On the company’s second-quarter earnings call, Choice President and CEO Steve Joyce handed the call over to current President and COO Pat Pacious, who will take over as CEO in January 2018.
ROCKVILLE, Maryland—Current Choice Hotels International President and COO Pat Pacious told analysts on a second-quarter earnings call that he’ll remain focused on the company’s current growth strategies once he takes over Steve Joyce’s role as president and CEO of the company, which will happen in January.
“We’re going to continue to do the three things we mentioned that (Joyce) and I have been working on, which is expand our great business we have in midscale; we’re going to capitalize on the significant momentum we’ve got going on in upscale, and we’re going to look at international growth as a real opportunity for us,” Pacious said. “So you’re not going to see a significant shift in strategy; the strategy that (Joyce) has led in the last 10 years and that I’ve been working with him on, we feel really confident about it, so does our board, and we like the growth prospects associated with that.”
Analysts asked if Pacious would be less likely to tackle projects related to mergers and acquisitions during the transition process from COO to CEO.
“I’m not going to comment on a specific M&A opportunity, but I think it goes back to those tenets that we look to, which is it’s got to be (good) for shareholders and it’s got to make sense from the standpoint of how we can (help) those individual hotel owners (improve) their businesses,” Pacious said.
During the second quarter of 2017, Choice’s Cambria Hotels brand surpassed 30 open properties with the opening of three new Cambria locations, according to an earnings release. Dominic Dragisich, CFO at Choice, said the company will continue to put money into the upscale brand to accelerate its growth.
“It’s an annual target of $40 million to $50 million that we deploy on an annual basis for that brand … for at least this year and probably early into 2018,” Dragisich said. “At the end of the day, we have $475 million authorized (for) deployment of that brand.” He said the company has about 70 Cambria hotels in its pipeline now, and the goal is to get that to 100 before the company pulls back spending on the brand.
Choice executed 11 new-construction franchise agreements for the Cambria brand during the second quarter, according to the release, which is a 22% increase compared to the second quarter of 2016.
In the second quarter, Choice’s domestic systemwide revenue per available room rose 2% to $56.17, occupancy increased 0.3% to 65.9% and average daily rate grew 1.5% to $85.19, all compared to the same quarter in 2016. Choice expects net income for the full year to range between $160 million and $163 million, and RevPAR during the third quarter is expected to grow between 1% and 2%, and 2% to 3% for the full year.
A total of 176 new franchised hotel development contracts were executed during the quarter. “The new-construction and conversion domestic pipelines totaled 523 and 198 hotels, respectively at (30 June 2017), representing increases of (30%) and (5%) from (30 June 2016),” the release states.
As of press time, Choice stocks were up 10.3% year to date. The Baird/STR Hotel Stock Index was up 23.3% for the same time period.