CHH - Earnings call transcript Q4 2019 | Choice Hotels International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International Fourth Quarter and Full Year 2019 Earnings Conference Call [Operator Instructions]. Please note, this call is being recorded. I would now like to turn the conference over to Allie Summers, Investor Relations Director for Choice Hotels.

Allie Summers

Thank you, operator. everyone. again, welcome And to the honor Investor time Relations Director. joining my first for as It’s to working meeting you. forward look I and with of all

Before results. predictive like this would you in be we you company assist begin, during and the that its used to to conference results forward-looking or remind certain understanding statements Actual will call, we affecting other differ the important the company's consult materially you and should about should you from may that information XX-K company those SEC and consider. statements, risk for indicated factors in forward-looking filings Form

of These speak reflect date, statements no forward-looking undertake or obligation events publicly as to today's them and update we circumstances. to subsequent

and find our Investor press release, full-year referred reconciliation a our non-GAAP our which to is can posted remarks financial site the of in part under on at choicehotels.com, measures quarter XXXX You as Web Relations earnings of fourth section. the

Dom an provide Officer, will our and This on XXXX Chief Executive fourth and our XXXX morning, Officer, full for XXXX. results. expectations our update President and quarter year Pat financial overview of Pacious, then review Dragisich, performance provide an Chief our operating will Financial

take Following glad their to your remarks, be we'll questions.

I'll to call the that, over with And turn Pat.

Pat Pacious

whole. fourth And as as the full-year to the morning, report following all of the to XXXX you. XXXX quarter full quarter a announced everyone. joining This for the compared year pleased strong a We're I'd for positive resource know be prior great and full-year for thanks performance, results results we period. and morning, that to call. for financial I welcome XXXX reflecting fourth earnings Good team and to our like Allie she will

and per our by end was of by grew of per the a XXXX XX%, earnings X% top year value our franchise and in franchise and proposition our $X.XX end tomorrow; adjusted top with previous of services brands options And, exceeding platform new that full continues previous guidance. the the EBITDA adjusted grew to with improving year investment; provide that we investments owners; that's share guidance value. for our share. We investments of investment owners in customer our guests are travel they for our new the

also will ones segments strategy and positioning continue more the locations. to to specific, To to grow of revenue company the stay as tomorrow year more upscale, our an we in midscale appeal XXXX and and our brand strengthening the in segment. we investment new building be intense customer of be existing extended are

brands segments. intentional geographic we We our about these three have grow also the keys market been across targeting to are

our timely, domestically our hotel, last we strategy the on intensity revenue are hotels stay and we've extended is this for great And in internationally. segments, success each both the and executing had Stated upscale, focus of those system the in attracting midscale year. new currently and

year prior in in For increase growth intense full-year revenue extended drove we more increase period, and and this the X.X% substantial stay full the upscale, rate and with XXXX a growth value segments expect XXXX. to across versus we units, higher midscale

new of improving and is pipeline Our welcoming percentage hotels. higher construction portfolio is our a

shareholders Hotels’ the brand, the to the franchisees morning, share metrics life growing having nearly are benefiting. are throughout agreement. expect And of to for in Choice hotel New this right of hotels market. more pipeline right construction result, we The in as off today. more of new proof right higher the franchise our typically system are and a in hotels is are the as revenue a success gross these the anticipated in revenues And in segment, higher likely intense will we'll than XX% revenue room company average long generate strategically These term. Choice and that the that hotel our we pay the

few a a over impressive X,XXX we're about upscale proposition our travel to of provide provide now platform how Ascend say each it the Cambria and our expanding Dom. last hotels off before words segment and and other we value-added investing segment, on to the growth year. I'll experienced brief brands program our and update value In in partners each handing

In XXXX, these ongoing count have a year-over-year and portfolio. was brand, Cambria by XX which XX hotels, XX% company's domestic a XX% year-over-year domestic our under open XX,XXX and brands grew hotels our year-end. in two of as construction reached count already we by of the room its This now are with growth room increased XX highlighted pipeline milestone upscale momentum in upscale over rooms across the domestic of which of

Apple XX%, Ascend domestic grew with portfolio the its associated X,XXX and all for inclusive known partnership resort. rooms AMResorts luxury, which our Leisure Hotel of including its Group And over Collection, room with brands, over strategic count

intensity representing Cambria upscale opening the year-over-year last of in complemented fuel agreements year Houston Once XX franchise new of brand's doors hotels, ended largest a RevPAR Last in system. Disneyland high our X,XXX market in rooms’ in Our our was by growth major by year. the and the upscale to Cambria these drive ability markets XXth over Boston, brand we property Anaheim, Phoenix, California. revenue upscale like just new rooms XX% the upscale year, properties outside our further and hotel, increase will opened the opened,

growth brand the for XX to active come. new years of join hotels, the expect XX begin XX for in to another record expect up under many additional openings to will on and as Cambria, projects construction great across consecutive construction currently year, the the we second openings which for This anticipated country. we for a stage exceed hotels the brand's setting the year, be XX shaping Cambria to is year continued XXXX with pre-construction,

had record The Choice's upscale Collection, in XXXX. top also brand a Hotel Ascend year

brand broke Ascend by soft the largest number in For the global Hotel agreements development its is Ascend the system, over With we of far. XX% XXX awarded. straight second year, increase year-over-year in domestic, with for Collection the industry's franchise records hotels

soft fact, than In larger next the two its brands combined.

drive of Choice leadership component to of and portfolio. is critical Performance strategy strategy to and to flagship mid is transformation intensity our our our commitment segment continued our franchisees scale points be the our working. brand mid-scale maintain Our position brands, to the The Comfort the of revenue upper continues improving. of of our a

Our $X.X driving the billion hotels transformation efforts through to refresh gain. multiyear is existing share Comfort

Comfort one hotels openings Comfort of in for per grow an year, and completed more that opened the the continues construction the to at agreements developer their renovation development in for eight local in community week, past the Last quarters. consecutive XXXX competitors franchise experience under versus the year the Comfort year, The And growing. to for XX continued appeal hotels highest index awarded of we the hotel XX% versus average than brand domestic gains three increase number interest is over prior brand in domestic years. active end. RevPar with

XXX refresh. In to since fact, we the Comfort the have almost hotels pipeline nearly doubled

XXXX revenue this life earlier is the net agreements revenues on year as Domestic agreements for expect mentioned we their of focus and in compared that franchise our return Comfort over I awarded XX% And to XXXX over to and year higher intensity. accelerate to prior in growth awarded to full domestic Comfort franchise unit contract year. the expected generate are beyond. Comfort

in the Comfort’s Our chapter transformation. attention now has next turned to

prototype is advantage owner the to segment. build than maintains the revenue meet in in the and the invest delivered expect to Comfort eager are which upper enthusiastic in future we More franchisee Comfort’s leader Comfort what’s from who hotels existing proven our existing The quarter prototype reviews our of to The of builds Comfort Part low help brands. unveil developers to month, already our the at for and maintain competition, brand mid has Comfort our guests room’s the demand on design success. the cost channels. flexible commitment Choice over franchisees prototype its scale options as to and proposition, came generated flagship from delivers new that XX% in Next fourth its value of received position preferences. invest driving

Relatively two agreements an dozen is and Clarion the with and launch resonating last brand The open surpassed conversion our is XX experiencing now more the as Pointe, of extension this to open has or total year, awarded Pointe awaiting than year. success Clarion We Clarion Pointe is number expect XX Clarion great hotels, which midscale new to franchise domestic of our popular brand. hotels Pointe guests. hotels since Clarion brand portfolio

score Our satisfaction first guest hotel of of has out X.X Clarion a XX. Pointe

segment supply that stays of significant a where or is Everhome now the a Suite demand where hotel kicked brand to the Everhome nearly brand. one inventory We midscale stay the is fastest midscale exceeds the and extended plus hotel XX Shifting a of the seven extended-stay, growing of of nights. decade for years industry. first launching enter segments data tell to us in older far portion off stay new extended construction by the Suite, XXXX

celebrated Suites brand, first brand developers hotels XX ground Everhome on hotel and to Texas by Suites build the launched and Austin, committed in multiple the Los Everhome have to We already the market. Angeles breaking the display expected

open extended Everhome our expect We In of unveiled MainStay driver hotels as is unit both open growth. suite, performance X.X%. surpassed We stay WoodSpring, Everhome improve the Suites WoodSpring brand Suites A next growth for stay just in brands. count continues first year. major increased extended company by we XXXX, to the and the our XXX across which to Suburban and

last domestic additional XX awarded year. also We agreements WoodSpring franchise

proposition words expanding by we're in drove stays and committed our basis few existing increased I'll coming close about increase point platform value members. maximizing loyalty and revenues a number of XXX franchisees’ return Last with the the contribution and our both from of investment loyalty our our share total to business. enhancing year, we on how our

Our Choice follows enhancements our offering. to several major strong contribution loyalty privileges

courses at also our Choice in times travelers S. strategic out the just hotel. and of rewards which XX inclusive company. of offer our month, nearly increase opportunity at with at points the basis Choice stay the Cambria as bookings loyalty contribution by rolled hotel this new for for on year-over-year business members, perk And any in having well XXXX. members went the privileges and newest agreement country. redeem points offering than brand's members all the as we fall AMResort, elite while The earn of U. Central Caribbean its members This special XXX help our benefits to luxury top we all-inclusive positions by and and members locations This hospitality kind golf Choice exclusive program, Mexico, equipment, pleased resort golf, their to By live directly first our the booking as We're the in America, major our more gives is use million Choice. to when the rated across apparel choicehotels.com. offering, largest on industry, allowing deals points for latest to Golf result access with privileges earn This

three prove points on our closing, franchisee proposition. In delivering we're value

agreement their owner. system renewing remain when brands our as joining for in when more a pay our to new to willing are owners First, or

Specifically, awarded. a new year gives XXXX rates see renewal continued value for and owners effective franchise to increased to that was brand. record This we us in agreements continue optimism of improve re-licensing the our royalty And revenue.

were And finally, nearly owners. which awarded extremely Second, of existing we franchise rate, are franchisee maintained six agreements returning retention we last with of out proud. XX voluntary or year XX%

and remained brands, to Dom our will right to the turn As over to financial right XXXX, we we the grow our in the I'd and look like owners shareholders investing of pay-off committed continue growth ahead in fuel market. Choice's segment, in results. This to long-term CFO, will share specifics more to the right Dom? now for business alike. our who to Dragisich, it

Dom Dragisich

Thanks, and everyone. morning, Pat, good

earnings performance pleased financially a and allows note. rather business decade very return next business close are our The the plan to and the position continues in months, of term, strong long and us in financial but have to investment XX in another and grow XXXX not on the out we to We next year just beyond. What us of for our is resiliency accomplished high to shareholders. invest capital well XXXX continually for model the

over end full in For full performance, EBITDA, management year of revenue strategies with our in resulted top our solid achieving to Total by the of end share full to Thanks and effective XXXX full the revenue year top billion our operational year representing prior XX% reached XXXX, a earnings year adjusted increase tax share, strong X% over by the per grew of an full growth, adjusted previous focused $X.XX. $X.X per prior cost increase to for period income investments year tax full the implementation year rate, $X.X reduce our and XXXX of revenues we disciplined exceeded guidance combined year. combination guidance. the our X%

at our results. look take closer fourth a Let's now quarter

top the same million system to to increased quarter $XXX.X by and were as X% adjusted of our increase per share. of year marketing Fourth and quarter For prior grew EBITDA previous quarter XXXX by adjusted over period excluding reservation $X.XX, share XXXX the per XXXX, $XX $X.XX the and earnings fourth X% compared million. end the to XX% exceeded total revenues a fees, guidance

be model that off business by for performance driven brands. us resilience and proof geographies paying and segments, higher our positions value growth our the across strategy is continues well to financial Our are franchise results long-term of future growth. These and

franchise business Our drive profitability owners’ which places top at multiple growth. provides to center, line our model, revenue the ways

value travel over solutions reminder, of hotels increasing to in par, hotels improving and added our our system, services of their X,XXX rev more our number effective expanding continuing other expand a key by partners. and are; the and platform revenue rate levers to As procurement royalty providing the revenue the intensity

dive we along for compared This to we with our segments set, the our RevPAR me key softer levers Let revenue competitive overall year, four RevPAR. industry where with experienced into beginning results expectations operate.

Our year, in system which RevPAR was basis points full the with guidance. declined line our domestic for wide XX

guidance, of wide domestic oil regional attribute end system oil results performance which Southeast in tougher mix benefited current primarily at low gas by period fourth same of had compared in of versus and hurricane States. to fourth and of United been the set prior challenges, the the activity the to were X.X% RevPAR impacted We quarter which and from competitive declining the quarter, our in lingering geographic Our the year. XXXX the fourth portfolio market, quarter comparable, performance the our the price production XXXX,

again the we've especially paying high is presence the points in RevPAR are where higher industry RevPAR Cambria segments brand. the fourth we quarter. Cambria, same-store also during true in our which increased segment This correspond growth competitive in for fourth results These significantly We investments by thanks with made stopping achieved the overall the key to our environment, basis very we upscale set RevPAR Despite year, pleased scales once are our chain of expansion XX off. value for last that continued its exceeded the strong quarter.

continue opening be performance RevPAR of of hotels financial expand to brand's the over which Cambria expect in and XXXX Cambria further hotels. performance. to enhance brands the We portfolio in XX long-term Cambria taking strong bolstered tough will system markets, total to our the the XX intensity by drive The further revenue

expect company's to RevPAR of We year-over-year upscale in quarter. points XXX even local Choice's our the XXXX. an by in basis grew versus WoodSpring, contribute share brand, portfolios Furthermore, extended proportion greater the gross room fourth its gains stay revenue competitors largest

gains consecutive we've Comfort Comfort revenue that Finally, index completed continues Comfort more at local to the renovations improve their the RevPAR quarter experience initiatives be for intense. our working. our to are guest And the third implemented experienced versus competitors. their hotels pipeline

flat X%, competitive which and For our in be between set. quarter line both with for domestic system-wide we decline XXXX, a is full to the RevPAR expectations year industry first expect and of

that will as strategic are in to investments RevPAR optimistic are RevPAR geographies, fuel a long-term catalyst making we well higher be strong for pipeline expansion. as and growth We markets our

Our is which intensity and benefit portfolio hotels. the absolute second revenue lever unit growth, revenue size and from the of of rooms its our

of hotels. XXX we XXXX, hotel XXXX. construction X.X% opened a domestic domestic to an domestic decade, total day reach a year-over-year X,XXX unit from we over rooms. for XX,XXX For Choice opened Hotels representing hotels full increased average over increase year one most of Notably, per year XX% in new nearly XXXX, In full a new hotels, the by

XXXX. stay the pleased key year-over-year. segments in unit of upscale, rooms Across our and are grew more X.X% brands by full our increased for the year intense we X.X% growth in and mid-scale the segment, revenue extended domestic with We hotels by number

Let highlights. me a share of couple

grew by More increased while increased more the its portfolio XX%. specifically, number rooms we domestic year. over the First, in than the XX%, Cambria growth number of rooms count Ascend XX% upscale prior our from by a room of to XX,XXX,

unit end increase domestic domestic in since digit X% a the more than We portfolio to XXX respectively growth WoodSpring in hotels extended over number of double year, XX% nearly continue XXXX, strategy growth rooms number last each we of same experienced of in suburban over period Woodspring MainStay hotels. year X.X% stay surpassed we XX% year-over-year the finally, And resulting successfully internationally an of XXXX. and Next, and openings respectively. our the by with in in doubled X.X% against XX% nearly increase our the international XXXX, of the resulting increases prior year. and execute in units and number

awarded in year. of December prior awarding ever franchise in significantly the we XX% agreements, domestic Demand a the to history compared brands we the grew December alone, in note, increase the for fourth month the over of domestic where achieved best X% franchise total period XXX increase XXXX. by Choice's company's quarter, the Of a same XXX agreements

Upscale domestic of inroads awarded period these upscale increase. we in were of XXXX. signed over are year-over-year for franchise the are quarter Our XX% the brands the XX alone, increase of a XX% new agreements a We agreements a making. in great brands example our same XX fourth XXXX,

under pipeline history, optimism contracts for domestic year-end the nearly results year company's domestic we hotels for in development In construction awaiting for approve XXXX, XXXX, or brand's the represents X,XXX This total addition, in outlook. over rooms. the history. largest a conversion our for for XXXX the accounting of increased we our brand hotels. XXX pipeline single XX,XXX highest our global in number Ascend drive executed At franchise even These greater

three over pipeline. represented are More year-end, construction of with At this we very quarters pleased projects new importantly, composition. the

segment. robust by grew XX% very pleased see driven to pipeline year-over-year the extended expansion stay future Woodspring growth, in domestic the stay are XXX Comfort's brand's construction XXXX, the addition fueling pipeline to the momentum hotels in extended we The In of by brand. continued to new

growth we and growth For Furthermore, range segments, expect full rate. rate unit upscale unit midscale between domestic versus growth further X.X% X.X%. and the to XXXX project XXXX's year stay, increase extended of our to net we key

brand, Our revenue for the third our willing pay strategy franchise lever, focused franchisee price are remains driver our maximizing to our agreements, franchisees profitability. of our growth more as of significant on a affirming

the with for fourth pleased the full area, both performance are in We XXXX. this and quarter year company's

digit basis achieved grew point committed versus XX fourth the the full which demand basis franchisee to increasing domestic royalty while double to XXXX to system. consecutive XXXX providing of the with and period same increased We bottom quarter X.XX% royalty the we and prior for on year. company, investment line. effective rate growth points Our points our for rates basis the year XX highest of for year fourth XXXX, return the driving top remain by enter simultaneously our marked

projected As we full for points effective of a basis of growth increase communicated, to X see previously and XXXX. royalty year continued between to expect rate range X the and

we Given anticipate we come. affiliated the of increasingly be lever our brand, attractive their to and value to sustained years with to provide franchisees desire for this growth proposition

and we enabled customers. line fourth We other the guests while ahead expanding to drive XX% where we believe partnerships, compared XXXX, final we and added platform. top services our increase that In this procurement through and our hotel to sustain seeing million in X,XXX we period new to solutions partners, products to resources. revenue key revenue travel ability revenue and one us and can strong growth business our to same revenues the of In and hotels, and value tangible are years continue further XXXX, procurement services the prior over Our deliver key other number services our of our as owners to to increased lever platform franchisee the is year. expand $XX.X great success our technology

cash it opening business about committed and XXXX. term I up capital through outlook the few the capital Before million to flow with back and $XX return remain in year, to generating our for Last our a earnings and to in to approximately of questions, share approximately shareholders a million our We repurchases. for allocation long continue our dividends that cash will combination returned us $XX.X close operating significant we $XXX allows to words investing strategy in for million shareholders.

to quarter of the to Board fourth the announced rate dividend company's the XXXX, outstanding. X% During increase $X.XX per annual share Directors common of

to XXXX. full turn year like would outlook I the now our to for

per ahead and million between share. to $XXX year million share adjusted we range earnings diluted EBITDA full Looking and adjusted to $X.XX expect between for XXXX, per $X.XX range $XXX and

For position for drive diluted between expect we will the per per strengthen and continues first come. earnings in share. years outsized of we the remain to share industry to XXXX, optimistic $X.XX we quarter Choice to its returns to and adjusted range $X.XX continue that

that include offer another to penetrate of strengthening larger our in of travel These guests, system our we as the programs see and continued us while higher a We franchisee brands intensity count, added and launching on the driving number and value strategic partners. allow XXXX year services new key room growing and value further to of of our RevPAR market propositions focus investment revenue our areas areas other business. franchisees,

investments future. business fuel and our position expect and into We to successfully for these further us the XXXX well franchise

this Pat At any to would questions. happy be and answer Operator? time, I

Operator

instructions]. begin the session We’ll question-and-answer now [Operator

Please ahead. comes go of Kelley, America. Shaun question from Bank First

Shaun Kelley

release Thank you the prepared in the in and the for detail remarks.

little us For guys maybe if you Pat guidance. unit bit more net could wondering on color I growth the or a Dom, was give

came in in kind sort of cleanup terminations think or very you on think on. end that also QX low is the system you bit you So of the provided we just any within the with high. Are a what voluntary that effect, to to of then as probably number? were And about continue expecting as level thinking, elevated X% little you I overall, move numbers we actually of especially base X.X% here, either

that and that any XQ helpful? shifts as will between of is be it maybe just So timing XQ

Pat Pacious

to speak can Dom timing. the

and our developing in I RevPAR we think broadly higher market We're as in what we're remarks. higher segment. mentioned is, RevPAR hotels seeing

and a markets doing new result, hotels and a developing to of longer. bit actually costs actually little takes in a get built lot entitlements as the hotels where more more labor we're probably is we're expensive, constructions So

Comfort’s seeing we're amount the of of So in that into delay fact pushing the the open, construction start they but to a once reflective more little time lot upscale new through more taking we're it's a markets little actually where of of project usually a that's hotels to to bit and higher in our RevPAR more segment. get And bit markets actually where open. the entitlement are we're doing time translate a it get more

Dom Dragisich

of numbers, thought it's then in line with to everybody. XX Shaun, And we just terms the so, I ground basis mean overall where six be, generally or could about Every just hotels in we points.

shift just a QX having basis we XX bit basis impact numbers, way. points into those from So which little either XX could points QX, of shift or did

when I look about you take segments, portfolio that just obviously relevant we're lower cleaning of the some more continuing look units economy a out at at think there. we stronger a segment when we're at you keep segments, revenue the of were X.X% take little seeing is But terms year. this what performing really based conversion softer in to a optimistic in on by of there, those intense just what activity those

in expect terms of in growth that XXXX. actually We increase rates to

you think are moderately So XXXX. in us going when tailwind we a big Comfort even And as numbers be obviously those declining actually think that's about to XXXX. for about

accelerate further averages XXXX to Comfort back to and expect historical return and to moderate in growth XXXX actually We then beyond. albeit growth in

Shaun Kelley

in I prepared could would tax remarks Dom there. you follow mentioned think bit about up your a quickly, or be, I which strategies one And some items little if

a decent just conservative I guidance a in low of little there probably predict? Are has the terms think bit that the continue ‘XX any is more strategies, just material therefore the -- hard tax but give is meaner version here? from also cadence. in can maybe impact Or to we XXs guidance to you of there place both did saw a around be and to move ‘XX the that and the color back amount right and either. a on rate Could EPS impacted things for then growth sort

Dom Dragisich

is, in not which guide of I rate us full a terms Shaun, bit of year. for items, a those tax for a any of think key do the actually are we typically discreet tailwind the to better

take look we So at are XX.X%. when XXXX, obviously at you a

XX.X% those to guiding discrete not any but We’re items. does that include of

So rate opportunity definitely tax in XXXX. see we do more the in

new the structure. tax are also We a implementing in process of

in you're little to of numbers. noise going see QX the bit So a

see significant reported You're benefit an eight from probably an amortized in period. going economic over to are to benefits the be a pretty but those going perspective year

guess So in the see XX.X% Obviously, is best benefits additional see terms items. we have right that could some we discrete we the of now. that

Operator

Next question Allen, comes Thomas Please from Morgan Stanley. go ahead.

Thomas Allen

Just on following earlier the questions. one of up

growth How Now much focusing about more think you. on hotels. Thank the that you're higher unit we long-term RevPAR your targets? should

Pat Pacious

Ascend upscale So you Shaun, and I think both hotel. existing the in particularly growth if the is look Ascend, Cambria at collection the segment with rates that we're seeing,

right significant a amount in can three literally those as or seeing of open that that months. short are now, in we're as a So hotels day growth brand and get

in new our shifted you've to particular got a Comfort, heavier at more look a sort you of brand, has of mix construction. on segment. brands So the two tale When Comfort in of much upscale

that mentioned, to begin Dom XXXX again as So with brand to norm we closer we sort X% expect get as getting do in and growth XXXX back to of historical beyond. grow to a

particular, story. segments in look a when changing it's those two at So you

about months. a story get both stay in that WoodSpring brand Extend about is become you construction What's built with XX for new and a interesting WoodSpring can Everhome. now us

then we're are mid-scale. also ability is brands. we're stay brands And into getting the where timeframe that what's more happened So brand a into, to hotels attract those and Suburban, difference to in the there the short conversion brands, grow and MainStay markets from going particularly more our conversion extended those big rapidly is starting

from we overall, trajectory. different look do in So what growth sort call see we're expecting stories, of it's that at at growth X% perspective, But each a is has a really three XXXX. one unit midpoint to different the it

Dom Dragisich

look just closer as a averages of Comfort given just just to saw, you our X% of mid-scale you and that historical you're remove at segments the Comfort focus remove at noise, we above transformation, terms you right and other actually out decline pretty when specifically some so when Comfort much removing are the take in about you given there, our the X.X% key brands. So again those when of

back average long-term, between in the we been get rates. has and historical expect those Our and X% X% somewhere to to

Thomas Allen

call And bookings. growth, Thank some some give strength last just recent you then down you. similar? you Hilton your their seen talked seeing Have anything to in around on that Can qualitative X on And flat? RevPAR guide. comments week about

Pat Pacious

So mean stop a overall continues it’s getting on right being demand. that's is and I the our industry coming now think guidance, I situation in you're where supply to

look we States For are us as over and two in in well where gas you on the oil might at particular, particular, expected from as those or penetrated West in we an what southeast markets Mountain are perspective. perform Those in see areas inventory not the the to the coast.

pipeline we do markets So pipeline is, where great under a for penetrated? mix open our greater have we in us we're as hotels news a where to at it currently perspective. is opportunity our performance those What’s look in

Dom Dragisich

negative, look a call so. at XX close points take came it basis probably just in to or When mid XXXX, you January

are We in February. positively more trending

we consumer, first quarter. slightly over comps, improvements again expect, so a that could market of of bit you terms moved tailwinds those see some of being better strength in a the tailwind, And of just some to the obviously,

However, best with right to in still is X flat. guess our negative that line now

Operator

Please comes go question Robin UBS. ahead. Farley, from Next

Robin Farley

had trend your system there just expectations. I'm XXXX XXXX net a a growth to just didn't expected for if have would sort -- in you're if unit question where they to to because your why and guess Comfort was get certain will franchisees were Comfort XXXX. with that in related at deadline up a brand part than I've that wondering of feel miss they to Thanks. make start XXXX? to Is to Or unit the return of the got removal exit looking in was prior by I trying growth you expecting, assessments?

Pat Pacious

and did speaking, broadly brand continue out some the were and those strategic Robin, we planned. of take quality to terminations

segment economy think where economy segment the we the part percentage brands portfolio. and a And in Econo it actually is lot terminations you larger Rodeway Lodge higher saw have that's a of are we where of when a hotels. as about in is think that I

So of that's a key that kind on front. driver

seeing little more what I show I new us a just construction, up. which Comfort, growth think of is is towards is taking as for a are that see unit it on shift to mentioned longer we bit

look construction, good we we of feel Comfort forward, as are footers number the that guidance forward. at on getting moving really So giving beginning actually we’re out about their hotels and

Robin Farley

just construction new it’s So really removal online come the that for slowdown, will will it's Comfort? not that

Pat Pacious

around terminations of been our Comfort out have last average historical steady The years. pretty over two the

Robin Farley

now you And this And it of quarter then year. for rate X said the be royalty is to guidance, digits kind last also had you on expected I high your think range end at low of single basis the points.

some you on Just with Thanks. happening us what's wondering could royalty give if color rates?

Dom Dragisich

we the dependent did fact is a two particular So the then that obviously it in for on we XXXX. and so of renewals years [relics] of lot bit, as just and talked six, renewal rack and given relicensing ago We've well. a a rates environment little raise seen number the about just additional brands and record the moderating it

sets new are that to for whenever rate a so And new contracts the a contracts transitioned those owner. royalty

that the the fair we're a is top that X that We transaction guidance. X. now point, midpoint time in range. depending for path achieve environment looks like of of a still X XXXX to X to the to basis right do what obviously, pretty So on to But guiding end being, see is X

Operator

Next Powell, Please ahead. go comes Anthony Barclays. from question

Anthony Powell

franchisees how for grows? and you a Are Cambria loan have to the change lenders seen at in your to the upscale Cambria growth more that the you that seeing terms in looked as look segment, value in rates brand brands or competitors’ owned of

Pat Pacious

grown, think we out other think open into own standpoint have brands, aware around the and our palette with value the pushed resonates it Yes, talked developers last of markets clean really prop to as of lenders being do has is boxed that that prior of are standpoint we from over owners I absolutely. we really on the have do about higher brands. something other from years markets brand, brand question RevPAR The the I of Cambria starting performing. other that improved that of from and itself market, and since the don't understand competitor brand the has And like but a who particular is we've that for upscale brand calls couple a

So Cambria has become a nice option for those owners.

own in well same the do that we have as owners competitors as segment. So Cambria,

Anthony Powell

the XXXX? was in was buy back but business look you pretty kind buybacks. -- you know revisit overall focus velocity a on growing onto And how that of in big want Can share I there more, year-over-year decline allocation, may and to just there capital

Dom Dragisich

X well to Repurchase Cambria the the a dependent Well, year. again, the and I additional variety obviously tremendous We one the authorization think like committed that's allocated the still do obviously our times buybacks to little ratio. the foremost, we XXX well. take a other becoming to clearer that certainly in returning assets that that of the of ended increase we dry look think which our of powder have conversation million. that with I to we had Cambria, We investments it of really happened we target keep obviously, clearer But this sheet first making. activity did with factors, to when form dividend year, balance at raise our to and late board capacity different on the million that also did we're are you have X can return prudent we and we shareholders to in potential purchasing capital thought as some continue is that last $X a to opportunities, on bit. amount and it's as leverage what XXXX, up as And was with equity inorganic

And we million of purchase so have shares X.X today. the ability to to another up as

Anthony Powell

follow portfolio. opportunities could RevPAR higher about maybe answer, about to sales some opportunities your Just of you even talked year? throughout categories of inorganic you to brands buy economy and intensity you the this you trim into that up And maybe there Are for on the talked the revenue to cover up scale?

Pat Pacious

segment We economy [Multiple Well, the Speakers]… take any second the have just to in part. assets don't

Anthony Powell

Brand sales…

Pat Pacious

attract get economy Comfort owners us, at for us we mean, lot to to as A ago, owners today great decades I four to our to us successful No, with us. know with brand start out for so back look opportunity an very Lodge Econo began with our opportunity into of that's with a they want it, want business. gives to an and the it they to favor an in in system. new new us it, put and to and into It's money capital a place owners asset have also money quality don't them our owners opportunity portfolio the where keep

and of a So I great it's necessary us. piece think piece of we are who it's for earnings a

on the I are look we portfolio first your for part question, you Speaking opportunities in when today. out us more think our broadly that at there, have of holes

think about opportunities extended about opportunity, point you an for some front. upscale upper those maybe do acquisition you the If upscale, have at day, where we something brand don't us think to on

available. we And if to time, our want keep point, that something may do those consider dry time Dom's to to so powder we from things, because like becomes

Operator

from Please question is Jeffries. Next David go ahead. Katz,

David Katz

in spread the you those? remind capital few us balance has the out, that come that buckets. remind remind some is, or where One quarter sheet, recycled past, million that's us Can you that back over your can questions. us, year. think you in when I about have And we're looking is? a of Can that's two So XXX different you you the talked of the at

Dom Dragisich

is a million, joint you partner. XX% a where or when than so key form it out the ventures XXX million have about money, take so the more the we just little XX an look about XX of call in at So million, equity

XX the it about On assets, that we've are about actually and recycled. a year about, million owned assets been of increased XX owned the about out as loans part and basis, what at XX million slightly, talked we of the about outlaid of it’s remainder XXX a back is we that we so million recurring call and have disbursements then was that, disbursement authorization We This actually we the million XXX brought XXX million well. this million or is so year.

David Katz

basis on The annualized an XX that’s million roughly? disbursements, of

Dom Dragisich

right. that’s Yes, Correct.

David Katz

did couple to or seem the I of commentary secondarily, have past there And of and stretching though then What's X% seems your and as that of prior maybe changed I go expectation growth been acceleration. level. remember things quarters it's where around changed at up? hovering unit And some look it back that was some some that over

Pat Pacious

are mentioned, construction, more doing may where growth, we In one of have economy in more we’ve new the sort segment more of number in. seeing owners that come of of the we as flattish segment think we're that's hotels, significant piece a it. I still Yes, that

brand, agreement sign If you Rodeway brand where franchise they that's has look at out. a a our one can a year

may it works them us they'll with So move stick they come on. in and if they for not,

extended we So above really in is look the in growth more exciting midscale and upscale and for that in day. the segments

of in where that X% mentioned growth. we X% XXXX the turning had we've over Dom's we point, around pulled Comfort, our that's as growth. out And To been which number, remarks, it's actually

segment both upscale think opportunities strategically exciting done basically, are the brands to be it growth be. growth you're have around going needs our going that's to turning so we beyond for forward. Comfort it’s I the to of is been We’ve historical key economy And return the So then stay growth. extended see going where drivers Comfort and to of

Operator

question from Next SunTrust. Scholes, go Please Patrick ahead. comes

Patrick Scholes

Two your it's of of conference heard of at Wyndham, InterCon to RevPAR call. minimal your type earnings, we reported very assume worst both it virus brought up all their scenario folks? gave who closest competitors have earnings. the Are or this that and some for corona case on I either the quantification haven’t

Pat Pacious

minimal. than would call less I it Patrick,

competition. have when X,XXX on But been of look you perspective temporarily If hotels in base, going it our closed of X.XX% revenue And our our in you seven from we is what's China. at Those our which happened hotels, of are at have country. it’s revenue. many as the look portfolio, with a has on

very So impact, from it market standpoint very, the small. in of is

markets other cities, in from international our I think U. at of comes inbound China. you we than portfolio, to look a have Chinese when and don't gateway S. the those inbound again, travel heavy travel and lot our concentration

an evolve not today. business the we're will Broadly how be So remains S. overtime. on to U. it at seen looking speaking, impact this

we impact its impact look small. our what open at is looking an on But just broadly it speaking potentially be. So do business, very to at remain as we could very,

Operator

[Operator Citigroup. Please Citigroup. Smedes ahead. Instructions] comes go Our next Rose, from question

Smedes Rose

to wanted positioning stay your space. you I just something ask extended in the about

kind your why of if wondering in around remarks mentioned you space. that is much persistent opening usually You space demand. in in was kind supply continue hotel that significantly we color could you just of little the demand of provide I there, to supply just see keeping more because with And case a ahead so imbalance think just of that you been general, usually supply that demand, and in sort the existing don't up that’s has of kind think

your kind into segment? of to there your brand that another what's and introduce So thoughts decision

Pat Pacious

of than is I you you sold have inventory in the XXXX think nights, and demand, stays were and the extended longer if seven about of XXXX supply at for look purpose only built the stay. current of X% for rooms XX%

hotel. are when So there extended they is prefer transient an in a to be fact probably staying consumers hotels longer in where stay

first factor. the that's So

eight of experience operating in segment, Everhome on got a extended the stay of fantastic around we've scale and we is side the model mid house. second the have decades The

for owners on a thing build cost So design for to worked right operate the us current mid-scale a brand bringing launch help also extended cost the the was two segment. it to stay option, to together for to low be with the our do. a We've like prototype to Everhome and low

the years When or segment age product older. you think about there the average is itself, XX

that customize you to will. want have to to of space lot a want. what to be able the get me time new consumers around was we They it want segment space, brand So the research and bring They if in a consumer space. to

the to shelving around of brand move there for consumer that's is move built drive them. so of things And product purpose its to really customer to type more the in allow a around, a and a that lot furniture the the into that designed

expect we've initial to and pretty already open broken reaction and our we it we're the excited on the we've one gotten so developers, And ground by from first next year.

Smedes Rose

would then Everhome, what what kind of construction per you, are key without the land, And on costs?

Dom Dragisich

key… per $XX,XXX About

Operator

Shojaian, Jared Please ahead. from comes Research. Wolfe question go Last

Jared Shojaian

we what you're do looks the Can versus expecting quarter to line? it about negative, was contributing fourth How much just us you. you XXXX? EBITDA this hotel’s like think in contribution Thank adjusted is positive. for And Third XXXX it XXXX? owned quarter tell how but

Dom Dragisich

clarify… Jared, make I you said from can an EBITDA to sure perspective, just

Jared Shojaian

Correct…

Dom Dragisich

an In call and equity XXXX, from that range a million owned somewhere perspective, $XX there's midpoint XXXX. So assets, in obviously or contribution it was so in the or about about million so. it $X

Jared Shojaian

the lighter on growth It so what guide in the then bit little embedded in Can late than about XXXX? kind think is and of came about for the And that looks what you drove SG&A, XXXX? you guide. a talk like XXXX how in year

Dom Dragisich

it full SG&A take you year look on was when a flat. XXXX in perspective, a at So

midyear, back supporting apples-to-apples an remember actually you basis, based it vacation was small in wasn't rental because that unit. flat on SaaS our company if sold we a Now

than that bit cost. or little attributed million of numbers, making So so environment, been expected. frankly, SG&A Obviously, X% is to those not to investments that entity X% a And to SG&A lower the deliver about with able able were a for probably we've the apples-to-apples cost particular better included we manage we to a had prudently the lot we're XXXX, at in softer RevPAR of grew $X so. in closer

and Now 'XX. there was some timing differences between 'XX

pretty investment we SG&A year. 'XX. on the increase an the XXXX is As is about expecting expected about into 'XX increase Embedded be year-over-year our to materially. X% in from numbers talked to We're call,

And fund do intense that’s areas investments side that in the of deficit that make expect obviously surpluses we house, in all XXXX obviously system that to continue to you on the and so the but see. and these in are embedded guidance revenue between

Jared Shojaian

if it's down out could to helpful. specifically be some in us quarter the you the absolute RevPAR I if how the may. change drill then And level, in further that fourth been of more just give one in index called that comp little the would set, year-over-year trending? quarter? How looks you. And Thank bit Dom, can RevPAR. you But challenges your a you the

Dom Dragisich

so obviously, lot in you RevPAR points. the portfolio XXXX XX there's gas X.X. basis mentioned XX comps to about our were of the to in or was when look that in basis there it weakness another took that a that When us So X.X. hurricane negative a and look southeast take the call tougher of so impact points, And at with oil specifically, it lapsing a then was market. QX take the QX a just in Pat at you a but

specifically perspective, to set overall so XX index actually if the from pretty just points set, you comp probably was portfolio areas. continuing XX for outperform on for items, basis about those Comfort’s the the industry, was normalize about you are to this those move side we specific about then basis normalize of the better comp our talked two And two modern quarter or those points or if an than specific So Comfort similar it house, to so.

that see in industry than trend slightly either continue guidance. the or to midpoint expect better the at we So XXXX, of

Jared Shojaian

down you've quick have that X% Cambria thought at one guess bit seen? would on up, was of to not Cambria. down Is you hopefully. Any little RevPAR. I historically RevPAR more maybe a ramp RevPAR color one continues this was that shed in Just you tailwind as to brand the too can get why much I quarter.

Dom Dragisich

same look comp it’s RevPAR. RevPAR, XX just so points those hotels RevPAR of reality by store set. actually how at not actually still it the given it the hotels, up When is, in better are X.X same The is than take is almost it's XX store new the So you was about XX basis portfolio, half a a ramp.

from look take an But down. store excited from it perspective, about just dragged it very perspective. when it’s portfolio is it where RPI So same given you we’re just positive a is at X.X, which again overall an

Operator

to Pat I’d to remarks. our concludes back ahead. question-and-answer This Pacious any session. go closing Please over conference for like turn the Mr.

Pat Pacious

you talk this our first day. we morning. you Thank to We'll a again everybody results. for your announce in time Have when great quarter May

Operator

presentation. is concluded. Thank for The today's now conference attending you

You may now disconnect.

Choice Hotels International (CHH) 18 Feb 202019 Q4 Earnings call transcript