Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-13393 | |
Entity Registrant Name | CHOICE HOTELS INTERNATIONAL INC /DE | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 52-1209792 | |
Entity Address, Address Line One | 1 Choice Hotels Circle | |
Entity Address, City or Town | Rockville, | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 20850 | |
City Area Code | 301 | |
Local Phone Number | 592-5000 | |
Title of 12(b) Security | Common Stock, Par Value $0.01 per share | |
Trading Symbol | CHH | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 50,991,519 | |
Entity Central Index Key | 0001046311 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
REVENUES | ||
REVENUES | $ 332,792 | $ 257,727 |
OPERATING EXPENSES | ||
Selling, general and administrative | 59,283 | 30,324 |
Depreciation and amortization | 10,023 | 6,231 |
Total operating expenses | 254,941 | 158,359 |
Gain on sale of business and assets, net | 0 | 29 |
Operating income | 77,851 | 99,397 |
OTHER INCOME AND EXPENSES, NET | ||
Interest expense | 14,084 | 11,470 |
Interest income | (1,883) | (1,280) |
Other (gain) loss | (1,908) | 1,716 |
Equity in net loss (gain) of affiliates | 63 | (244) |
Total other income and expenses, net | 10,356 | 11,662 |
Income before income taxes | 67,495 | 87,735 |
Income tax expense | 14,675 | 20,344 |
Net income | $ 52,820 | $ 67,391 |
Basic earnings per share (in usd per share) | $ 1.02 | $ 1.21 |
Diluted earnings per share (in usd per share) | 1.02 | 1.20 |
Cash dividends declared per share (in usd per share) | $ 0.2875 | $ 0.2375 |
Royalty, licensing and management fees | ||
REVENUES | ||
REVENUES | $ 107,492 | $ 90,739 |
Initial franchise fees | ||
REVENUES | ||
REVENUES | 7,882 | 8,402 |
Platform and procurement services fees | ||
REVENUES | ||
REVENUES | 13,843 | 11,683 |
Owned hotels | ||
REVENUES | ||
REVENUES | 22,332 | 12,037 |
OPERATING EXPENSES | ||
Operating expenses | 17,146 | 8,154 |
Other | ||
REVENUES | ||
REVENUES | 10,627 | 8,229 |
Other revenues from franchised and managed properties | ||
REVENUES | ||
REVENUES | 170,616 | 126,637 |
OPERATING EXPENSES | ||
Operating expenses | $ 168,489 | $ 113,650 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 52,820 | $ 67,391 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustment | 394 | (134) |
Other comprehensive income (loss), net of tax | 394 | (134) |
Comprehensive income | $ 53,214 | $ 67,257 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 31,679 | $ 41,566 |
Accounts receivable (net of allowance for credit losses of $24,558 and $23,435, respectively) | 214,103 | 216,614 |
Income taxes receivable | 4,736 | 4,759 |
Notes receivable (net of allowance for credit losses of $3,988 and $4,125, respectively) | 53,093 | 52,466 |
Prepaid expenses and other current assets | 37,477 | 32,517 |
Total current assets | 341,088 | 347,922 |
Property and equipment, at cost (net of accumulated depreciation and amortization of $266,825 and $253,323, respectively) | 434,282 | 427,306 |
Operating lease right-of-use assets | 66,398 | 68,985 |
Goodwill | 220,187 | 218,653 |
Intangible assets (net of accumulated amortization of $205,769 and $201,401, respectively) | 750,179 | 742,190 |
Notes receivable (net of allowance for credit losses of $6,370 and $6,047, respectively) | 56,382 | 55,577 |
Investments, employee benefit plans, at fair value | 34,758 | 31,645 |
Investments in affiliates | 33,216 | 30,647 |
Deferred income taxes | 80,593 | 88,182 |
Other assets | 89,140 | 91,068 |
Total assets | 2,106,223 | 2,102,175 |
Current liabilities | ||
Accounts payable | 93,135 | 118,863 |
Accrued expenses and other current liabilities | 78,842 | 131,410 |
Deferred revenue | 103,599 | 92,695 |
Current portion of long-term debt | 4,416 | 2,976 |
Liability for guest loyalty programs | 89,582 | 89,954 |
Total current liabilities | 369,574 | 435,898 |
Long-term debt | 1,374,814 | 1,200,547 |
Long-term deferred revenue | 132,520 | 134,149 |
Deferred compensation and retirement plan obligations | 40,420 | 36,673 |
Income taxes payable | 15,482 | 15,482 |
Operating lease liabilities | 69,708 | 70,994 |
Liability for guest loyalty programs | 48,420 | 47,381 |
Other liabilities | 8,277 | 6,391 |
Total liabilities | 2,059,215 | 1,947,515 |
Commitments and Contingencies | ||
Common stock, $0.01 par value; 160,000,000 shares authorized; 95,065,638 shares issued at March 31, 2023 and December 31, 2022; 51,174,432 and 52,200,903 shares outstanding at March 31, 2023 and December 31, 2022, respectively | 951 | 951 |
Additional paid-in-capital | 299,952 | 298,053 |
Accumulated other comprehensive loss | (4,817) | (5,211) |
Treasury stock, at cost; 43,891,206 and 42,864,735 shares at March 31, 2023 and December 31, 2022, respectively | (1,842,913) | (1,694,857) |
Retained earnings | 1,593,835 | 1,555,724 |
Total shareholders’ equity | 47,008 | 154,660 |
Total liabilities and shareholders’ equity | $ 2,106,223 | $ 2,102,175 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 24,558 | $ 23,435 |
Allowance for credit losses, current | 3,988 | 4,125 |
Accumulated depreciation and amortization, property, plant and equipment | 266,825 | 253,323 |
Intangible assets, accumulated amortization | 205,769 | 201,401 |
Allowance for credit losses, noncurrent | $ 6,370 | $ 6,047 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 160,000,000 | 160,000,000 |
Common stock, shares issued (in shares) | 95,065,638 | 95,065,638 |
Common stock, shares outstanding (in shares) | 51,174,432 | 52,200,903 |
Treasury stock, shares (in shares) | 43,891,206 | 42,864,735 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 52,820 | $ 67,391 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 10,023 | 6,231 |
Depreciation and amortization – marketing and reservation system | 9,276 | 7,154 |
Gain on sale and disposal of business and assets, net | 0 | (29) |
Amortization - franchise agreement acquisition cost | 4,637 | 3,784 |
Non-cash stock compensation and other charges | 10,630 | 7,555 |
Non-cash interest and investment (income) loss | (1,442) | 1,909 |
Deferred income taxes | 7,566 | (3,119) |
Equity in net loss of affiliates, less distributions received | 421 | 230 |
Franchise agreement acquisition costs, net of reimbursements | (28,092) | (12,435) |
Change in working capital and other | (53,806) | (14,747) |
Net cash provided by operating activities | 12,033 | 63,924 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in property and equipment | (19,566) | (26,809) |
Investment in intangible assets | (1,097) | (1,208) |
Proceeds from sale of business and assets | 0 | 8,494 |
Contributions to investments in affiliates | (3,620) | (268) |
Proceeds from sale of equity method investments | 868 | 0 |
Purchases of investments, employee benefit plans | (2,670) | (2,818) |
Proceeds from sales of investments, employee benefit plans | 716 | 1,853 |
Issuance of notes receivable | (3,660) | (1,245) |
Collections of notes receivable | 337 | 63 |
Other items, net | (771) | (529) |
Net cash used in investing activities | (29,463) | (22,467) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net borrowings pursuant to revolving credit facilities | 176,000 | 0 |
Debt issuance costs | (755) | 0 |
Purchases of treasury stock | (160,488) | (14,802) |
Dividends paid | (12,821) | (13,204) |
Proceeds from exercise of stock options | 5,504 | 2,211 |
Net cash provided by (used in) financing activities | 7,440 | (25,795) |
Net change in cash and cash equivalents | (9,990) | 15,662 |
Effect of foreign exchange rate changes on cash and cash equivalents | 103 | (58) |
Cash and cash equivalents at beginning of period | 41,566 | 511,605 |
Cash and cash equivalents at end of period | 31,679 | 527,209 |
Cash payments during the period for | ||
Income taxes, net of refunds | 1,603 | 513 |
Interest, net of capitalized interest | 13,396 | 14,462 |
Non-cash investing and financing activities | ||
Dividends declared but not paid | 14,985 | 13,250 |
Investment in property, equipment and intangibles acquired in accounts payable and accrued liabilities | $ 6,704 | $ 4,129 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in- Capital | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Retained Earnings | |
Beginning balance (in shares) at Dec. 31, 2021 | 55,609,226 | ||||||
Beginning balance at Dec. 31, 2021 | $ 265,882 | $ 951 | $ 259,317 | $ (4,574) | $ (1,265,032) | $ 1,275,220 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 67,391 | 67,391 | |||||
Other comprehensive income (loss), net of tax | (134) | (134) | |||||
Share-based payment activity (in shares) | [1] | 262,008 | |||||
Share-based payment activity | [1] | 9,558 | 6,068 | 3,486 | 4 | ||
Dividends declared | [1] | (13,250) | (13,250) | ||||
Treasury purchases (in shares) | (100,912) | ||||||
Treasury purchases | (14,802) | (14,802) | |||||
Ending balance (in shares) at Mar. 31, 2022 | 55,770,322 | ||||||
Ending balance at Mar. 31, 2022 | $ 314,645 | $ 951 | 265,385 | (4,708) | (1,276,348) | 1,329,365 | |
Beginning balance (in shares) at Dec. 31, 2022 | 52,200,903 | 52,200,903 | |||||
Beginning balance at Dec. 31, 2022 | $ 154,660 | $ 951 | 298,053 | (5,211) | (1,694,857) | 1,555,724 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 52,820 | 52,820 | |||||
Other comprehensive income (loss), net of tax | 394 | 394 | |||||
Share-based payment activity (in shares) | [1] | 315,049 | |||||
Share-based payment activity | [1] | 15,396 | 1,899 | 13,497 | 0 | ||
Dividends declared | [1] | (14,709) | (14,709) | ||||
Treasury purchases (in shares) | [2] | (1,341,520) | |||||
Treasury purchases | [2] | $ (161,553) | (161,553) | ||||
Ending balance (in shares) at Mar. 31, 2023 | 51,174,432 | 51,174,432 | |||||
Ending balance at Mar. 31, 2023 | $ 47,008 | $ 951 | $ 299,952 | $ (4,817) | $ (1,842,913) | $ 1,593,835 | |
[1] During the year ended December 31, 2022, the Company declared cash dividends at a quarterly rate of $0.2375 per share of common stock. In March 2023, the Company's board of directors approved a 21% increase in the quarterly cash dividend to $0.2875 per share, effective with the dividend payable on April 18, 2023 to shareholders of record on April 3, 2023. This increase will result in a projected 2023 annual dividend rate of $1.15 per share, subject to future declarations by the board of directors. During certain periods presented, accumulated dividends were paid to certain shareholders upon vesting of performance vested restricted stock units ("PVRSU") which are captured in Share-based payment activity. (2) Beginning January 1, 2023, Treasury purchases include excise tax as imposed by the Inflation Reduction Act of 2022. |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Parenthetical) - $ / shares | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Common Stock | |||
Dividends declared (in dollars per share) | $ 0.2875 | $ 0.2375 | |
Common stock dividends, percentage increase (as a percent) | 21% | ||
Common Stock | Forecast | |||
Dividends declared (in dollars per share) | $ 1.15 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements of Choice Hotels International, Inc. and its subsidiaries (together "Choice" or the "Company") have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are necessary to fairly present the Company's financial position and results of operations. Except as otherwise disclosed, all adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. Although we believe the disclosures made are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2023. Interim results are not necessarily indicative of the entire year results. Acquisition of Radisson Hotels Americas On August 11, 2022, the Company completed the acquisition (the "Transaction") of (1) all of the issued and outstanding shares of Radisson Hospitality, Inc. and (2) certain trademarks held by Radisson Hospitality Belgium BV/SRL (collectively referred to as "Radisson Hotels Americas"). The Company determined it is the accounting acquirer of Radisson Hotels Americas and accounted for the Transaction as a business combination using the acquisition method of accounting. Accordingly, assets acquired and liabilities assumed were recorded at their fair values as of the August 11, 2022 acquisition date, with the exception of certain asset and liabilities which were accounted for in accordance with provisions of ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). Refer to Note 14. Accordingly, our consolidated statements of income include Radisson Hotels Americas' results of operations in the three months ended March 31, 2023, but exclude Radisson Hotels Americas' results of operations in the three months ended March 31, 2022, as this period was prior to the acquisition date of the Transaction. Summary of Significant Accounting Policies The Company’s significant accounting policies are detailed in the “Summary of Significant Accounting Policies” section of Note 1 in the Annual Report on Form 10-K for the year ended December 31, 2022, inclusive of elements attributable to Radisson Hotels Americas balances and activity. Recently Adopted Accounting Standards In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses ("ASU 2022-02"). ASU 2022-02 eliminates the recognition and measurement guidance on troubled debt restructuring for creditors that have adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) ("Topic 326"), requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty, and includes new guidance on current-period gross write-offs presentation. ASU 2022-02 is effective for annual reporting periods beginning after December 15, 2022 and interim periods within those fiscal years. The Company adopted ASU 2022-02 on a prospective basis effective January 1, 2023, and concluded there is no impact to the consolidated financial statements or disclosures for the first quarter of 2023. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Contract Liabilities Contract liabilities relate to (i) advance consideration received, such as initial franchise fees paid when a franchise agreement is executed and system implementation fees paid at time of installation, for services considered to be part of the brand intellectual property performance obligation and (ii) amounts received when loyalty points are issued, but for which revenue is not yet recognized since the related loyalties points have not been redeemed. Deferred revenues from initial fees and system implementation fees are typically recognized over a five Significant changes in the contract liabilities balances during the period December 31, 2022 to March 31, 2023 are as follows: (in thousands) Balance as of December 31, 2022 $ 209,359 Increases to the contract liability balance due to cash received 24,053 Revenue recognized in the period (27,549) Balance as of March 31, 2023 $ 205,863 Remaining Performance Obligations The aggregate amount of transaction price allocated to unsatisfied or partially unsatisfied performance obligations is $205.9 million as of March 31, 2023. This amount represents fixed transaction price that will be recognized as revenue in future periods, which is captured in the consolidated balance sheet as current and non-current deferred revenue. Based on practical expedient elections permitted by ASU 2014-09, Revenue From Contracts with Customers (Topic 606) and subsequent amendments ("Topic 606"), the Company does not disclose the value of unsatisfied performance obligations for (i) variable consideration subject to the sales or usage-based royalty constraint or comprising a component of a series (including franchise, partnership, qualified vendor, and software as a service ("SaaS") agreements), (ii) variable consideration for which we recognize revenue at the amount to which we have the right to invoice for services performed, or (iii) contracts with an expected original duration of one year or less. Disaggregation of Revenue Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 (in thousands) Over time Point in time Total Over time Point in time Total Royalty, licensing and management fees $ 107,492 $ — $ 107,492 $ 90,739 $ — $ 90,739 Initial franchise fees 7,882 — 7,882 8,402 — 8,402 Platform and procurement services fees 13,239 604 13,843 11,131 552 11,683 Owned hotels 16,893 5,440 22,333 10,040 1,997 12,037 Other 10,627 — 10,627 8,229 — 8,229 Other revenues from franchised and managed properties 155,438 15,178 170,616 112,259 14,378 126,637 Total revenues $ 311,571 $ 21,222 $ 332,793 $ 240,800 $ 16,927 $ 257,727 Owned hotels point in time revenues represent goods and services purchased independently of the hotel stay, such as food and beverage, incidentals, and parking fees. The remaining point in time revenues represent loyalty points redeemed by members for benefits (with both franchisees and third-party partners), net of the cost of redemptions. As presented in Note 11, the Corporate & Other segment revenue amounts represent $26.1 million and $14.3 million for the three months ended March 31, 2023 and 2022, and are included in the Over time column of Other revenue and the Owned hotels revenue row. The remaining revenues relate to the Hotel Franchising & Management reportable segment. |
Receivables and Allowance for C
Receivables and Allowance for Credit Losses | 3 Months Ended |
Mar. 31, 2023 | |
Accounts and Financing Receivable, after Allowance for Credit Loss [Abstract] | |
Receivables and Allowance for Credit Losses | 90 days Total Current Total As of March 31, 2023 Senior $ — $ 12,897 $ 15,200 $ 28,097 $ 70,242 $ 98,339 Subordinated — — 2,053 2,053 14,524 16,577 Unsecured — — 400 400 4,517 4,917 $ — $ 12,897 $ 17,653 $ 30,550 $ 89,283 $ 119,833 As of December 31, 2022 Senior $ — $ 15,200 $ — $ 15,200 $ 80,266 $ 95,466 Subordinated — — 2,209 2,209 14,866 17,075 Unsecured 20 40 40 99 5,575 5,674 $ 20 $ 15,240 $ 2,249 $ 17,508 $ 100,707 $ 118,215 The Company evaluated its off-balance-sheet credit exposure for loan commitments and determined the likelihood of having to perform is remote as of March 31, 2023. Refer to Note 12. Variable Interest through Notes Issued The Company has issued notes receivables to certain entities that have created variable interests in these borrowers totaling $105.3 million and $103.2 million as of March 31, 2023 and December 31, 2022, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs"). Accounts Receivable Accounts receivable consist primarily of franchise and related fees due from hotel franchisees and are recorded at the invoiced amount. During the three months ended March 31, 2023, the Company recorded provisions for credit losses on accounts receivable of $1.8 million in selling, general and administrative ("SG&A") expenses and $2.1 million in marketing and reservation system expenses. During the three months ended March 31, 2022, the Company recorded reversal of provisions for credit losses on accounts receivable of $0.5 million in SG&A expenses and provisions of $0.3 million in marketing and reservation system expenses. During the three months ended March 31, 2023 and 2022, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $2.8 million and $0.3 million, respectively." id="sjs-B4">Receivables and Allowance for Credit Losses Notes Receivable The Company has provided financing in the form of notes receivable loans to franchisees to support the development of properties in strategic markets. The Company's credit quality indicator is the level of security in the note receivable. The composition of notes receivable balances by credit quality indicator and the allowance for credit losses is as follows: (in thousands) March 31, 2023 December 31, 2022 Senior $ 98,339 $ 95,466 Subordinated 16,577 17,075 Unsecured 4,917 5,674 Total notes receivable 119,833 118,215 Total allowance for notes receivable credit losses 10,358 10,172 Total notes receivable, net of allowance $ 109,475 $ 108,043 Current portion, net of allowance $ 53,093 $ 52,466 Long-term portion, net of allowance $ 56,382 $ 55,577 Amortized cost basis by year of origination and credit quality indicator are as follows: (in thousands) 2023 2022 2021 2020 2019 Prior Total Senior $ 3,480 $ — $ 8,018 $ — $ 28,819 $ 58,022 $ 98,339 Subordinated — — — — — 16,577 16,577 Unsecured — 390 1,288 953 203 2,083 4,917 Total notes receivable $ 3,480 $ 390 $ 9,306 $ 953 $ 29,022 $ 76,682 $ 119,833 The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses: (in thousands) March 31, 2023 December 31, 2022 Beginning balance $ 10,172 $ 16,779 Provision for credit losses 342 (938) Write-offs (156) (5,669) Ending balance $ 10,358 $ 10,172 As of both March 31, 2023 and December 31, 2022, one loan with a senior tranche met the definition of collateral-dependent and is collateralized by membership interests in the borrowing entities and the associated land parcel. The Company used a discounted cash flow ("DCF") market approach via quoted market prices to value the underlying collateral. The Company reviewed the borrower's financial statements, economic trends, industry projections for the market, and comparable sales capitalization rates, which represent significant inputs to the cash flow projections. These nonrecurring fair value measurements are classified as level three of the fair value measurement hierarchy, as there are unobservable inputs which are significant to the overall fair value. Based on these analyses, the fair value of collateral secures substantially all of the carrying value of each loan. Allowances for credit losses attributable to collateral-dependent loans are $0.9 million as of both March 31, 2023 and December 31, 2022, respectively. As of December 31, 2022, two loans had revised provisions as a result of loan repayments being made timely and a favorable reassessment of the underlying collateral's performance. The write-offs for the year ended December 31, 2022 are primarily associated with a loan previously classified as collateral-dependent that was settled in exchange for an operating hotel on April 14, 2022, as well as a loan that was settled under negotiated terms and therefore written off. The Company considers loans past due and in default when payments are not made when due in accordance with then current loan provisions or terms extended to borrowers, including loans with concessions or interest deferral. The Company suspends the accrual of interest when payments on loans are more than 30 days past due or upon a loan being classified as collateral-dependent. The Company applies payments received for loans on non-accrual status first to interest and then to principal. The Company does not resume interest accrual until all delinquent payments are received based on then current loan provisions. The amortized cost basis of notes receivable on non-accrual status was $18.4 million and $18.7 million at March 31, 2023 and December 31, 2022, respectively. The Company has identified loans totaling approximately $4.8 million as of both March 31, 2023 and December 31, 2022, respectively, with stated interest rates that are less than market rate, representing a total unamortized discount of $0.1 million as of both March 31, 2023 and December 31, 2022, respectively. These discounts are reflected as a reduction of the outstanding loan amounts and are amortized over the life of the related loan. The past due balances by credit quality indicator of notes receivable are as follows: (in thousands) 1- 30 days 31-89 days > 90 days Total Current Total As of March 31, 2023 Senior $ — $ 12,897 $ 15,200 $ 28,097 $ 70,242 $ 98,339 Subordinated — — 2,053 2,053 14,524 16,577 Unsecured — — 400 400 4,517 4,917 $ — $ 12,897 $ 17,653 $ 30,550 $ 89,283 $ 119,833 As of December 31, 2022 Senior $ — $ 15,200 $ — $ 15,200 $ 80,266 $ 95,466 Subordinated — — 2,209 2,209 14,866 17,075 Unsecured 20 40 40 99 5,575 5,674 $ 20 $ 15,240 $ 2,249 $ 17,508 $ 100,707 $ 118,215 The Company evaluated its off-balance-sheet credit exposure for loan commitments and determined the likelihood of having to perform is remote as of March 31, 2023. Refer to Note 12. Variable Interest through Notes Issued The Company has issued notes receivables to certain entities that have created variable interests in these borrowers totaling $105.3 million and $103.2 million as of March 31, 2023 and December 31, 2022, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs"). Accounts Receivable Accounts receivable consist primarily of franchise and related fees due from hotel franchisees and are recorded at the invoiced amount. During the three months ended March 31, 2023, the Company recorded provisions for credit losses on accounts receivable of $1.8 million in selling, general and administrative ("SG&A") expenses and $2.1 million in marketing and reservation system expenses. During the three months ended March 31, 2022, the Company recorded reversal of provisions for credit losses on accounts receivable of $0.5 million in SG&A expenses and provisions of $0.3 million in marketing and reservation system expenses. During the three months ended March 31, 2023 and 2022, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $2.8 million and $0.3 million, respectively. |
Investments in Affiliates
Investments in Affiliates | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Investments in Affiliates | Investments in Affiliates The Company maintains equity method investments in affiliates related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels in strategic markets. The Company has investments in affiliates that represent VIEs totaling $26.1 million and $24.5 million on the consolidated balance sheets at March 31, 2023 and December 31, 2022, respectively. The Company has determined that it is not the primary beneficiary of any of these VIEs, however it does exercise significant influence through its equity ownership and as a result the investment in these affiliates is accounted for under the equity method. For the three months ended March 31, 2023 and 2022, the Company recognized losses totaling $1.4 million and $0.8 million, respectively, from these investments that represent VIEs. The Company's maximum exposure to losses related to its investments in VIEs is limited to its equity investments as well as certain limited payment guaranties described in Note 12 of these financial statements. The Company recognized no impairment charges related to equity method investments during the three months ended March 31, 2023 and 2022. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consists of the following: March 31, 2023 December 31, 2022 (in thousands) $450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86%, less a discount and deferred issuance costs of $4.8 million and $4.9 million at March 31, 2023 and December 31, 2022, respectively $ 445,232 $ 445,080 $400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88%, less a discount and deferred issuance costs of $4.0 million and $4.2 million at March 31, 2023 and December 31, 2022, respectively 395,989 395,838 $850 million senior unsecured revolving credit facility with an effective interest rate of 5.87% less deferred issuance costs of $2.4 million and $1.8 million at March 31, 2023 and December 31, 2022, respectively (1) 533,593 358,189 Economic development loans with an effective interest rate of 3.00% at March 31, 2023 and December 31, 2022, respectively 4,416 4,416 Total debt $ 1,379,230 $ 1,203,523 Less current portion 4,416 2,976 Long-term debt $ 1,374,814 $ 1,200,547 (1) On February 14, 2023, the Company entered into a Third Amendment to the Amended and Restated Senior Unsecured Credit Agreement (the "Amendment"). The Amendment provides, among other things, for (i) an increase in the aggregate amount of commitments under the Company's existing $600 million unsecured credit facility (the "Revolver") by $250 million (the “Increased Commitments”) to an aggregate amount of $850 million and (ii) the replacement of the interest reference rate for U.S. dollar-denominated borrowings under the Revolver from LIBOR to an adjusted Secured Overnight Financing Rate. The pricing and other terms applicable to the Increased Commitments are the same as those applicable to the existing revolving loan commitments that were in effect prior to the Amendment. Except as amended by the Amendment, the remaining terms of the unsecured credit facility remain in full force and effect. Refer to Note 12 and the Liquidity and Capital Resources header of "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The changes in accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2023 and 2022 are as follows: (in thousands) Balance as of December 31, 2022 $ (5,211) Other comprehensive income (loss) before reclassification 394 Balance as of March 31, 2023 $ (4,817) (in thousands) Balance as of December 31, 2021 $ (4,574) Other comprehensive income (loss) before reclassification (134) Balance as of March 31, 2022 $ (4,708) The other comprehensive income (loss) before reclassification for both the three months ended March 31, 2023 and 2022 relate to foreign currency items, and there were no amounts reclassified from accumulated other comprehensive loss during either period. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company estimates the fair value of its financial instruments utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The following summarizes the three levels of inputs, as well as the assets that the Company values using those levels of inputs on a recurring basis. Level 1 : Quoted prices in active markets for identical assets and liabilities. The Company’s Level 1 assets consist of marketable securities (primarily mutual funds) held in the Deferred Compensation Plan. Level 2 : Observable inputs, other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable. The Company’s Level 2 assets consist of money market funds held in the Company's Deferred Compensation Plan. Level 3 : Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument. The Company does not currently have any assets recorded at fair value whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the three months ended March 31, 2023 and year ended December 31, 2022. As of March 31, 2023 and December 31, 2022, the Company had the following assets recorded in the consolidated balance sheets measured at fair value on a recurring basis: Fair Value Measurements at Reporting Date Using (in thousands) Total Level 1 Level 2 Level 3 As of March 31, 2023 Mutual funds (1) $ 32,649 $ 32,649 $ — $ — Money market funds (1) 3,521 — 3,521 — Total $ 36,170 $ 32,649 $ 3,521 $ — As of December 31, 2022 Mutual funds (1) $ 29,143 $ 29,143 $ — $ — Money market funds (1) 3,242 — 3,242 — Total $ 32,385 $ 29,143 $ 3,242 $ — (1) Included in Investments, employee benefit plans, at fair value and Prepaid expenses and other current assets on the consolidated balance sheets. Other financial instruments disclosure The Company believes that the fair values of its current assets and current liabilities approximate their reported carrying amounts due to the short-term nature of these items. In addition, the interest rates of the senior unsecured revolving credit facility adjust frequently based on current market rates; accordingly, we believe its carrying amount approximates fair value. The fair values of the Company's senior unsecured notes are classified as Level 2, as the significant inputs are observable in an active market. Refer to Note 5 for further information on debt. At March 31, 2023 and December 31, 2022, the carrying amounts and fair values are as follows: March 31, 2023 December 31, 2022 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value 2020 Senior Notes $ 445,232 $ 400,586 $ 445,080 $ 384,647 2019 Senior Notes 395,989 360,244 395,838 349,368 Fair value estimates are made at a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment. Settlement of such fair value amounts may not be possible or a prudent management decision. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective income tax rates were 21.7% and 23.2% for the three months ended March 31, 2023 and 2022, respectively. The effective income tax rates for the three months ended March 31, 2023 and 2022 were higher than the U.S. federal income tax rate of 21% primarily due to the impact of state income taxes, partially offset by excess tax benefits from share-based compensation. |
Share-Based Compensation and Ca
Share-Based Compensation and Capital Stock | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation and Capital Stock | Share-Based Compensation and Capital Stock The components of the Company’s pretax share-based compensation activity are as follows for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, (in thousands) 2023 2022 Stock options $ 1,388 $ 1,052 Restricted stock awards 3,699 3,043 Performance vested restricted stock units 4,684 3,354 Total share-based compensation expense $ 9,771 $ 7,449 A summary of share-based award activity as of and changes during the three months ended March 31, 2023 are presented below: Stock Options Restricted Stock Performance Vested Options Weighted Weighted Shares Weighted Shares Weighted Outstanding at January 1, 2023 1,010,647 $ 94.97 399,099 $ 128.47 437,180 $ 140.05 Granted 88,733 123.62 35,361 123.71 104,128 128.88 Performance-Based Leveraging (1) — — — — — — Exercised/Vested (107,252) 52.25 (68,432) 93.31 (120,308) 145.41 Expired — — — — — — Forfeited (645) 123.71 (4,201) 106.66 (960) 139.95 Outstanding at March 31, 2023 991,483 $ 102.13 6.3 361,827 $ 134.91 420,040 $ 135.78 Options exercisable at March 31, 2023 596,997 $ 90.05 4.8 (1) There has been no change to PVRSUs outstanding in the three months ended March 31, 2023 based on the Company's performance relative to the targeted performance conditions contained in PVRSUs. The fair value of the restricted stock awards and the PVRSUs with performance conditions granted during the three months ended March 31, 2023 were equal to the market price of the Company’s common stock on date of grant. The fair value of the PVRSUs with market conditions based on the Company’s total shareholder return relative to a predetermined peer group was estimated using a Monte Carlo simulation method as of the grant date. The requisite service periods for restricted stock and PVRSUs granted was between 9 months and 48 months. PVRSU award vesting ranges between 0% and 230% of the initial units granted. The stock options granted by the Company had an exercise price equal to the market price of the Company's common stock on the date of grant. The fair value of the options granted during the three months ended March 31, 2023 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions: Risk-free interest rate 4.10 % Expected volatility 30.90 % Expected life of stock option 6.0 years Dividend yield 0.9 % Requisite service period 4 years Contractual life 10 years Weighted average fair value of options granted (per option) $ 42.59 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company’s shares of restricted stock contain rights to receive nonforfeitable dividends and thus are participating securities requiring the computation of basic EPS using the two-class method. As the shares of restricted stock are both potential shares of common stock and participating securities, the Company calculates diluted earnings per share by the more dilutive of the treasury stock method or the two-class method. The calculation of EPS for net income available to common shareholders excludes the distribution of dividends and undistributed earnings attributable to participating securities from the numerator. The diluted earnings weighted average shares of common stock outstanding includes stock options, PVRSUs and RSUs. The computation of basic and diluted earnings per share of common stock is as follows: Three Months Ended March 31, (in thousands, except per share amounts) 2023 2022 Numerator: Net income $ 52,820 $ 67,391 Income allocated to participating securities (272) (324) Net income available to common shareholders $ 52,548 $ 67,067 Denominator: Weighted average shares of common stock outstanding – basic 51,269 55,412 Basic earnings per share $ 1.02 $ 1.21 Numerator: Net income $ 52,820 $ 67,391 Income allocated to participating securities (272) (324) Net income available to common shareholders $ 52,548 $ 67,067 Denominator: Weighted average shares of common stock outstanding – basic 51,269 55,412 Dilutive effect of stock options and PVRSUs 445 642 Weighted average shares of common stock outstanding – diluted 51,714 56,054 Diluted earnings per share $ 1.02 $ 1.20 The following securities have been excluded from the calculation of diluted weighted average shares of common stock outstanding as the inclusion of these securities would have an anti-dilutive effect: Three Months Ended March 31, (in thousands) 2023 2022 Stock options 240 156 PVRSUs — 76 |
Reportable Segment Information
Reportable Segment Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Reportable Segment Information | Reportable Segment Information The Hotel Franchising & Management reportable segment includes the Company's hotel franchising operations consisting of its 22 brands and brand extensions and hotel management operations of 13 Radisson Hotels Americas hotels (inclusive of 3 owned hotels). The 22 brands and brand extensions and hotel management operations are aggregated within this reportable segment considering their similar economic characteristics, types of customers, distribution channels and regulatory business environments. Revenues from the hotel franchising and management business include royalty fees, initial franchise fees and relicensing fees, cost reimbursement revenues, procurement services revenue, base and incentive management fees, and other hotel franchising and management related revenue. The Company provides certain services under its hotel franchise and management agreements which result in direct and indirect reimbursements. The cost reimbursement revenues received from franchisees are included in hotel franchising and management revenues and are offset by related expenses to calculate hotel franchising operating income. Equity in earnings or losses from hotel franchising related investment in affiliates is allocated to the Company's Hotel Franchising & Management reportable segment. The Company evaluates its Hotel Franchising & Management reportable segment based primarily on the results of the segment without allocating corporate expenses, indirect general and administrative expenses, interest expense, interest income, other gains and losses or income taxes, which are included in the Corporate & Other column. Corporate & Other revenues include owned hotel revenues and revenues related to the Company's SaaS technology solutions division which provide cloud-based property management software to non-franchised hoteliers. Intersegment revenue adjustment is from the elimination of Hotel Franchising & Management revenue which include royalty fees, management and cost reimbursement fees charged to our owned hotels against franchise and management fee expense recognized by our owned hotels in Corporate & Other operating income (loss). Our President and Chief Executive Officer, who is our chief operating decision maker, does not use assets by operating segment when assessing performance or making operating segment resource allocations decisions and therefore assets by segment are not disclosed below. The following table presents the financial information for the Company's segments: Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 (in thousands) Hotel Corporate & Intersegment Eliminations Consolidated Hotel Corporate & Intersegment Eliminations Consolidated Revenues $ 309,047 $ 26,064 $ (2,319) $ 332,792 $ 244,371 $ 14,260 $ (904) $ 257,727 Operating income (loss) $ 105,491 $ (27,640) $ — $ 77,851 $ 107,320 $ (7,923) $ — $ 99,397 Income (loss) before income taxes $ 105,428 $ (37,933) $ — $ 67,495 $ 107,564 $ (19,829) $ — $ 87,735 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is not a party to any litigation other than litigation in the ordinary course of business. The Company's management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or collectively, will have a material adverse effect on the Company's financial position, results of operations or cash flows. Contingencies The Company entered into various limited payment guaranties with regards to the Company’s VIEs supporting their efforts to develop and own hotels franchised under the Company’s brands. Under these limited payment guaranties, the Company has agreed to guarantee a portion of the outstanding debt until certain conditions are met such as (a) the loan matures, (b) certain debt covenants are achieved, (c) the maximum amount guaranteed by the Company is paid in full or (d) the Company, through its affiliates, ceases to be a member of the VIE. The maximum exposure of principal incidental to these limited payment guaranties is $5.7 million, plus unpaid expenses and accrued unpaid interest. As of March 31, 2023 and December 31, 2022, the Company believed the likelihood of having to perform under the aforementioned limited payment guaranties was remote. In the event of performance, the Company has recourse for one of the transactions in the form of a membership interest pledge as collateral for the guaranty. Commitments The Company has the following commitments outstanding at March 31, 2023: • The Company provides financing in the form of franchise agreement acquisition payments to franchisees for property improvements, hotel development efforts and other purposes. These payments are typically made at commencement of construction or hotel opening, in accordance with agreed upon provisions in individual franchise agreements. At March 31, 2023, the Company had commitments to extend an additional $334.6 million for these purposes provided the conditions of the payment are met by its franchisees. • As part of the acquisition of Radisson Hotels Americas, the Company entered into a long-term management arrangement, with an expiration date of July 31, 2031, to manage eight hotel properties owned by a third-party. In conjunction with the management arrangement, the Company entered into a guarantee with the third-party to fund any shortfalls in the payment of the third-party owner’s priority stipulated in the management agreement. The maximum guarantee under the agreement is $22 million. The Company believes the future performance is expected to be sufficient on both an annual basis and over the duration of the agreement. Accordingly, no liability was recorded as of March 31, 2023 in accrued liabilities within the consolidated balance sheets. • To the extent existing unconsolidated affiliates proceed to the hotel construction phase, the Company is committed to make capital contributions totaling $11.6 million to support their efforts to construct Cambria hotels. • The Company committed to provide financing in the form of loans or credit facilities to franchisees for Choice brand development efforts. At March 31, 2023, the Company has remaining commitments of approximately $0.7 million, upon certain conditions being met. • The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation system fees. In accordance with terms of our franchise agreements, the Company is obligated to use the marketing and reservation system revenues it collects from the current franchisees comprising its various hotel brands to provide marketing and reservation services appropriate to support the operation of the overall system. To the extent revenues collected exceed expenditures incurred, the Company has a commitment to the franchisee system to make expenditures in future years. Conversely, to the extent expenditures incurred exceed revenues collected, the Company has the contractual enforceable right to assess and collect such amounts. In the ordinary course of business, the Company enters into numerous agreements that contain standard indemnities whereby the Company indemnifies another party for breaches of representations and warranties. Such indemnifications are granted under various agreements, including those governing (i) purchases or sales of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) access to credit facilities, (v) issuances of debt or equity securities, and (vi) certain operating agreements. The indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) franchisees in licensing agreements, (iv) financial institutions in credit facility arrangements, (v) underwriters in debt or equity security issuances and (vi) parties under certain operating agreements. In addition, these parties are also generally indemnified against any third-party claim resulting from the transaction that is contemplated in the underlying agreement. While some of these indemnities extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of future payments that the Company could be required to make under these indemnities, nor is the Company able to develop an estimate of the maximum potential amount of future payments to be made under these indemnifications as the triggering events are not subject to predictability. With respect to certain of the aforementioned indemnities, such as indemnifications of landlords against third-party claims for the use of real estate property leased by the Company, the Company maintains insurance coverage that mitigates potential liability. |
Transactions with Unconsolidate
Transactions with Unconsolidated Affiliates | 3 Months Ended |
Mar. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Transactions with Unconsolidated Affiliates | Transactions with Unconsolidated Affiliates The Company has a management fee arrangement for marketing services with a partner in an unconsolidated affiliate. For the three months ended March 31, 2023 and 2022, fees earned and payroll costs reimbursed under this arrangement totaled $0.7 million and $0.4 million, respectively. The Company has entered into franchise agreements with certain of the unconsolidated affiliates discussed in Note 4. Pursuant to these franchise agreements, for the three months ended March 31, 2023 and 2022, the Company recorded royalty and marketing reservation system fees of approximately $5.8 million and $4.2 million, respectively. The Company recorded $4.1 million and $3.9 million as a receivable due from these affiliates as of March 31, 2023 and December 31, 2022, respectively. As part of the acquisition of Radisson Hotels Americas as discussed in Note 14, the Company has a management fee arrangement with an investment in an unconsolidated affiliate accounted for under the cost method. For the three months ended March 31, 2023, fees earned and payroll costs reimbursed under this arrangement totaled $1.0 million. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions August 2022 Radisson Hotels Americas Acquisition On August 11, 2022, the Company completed the acquisition of Radisson Hotels Americas. The accounting purchase price for the Transaction was $673.9 million, which includes the base purchase price of $675.2 million, adjusted for Disclosed Leakage (as defined in the Share Sale and Purchase Agreement) and certain other prepaid expenses. To fund the Transaction, Choice drew $175.0 million on the Company's existing senior unsecured credit facility, and funded the remainder with cash on hand. Additionally, in connection with the acquisition, we recorded $10.4 million of transaction, transition, and severance expense, included within Selling, general and administrative, during the three months ended March 31, 2023. Preliminary Fair Values of Assets Acquired and Liabilities Assumed The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets acquired and liabilities assumed as of August 11, 2022. These preliminary fair values are based on management’s estimates and assumptions, using the best information available at the time of this filing. During the fourth quarter of 2022 and first quarter of 2023, the Company recorded net measurement period adjustments that revised goodwill by a $9.1 million reduction and $1.5 million increase, respectively, as presented in the table below. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date. The measurement period adjustments resulted in no impact to our consolidated statements of income. The final valuation and related allocation of the purchase price will be completed no later than 12 months after the closing date. The final acquisition accounting adjustments may b e materially different and may include (1) changes in fair value of property and equipment and associated salvage values, (2) changes in allocations to intangible assets, such trade names, acquired franchise and management agreements, above and below market leases, as well as goodwill; and (3) other changes to assets and liabilities, such as working capital. The preliminary allocation of the purchase price, including measurement period adjustments, as presented in our consolidated balance sheets: (in thousands) August 11, 2022 - original Measurement Period Adj - 4th quarter 2022 Measurement Period Adj - 1st quarter 2023 August 11, 2022 - as adjusted Cash and cash equivalents $ 113,023 $ — $ — $ 113,023 Restricted cash 10,403 — — 10,403 Accounts receivable 32,972 8,752 (1,941) 39,783 Notes receivable - current 1,709 — (860) 849 Prepaid expenses and other current assets 8,139 — — 8,139 Property and equipment 125,441 — — 125,441 Operating lease right-of-use of assets 42,315 (2,016) — 40,299 Intangible assets 447,400 (300) — 447,100 Notes receivable - noncurrent 2,592 — — 2,592 Investment in affiliates 471 — — 471 Other assets 2,129 — — 2,129 Total assets acquired $ 786,594 $ 6,436 $ (2,801) $ 790,229 Accounts payable $ 8,295 $ (1,566) $ (1,941) $ 4,788 Accrued expenses and other current liabilities 15,987 425 674 17,086 Deferred revenue - current (1) 5,745 1,566 — 7,311 Liability for guest loyalty program - current (1) 3,542 3,792 — 7,334 Long-term debt 55,975 — — 55,975 Long-term deferred revenue (1) 26,499 (3,915) — 22,584 Deferred compensation and retirement plan obligations 9,265 — — 9,265 Operating lease liabilities 42,705 (2,016) — 40,689 Liability for guest loyalty program - noncurrent (1) 10,180 (1,443) — 8,737 Other liabilities 3,052 543 — 3,595 Total liabilities assumed $ 181,245 $ (2,614) $ (1,267) $ 177,364 Fair value of net assets acquired $ 605,349 $ 9,050 $ (1,534) $ 612,865 Goodwill 68,507 (9,050) 1,534 60,991 Total purchase consideration $ 673,856 $ — $ — $ 673,856 (1) The Deferred revenue (including deferred affiliation fees) and Liability for guest loyalty program balances were assumed at their carrying value at the date of the acquisition pursuant to the application of ASU 2021-08. Refer to Note 1. Property and Equipment The following table presents the preliminary estimates of fair value of the acquired property and equipment, which is primarily concentrated at three acquired hotel properties, and their estimated weighted average remaining useful lives. Estimated Useful Life Estimated Fair Value (in years) (in thousands) Land N/A $ 7,159 Construction in progress N/A 3,190 Building and leasehold improvements 24.4 93,934 Site improvements 23.1 586 Furniture, fixtures and equipment 3.9 8,334 Computer equipment and software 2.0 12,238 Total $ 125,441 We provisionally estimated the value of the property and equipment through a combination of income, cost and market approaches, which are primarily based on significant Level 2 and Level 3 assumptions, such as estimates of future income growth, discount rates, capitalization rates and capital expenditure needs of the hotels. We are continuing to assess the marketplace assumptions and property conditions, which could result in changes to these provisional values. Identified Intangible Assets The following table presents our preliminary estimates of the fair value of the acquired identified intangible assets and their estimated useful lives: Estimated Useful Life Estimated Fair Value (in years) (in thousands) Trade names N/A $ 223,700 Franchise agreements 15.5 220,100 Management agreements 15.5 3,300 Total $ 447,100 The fair value of the trade names was provisionally estimated using the relief-from-royalty method. This method applies an estimated royalty rate to forecasted future cash flows, discounted to present value. The fair value of the franchise and management agreements was preliminarily estimated using a multi-period excess earnings method, a variation of the income approach. This method uses the present value of incremental after-tax cash flows attributable to the intangible asset to estimate fair value. These valuation methodologies utilize Level 3 assumptions, and we are continuing to assess the assumptions used in estimating these values as well as the respective useful lives, which could result in changes to these provisional values. Debt Assumed As part of the Transaction, we assumed a mortgage related to an acquired hotel property. The mortgage had an associated interest rate cap agreement with an effective date of July 30, 2021 through August 6, 2024. Subsequent to the acquisition closing date, the mortgage, inclusive of the outstanding interest and fees, was repaid in full in the amount of $56.0 million using cash we acquired. Additionally, the interest rate cap agreement was terminated, which resulted in a payment to Choice in the amount of $1.9 million. Related to the mortgage, we acquired $10.4 million in restricted cash, for which restrictions were lifted upon repayment. Operating Leases The Company measured operating lease liabilities assumed at the present value of remaining payments as of the acquisition date, discounted using Choice's applicable incremental borrowing rate, in accordance with Leases (Topic 842) . The corresponding right-of-use assets acquired were measured at the value of the lease liabilities, further adjusted for favorable or unfavorable lease terms as compared to market terms. We are continuing to assess market assumptions, which could change our preliminary estimate. Income Taxes Pursuant to the terms of the Transaction, the parties agree to jointly make a valid, timely election under Section 338(h)(10) of the U.S. Internal Revenue Code and under any similar provisions of state or local law with respect to the purchase of the shares of Radisson Hotels Americas. Under this election, the parties agreed to treat the Transaction for federal income tax purposes as if it had been structured as an asset sale and purchase. As a result of this election, the tax basis of the assets acquired and liabilities assumed by Choice were reset to fair value at the time of the acquisition, which results in the elimination of previously established deferred income tax balances and the establishment of new balances that reflect the new tax basis, including tax deductible goodwill. Because the accounting for the Transaction is ongoing, the resulting deferred tax balances are still being finalized. Pro Forma Results of Operations The following unaudited pro forma information presents the combined results of operations of Choice and Radisson Hotels Americas as if we had completed the Transaction on January 1, 2021, but using our preliminary fair values of assets acquired and liabilities assumed as of the acquisition date. The unaudited pro forma information reflects adjustments relating to (i) the allocation of purchase price and related adjustments, including incremental depreciation and amortization expense based on the preliminary fair values of the property and equipment assets and intangible assets acquired; (ii) the incremental impact of the Revolver draw on interest expense and amortization of financing costs; (iii) nonrecurring transaction costs; and (iv) income tax impact of the aforementioned pro forma adjustments. As required by GAAP, these unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the transaction had occurred at the beginning of the period presented, nor are they indicative of future results of operations. Three Months Ended (in thousands) March 31, 2022 Revenues $ 311,469 Net income 63,700 Radisson Hotels Americas Results of Operations The results of Radisson Hotels Americas have been consolidated with the Company since August 11, 2022 and are included in the Company’s Consolidated Statement of Income for the three months ended March 31, 2023. The following table presents these results. Three Months Ended (in thousands) March 31, 2023 Revenues $ 62,383 Net income 3,273 Goodwill The $61.0 million excess value recorded in goodwill is primarily attributable to value we expect to realize from the existing customer base, improvements in RevPAR, cost synergies and new agreements signed with new franchisees and developers. Goodwill for the Transaction is fully attributable to the Hotel Franchising & Management reportable segment and is fully deductible for tax purposes. The following table details the carrying amount of the Company's goodwill, including goodwill arising from the acquisition of Radisson Hotels Americas, as of March 31, 2023. (in thousands) Goodwill, excluding goodwill arising from Radisson Hotels Americas acquisition $ 166,774 Accumulated impairment losses (7,578) Goodwill arising from Radisson Hotels Americas acquisition 60,991 Goodwill, net carrying amount $ 220,187 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policy) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of Choice Hotels International, Inc. and its subsidiaries (together "Choice" or the "Company") have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are necessary to fairly present the Company's financial position and results of operations. Except as otherwise disclosed, all adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. Although we believe the disclosures made are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2023. Interim results are not necessarily indicative of the entire year results. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses ("ASU 2022-02"). ASU 2022-02 eliminates the recognition and measurement guidance on troubled debt restructuring for creditors that have adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) ("Topic 326"), requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty, and includes new guidance on current-period gross write-offs presentation. ASU 2022-02 is effective for annual reporting periods beginning after December 15, 2022 and interim periods within those fiscal years. The Company adopted ASU 2022-02 on a prospective basis effective January 1, 2023, and concluded there is no impact to the consolidated financial statements or disclosures for the first quarter of 2023. |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract with Customer, Liability | Significant changes in the contract liabilities balances during the period December 31, 2022 to March 31, 2023 are as follows: (in thousands) Balance as of December 31, 2022 $ 209,359 Increases to the contract liability balance due to cash received 24,053 Revenue recognized in the period (27,549) Balance as of March 31, 2023 $ 205,863 |
Schedule of Disaggregation of Revenue | Disaggregation of Revenue Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 (in thousands) Over time Point in time Total Over time Point in time Total Royalty, licensing and management fees $ 107,492 $ — $ 107,492 $ 90,739 $ — $ 90,739 Initial franchise fees 7,882 — 7,882 8,402 — 8,402 Platform and procurement services fees 13,239 604 13,843 11,131 552 11,683 Owned hotels 16,893 5,440 22,333 10,040 1,997 12,037 Other 10,627 — 10,627 8,229 — 8,229 Other revenues from franchised and managed properties 155,438 15,178 170,616 112,259 14,378 126,637 Total revenues $ 311,571 $ 21,222 $ 332,793 $ 240,800 $ 16,927 $ 257,727 |
Receivables and Allowance for_2
Receivables and Allowance for Credit Losses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounts and Financing Receivable, after Allowance for Credit Loss [Abstract] | |
Schedule of Notes Receivable | The composition of notes receivable balances by credit quality indicator and the allowance for credit losses is as follows: (in thousands) March 31, 2023 December 31, 2022 Senior $ 98,339 $ 95,466 Subordinated 16,577 17,075 Unsecured 4,917 5,674 Total notes receivable 119,833 118,215 Total allowance for notes receivable credit losses 10,358 10,172 Total notes receivable, net of allowance $ 109,475 $ 108,043 Current portion, net of allowance $ 53,093 $ 52,466 Long-term portion, net of allowance $ 56,382 $ 55,577 |
Schedule of Financing Receivable Credit Quality Indicators | Amortized cost basis by year of origination and credit quality indicator are as follows: (in thousands) 2023 2022 2021 2020 2019 Prior Total Senior $ 3,480 $ — $ 8,018 $ — $ 28,819 $ 58,022 $ 98,339 Subordinated — — — — — 16,577 16,577 Unsecured — 390 1,288 953 203 2,083 4,917 Total notes receivable $ 3,480 $ 390 $ 9,306 $ 953 $ 29,022 $ 76,682 $ 119,833 |
Schedule of Financing Receivable, Allowance for Credit Loss | The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses: (in thousands) March 31, 2023 December 31, 2022 Beginning balance $ 10,172 $ 16,779 Provision for credit losses 342 (938) Write-offs (156) (5,669) Ending balance $ 10,358 $ 10,172 |
Schedule of Past Due Balances of Notes Receivable | The past due balances by credit quality indicator of notes receivable are as follows: (in thousands) 1- 30 days 31-89 days > 90 days Total Current Total As of March 31, 2023 Senior $ — $ 12,897 $ 15,200 $ 28,097 $ 70,242 $ 98,339 Subordinated — — 2,053 2,053 14,524 16,577 Unsecured — — 400 400 4,517 4,917 $ — $ 12,897 $ 17,653 $ 30,550 $ 89,283 $ 119,833 As of December 31, 2022 Senior $ — $ 15,200 $ — $ 15,200 $ 80,266 $ 95,466 Subordinated — — 2,209 2,209 14,866 17,075 Unsecured 20 40 40 99 5,575 5,674 $ 20 $ 15,240 $ 2,249 $ 17,508 $ 100,707 $ 118,215 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Components of Debt | Debt consists of the following: March 31, 2023 December 31, 2022 (in thousands) $450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86%, less a discount and deferred issuance costs of $4.8 million and $4.9 million at March 31, 2023 and December 31, 2022, respectively $ 445,232 $ 445,080 $400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88%, less a discount and deferred issuance costs of $4.0 million and $4.2 million at March 31, 2023 and December 31, 2022, respectively 395,989 395,838 $850 million senior unsecured revolving credit facility with an effective interest rate of 5.87% less deferred issuance costs of $2.4 million and $1.8 million at March 31, 2023 and December 31, 2022, respectively (1) 533,593 358,189 Economic development loans with an effective interest rate of 3.00% at March 31, 2023 and December 31, 2022, respectively 4,416 4,416 Total debt $ 1,379,230 $ 1,203,523 Less current portion 4,416 2,976 Long-term debt $ 1,374,814 $ 1,200,547 (1) On February 14, 2023, the Company entered into a Third Amendment to the Amended and Restated Senior Unsecured Credit Agreement (the "Amendment"). The Amendment provides, among other things, for (i) an increase in the aggregate amount of commitments under the Company's existing $600 million unsecured credit facility (the "Revolver") by $250 million (the “Increased Commitments”) to an aggregate amount of $850 million and (ii) the replacement of the interest reference rate for U.S. dollar-denominated borrowings under the Revolver from LIBOR to an adjusted Secured Overnight Financing Rate. The pricing and other terms applicable to the Increased Commitments are the same as those applicable to the existing revolving loan commitments that were in effect prior to the Amendment. Except as amended by the Amendment, the remaining terms of the unsecured credit facility remain in full force and effect. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive Loss | The changes in accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2023 and 2022 are as follows: (in thousands) Balance as of December 31, 2022 $ (5,211) Other comprehensive income (loss) before reclassification 394 Balance as of March 31, 2023 $ (4,817) (in thousands) Balance as of December 31, 2021 $ (4,574) Other comprehensive income (loss) before reclassification (134) Balance as of March 31, 2022 $ (4,708) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets | As of March 31, 2023 and December 31, 2022, the Company had the following assets recorded in the consolidated balance sheets measured at fair value on a recurring basis: Fair Value Measurements at Reporting Date Using (in thousands) Total Level 1 Level 2 Level 3 As of March 31, 2023 Mutual funds (1) $ 32,649 $ 32,649 $ — $ — Money market funds (1) 3,521 — 3,521 — Total $ 36,170 $ 32,649 $ 3,521 $ — As of December 31, 2022 Mutual funds (1) $ 29,143 $ 29,143 $ — $ — Money market funds (1) 3,242 — 3,242 — Total $ 32,385 $ 29,143 $ 3,242 $ — (1) Included in Investments, employee benefit plans, at fair value and Prepaid expenses and other current assets on the consolidated balance sheets. |
Schedule of Carrying Amounts and Fair Values | At March 31, 2023 and December 31, 2022, the carrying amounts and fair values are as follows: March 31, 2023 December 31, 2022 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value 2020 Senior Notes $ 445,232 $ 400,586 $ 445,080 $ 384,647 2019 Senior Notes 395,989 360,244 395,838 349,368 |
Share-Based Compensation and _2
Share-Based Compensation and Capital Stock (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Pre-Tax Stock-Based Compensation Expenses | The components of the Company’s pretax share-based compensation activity are as follows for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, (in thousands) 2023 2022 Stock options $ 1,388 $ 1,052 Restricted stock awards 3,699 3,043 Performance vested restricted stock units 4,684 3,354 Total share-based compensation expense $ 9,771 $ 7,449 |
Schedule of Change In Stock-Based Award Activity | A summary of share-based award activity as of and changes during the three months ended March 31, 2023 are presented below: Stock Options Restricted Stock Performance Vested Options Weighted Weighted Shares Weighted Shares Weighted Outstanding at January 1, 2023 1,010,647 $ 94.97 399,099 $ 128.47 437,180 $ 140.05 Granted 88,733 123.62 35,361 123.71 104,128 128.88 Performance-Based Leveraging (1) — — — — — — Exercised/Vested (107,252) 52.25 (68,432) 93.31 (120,308) 145.41 Expired — — — — — — Forfeited (645) 123.71 (4,201) 106.66 (960) 139.95 Outstanding at March 31, 2023 991,483 $ 102.13 6.3 361,827 $ 134.91 420,040 $ 135.78 Options exercisable at March 31, 2023 596,997 $ 90.05 4.8 (1) There has been no change to PVRSUs outstanding in the three months ended March 31, 2023 based on the Company's performance relative to the targeted performance conditions contained in PVRSUs. |
Schedule of Weighted Average Assumptions of Black-Scholes Option-Pricing Model | The fair value of the options granted during the three months ended March 31, 2023 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions: Risk-free interest rate 4.10 % Expected volatility 30.90 % Expected life of stock option 6.0 years Dividend yield 0.9 % Requisite service period 4 years Contractual life 10 years Weighted average fair value of options granted (per option) $ 42.59 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Common Share | The computation of basic and diluted earnings per share of common stock is as follows: Three Months Ended March 31, (in thousands, except per share amounts) 2023 2022 Numerator: Net income $ 52,820 $ 67,391 Income allocated to participating securities (272) (324) Net income available to common shareholders $ 52,548 $ 67,067 Denominator: Weighted average shares of common stock outstanding – basic 51,269 55,412 Basic earnings per share $ 1.02 $ 1.21 Numerator: Net income $ 52,820 $ 67,391 Income allocated to participating securities (272) (324) Net income available to common shareholders $ 52,548 $ 67,067 Denominator: Weighted average shares of common stock outstanding – basic 51,269 55,412 Dilutive effect of stock options and PVRSUs 445 642 Weighted average shares of common stock outstanding – diluted 51,714 56,054 Diluted earnings per share $ 1.02 $ 1.20 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities have been excluded from the calculation of diluted weighted average shares of common stock outstanding as the inclusion of these securities would have an anti-dilutive effect: Three Months Ended March 31, (in thousands) 2023 2022 Stock options 240 156 PVRSUs — 76 |
Reportable Segment Information
Reportable Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Financial Information for Company's Franchising Segment | The following table presents the financial information for the Company's segments: Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 (in thousands) Hotel Corporate & Intersegment Eliminations Consolidated Hotel Corporate & Intersegment Eliminations Consolidated Revenues $ 309,047 $ 26,064 $ (2,319) $ 332,792 $ 244,371 $ 14,260 $ (904) $ 257,727 Operating income (loss) $ 105,491 $ (27,640) $ — $ 77,851 $ 107,320 $ (7,923) $ — $ 99,397 Income (loss) before income taxes $ 105,428 $ (37,933) $ — $ 67,495 $ 107,564 $ (19,829) $ — $ 87,735 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The preliminary allocation of the purchase price, including measurement period adjustments, as presented in our consolidated balance sheets: (in thousands) August 11, 2022 - original Measurement Period Adj - 4th quarter 2022 Measurement Period Adj - 1st quarter 2023 August 11, 2022 - as adjusted Cash and cash equivalents $ 113,023 $ — $ — $ 113,023 Restricted cash 10,403 — — 10,403 Accounts receivable 32,972 8,752 (1,941) 39,783 Notes receivable - current 1,709 — (860) 849 Prepaid expenses and other current assets 8,139 — — 8,139 Property and equipment 125,441 — — 125,441 Operating lease right-of-use of assets 42,315 (2,016) — 40,299 Intangible assets 447,400 (300) — 447,100 Notes receivable - noncurrent 2,592 — — 2,592 Investment in affiliates 471 — — 471 Other assets 2,129 — — 2,129 Total assets acquired $ 786,594 $ 6,436 $ (2,801) $ 790,229 Accounts payable $ 8,295 $ (1,566) $ (1,941) $ 4,788 Accrued expenses and other current liabilities 15,987 425 674 17,086 Deferred revenue - current (1) 5,745 1,566 — 7,311 Liability for guest loyalty program - current (1) 3,542 3,792 — 7,334 Long-term debt 55,975 — — 55,975 Long-term deferred revenue (1) 26,499 (3,915) — 22,584 Deferred compensation and retirement plan obligations 9,265 — — 9,265 Operating lease liabilities 42,705 (2,016) — 40,689 Liability for guest loyalty program - noncurrent (1) 10,180 (1,443) — 8,737 Other liabilities 3,052 543 — 3,595 Total liabilities assumed $ 181,245 $ (2,614) $ (1,267) $ 177,364 Fair value of net assets acquired $ 605,349 $ 9,050 $ (1,534) $ 612,865 Goodwill 68,507 (9,050) 1,534 60,991 Total purchase consideration $ 673,856 $ — $ — $ 673,856 (1) The Deferred revenue (including deferred affiliation fees) and Liability for guest loyalty program balances were assumed at their carrying value at the date of the acquisition pursuant to the application of ASU 2021-08. Refer to Note 1. The following table presents the preliminary estimates of fair value of the acquired property and equipment, which is primarily concentrated at three acquired hotel properties, and their estimated weighted average remaining useful lives. Estimated Useful Life Estimated Fair Value (in years) (in thousands) Land N/A $ 7,159 Construction in progress N/A 3,190 Building and leasehold improvements 24.4 93,934 Site improvements 23.1 586 Furniture, fixtures and equipment 3.9 8,334 Computer equipment and software 2.0 12,238 Total $ 125,441 The following table presents our preliminary estimates of the fair value of the acquired identified intangible assets and their estimated useful lives: Estimated Useful Life Estimated Fair Value (in years) (in thousands) Trade names N/A $ 223,700 Franchise agreements 15.5 220,100 Management agreements 15.5 3,300 Total $ 447,100 |
Schedule of Pro Forma Information | The following unaudited pro forma information presents the combined results of operations of Choice and Radisson Hotels Americas as if we had completed the Transaction on January 1, 2021, but using our preliminary fair values of assets acquired and liabilities assumed as of the acquisition date. The unaudited pro forma information reflects adjustments relating to (i) the allocation of purchase price and related adjustments, including incremental depreciation and amortization expense based on the preliminary fair values of the property and equipment assets and intangible assets acquired; (ii) the incremental impact of the Revolver draw on interest expense and amortization of financing costs; (iii) nonrecurring transaction costs; and (iv) income tax impact of the aforementioned pro forma adjustments. As required by GAAP, these unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the transaction had occurred at the beginning of the period presented, nor are they indicative of future results of operations. Three Months Ended (in thousands) March 31, 2022 Revenues $ 311,469 Net income 63,700 Three Months Ended (in thousands) March 31, 2023 Revenues $ 62,383 Net income 3,273 |
Schedule of Goodwill | The following table details the carrying amount of the Company's goodwill, including goodwill arising from the acquisition of Radisson Hotels Americas, as of March 31, 2023. (in thousands) Goodwill, excluding goodwill arising from Radisson Hotels Americas acquisition $ 166,774 Accumulated impairment losses (7,578) Goodwill arising from Radisson Hotels Americas acquisition 60,991 Goodwill, net carrying amount $ 220,187 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue, remaining performance obligation | $ 205,900 | |
Revenues | $ 332,792 | $ 257,727 |
Royalty, licensing and management fees | ||
Disaggregation of Revenue [Line Items] | ||
Redemption of loyalty points period | 3 years | |
Revenues | $ 107,492 | 90,739 |
Corporate & Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 26,064 | 14,260 |
Corporate & Other | Over time | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 26,100 | 14,300 |
Intersegment Eliminations | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | (2,319) | (904) |
Intersegment Eliminations | Royalty, licensing and management fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ (2,300) | $ (900) |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue, recognition period | 5 years | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Deferred revenue, recognition period | 10 years |
Revenue - Contract Liability (D
Revenue - Contract Liability (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Changes in Contract Liability [Roll Forward] | |
Balance as of December 31, 2022 | $ 209,359 |
Increases to the contract liability balance due to cash received | 24,053 |
Revenue recognized in the period | (27,549) |
Balance as of March 31, 2023 | $ 205,863 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | $ 332,793 | $ 257,727 |
Over time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 311,571 | 240,800 |
Point in time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 21,222 | 16,927 |
Royalty, licensing and management fees | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 107,492 | 90,739 |
Royalty, licensing and management fees | Over time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 107,492 | 90,739 |
Royalty, licensing and management fees | Point in time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 0 | 0 |
Initial franchise fees | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 7,882 | 8,402 |
Initial franchise fees | Over time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 7,882 | 8,402 |
Initial franchise fees | Point in time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 0 | 0 |
Platform and procurement services fees | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 13,843 | 11,683 |
Platform and procurement services fees | Over time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 13,239 | 11,131 |
Platform and procurement services fees | Point in time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 604 | 552 |
Owned hotels | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 22,333 | 12,037 |
Owned hotels | Over time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 16,893 | 10,040 |
Owned hotels | Point in time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 5,440 | 1,997 |
Total Topic 606 revenues | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 10,627 | 8,229 |
Total Topic 606 revenues | Over time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 10,627 | 8,229 |
Total Topic 606 revenues | Point in time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 0 | 0 |
Other revenues from franchised and managed properties | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 170,616 | 126,637 |
Other revenues from franchised and managed properties | Over time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | 155,438 | 112,259 |
Other revenues from franchised and managed properties | Point in time | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue | $ 15,178 | $ 14,378 |
Receivables and Allowance for_3
Receivables and Allowance for Credit Losses - Schedule Of Notes Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Notes Receivable and Allowance for Losses [Line Items] | |||
Notes receivable | $ 119,833 | $ 118,215 | |
Total allowance for notes receivable credit losses | 10,358 | 10,172 | $ 16,779 |
Total notes receivable, net of allowance | 109,475 | 108,043 | |
Current portion, net of allowance | 53,093 | 52,466 | |
Long-term portion, net of allowance | 56,382 | 55,577 | |
Senior | |||
Notes Receivable and Allowance for Losses [Line Items] | |||
Notes receivable | 98,339 | 95,466 | |
Subordinated | |||
Notes Receivable and Allowance for Losses [Line Items] | |||
Notes receivable | 16,577 | 17,075 | |
Unsecured | |||
Notes Receivable and Allowance for Losses [Line Items] | |||
Notes receivable | $ 4,917 | $ 5,674 |
Receivables and Allowance for_4
Receivables and Allowance for Credit Losses - Credit Quality Indicator (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Notes Receivable and Allowance for Losses [Line Items] | ||
2023 | $ 3,480 | |
2022 | 390 | |
2021 | 9,306 | |
2020 | 953 | |
2019 | 29,022 | |
Prior | 76,682 | |
Total | 119,833 | $ 118,215 |
Senior | ||
Notes Receivable and Allowance for Losses [Line Items] | ||
2023 | 3,480 | |
2022 | 0 | |
2021 | 8,018 | |
2020 | 0 | |
2019 | 28,819 | |
Prior | 58,022 | |
Total | 98,339 | 95,466 |
Subordinated | ||
Notes Receivable and Allowance for Losses [Line Items] | ||
2023 | 0 | |
2022 | 0 | |
2021 | 0 | |
2020 | 0 | |
2019 | 0 | |
Prior | 16,577 | |
Total | 16,577 | 17,075 |
Unsecured | ||
Notes Receivable and Allowance for Losses [Line Items] | ||
2023 | 0 | |
2022 | 390 | |
2021 | 1,288 | |
2020 | 953 | |
2019 | 203 | |
Prior | 2,083 | |
Total | $ 4,917 | $ 5,674 |
Receivables and Allowance for_5
Receivables and Allowance for Credit Losses - Allowance for Credit Loss Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 10,172 | $ 16,779 |
Provision for credit losses | 342 | (938) |
Write-offs | (156) | (5,669) |
Ending balance | $ 10,358 | $ 10,172 |
Receivables and Allowance for_6
Receivables and Allowance for Credit Losses - Narrative (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 USD ($) loan | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) loan | Dec. 31, 2021 USD ($) | |
Notes Receivable and Allowance for Losses [Line Items] | ||||
Total allowance for notes receivable credit losses | $ 10,358 | $ 10,172 | $ 16,779 | |
Number of loans with revised provisions | loan | 2 | |||
Loans and financing receivable | 56,382 | $ 55,577 | ||
Allowance for credit loss | 2,800 | $ 300 | ||
Variable Interest Entity, Not Primary Beneficiary | ||||
Notes Receivable and Allowance for Losses [Line Items] | ||||
Loans and financing receivable | 105,300 | 103,200 | ||
SG&A expenses | ||||
Notes Receivable and Allowance for Losses [Line Items] | ||||
Provision for (reversal of) credit losses | 1,800 | (500) | ||
Marketing and reservation system expenses | ||||
Notes Receivable and Allowance for Losses [Line Items] | ||||
Provision for (reversal of) credit losses | 2,100 | $ 300 | ||
Interest Rate Below Market Reduction | Variable Interest Entity, Not Primary Beneficiary | ||||
Notes Receivable and Allowance for Losses [Line Items] | ||||
Loans and financing receivable | 4,800 | 4,800 | ||
Receivable with imputed interest, discount | $ 100 | $ 100 | ||
Collateral-Dependent Loans | ||||
Notes Receivable and Allowance for Losses [Line Items] | ||||
Number of loans | loan | 1 | 1 | ||
Total allowance for notes receivable credit losses | $ 900 | $ 900 | ||
Impaired Loans | ||||
Notes Receivable and Allowance for Losses [Line Items] | ||||
Nonaccrual status | $ 18,400 | $ 18,700 |
Receivables and Allowance for_7
Receivables and Allowance for Credit Losses - Past Due Balances Of Mezzanine And Other Notes Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | $ 119,833 | $ 118,215 |
Senior | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 98,339 | 95,466 |
Subordinated | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 16,577 | 17,075 |
Unsecured | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 4,917 | 5,674 |
Total Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 30,550 | 17,508 |
Total Past Due | Senior | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 28,097 | 15,200 |
Total Past Due | Subordinated | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 2,053 | 2,209 |
Total Past Due | Unsecured | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 400 | 99 |
1- 30 days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 0 | 20 |
1- 30 days Past Due | Senior | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 0 | 0 |
1- 30 days Past Due | Subordinated | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 0 | 0 |
1- 30 days Past Due | Unsecured | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 0 | 20 |
31-89 days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 12,897 | 15,240 |
31-89 days Past Due | Senior | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 12,897 | 15,200 |
31-89 days Past Due | Subordinated | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 0 | 0 |
31-89 days Past Due | Unsecured | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 0 | 40 |
> 90 days Past Due | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 17,653 | 2,249 |
> 90 days Past Due | Senior | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 15,200 | 0 |
> 90 days Past Due | Subordinated | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 2,053 | 2,209 |
> 90 days Past Due | Unsecured | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 400 | 40 |
Current | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 89,283 | 100,707 |
Current | Senior | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 70,242 | 80,266 |
Current | Subordinated | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | 14,524 | 14,866 |
Current | Unsecured | ||
Financing Receivable, Past Due [Line Items] | ||
Notes receivable | $ 4,517 | $ 5,575 |
Investments in Affiliates (Deta
Investments in Affiliates (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Variable Interest Entity [Line Items] | |||
Investments in joint ventures included in unconsolidated entities | $ 2,106,223,000 | $ 2,102,175,000 | |
Equity method investment impairment | 0 | $ 0 | |
Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Investments in joint ventures included in unconsolidated entities | 26,100,000 | $ 24,500,000 | |
Losses attributable to variable interest entities | $ 1,400,000 | $ 800,000 |
Debt - Schedule Of Components O
Debt - Schedule Of Components Of Debt (Details) - USD ($) | Feb. 14, 2023 | Mar. 31, 2023 | Feb. 13, 2023 | Dec. 31, 2022 |
Debt [Line Items] | ||||
Long-term debt | $ 1,379,230,000 | $ 1,203,523,000 | ||
Less current portion | 4,416,000 | 2,976,000 | ||
Long-term debt | $ 1,374,814,000 | $ 1,200,547,000 | ||
Economic Development Loans | ||||
Debt [Line Items] | ||||
Debt instrument effective interest rate | 3% | 3% | ||
Long-term debt | $ 4,416,000 | $ 4,416,000 | ||
Line of Credit | Revolving Credit Facility | ||||
Debt [Line Items] | ||||
Total capacity | $ 850,000,000 | $ 600,000,000 | ||
Borrowing capacity period increase | $ 250,000,000 | |||
$450 Million Senior Unsecured Notes Due 2031 | Senior | ||||
Debt [Line Items] | ||||
Debt instrument face amount | $ 450,000,000 | $ 450,000,000 | ||
Debt instrument effective interest rate | 3.86% | 3.86% | ||
Deferred issuance costs | $ 4,800,000 | $ 4,900,000 | ||
Long-term debt | 445,232,000 | 445,080,000 | ||
$400 Million Senior Unsecured Notes Due 2029 | Senior | ||||
Debt [Line Items] | ||||
Debt instrument face amount | $ 400,000,000 | $ 400,000,000 | ||
Debt instrument effective interest rate | 3.88% | 3.88% | ||
Deferred issuance costs | $ 4,000,000 | $ 4,200,000 | ||
Long-term debt | 395,989,000 | 395,838,000 | ||
$800 Million Unsecured Revolving Credit Facility | Senior | ||||
Debt [Line Items] | ||||
Debt instrument face amount | $ 850,000,000 | $ 850,000,000 | ||
Debt instrument effective interest rate | 5.87% | 5.87% | ||
Deferred issuance costs | $ 2,400,000 | $ 1,800,000 | ||
Long-term debt | $ 533,593,000 | $ 358,189,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Loss, Net of Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | $ 154,660 | $ 265,882 |
Other comprehensive income (loss) before reclassification | 394 | (134) |
Ending balance | 47,008 | 314,645 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (5,211) | (4,574) |
Ending balance | $ (4,817) | $ (4,708) |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule Of Fair Value Of Assets (Details) - Fair value, measurements, recurring - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value Measurements [Line Items] | ||
Total | $ 36,170 | $ 32,385 |
Mutual funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | 32,649 | 29,143 |
Money market funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | 3,521 | 3,242 |
Level 1 | ||
Fair Value Measurements [Line Items] | ||
Total | 32,649 | 29,143 |
Level 1 | Mutual funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | 32,649 | 29,143 |
Level 1 | Money market funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | 0 | 0 |
Level 2 | ||
Fair Value Measurements [Line Items] | ||
Total | 3,521 | 3,242 |
Level 2 | Mutual funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | 0 | 0 |
Level 2 | Money market funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | 3,521 | 3,242 |
Level 3 | ||
Fair Value Measurements [Line Items] | ||
Total | 0 | 0 |
Level 3 | Mutual funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | 0 | 0 |
Level 3 | Money market funds | Investments, employee benefit plans, at fair value | ||
Fair Value Measurements [Line Items] | ||
Mutual funds and money market funds, fair value | $ 0 | $ 0 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Carrying Amounts and Fair Values (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value Measurements [Line Items] | ||
Long-term debt | $ 1,379,230 | $ 1,203,523 |
Senior | 2020 Senior Notes | ||
Fair Value Measurements [Line Items] | ||
Long-term debt | 445,232 | 445,080 |
Senior | 2020 Senior Notes | Level 2 | Carrying Amount | ||
Fair Value Measurements [Line Items] | ||
Long-term debt | 445,232 | 445,080 |
Senior | 2020 Senior Notes | Level 2 | Fair Value | ||
Fair Value Measurements [Line Items] | ||
Long-term debt | 400,586 | 384,647 |
Senior | 2019 Senior Notes | ||
Fair Value Measurements [Line Items] | ||
Long-term debt | 395,989 | 395,838 |
Senior | 2019 Senior Notes | Level 2 | Carrying Amount | ||
Fair Value Measurements [Line Items] | ||
Long-term debt | 395,989 | 395,838 |
Senior | 2019 Senior Notes | Level 2 | Fair Value | ||
Fair Value Measurements [Line Items] | ||
Long-term debt | $ 360,244 | $ 349,368 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (percent) | 21.70% | 23.20% |
Share-Based Compensation and _3
Share-Based Compensation and Capital Stock - Pre-Tax Stock-Based Compensation Expenses And Associated Income Tax Benefits (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation and Capital Stock [Line Items] | ||
Total share-based compensation expense | $ 9,771 | $ 7,449 |
Stock options | ||
Share-Based Compensation and Capital Stock [Line Items] | ||
Total share-based compensation expense | 1,388 | 1,052 |
Restricted stock awards | ||
Share-Based Compensation and Capital Stock [Line Items] | ||
Total share-based compensation expense | 3,699 | 3,043 |
Performance vested restricted stock units | ||
Share-Based Compensation and Capital Stock [Line Items] | ||
Total share-based compensation expense | $ 4,684 | $ 3,354 |
Share-Based Compensation and _4
Share-Based Compensation and Capital Stock - Summary of Change in Stock-Based Award Activity (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Stock Options | |
Options | |
Outstanding, beginning balance (in shares) | shares | 1,010,647 |
Granted (in shares) | shares | 88,733 |
Performance-Based Leveraging (in shares) | shares | 0 |
Exercised/Vested (in shares) | shares | (107,252) |
Expired (in shares) | shares | 0 |
Forfeited (in shares) | shares | (645) |
Outstanding, ending balance (in shares) | shares | 991,483 |
Options exercisable (in shares) | shares | 596,997 |
Weighted Average Exercise Price | |
Beginning balance (in usd per share) | $ / shares | $ 94.97 |
Granted (in usd per share) | $ / shares | 123.62 |
Performance-Based Leveraging (in usd per share) | $ / shares | 0 |
Exercised/Vested (in usd per share) | $ / shares | 52.25 |
Expired (in usd per share) | $ / shares | 0 |
Forfeited (in usd per share) | $ / shares | 123.71 |
Ending balance (in usd per share) | $ / shares | 102.13 |
Options exercisable - weighted average exercise price (in usd per share) | $ / shares | $ 90.05 |
Weighted Average Remaining Contractual Term | |
Outstanding | 6 years 3 months 18 days |
Options exercisable | 4 years 9 months 18 days |
Restricted Stock | |
Restricted Stock and Performance Vested Restricted Stock Units, Shares | |
Outstanding, beginning balance (in shares) | shares | 399,099 |
Granted (in shares) | shares | 35,361 |
Performance-Based Leveraging (in shares) | shares | 0 |
Exercised/Vested (in shares) | shares | (68,432) |
Expired (in shares) | shares | 0 |
Forfeited (in shares) | shares | (4,201) |
Outstanding, ending balance (in shares) | shares | 361,827 |
Restricted Stock and Performance Vested Restricted Stock Units, Weighted Average Grant Date Fair Value | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 128.47 |
Granted (in usd per share) | $ / shares | 123.71 |
Performance-Based Leveraging (in usd per share) | $ / shares | 0 |
Exercised/Vested (in usd per share) | $ / shares | 93.31 |
Expired (in usd per share) | $ / shares | 0 |
Forfeited (in usd per share) | $ / shares | 106.66 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 134.91 |
Performance vested restricted stock units | |
Restricted Stock and Performance Vested Restricted Stock Units, Shares | |
Outstanding, beginning balance (in shares) | shares | 437,180 |
Granted (in shares) | shares | 104,128 |
Performance-Based Leveraging (in shares) | shares | 0 |
Exercised/Vested (in shares) | shares | (120,308) |
Expired (in shares) | shares | 0 |
Forfeited (in shares) | shares | (960) |
Outstanding, ending balance (in shares) | shares | 420,040 |
Restricted Stock and Performance Vested Restricted Stock Units, Weighted Average Grant Date Fair Value | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 140.05 |
Granted (in usd per share) | $ / shares | 128.88 |
Performance-Based Leveraging (in usd per share) | $ / shares | 0 |
Exercised/Vested (in usd per share) | $ / shares | 145.41 |
Expired (in usd per share) | $ / shares | 0 |
Forfeited (in usd per share) | $ / shares | 139.95 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 135.78 |
Share-Based Compensation and _5
Share-Based Compensation and Capital Stock - Narrative (Details) - Performance vested restricted stock units | 3 Months Ended |
Mar. 31, 2023 | |
Minimum | |
Share-Based Compensation and Capital Stock [Line Items] | |
Requisite service period | 9 months |
Performance period, percent | 0% |
Maximum | |
Share-Based Compensation and Capital Stock [Line Items] | |
Requisite service period | 48 months |
Performance period, percent | 230% |
Share-Based Compensation and _6
Share-Based Compensation and Capital Stock - Weighted Average Assumptions Of Black-Scholes Option-Pricing Model (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares | |
Stock options | |
Share-Based Compensation and Capital Stock [Line Items] | |
Risk-free interest rate | 4.10% |
Expected volatility | 30.90% |
Expected life of stock option | 6 years |
Dividend yield | 0.90% |
Requisite service period | 4 years |
Contractual life | 10 years |
Weighted average fair value of options granted (in usd per share) | $ 42.59 |
PVRSUs | Minimum | |
Share-Based Compensation and Capital Stock [Line Items] | |
Requisite service period | 9 months |
Performance period, percent | 0% |
PVRSUs | Maximum | |
Share-Based Compensation and Capital Stock [Line Items] | |
Requisite service period | 48 months |
Performance period, percent | 230% |
Earnings Per Share - Computatio
Earnings Per Share - Computation Of Basic And Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net income | $ 52,820 | $ 67,391 |
Income allocated to participating securities | (272) | (324) |
Net income available to common shareholders | $ 52,548 | $ 67,067 |
Denominator: | ||
Weighted average shares of common stock outstanding – basic (in shares) | 51,269 | 55,412 |
Basic earnings per share (in usd per share) | $ 1.02 | $ 1.21 |
Numerator: | ||
Net income | $ 52,820 | $ 67,391 |
Income allocated to participating securities | (272) | (324) |
Net income available to common shareholders | $ 52,548 | $ 67,067 |
Denominator: | ||
Weighted average shares of common stock outstanding – basic (in shares) | 51,269 | 55,412 |
Diluted effect of stock options and PVRSUs (in shares) | 445 | 642 |
Weighted average shares of common stock outstanding – diluted (in shares) | 51,714 | 56,054 |
Diluted earnings per share (in usd per share) | $ 1.02 | $ 1.20 |
Earnings Per Share - Antidiluti
Earnings Per Share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Stock options (in shares) | 240 | 156 |
PVRSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
PVRSUs (in shares) | 0 | 76 |
Reportable Segment Informatio_2
Reportable Segment Information - Narrative (Details) | Mar. 31, 2023 brand hotel |
Segment Reporting [Abstract] | |
Number of brands | brand | 22 |
Number of hotel management operations | 13 |
Number of owned hotels | 3 |
Reportable Segment Informatio_3
Reportable Segment Information - Schedule Of Financial Information For Company's Franchising Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reportable Segment Information [Line Items] | ||
Revenues | $ 332,792 | $ 257,727 |
Operating income (loss) | 77,851 | 99,397 |
Income (loss) before income taxes | 67,495 | 87,735 |
Corporate & Other | ||
Reportable Segment Information [Line Items] | ||
Revenues | 26,064 | 14,260 |
Operating income (loss) | (27,640) | (7,923) |
Income (loss) before income taxes | (37,933) | (19,829) |
Intersegment Eliminations | ||
Reportable Segment Information [Line Items] | ||
Revenues | (2,319) | (904) |
Operating income (loss) | 0 | 0 |
Income (loss) before income taxes | 0 | 0 |
Hotel Franchising & Management | Operating Segments | ||
Reportable Segment Information [Line Items] | ||
Revenues | 309,047 | 244,371 |
Operating income (loss) | 105,491 | 107,320 |
Income (loss) before income taxes | $ 105,428 | $ 107,564 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Mar. 31, 2023 USD ($) hotel | Nov. 01, 2022 USD ($) |
Commitments and Contingencies [Line Items] | ||
Limited payment guaranties | $ 5.7 | |
Other commitment | $ 0.7 | |
Radisson Hotels Americas | Affiliated Entity | ||
Commitments and Contingencies [Line Items] | ||
Number of hotels managed | hotel | 8 | |
Maximum amount of guarantee | $ 22 | |
Forgivable notes receivable | ||
Commitments and Contingencies [Line Items] | ||
Other commitment | $ 334.6 | |
Capital contributions to joint ventures | ||
Commitments and Contingencies [Line Items] | ||
Other commitment | $ 11.6 |
Transactions with Unconsolida_2
Transactions with Unconsolidated Affiliates (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Member of Unconsolidated Joint Venture | |||
Related Party Transaction [Line Items] | |||
Royalty and marketing and reservation system fees | $ 5.8 | $ 4.2 | |
Receivables | 4.1 | $ 3.9 | |
Joint Venture Partner | |||
Related Party Transaction [Line Items] | |||
Fees earned and payroll costs reimbursed from marketing services arrangement | 0.7 | $ 0.4 | |
Affiliated Entity | Radisson Hotels Americas | |||
Related Party Transaction [Line Items] | |||
Fees earned and payroll costs reimbursed from marketing services arrangement | $ 1 |
Acquisitions - Narrative (Radis
Acquisitions - Narrative (Radisson Hotels Americas Acquisition) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 11, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 220,187 | $ 218,653 | |
Radisson Hotels Americas | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 673,900 | ||
Base purchase price to acquire businesses | 675,200 | ||
Acquisition related costs | 10,400 | ||
Goodwill | $ 1,534 | $ (9,050) | |
Long-term debt | 55,975 | ||
Proceeds from acquired derivative | 1,900 | ||
Restricted cash | 10,403 | ||
Goodwill | 60,991 | ||
Radisson Hotels Americas | Revolving Credit Facility | Unsecured Credit Facility | Line of Credit | |||
Business Acquisition [Line Items] | |||
Proceeds from lines of credit | $ 175,000 |
Acquisitions - Schedule of Reco
Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Aug. 11, 2022 | |
Total liabilities assumed | |||
Goodwill | $ 220,187 | $ 218,653 | |
Radisson Hotels Americas | |||
Total assets acquired | |||
Cash and cash equivalents | $ 113,023 | ||
Restricted cash | 10,403 | ||
Accounts receivable | 39,783 | ||
Notes receivable - current | 849 | ||
Prepaid expenses and other current assets | 8,139 | ||
Property and equipment | 125,441 | ||
Operating lease right-of-use of assets | 40,299 | ||
Intangible assets | 447,100 | ||
Notes receivable - noncurrent | 2,592 | ||
Investment in affiliates | 471 | ||
Other assets | 2,129 | ||
Total assets acquired | 790,229 | ||
Total liabilities assumed | |||
Accounts payable | 4,788 | ||
Accrued expenses and other current liabilities | 17,086 | ||
Deferred revenue - current | 7,311 | ||
Liability for guest loyalty program - current | 7,334 | ||
Long-term debt | 55,975 | ||
Long-term deferred revenue | 22,584 | ||
Deferred compensation and retirement plan obligations | 9,265 | ||
Operating lease liabilities | 40,689 | ||
Liability for guest loyalty program - noncurrent | 8,737 | ||
Other liabilities | 3,595 | ||
Total liabilities assumed | 177,364 | ||
Fair value of net assets acquired | 612,865 | ||
Goodwill | 60,991 | ||
Total purchase consideration | 673,856 | ||
Measurement Period | |||
Cash and cash equivalents | 0 | 0 | |
Restricted cash | 0 | 0 | |
Accounts receivable | (1,941) | 8,752 | |
Notes receivable - current | (860) | 0 | |
Prepaid expenses and other current assets | 0 | 0 | |
Property and equipment | 0 | 0 | |
Operating lease right-of-use of assets | 0 | (2,016) | |
Intangible assets | 0 | (300) | |
Notes receivable - noncurrent | 0 | 0 | |
Investment in affiliates | 0 | 0 | |
Other assets | 0 | 0 | |
Total assets acquired | (2,801) | 6,436 | |
Accounts payable | (1,941) | (1,566) | |
Accrued expenses and other current liabilities | 674 | 425 | |
Deferred revenue - current | 0 | 1,566 | |
Liability for guest loyalty program - current | 0 | 3,792 | |
Long-term debt | 0 | 0 | |
Long-term deferred revenue | 0 | (3,915) | |
Deferred compensation and retirement plan obligations | 0 | 0 | |
Operating lease liabilities | 0 | (2,016) | |
Liability for guest loyalty program - noncurrent | 0 | (1,443) | |
Other liabilities | 0 | 543 | |
Total liabilities assumed | (1,267) | (2,614) | |
Fair value of net assets acquired | (1,534) | 9,050 | |
Goodwill | 1,534 | (9,050) | |
Total purchase consideration | $ 0 | $ 0 | |
Radisson Hotels Americas | Previously Reported [Member] | |||
Total assets acquired | |||
Cash and cash equivalents | 113,023 | ||
Restricted cash | 10,403 | ||
Accounts receivable | 32,972 | ||
Notes receivable - current | 1,709 | ||
Prepaid expenses and other current assets | 8,139 | ||
Property and equipment | 125,441 | ||
Operating lease right-of-use of assets | 42,315 | ||
Intangible assets | 447,400 | ||
Notes receivable - noncurrent | 2,592 | ||
Investment in affiliates | 471 | ||
Other assets | 2,129 | ||
Total assets acquired | 786,594 | ||
Total liabilities assumed | |||
Accounts payable | 8,295 | ||
Accrued expenses and other current liabilities | 15,987 | ||
Deferred revenue - current | 5,745 | ||
Liability for guest loyalty program - current | 3,542 | ||
Long-term debt | 55,975 | ||
Long-term deferred revenue | 26,499 | ||
Deferred compensation and retirement plan obligations | 9,265 | ||
Operating lease liabilities | 42,705 | ||
Liability for guest loyalty program - noncurrent | 10,180 | ||
Other liabilities | 3,052 | ||
Total liabilities assumed | 181,245 | ||
Fair value of net assets acquired | 605,349 | ||
Goodwill | 68,507 | ||
Total purchase consideration | $ 673,856 |
Acquisitions - Schedule Of Prop
Acquisitions - Schedule Of Property Plant And Equipment Acquired (Details) - Radisson Hotels Americas $ in Thousands | Aug. 11, 2022 USD ($) |
Business Acquisition [Line Items] | |
Property and equipment | $ 125,441 |
Land | |
Business Acquisition [Line Items] | |
Property and equipment | 7,159 |
Construction in progress | |
Business Acquisition [Line Items] | |
Property and equipment | $ 3,190 |
Building and leasehold improvements | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 24 years 4 months 24 days |
Property and equipment | $ 93,934 |
Site improvements | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 23 years 1 month 6 days |
Property and equipment | $ 586 |
Furniture, fixtures and equipment | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 3 years 10 months 24 days |
Property and equipment | $ 8,334 |
Computer equipment and software | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 2 years |
Property and equipment | $ 12,238 |
Acquisitions - Schedule of Inde
Acquisitions - Schedule of Indefinite-Lived Intangible Assets (Details) $ in Thousands | Aug. 11, 2022 USD ($) |
Trade Names | |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 223,700 |
Radisson Hotels Americas | |
Business Acquisition [Line Items] | |
Estimated Fair Value | $ 447,100 |
Radisson Hotels Americas | Franchise Rights | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 15 years 6 months |
Estimated Fair Value | $ 220,100 |
Radisson Hotels Americas | Management Agreements | |
Business Acquisition [Line Items] | |
Estimated Useful Life | 15 years 6 months |
Estimated Fair Value | $ 3,300 |
Acquisitions - Schedule of Pro
Acquisitions - Schedule of Pro Forma Information (Details) - Radisson Hotels Americas $ in Thousands | 3 Months Ended |
Mar. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | |
Revenues | $ 311,469 |
Net income | $ 63,700 |
Acquisitions - Schedule of Busi
Acquisitions - Schedule of Business Acquisition Result Of Operation (Details) - Radisson Hotels Americas $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Business Acquisition [Line Items] | |
Revenues | $ 62,383 |
Net income | $ 3,273 |
Acquisitions - Schedule of Good
Acquisitions - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Aug. 11, 2022 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 220,187 | $ 218,653 | |
Radisson Hotels Americas | |||
Business Acquisition [Line Items] | |||
Goodwill, excluding goodwill arising from Radisson Hotels Americas acquisition | 166,774 | ||
Accumulated impairment losses | (7,578) | ||
Goodwill arising from Radisson Hotels Americas acquisition | $ 60,991 | ||
Goodwill | $ 60,991 |