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Choice Hotels (CHH) Beats on Q2 Earnings Estimates, Raises View
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Choice Hotels International, Inc. (CHH - Free Report) delivered impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by synergies through the Radisson Hotels Americas integration (ahead of schedule) and momentum in the conversion projects pipeline. Following the results, shares of the company rose 2.5% during trading hours on Aug 8.
Q2 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (EPS) of $1.75, surpassing the Zacks Consensus Estimate of $1.70. The company reported an adjusted EPS of $1.43 in the prior-year quarter.
Quarterly revenues of $427.4 million surpassed the consensus mark of $423 million by 1.2%. The metric rose 16.2% from the year-ago quarter’s level.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
During the second quarter, domestic royalties increased 7% year over year to $125.1 million. During the quarter, domestic revenues per available room (RevPAR) came in at $60.32 compared with $60.04 reported in the prior year period. The upside was driven by a 2.8% rise in the average daily rate.
During the quarter, the effective royalty rate increased 6 basis points year over year to 4.99%.
Operating Results
Total operating expenses during second-quarter 2023 increased 42% year over year to $303 million. Our estimate for the metric was $305.2 million.
During the quarter, adjusted EBITDA rose 18.2% year over year to $153.1 million. Our estimate for the metric was $146.1 million.
Balance Sheet
As of Jun 30, 2023, Choice Hotels had cash and cash equivalents of $36.2 million compared with $31.7 million as of Mar 31, 2023.
Long-term debt at the end of the second quarter was $1,384.3 million compared with $1,374.8 million reported in the previous quarter.
During the second quarter, Goodwill (as a percentage of total assets) came in at 10.5% (almost flat sequentially).
Outlook
In 2023, the company anticipates adjusted net income in the range of $298-$306 million, up from the previous expectation of $292-$302 million. Adjusted EBITDA is expected to be between $530 million and $540 million, up from the previous expectation of $525-$540 million. The company expects adjusted EPS to be between $5.86 and $6.01 compared with the prior expectations of $5.70 and $5.90. The Zacks Consensus Estimate for 2023 earnings is pegged at $5.93.
Domestic RevPAR growth in 2023 is estimated at approximately 2% compared with 2022. In 2023, the company’s domestic effective royalty rate is anticipated to increase in the mid-single digits on a year-over-year basis.
Other Updates
The domestic extended-stay pipeline reached 450 hotels as of Jun 30, 2023. At the end of second-quarter 2023, the number of domestic hotels and rooms increased 6.9% and 8.8%, respectively, year over year. The company’s pipeline for conversion hotels rose 14% year over year.
As of Jun 30, 2023, domestic pipelines increased 9% year over year to 899 hotels. The company’s international pipeline rose 29% year over year to 61 hotels.
Zacks Rank & Peer Releases
Choice Hotels currently has a Zacks Rank #4 (Sell).
Marriott International, Inc. (MAR - Free Report) reported solid second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics also increased year over year. The company’s adjusted EPS of $2.26 beat the Zacks Consensus Estimate of $2.19. In the prior-year quarter, the company had reported adjusted EPS of $1.80. Quarterly revenues of $6,075 million surpassed the consensus mark of $6,047 million. The top line surged 13.8% on a year-over-year basis.
The upside was primarily driven by robust leisure demand and solid global booking trends. Also, substantial RevPAR growth in international markets added to the upside. Backed by the solid underlying performance, the company lifted its expectations for 2023. The Zacks Rank #1 (Strong Buy) company has gained 30% in the past year compared with the industry’s 19.4% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported solid second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics also increased year over year. The company’s adjusted EPS of $1.63 beat the Zacks Consensus Estimate of $1.57. In the prior-year quarter, the company had reported adjusted EPS of $1.29. Quarterly revenues of $2,660 million surpassed the Zacks Consensus Estimate of $2,541 million and increased 18.8% from the year-ago quarter’s levels.
During the quarter, system-wide RevPAR increased 12.1% year over year, buoyed by strong demand drove continued pricing power across all segments. Given the consistency in growth across all customer segments, the company raised its outlook for 2023. Much of optimism prevails on account of recovery in international markets, business transient and group demand. The Zacks Rank #3 (Hold) company has gained 16.9% in the past year.
Hyatt Hotels Corporation (H - Free Report) reported mixed second-quarter 2023 results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same. However, the top and the bottom line increased on a year-over-year basis. The company’s adjusted EPS of 82 cents missed the Zacks Consensus Estimate of 83 cents. In the prior-year quarter, the company had reported an adjusted EPS of 46 cents. Quarterly revenues of $1,705 million beat the consensus mark of $1,650 million. Moreover, the top line climbed 15% on a year-over-year basis. The Zacks Rank #3 company has gained 32% in the past year.
Backed by strength in group booking activity, the company updated its 2023 RevPAR outlook. Management anticipates 2023 system-wide RevPAR to rise 14-16% (earlier guidance: 12-16%) from 2022 levels.
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Choice Hotels (CHH) Beats on Q2 Earnings Estimates, Raises View
Choice Hotels International, Inc. (CHH - Free Report) delivered impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by synergies through the Radisson Hotels Americas integration (ahead of schedule) and momentum in the conversion projects pipeline. Following the results, shares of the company rose 2.5% during trading hours on Aug 8.
Q2 Earnings and Revenues
In the quarter under review, Choice Hotels reported adjusted earnings per share (EPS) of $1.75, surpassing the Zacks Consensus Estimate of $1.70. The company reported an adjusted EPS of $1.43 in the prior-year quarter.
Quarterly revenues of $427.4 million surpassed the consensus mark of $423 million by 1.2%. The metric rose 16.2% from the year-ago quarter’s level.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Choice Hotels International, Inc. price-consensus-eps-surprise-chart | Choice Hotels International, Inc. Quote
Franchising & Royalties
During the second quarter, domestic royalties increased 7% year over year to $125.1 million. During the quarter, domestic revenues per available room (RevPAR) came in at $60.32 compared with $60.04 reported in the prior year period. The upside was driven by a 2.8% rise in the average daily rate.
During the quarter, the effective royalty rate increased 6 basis points year over year to 4.99%.
Operating Results
Total operating expenses during second-quarter 2023 increased 42% year over year to $303 million. Our estimate for the metric was $305.2 million.
During the quarter, adjusted EBITDA rose 18.2% year over year to $153.1 million. Our estimate for the metric was $146.1 million.
Balance Sheet
As of Jun 30, 2023, Choice Hotels had cash and cash equivalents of $36.2 million compared with $31.7 million as of Mar 31, 2023.
Long-term debt at the end of the second quarter was $1,384.3 million compared with $1,374.8 million reported in the previous quarter.
During the second quarter, Goodwill (as a percentage of total assets) came in at 10.5% (almost flat sequentially).
Outlook
In 2023, the company anticipates adjusted net income in the range of $298-$306 million, up from the previous expectation of $292-$302 million. Adjusted EBITDA is expected to be between $530 million and $540 million, up from the previous expectation of $525-$540 million. The company expects adjusted EPS to be between $5.86 and $6.01 compared with the prior expectations of $5.70 and $5.90. The Zacks Consensus Estimate for 2023 earnings is pegged at $5.93.
Domestic RevPAR growth in 2023 is estimated at approximately 2% compared with 2022. In 2023, the company’s domestic effective royalty rate is anticipated to increase in the mid-single digits on a year-over-year basis.
Other Updates
The domestic extended-stay pipeline reached 450 hotels as of Jun 30, 2023. At the end of second-quarter 2023, the number of domestic hotels and rooms increased 6.9% and 8.8%, respectively, year over year. The company’s pipeline for conversion hotels rose 14% year over year.
As of Jun 30, 2023, domestic pipelines increased 9% year over year to 899 hotels. The company’s international pipeline rose 29% year over year to 61 hotels.
Zacks Rank & Peer Releases
Choice Hotels currently has a Zacks Rank #4 (Sell).
Marriott International, Inc. (MAR - Free Report) reported solid second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics also increased year over year. The company’s adjusted EPS of $2.26 beat the Zacks Consensus Estimate of $2.19. In the prior-year quarter, the company had reported adjusted EPS of $1.80. Quarterly revenues of $6,075 million surpassed the consensus mark of $6,047 million. The top line surged 13.8% on a year-over-year basis.
The upside was primarily driven by robust leisure demand and solid global booking trends. Also, substantial RevPAR growth in international markets added to the upside. Backed by the solid underlying performance, the company lifted its expectations for 2023. The Zacks Rank #1 (Strong Buy) company has gained 30% in the past year compared with the industry’s 19.4% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported solid second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics also increased year over year. The company’s adjusted EPS of $1.63 beat the Zacks Consensus Estimate of $1.57. In the prior-year quarter, the company had reported adjusted EPS of $1.29. Quarterly revenues of $2,660 million surpassed the Zacks Consensus Estimate of $2,541 million and increased 18.8% from the year-ago quarter’s levels.
During the quarter, system-wide RevPAR increased 12.1% year over year, buoyed by strong demand drove continued pricing power across all segments. Given the consistency in growth across all customer segments, the company raised its outlook for 2023. Much of optimism prevails on account of recovery in international markets, business transient and group demand. The Zacks Rank #3 (Hold) company has gained 16.9% in the past year.
Hyatt Hotels Corporation (H - Free Report) reported mixed second-quarter 2023 results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same. However, the top and the bottom line increased on a year-over-year basis. The company’s adjusted EPS of 82 cents missed the Zacks Consensus Estimate of 83 cents. In the prior-year quarter, the company had reported an adjusted EPS of 46 cents. Quarterly revenues of $1,705 million beat the consensus mark of $1,650 million. Moreover, the top line climbed 15% on a year-over-year basis. The Zacks Rank #3 company has gained 32% in the past year.
Backed by strength in group booking activity, the company updated its 2023 RevPAR outlook. Management anticipates 2023 system-wide RevPAR to rise 14-16% (earlier guidance: 12-16%) from 2022 levels.