Choice Hotels International executives on the fourth quarter/full-year earnings call said the growth of Cambria Hotel & Suites continues to be a top priority for the company, along with expansion in European markets.
ROCKVILLE, Maryland—Choice Hotels International CEO Steve Joyce attributed the company’s strong fourth quarter and full-year 2016 growth to three key drivers: Strategic efforts to help increase franchisee profitability, accelerated growth in the upscale segment, and domestic and international growth.
Choice’s Cambria Hotel & Suites brand entered major markets with property openings and groundbreaking in cities such as New York, Philadelphia, and Nashville, Tennessee, according to a news release. The brand had a full-year revenue per available room of over $100, and as of 31 December, 2016, there were 66 Cambria hotels in the new construction pipeline.
“We had made a significant amount of investment behind the Cambria brand to spur developer interest, and this move is paying off,” Joyce said on a Thursday morning earnings call. “Cambria Hotel & Suites’ pipeline at the end of 2016 had a more than 50% increase from 2015.”
Joyce said Choice’s Ascend soft brand is “also on a roll,” with 173 properties opened globally.
“Choice pioneered the soft brand concept before any of the other major hotel companies,” he said. “And while our competitors have been trying to build a presence through a soft brand, Choice already has one.”
On the franchising side, 267 new franchised hotels were approved for development in the fourth quarter, which brought franchise agreements for the full year to 645 hotels. Initiatives such as the smart rates proprietary pricing optimization system and the relaunch of the Choice Privileges loyalty program helped franchisees increase profitability.
“These tools have made a very positive impact on RevPAR,” Joyce said. “Domestic systemwide RevPAR increased 3.9% and exceeded total industry results by (0.7%).”
He added that the company also exceeded growth for each of its competitive segments: Choice upscale, upper midscale and midscale.
Growth in Europe
Choice has impressive domestic growth, but Joyce said the company is also seeing growth in key international markets.
“Choice secured agreements in seven new international markets in 2016,” he said, “specifically, United Arab Emirates, Saudi Arabia, Austria, Belgium, Finland, Greece and Hungary. This is through both master franchise agreements and direct franchising.”
He added that international growth will continue in 2017 “as we put a focus on our European international division.”
Q4 numbers, 2017 outlook
Domestic systemwide RevPAR grew 5% in the fourth quarter of 2016, according to the earning release. Occupancy increased 2.7%, while average daily rate increased 2.3%.
For the first quarter of 2017, RevPAR is expected to increase between 3.5% and 4.5%, and for the full year, RevPAR is expected to increase between 3% and 4%. On the call, Joyce said Choice is expecting higher RevPAR growth in the first quarter than for the full year because Easter falls in the second quarter this year, which should lead to more leisure travel in the first quarter.
As of press time, Choice’s shares were up 11.9% year to date. The Baird/STR Hotel Stock Index was up 19.5% for the same period.