2022.
In 2023, the company’s domestic effective royalty rate (excluding the impact of Radisson Hotels Americas) is anticipated to increase in the mid-single digits compared with 2022 levels.
Zacks Rank & Key Picks
Choice Hotels currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are OneSpaWorld Holdings Limited. (OSW - Free Report) , Las Vegas Sands Corp. (LVS - Free Report) and Playa Hotels & Resorts N.V. (PLYA - Free Report) .
OneSpaWorld currently sports a Zacks Rank #1. OSW has a trailing four-quarter earnings surprise of 84.2%, on average. Shares of the company have increased 2.9% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 24.2% and 91%, respectively, from the year-ago period’s levels.
Las Vegas Sands sports a Zacks Rank #1. LVS has a long-term earnings growth rate of 4.9%. The stock has increased 18.8% in the past year.
The Zacks Consensus Estimate for LVS’ 2023 sales and EPS indicates a rise of 100.8% and 217.5%, respectively, from the year-ago period’s estimated levels.
Playa Hotels carries a Zacks Rank #2 (Buy). PLYA has a trailing four-quarter earnings surprise of 19.4%, on average. Shares of the company have declined 8.3% in the past year.
The Zacks Consensus Estimate for PLYA’s 2023 sales and EPS indicates a rise of 7.9% and 26.3%, respectively, from the year-ago levels.