CHH - Earnings call transcript Q1 2019 | Choice Hotels International, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's First Quarter 2019 Earnings Call. At this time, all lines are in a listen-only mode. I will now turn the conference over to Oscar Oliveros, Investor Relations Director for Choice Hotels.

Oscar Oliveros

Thank you, operator, and welcome, everyone.

understanding would certain remind will predictive to you we this that be begin, its assist call, and conference or in we like you to during used results. Before company the forward-looking statements Actual forward-looking results in statements. may from indicated materially differ those information that should for you the should SEC consult factors risk you Form XX-K consider. important And other affecting and company's filings about the company subsequent update events and statements circumstances. we today's undertake them speak to to obligation forward-looking reflect These date, publicly or as no of

You Chief of can our XXXX. Officer, overview the of and under our reconciliation release, our financial Dominic Executive non-GAAP an in our on provide financial to then choicehotels.com, Officer, find a results. quarter Investor operating press XXXX update measures and Relations first for remarks the XXXX our our earnings on provide posted of at Chief referred as Dragisich, XXXX section. Financial performance is an review part will This will which our website Pacious, quarter Patrick first quarter first President expectations morning,

be to remarks, we'll that, over to happy the their take Pat. With your I'll Following turn questions. call

Patrick Pacious

successful Good been It's Oscar. rewarding to a Thanks, year. the and morning. start

to the of Clarion Inn, you earnings brands: was at to first of four conference work XXXX great exciting our more drive commitment resources hosted learn redesigned things our profits. call. like brands several Just logos our the welcome last to hard Hotel attend annual and General Choice the and Today, Managers suppliers as X,XXX week, them Sleep tone we associates, rollout who for our well of at This is for including of happening than thanks with convention optimistic a new the to year, about I'd to Suites. franchisees, event industry Inn, as convention. XXth and the announcements, very quarter MainStay our Quality franchisees annually convention with we have our success The every

to Our financial of at to franchisees which continues our the strong deliver proven technology, and model, performance intersection shareholders. business sits hospitality, franchising and

quarter delivery XX-year-long strong During of royalty business by operational our footprint, capabilities first the we of continued the and history growth performance, global revenue. delivering XXXX, of highlighted our

our annual and we $X enabled additional the than of global EBITDA the Pointe of positive $X.XX to our two by X,XXX highest our awards. driver Comfort prior growth, proprietary delivery business the by our basis capabilities with WoodSpring X% more of We technology the exceptional to with earnings brand, franchisees is new our to XXX compared to our last brands, as Cambria strategic revenue capabilities, believe and Additionally, building history per well Clarion These effects points drives quarter our was significantly continues were million same international by revenue system and basis and share, to which work. on first today are our our results largest growth other and cloud-based the adjusted the year choicehotels.com several year. into recognized Three billion industry their same profitability. proprietary grew program delivery extended-stay implementing year, upscale, this the in room-count is guidance. main renovation contribution as and we This decade. that over increased exceeding enhanced maximize investments adding months quarter. first year. delivered openings contribution, up expansion our hotel of included in that newest which our $XX.X rooms in upscale long-term distribution period hotels, number adjusted share and help top-end with our These continued last will strategy the to financial Ascend, more simultaneously reservation than show and as Suites, platform, a refresh almost long-standing including grew XX% per executing to of while points capabilities XX have period in our results business We our the construction quarter in recently franchisees over choiceEDGE, The diluted

our focus revenues aimed value I'm to owners' development In to on proposition. continues addition, our developments strong portfolio our Today, on our with quarter. our resulted in efforts and our to segments more recent driving profitability. improve and with this special results hotels rates double-digit share our franchised growth them This our going highlight efficiently focus advantage operate market at in a resources opportunities top-line the brand providing boosting and royalty effective technology take to of to

long-term X our in transformation investments increasing strengthening X The is States. our mid-week has share is our Comfort in as to hotels in of of segment, investment expand travelers including hotels. established to several example bolster of our midscale multiyear midscale and represent segment, on approach. our and and Choice strategy, growing and upscale part As Midscale brand a we core our prime embarked United of extended-stay the segments, most our segments, long-term business

complete. standards these are progressing areas, quarters. and ahead to of renovations is The new in their to renovations XX% two completed guestrooms are the that that and renovation efforts RevPAR of system within one Comfort experiencing today, system improvement Comfort schedule. as net growth already recommend certified index installed are of having the of over RevPAR and elevated have lift, Nearly hotels As signs has XX% their to signal Comfort brand common likelihood

the RevPAR end fourth end of first quarter. of in their X% the In renovations is in their us travel. fact, the the capture their by also nearly and mid-week most greater its These year more to and starting growth XXXX than compared business to demand. hotels our The business Comfort growth hotels themselves. and midscale yet that the business their the share completed captured revenue one-third same helps upgrades. growth Comfort brand hotels a portfolio completed had of are our to of of doubled travel, last results more Therefore, have business travel for quarter of by Comfort speak that competitive mid-week the that complete attracting renovations

We our even among newly with are renovated hotels. gain newly Comfort that we opened and greater traction optimistic corporate will travelers

and half As on biggest Comfort revenue, transformation brand have our royalty RevPAR. impacts for is is also approximately the positive accounts our expected to long-term

hotels are to schedule, forecast. be pleased we While our ahead more there were of did renovation, impact which under

the all our quarter. Comfort would guidance If hotels, you have exclude met for RevPAR

our transformation, Given the of believe half completed portfolio the in recently Comfort a lift the has half RevPAR entire that we nearly experience that brand second will Comfort their year.

to focus the XXX the In with XXXX, its Comfort system, construction a XX Comfort quarter hotels. construction. hotels, we nearly new growing franchise on As are of new which brand's transform pipeline domestic the also first of XX% bringing new awarded we're agreements, pipeline we

gives great During is year. year week and the of opened first our more for to confidence quarter plan XXXX, a Comfort start Comfort open per to hotels. Comfort the in one we this This us XX than

our to Pointe number first our Another extension Pointe, of of midscale is of hotels Clarion to Clarion part expected open brand. in segment quarter, known awarded agreements Clarion launch the a X our bringing the Clarion We franchise strengthen the nearly of effort XX. well to Pointe select-service midscale

and after pleased with can Springs, Clarion in opened scale remain its We've launch segment. Pointe reception doors brand months midscale The in first developers' achieve of this recently seven Texas, confident Pointe been new Sulphur the initial the of Clarion that significant brand. the

to by Next business the And upscale It appeal the appeal have we're our its upscale first is domestic area Upscale seeing designed because basis is grew success. we to upscale RevPAR X.X% rooms continue where our efforts points. XX modern chain where payoff. Since year-over-year, our by and Cambria almost the us, portfolio. focus, of grow. the brand our business segment, a purposely investments traveler. outpacing room time-starved, ample we XXX is segment, fast-growing over over an The healthy and focus also Cambria travelers. points important XXXX, quarter, scale is have to basis XXX see hotels for to doubled a to for industry In

hotels performance pipeline is to Cambria over are hotels, long-term New this a and and in a hotel. location X we year. opening Cambria the revenue result expect thoughtful strong XX the travel to Cambria's opportunity business average XXXX. impressive times Further on space hotels system, RevPAR West room second and rooms Jersey, for one outstanding opened magnifying bring capture of to on as to proposition the and set record-breaking straight puts Cambria have to which additional Omaha, XX track their to focus Thanks gross one development in operating performance, and maximizing to the that in grew of This also new expected strategic opened generates Comfort Cambria Nebraska. We our market and two is the investments, value The XX,XXX growth on Orange, doors incremental success upscale the revenue. hotel drive our brand's

and provides We luxury of is Caribbean. development the our AMResorts, program, aspirational redeem points than entered all-inclusive across our allowing have to yearend. destinations. Choice at loyalty members The properties to agreement expected Group Choice their This has to more portfolio Apple enhance another to Choice travel another with earn resorts upscale AMResorts' business Privileges with award-winning XX our redeem Privileges, America points a award-winning Hotels' its by an by opportunity exciting travelers strategic to known Latin customers. brand and for benefiting Choice Leisure arrangement

Our upscale Collection, where especially proving independent upscale driver is Ascend markets, growth, convert quickly Hotel in our established soft be to important brand, can the international of an we hotels.

more business of their brand almost the hotels opportunities one can powerful up By of Ascend, biggest while delivery to in connecting individuality, a hotels independent offers international with XX% our keep room than platform like Choice's immediately. Europe, Ascend make supply. where soft working

large and While success expand not early about proven our seeing growing excited key more to our international across domestic the portfolio, open larger, globe. higher-quality we in as are hotels opportunity strategy as in to markets. profitable We're the brands our

our first XXX,XXX XXXX, rooms average rooms. fact, XXX count grown to quarter, the has In more our X% to hotel. international hotel room per since increased year-over-year In we from rooms than by size XX nearly

and Suites franchise XXXth of last seven of WoodSpring in the our fastest-growing agreements quarter brands extended-stay. celebrated and opening We month hotel Suites Portland, its the continues impressive WoodSpring is the Oregon. WoodSpring awarded in is Next growth. one first

prior XXX WoodSpring Colorado, more hotels year. to over XX states XXXX, the the by end a over XX% the the year by also into hotels WoodSpring agreement the and the throughout of Western Suites management of next period multiunit pipeline brand's first the of quarter We brings having entered Arizona around grew and Nevada. WoodSpring properties. opened company a In country anticipate with franchise XXX develop We hotel to pipeline than

the over excluding every the has been led WoodSpring of prior in extended-stay the been the suburban in doubling it extended-stay When joined period, of and for first historically XX% Choice since fueled the WoodSpring, renewed entire we the has interest have quarter increased of year WoodSpring more brands than our all brought brand. the the case growth pipeline As expansion by have an to our where quarter portfolio. family, area underrepresented. West, our pipeline a

For fuel pipeline Increasing increased by States of growth future pipeline the by major portfolio quarter a growth. the diversify helps This total XXXX, in California, represents was opportunity Western led over XX%. and XX%. to hotel presence United our our almost our by Western first revenue U.S. our grew where

Together, drive technology are to platform. bottom business. ChoiceEDGE these was with the revenue line Finally, new also us take data our top expertise and We've an Top-line corporate unit using to alongside both a tools full forward-looking management our features our economics of franchisees. improve and growth array and the automated help innovations and built to for developed of analytics platform government our boost of oversell periods. to high-demand line starts designed franchisees. advantage we

are acquisition Additionally, driving customer by direct we bookings. reducing costs

gross a mobile, one-third and increase shop has positive provides emerging same acquisition year. booking decade, generated XX% they while room revenue over channel our to meeting to owners. Book execute revenue costs. which also Book to reducing ability on on growth on happy our to that customer focused the where I'm testament last a is proprietary is driver our long-term our digital approximately an vision. results. through Our yielding in Google quickly direct channels, as saw on is still contribution that by increased We're book, key customer say Google last particularly direct in A our booking benefits the the

illustrate technology results performance that the delivering intersection these enable and at of franchisees and All shareholders. to of our franchising us serve best to guests, position our strong hospitality, while financial

over our position Dom new our it now to in specifics share like upscale Additionally, who growth brands, our will travel and will CFO, our improvements investments financial Dragisich, complementing strength. in to capture our turn midscale demand, more brands in business results. construction to our leisure of I'd more

Dominic Dragisich

Thanks, Pat, everyone. and good morning,

again strong confident once remainder the to pleased the results, financial year. are report of outlook our We are and for we in

optimistic We also for beyond. long-term and growth our prospects remain in XXXX

strength highlights levers. cash Our the allows us strong which growth and performance generate of our first operating business quarter to asset-light results multiple flow through substantial deliver model,

our strength expectations, our growth. enables were earnings the below While adjusted slightly our model per and first domestic quarter deliver results EBITDA revenue, business us RevPAR share adjusted to continued of

year As share a guidance. diluted adjusted result, per full we are raising earnings our

Additionally, returning shareholders. to to significant still capital us long-term, cash our while strong invest allow flows the for our

to Total X% revenues increases $XXX the Let's and are the relative quarter to detail. adjusted $XX.X XXXX, to quarter increased noted. except EBITDA million, first of review million. the more increased where for X% first first quarter All in

XXX top-line well at revenue our our in drive lower-than-expected operating as driven as costs. points, growth adjusted ability Our key by day-to-day margins to increased initiatives basis operations

earnings diluted our increase $X.XX share. guidance adjusted share by end per were Lastly, top $X.XX, exceeded per of the a that XX%

longstanding strong operations drive franchise to Our franchisees profitability continued our to commitment results.

system First million. X% and $XXX.X fees, to marketing excluding quarter revenues, reservation increased

revenue addition and to translates domestic XX-basis-point source, million, our increased royalties, which X.X% year-over-year $XX.X a domestic XXX in rate. increase to the largest hotels by X% to our Our highlighted increase royalty effective system, a of

X.X% systemwide was first our domestic which approximately of guidance slightly quarter, Our below decreased RevPAR the for unchanged.

increased the and our RevPAR many to at from These activity from we run, Central transformation, fuel the optimistic RevPAR pipeline and predominantly federal XXXX, renovation the the X%. comparables, we country, our agencies making first the which forecasted; by high during Southeastern long and the South more QX California challenges our in Comfort long-term We which will hurricane attribute saw to impacts, United benefit are that occupancy parks investments of onetime our multi-week of softness our strategic under States. like have QX than markets lingering quarter national hotels; strong in hotels our shutdown the In quarter growth Excluding growth. would tougher the of are approximately benefited short-term. in which across depressed are and RevPAR

portfolio most of drive our continue been We initiatives growing share upscale segment. strategic of upscale will that growth, of the to One brands. top-line believe on evolve the has our our in our successful focus nature the and because revenue-intense

by is Pat RevPAR the of quarter. saw basis midscale points ahead by to transformation. XXXX our fourth schedule said, hotels its quarter that As nearly brand, multiyear Comfort, XX segment the growth Comfort finish largest in outpaced X%, The the completed first their of and of renovations upper

in contributor expect to half and their RevPAR We have of be the majority expect systemwide to the completed by system Comfort system the midyear a positive renovations year. the the to of second

command other the of now refreshed results, impact positive Based domestic to negative to Comfort of for to onetime quarter and construction portfolio and future. a first XXX in drive headwinds the XXXX. into we on having X% the expect to refresh the brand RevPAR growth between the full that year new further newly addition and increase for RevPAR the and confidence between can X% second second the Comforts over well we our XXXX pipeline, In and X% expect the X% domestic fully midscale quarter range upper RevPAR expected accelerated have the giving us system, rates transformed quarter,

XXXX. based growth Additionally, a acceleration initiatives, our anticipate RevPAR in and forecasts likely our strategic economic on we domestic ongoing and in continued

multiple previously has other levers. drive growth avenues our business our As to mentioned, through model revenue

increase franchisees, our allows open within which drive of other grow the streams to our improve growth of XX% services, which the revenue procurement new quarter. rate leverage value the increased development as the size to platform our offerings such hotels emerging We and of us proposition pipeline, scale platform, our and first royalty in continue to our through to

the success pace over in of good domestic great driven size Our increased openings. first XXXX. in was In for hotel by X%. system This set a the number quarter, our system units our

of hotel openings three year fact, first we since have months of the in XXXX. number highest the In the

We pleased by XX% with of almost domestic are XX,XXX upscale, of count a our room total strength where the particularly for rooms. grew year-over-year

For The X% to to between and full growth unit year we domestic development continue growth range of year also XXXX, XXXX. pipeline compared full net X% expect to our strong. remains

segment, domestic During Comfort were midscale pipeline the our first especially At from hotels, domestic XXXX, for construction rooms Over are XX,XXX franchise were in our domestic construction XX or quarter our franchise March of we for quarter domestic and XX% a for XX% the conversion, of uptick X% awarded new the overall in approved awarded hotels. system. under whose development of new rooms We with of contracts XXX end, The flagship up year-over-year. our XXXX. pleased these represent Comfort current XX, pipeline operating XX% brand, hotels deals was agreements. or nearly hotels awaiting our in increase opened in agreements

Our quarter, new any and grew long-term openings domestic in in almost the construction pipeline were for construction a growth. continued at first give solid a quarter foundation highest RevPAR us first the new XX% by rooms These unit, decade. and developments

hotels tremendous saw under conversion, also development. for number construction hotels pipeline pipeline, or growth growth have demonstrating strategy that international is the of international approved quarter we in now We awaiting our our tripled over this XXX working. international as Our

rate, agreements. lever, by Our the final franchise is of driven royalty pricing

by basis effective for royalty XX points. the domestic quarter rate first grew Our

them and manage the rate. franchisees resources better focus effective royalty profitability by to maximize to our drives Our hotels business incremental their with delivering providing

with growth basis continued points We basis increase year in value forecast over in our to XXXX. XX improvement effective are expect full for and our continuous XXXX committed an X rate, points royalty of and confident a remain between proposition,

the is investments both in long-term commitment and Our shareholder business a to returns priority.

first million form the cash and of our $XX returned dividends XXXX, $XX These repurchases. to the quarter shareholders. $XX in returns approximately back in During we share million of came in million

flows cash return debt position and excess and shareholders. strong business to cash us to to continue the Our capacity grow well flow

minute will on a remainder spend year. our Finally, I for outlook earnings the of the

second quarter range XXXX, earnings expect the $X.XX adjusted from share. per share to we per of $X.XX diluted For to

For million expect between to continue we range to XXXX, $XXX full adjusted and million. $XXX EBITDA year

per optimistic diluted of to had result We the we continue At to share, remain full-year this our earnings range performance through that be drive of Choice Pat a our outperformance guidance answer and strong to will year, I adjusted our we long-term Operator? increasing $X.XX to strong this start as per focus. are quarter. a would a happy and share as you results have. $X.XX our questions any time,

Operator

Thank you.

We will ahead. Please from Instructions] America. with question Kelley Bank the of [Operator First session. question-and-answer begin Shaun now go today comes

Shaun Kelley

morning, good Hi, everybody.

Patrick Pacious

Shaun. morning, Good

Shaun Kelley

assume Just maybe kind start your wanted that of franchisees when is think to you with, I convention, was all industry I recent. your major which show up, mentioned

that? development just we remain and RevPAR poll chain continue little see talk environment because interested the around lower-end the So as could at people conversations, development maybe industry, to in kind particularly you about scales, impressed the a of level think by I lackluster a new bit feedback new there. the mid- we out I'm given industry from the of

what development pipeline we're seeing? tell activity just of the what you signings looking about sort are can they're and telling So in you your right driving franchisees some and that that's now, us for of

Patrick Pacious

three what construction It's Yeah, to that well, education doing massive new, WoodSpring, brands massive who things. really week but and the trade get Thanks, for renovations leading we're get our answer Comfort of transformation opportunity our look good Cambria And selling reaction business. Sure. the a your fantastic contracts our it's is To like. uptick buying what where is pulse doing we're a that's to we significant And brands. to a new the in I'll us where doing owners really our is on Shaun. inform a Pointe, development are things have lot to planning a opportunity. so for the it's seeing convention to opportunity what come a question, it's of What we're the our Clarion in minute. are a really of and those supplies, and them about with talk to also brand. front at as of show, on happens It's types at other franchisees a also the

some Comfort mentioned, a with segment in As of our we XX% Cambria. that quarter The we came education country the with have our have around of segment palette hotels a interest, our lot doing that's Cambria upscale Cambrias opened, the interest Dom XX more a of franchisees to brand brand, With only develop and us. really Cambria first the we up lot select-service and in who across do to the upscale contracts. sessions clean in in

as And of us seeing doing to a in that Owners now. into that lot to a have sessions of learn segment had WoodSpring people the in that general, ours and extended-stay so, we're Comforts pickup model. upscale looking with tell segments those were at about and you, And well. crowding segment business who those I that are doing sessions from outside

in If at that the are really look strong. particular, extended-stay, fundamentals industry you segment,

And WoodSpring, a interest so, Suburban. in of three extended-stay our segment across the MainStay brands, we're of and amount significant all seeing

Shaun Kelley

much. very you Thank

Operator

with Please Jefferies. The question Katz David comes ahead. go from next

David Katz

Hi, everyone. good morning,

Patrick Pacious

David. morning, Good

Dominic Dragisich

David. morning, Good

David Katz

about But ask is the profits, of a environment? the can about which us of level improving I point neutral, certain just thought you what level, data sort level, help about at about, the at hotel in elaborate bit I franchisee out we'd either that that a means. more always context than And low-ish to on and earnings so the yours. calibrate is to point how RevPAR question suppose, just hotel more wanted the RevPAR our the we analytics in up a how models think of follow about plays right, and

Patrick Pacious

them technology is to the our us, then way run their analytics data businesses. owners Yeah, helping help and help so ways we are is new finding

on help allowing our help not find their have parameters is piece of your the where whether a as hotels missing they're their Virtual people sure that's that us past out may which business the program their staying them, the within that travel Technology of management rules may missing Pay, staying they're company go technology the front, we've who and identify mean revenue are to at to group inventory it. people whether lot have. corporate answering can book channel setting government So that that showing allows hotel, RFPs so on that's front. by owners the And opportunity, where that's us, rates, right a them places lot does is line our management what the of that a top accounts, of labor-intensive on how like franchisor, There's and a is there we the for hotels. FedRooms. their a program for company are things with and a really are that and a rates effort cards to into this consistent product up with rolled do The in credit government things out have make have or to that quarter, and I helping

through opportunity We can business hotel through with You industry hotels a our work it, to a beneficial, piece like new of virtual able credit in card. and technology adding deliver the that. we're to it's and only company have We're companies into it's really that essentially. do now the an have to

house. the The is other cost the of side side of coin the

data like markets. items our cost similar other and help to compare we're owners in hotels analytics, to able line now actually their technology using So

rising. an insurance And ultimately savings, down costs brand now to owners are calibrate so we're and labor whether find lot getting use to and of level where and able can we're their boosting of in the tools, labor a to the that positive line. where these workman's lot we're these and and sessions telling education are where mean the shift feedback your costs, bottom A are owners how them paying, into it's our crowding today sessions, those comp you're they like our help cost costs, I particularly environment really

on So centrally able the through that gross about improvement driving delivered of that, to the just achieve is RevPAR the game, economic about tools. at investment of It's the end technology use we're unit room not also return revenue. and the and

David Katz

Got been kind of ask How it. we've been from the Perfect. And opportunity Where a out longer-term lot could announcements at you be a some out turn - which that of to brand? about specific set there. seeing the addressable that If has - do think perspective? market I WoodSpring, for may or about

Patrick Pacious

I So it's look north properties. XXX we think, where at today, at it of just

there. We triple the XXX of easy us do the are be WoodSpring doubling at see demand would end to expect think probably to XXXX. be and likely demand that to see We It's by like where is us footprint close markets, the X,XXX drivers something footprint. in there or to

double the the of is And brands look so to the no of you there's see there size today, because is think sitting in segment, you that when where WoodSpring interesting, hotels a lot in David, have of gotten I if across look sort transient too, today. demand industry, is and you What's across the extended-stay extended-stay marketplace. extended-stay

the our owners visible, a it, are And already demand to and driver of necessarily our owners because that's this performance like WoodSpring, where significant themselves, looking generators markets. at in so product is a great GOP the are those saying asset and demand that's not another see to but is build,

David Katz

it. Perfect. Thank much. very Got you

Patrick Pacious

you. Thank

Operator

SunTrust. Miller question with comes ahead. from Gregory next go Please The

Gregory Miller

I'm much. on very Scholes. Thanks for Patrick

international today? any for Are stage question there brand have versus you see the domestic good in towards growth? you particularly I interest brands certain And had, your at where today in lodging yourselves acquisitions? do are opportunities cycle, First regions, is bias can what this that underrepresented

Patrick Pacious

Yeah.

would look at segments as look that it's acquisition current be we our think I we So at would opportunities, portfolio. additive primarily to

we full So extended-stay. don't product service have in today, if that's where and that's above, you in upscale think about upscale,

we in portfolio two of so might that opportunities opportunity our fit a There's at would that And to see time be those looked launching we bit domestically. probably our from in brands if addressing key segments or existing either are you stay will, more that brands gaps, occasion, so also type that more niche different that time at is little have profile. acquiring a

where clearly, international our the been. front, On focus is has Europe

we've in We or been hotel XX - year. have France, last some Comforts about Paris, owners. with We brands added just multiunit deals generally, hotel doing of more Paris or and in outside

do opportunities, a sets brand, not But and group in a do nicely but in Asia opportunity by And you Asia-Pac brands, there. hotels. acquisition So platform there's up itself in see platform market. more for where maybe market, Europe the a our region. then we by more Australia, of And have big that our a hotels our XXX so we opportunity with to the certainly is have multiunit

to to So time at tests, meet I things key where I test, looked litmus litmus my always an on grow meet we of at owners these are provide allows have tests: comes for return acquisition and sense it but for at a And of this in us. would shareholders' through that we a our and can sitting to footprint if we two hotel how can makes litmus can I And to pursue. cases to It scale. own that's things it returns? acquisition lot today, that We're assets? time, adding the back sense how those but do, to two those economically for and makes to us look X,XXX those big more things investment improve hotels something us have so owners from isn't improve two

Dominic Dragisich

X.XX. would frankly. our side our remain Historically leverage add levels, low We're the I on always levels been about thing is of speaking, QX has only the leverage house balance and very highest at the Greg, Yeah. sheet levels. at

target X Cambria. us but given we're have we for prioritize that's doing inorganic, range again, that investments just organic do we to whether where those And so like between X to capacity, always what wanting our strategic in times, are with

Gregory Miller

franchisees? do as customer today? Good competitiveness have to about This are impact you I about hear. another OYO level the And a for and stateside emerging. market are initial there your indications OYO, from And some had thoughts then attracting that you be question. it hotels appears perspective What to retaining for is its any share and and Indian seems company, of that

Patrick Pacious

and we We're markets particular. is in market, in we segments, watching. anyway, a the a lot an India, it product at not today. in operate where having impact something larger is where impact of the have It international our seeing Yeah. looking on are don't on Domestically, brands today we and mostly

be watching. multiple is market it services ways to in management to from appear technology we're as So revenue franchising. so approaching be well, providing They everything the what looks something to and

bit multifaceted our a approach of threat U.S. to seeing at not point, franchise we're But business the a this to a in be here it's pursuing. core they appear So

Gregory Miller

all Okay. from you. Thank That's us.

Patrick Pacious

Thank you.

Operator

with UBS. Farley question comes next ahead. go from Please The Robin

Unidentified Analyst

Hi. This on Quest] for calling [Jay Robin. is [ph]

it travel quick so Was hotels revenue them, if do? question, renovated did leisure for and how in doubling business Just negative? was saw the travel RevPAR X% up quarter,

Patrick Pacious

a something up Leisure travel think was to like I No. little was X.X%. positive bit flat,

call six growth strength leisure But that's - a last months several growth continued in it's that strength years, a and it, group. business, still real the be industry, So of had to a ours. the the of particularly been there. lot travel, has over in sitting in last It's is the

And business so got Comforts, Comforts, benefiting at in those travel done looked tail the that one-third and group. in year, we the who pickup hotels of the end from of at our are renovations that last particular when

Dominic Dragisich

a - The headwinds an remarks, is, it those three mentioned when prepared I in saw. onetime the only add QX results, I thing look at you we would comparison. not take major that it apples-to-apples

to QX, to Modern a normalized back levels. that So take in when those you at returning But where and will Move you be look QX in in QX, renovations. had to going we're particular, be

with particular, in hurricane, well. on the to call as then finally, alluded headwinds lag government and Texas, and what there had shutdown, the as the the I the You

Unidentified Analyst

guys. we so in you, of in is QX underlying the came RevPAR how benefit WoodSpring quarter of going into guess plugged how coming how question WoodSpring full more - the Thank over growth? I strong a one much that's more acquisition? the And regarding that guess was - being think So of pretty lapping I the in forward? the Great. first strength quarter about Choice quarter. like In And onetime kind from RevPAR last RevPAR year system? Like of more much the should

Patrick Pacious

Yeah.

the by state impacted WoodSpring. - the WoodSpring Texas, was largest presence Let the in just has significant the me which address most hurricane. a

lot business occurring So when response have from year-over-year there. look you FEMA of a a and comp, that the they the was hurricane at that year-ago work

have at you think, I that sure to make you're that. looking So

We will you're have be year-over-year really good we comps. right, the be will where providing quarter, - QX, first

want If you partially add and recall, we Dom, February QX of last to in Xst closed on the of number. that acquisition partially the to that? it do year, so out you was

Dominic Dragisich

Yeah.

QX to. include Pat in was headwinds hurricane into alluded Just the X.X% That specifics. that about does getting those positive. WoodSpring

portfolio always it If if in you just in included, we've about of it grew press we've Historically was the remove also WoodSpring the impacts, exhibit at release, those RevPAR in January. speaking, that X.X%. actually included as

always seeing apples-to-apples that you're So comp.

year, at If WoodSpring last X%-plus. still growing you was remember

a sustaining in we X%-plus it's normalized that to still on expect the see RevPAR growth, So and that basis, future.

Unidentified Analyst

Great. you. Thank

Patrick Pacious

Thank you.

Operator

comes Please Shojaian Research. ahead. from with Jared next The Wolfe go question

Clyde Singleton

on Jared. for Good morning. It's Clyde Singleton

Patrick Pacious

Good morning, Clyde.

Dominic Dragisich

morning. Good

Clyde Singleton

trends, and give through does model last I you did XQ? trends What into And so those track? you? not looking mentioned are usually How you quarter, far believe that March. your have visibility you sets February typically how business data see much in do much

Patrick Pacious

Yeah.

would if thing. think were on and I of is leisure sort of long booking conventions think upscale in as a not about upper our if particularly as the segment, the have business, and midscale type business that player travel you you window, meetings in you that

is relative shorter. our So window little a competitors, our bit most of to booking

of bit weeks is world, that little limited. into beyond, six visibility our sort out more So and a that

about and products, the with think industry a And are, of along about think, trended to, we track metrics insiders the we particular. lot some have historically, a I midscale when industry particularly really CBRE. PwC how and of significant the of forecast we're that where think segments, player of when those with STR segments you you closely in

So metrics those that trend we to. closest are the to tend

interesting, you a growth, is that in from on of I is its And where RevPAR year-over-year that, actually is in growth area, WoodSpring you brand A economy lot you're is a the today, that's about What's high. off the if fascinating is see lower supply our coming but in new about going key contributor it's economy extended-stay. also of you look think segment, construction economy at think, what's when base. it's actually shrinking, seeing particular. so the

at growth look where to rate segment just the can't at interesting an you without underlying look the in understanding that's fundamentals. economy truly So

Dominic Dragisich

Okay. And to alleviating little the us see to impacts only allowed thing that I would Move onetime to versus in add what about QX. impact, ahead that is do to impacts really a bit those continue isolate talked the I tools that Three in - we really in seeing QX that Modern probably in we saw see QX, just QX. continuing you have

of have lag, You you have shift, the still then hurricane obviously. a and bit Easter a

And impacts, so when that QX those range. you talked X% in somewhere probably was were what all RevPAR you about in we remove

also to the in remove would impacts X% those you If both actually RevPAR. that around as that right expect and QX well, QX. the And in year full for as we guidance imply you're accelerate actually QX

Clyde Singleton

Thank if want that? several Very do anything's you still and on a just helpful. SkyTouch? quarters noticed or updates you. you on changed speak haven't it Thank anything see can you. you any for drag to EBITDA, Is on have there. We it mentioned Also,

Patrick Pacious

Yeah.

the it's past, think, - in said to we continuing grow. it's as I

expenses, now fast about essentially payments platform. you benefit then that is the breakeven business, upfront from I And that this and financial service. you division As we're pay The have about perspective, subscription get think to XXX a the a monthly you - software marketing on the hotels year. performance as long-term a on from are at is

it's continuing a So had. reason really the contributor yet positive we're we don't at has material not is up to bring that business. the this on But SkyTouch point, momentum very the it

Dominic Dragisich

is and to no the franchise Which non-franchise statements guiding is to the at the reason breakeven. non-franchising are financial point, to fairly why results Pat's both we point, are this immaterial reality longer results. The

Clyde Singleton

Got one and if do much I you. housekeeping, How CapEx on to more you sense. spend year? That expect this may. And makes quick key-money

Dominic Dragisich

ballpark speaking, been in our to key-money is around has CapEx Historically million. $XX Obviously, that million somewhere right well. $XX as

with million we're doing that and what does as with we the that include Just have Cambria key-money well. our authorized, disbursements $XXX

was key-money of the majority at to Cambria that take you investment look when we where was were year, about a So the $XX But program. through million. last closer

Clyde Singleton

Helpful. Thanks so much.

Patrick Pacious

problem. No

Operator

Please The Powell go ahead. next question comes with from Anthony Barclays.

Anthony Powell

everyone. Hi, good morning,

re-launch Your Have any their midscale you competitor, loyalty from competitive seen expect do kind they're [Reving] advertising in to year? impact program [ph], you that or pretty your re-launched result of heavily. see and this

Patrick Pacious

competitor? midscale Which

Anthony Powell

Wyndham. Wyndham, Wyndham,

Patrick Pacious

that's Express. why I mean, tend clarity with think Oh, Holiday no. I getting we compete was to midscale segment. I more on Inn another some brand, That's the

to actually impact on focus ad also midscale on program we're it summer, renovations, reintroduce a any do really our competitors the from at about changing to the campaign loyalty new convention, set. the well. as or highlight a we from seen the reintroduce ready lot haven't exterior getting the advertising is We to the the this ourselves our is What brand fact traveler, and Comfort that signage talked

of in of more as headwinds So second half renovations year, tailwind. from turn the help we the do the a they're in of spend towards additional do marketing now as to that sort to Comfort us, Dom we with expect expect mentioned, right

Anthony Powell

really [Amira] [ph], I cards. segment? companies credit that maybe you an to Got for brand, with have co-brand large more. think your Hilton opportunity of contribution well fees thanks. card, increase other that it, Is their XX% from done to the close credit or And it's for

that is So could that something maybe you faster? grow even

Dominic Dragisich

it's to today financial say the results. overall would fairly I immaterial Yeah,

If continue you as now at look if the talked $X in a to do our at as an million that this this take especially per long-term, we on frankly. mid-term is growing about We year, opportunity, not see the loyalty several grow program. past, more, where program to calls loyalty you

fairly to minimis. see that additional that, we with where through opportunity one and And today, of so, revenue given do value top-line growth programs, we of as just as leverage de are ultimately add but an those

Anthony Powell

you on progressing? doing faster ownership, vacation more one years ago. And that two year business I ago thanks. test it, were think guess, or Got do the non-franchisee business And some growing that the you in is future? I How see side, a

Patrick Pacious

distribution of and model. a like Yeah, managed be customers vacation, we more entered XXXX, in that to affiliate to ago a XXXX, years that actually we where model model, segment rental franchising that we're three our companies. pivoted looked ownership with delivering in And more

XX,XXX units so primarily. U.S. the markets now in that business spread we've And across about increased to XX

we to be today. a how with a and as of feeling understand to bit are members, we're And We customer, It Choice will that product. test that are kind good our where use we're you going over us. But, that about pretty optimistic want number business particularly our of for increase healthy those Privileges time markets. nice is pretty of learn, that

Anthony Powell

Right. Great, thank you.

Operator

Please Longbow with comes ahead. from Alton Stump question Research. go Next

Alton Stump

Hey, and in thanks, conversions good morning. about the of I just wanted independents. particular, from ask to pace

year. You to time last back this can take versus now

the are there, Given the across costs costs to going cetera, cost obviously, up et interest of labor, bill. or most board, fact all that,

for over to independents that so, And to banners? rising is convert your have incentive more to

Patrick Pacious

is get Yeah, soft I find for brand take things, top-line customer realize the revenue. you with, It lower, particular the available instance, independents into to the once collection, in think or they cost for come that's come business our if distribution on What right they And they Collection them. the training then that Ascend all you It's us a delivery. the we hit usually, and to for. acquisition - costs.

wins a Facebook. X. we did We In awards fantastic like Salesforce and and a that Top of training significant beats number XXX, [eLearn Google and sort were [ph], companies university Magazine] out online ranked have and

independent run to run available a a how is around training that of hoteliers. small these how all hotel, business to So to

that layer that a run X,XXX types marketing, you costs do lot things a engine owner. those across to required revenue on You to they're of can lower when are to when were that single-asset able management, we hotel. those difficult of really top things a search of of spread costs units, you're those But

just them. keeps what and attracts which that usually them savings coming it's top-line not cost piece. back. is So bottom-line It's Top-line the

Dominic Dragisich

a the actually Exhibit is take X add I year-over-year. on you unit that would basis particular results. When at the thing we only release, at Ascend with the it's look that a up domestically, really have a you look showing in net grew press And XX% we the take portfolio in

Pat exactly what really reinforcing said. just So had

Alton Stump

all have. That's I you. Thank Great.

Patrick Pacious

Thank you.

Operator

closing This concludes the over to any like I for to session. back would now Pacious conference Patrick turn remarks. question-and-answer our

Patrick Pacious

joining for everyone, you, us Thank today.

core And it's Our create ultimately for value lasting in a got strong We've for be shareholders. strive performance and franchisees, to compelling lot a our XXXX. guests great this quarter excited lays about. business we foundation or investing our whether solid opportunities, a our pursuing to our

see your we'll in you And enjoy So, summer. August.

Operator

This presentation. has Thank now conference concluded. for today's attending you

You may disconnect. now

Choice Hotels International (CHH) 12 May 192019 Q1 Earnings call transcript