CHH - Earnings call transcript Q1 2020 | Choice Hotels International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's First Quarter 2020 Earnings Call. [Operator Instructions].

I will now turn the conference over to Allie Summers, Investor Relations Director of Choice Hotels. Please go ahead.

Allie Summers

you us thank and morning, for today. joining Good

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

a our our about and find press financial under at our first is impact a file and hospitality to in release of of industry, on earnings as earnings the morning for the challenging quarter has COVID-XX to important Relations XXXX We can posted referred website reconciliation remarks is would measures part like issued the the to Hotels, section. acknowledge choicehotels.com this that to Investor which everyone non-GAAP for details today the release, we XX-Q refer later and may including we'll continue how impacted Choice time Choice. this You

by competitors. Pacious, Senior be President few Financial us Chief in are and a Vice and They our our Pat strategic believe Real Executive Dom here, call information Oaksmith, room primarily will Estate joined and Officer, Chief Finance. of President, the focus Dragisich, we will differentiate the and reiterating our of during from Scott Instead items importance on Officer; this

happy Don's and take Following remarks, questions. be Pat your we'll to

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

Patrick Pacious

well. you appreciate to and your are us families you the We time Allie, good morning, join and everyone. hope taking and Thanks,

keep owners frontlines travelers tirelessly time. their of who've have remarkable. Before want thank franchise to the been at essential On dedication those we staff, the gratitude this caring to to trying our like us of for all Hotels, safe to crisis. been of through Choice all first and my you. this of recognize on who They are behalf I'd begin, I truly us during working express also

both the downturns, that peers demand of the brands precedent, is strength environments. a has again performance situation While declining current past well-known Choice in company positioned is It no economic bearing is uniquely and that outperform drives it in true of rising trend to has as its out. once the our our

quarter our the hotels competition System-wide brands. overall the by overall RevPAR Our growth industry, the rates in higher extended-stay especially first points. basis XXX outperformed occupancy outperformed a to for domestic industry system-wide contributed on were rate that This several the fronts. than

our Additionally, segments continued the the brands compete of which we quarter. STR. outperformed second worst as in scale primary reported trends by the have throughout chain into RevPAR the pandemic weeks These

continued in the growing segments to previous right right this past rates gains shown X X have our past press been brands weeks, brands long-term the grow this occupancy the consistently as outperformance versus strategy right to share even the occupancy And We since the achieved Exhibit And RevPAR week, For release, and in our have April. of week. of locations. early in attribute over climbing competition. our the

brands segment that quarter mid-scale of first in portfolio, do early so domestic the continues XXXX and our a total through May. X/X outperformed Our represent of to

resort destinations. town our locations, hotels retained to level in consumer the XX%. of or XX% occupancy and April, industry-wide STR, suburban, according are domestic almost areas extended-stay our than interstate brand XXX in hotels month maintained WoodSpring small demand and And of at of was higher even Our an higher in XX% that, urban hotels

in contributed There occupancy domestic from caused Since our precipitous our hotels been additional our drop the and factors insulated travel are portfolio the to has serve that travelers, international outperformance. mostly by RevPAR pandemic.

we for best, staying segments customer of and benefited who transportation, with logistics, travelers, have construction from been who those business our government years. like Finally, know the us loyalty brands

also a balance of prudent entered of company years maintaining allocation exercising thanks sheet, Our to the a debt. with crisis capital levels and strategy strong low

measured will in upon to Our detail take liquidity financial our in more needs the additional his based revised and to Dom cost position view allowed approach capital cover us this a and management of remarks. strategic, environment.

the crisis. provided to significant we've level combination a our the throughout owner and outperformed thanks Hotels competition, Choice the them base support of of resilient franchise

with Our typical in owner provides low levels, them which debt is overall an flexibility with cycles. down operator franchisee X financed hotels financial

softer a payroll at expenditures. higher our margins costs, less to as expenses capital and reduce service flex operate hotels can and, operating environment, demand are to intensive adapt To limited These franchisees in labor full-service hotels. postpone general, compared

owner's an according To the their eye standards XX% extended hotels brand In of in flexible lower costs. several the date, reduced deadlines contacted adopted manage helping our brand them to response more program with to franchisee term. position each individual longer and them been have We've nearly crisis, tailored help to program. every fees, the fixed owners' to program situation deferral in towards fee in we cash enrolled succeed system

the call fortunate of visited Trump the qualify industry same March as operate across many on occupancy I that the portfolio Just advocacy my business President indicating administration. and workers the with XX% our has to At XX% been at to efforts colleagues franchisees exchange small April provisions additional have above level time, White specific businesses, our expand expand for relief with the used without for through the for small Because would provide opportunity to XX. substantive since owners hotels when owners along we ramped for House their and XX, of I assistance. up that a able perspective, have eligibility week federal I access our the our been to average was to capital.

for were advocated that pleased Act. are We in CARES the provisions the included SBA we strenuously

before this quickly as the education our law, for through or CARES franchisees as was date, Disaster Injury have signed Act SBA possible. to secured into Loans, To an capital of program to Economic our outreach and loans EIDL. Paycheck new the hotels we enable nearly and or Protection applied XX% launched Even Program online vital access

We've only during levels sales associates that also launched our sales franchisees' and for up environment to otherwise we the delivered best many steps our cleanliness they the to this redeploying staff taken We've developed virtual achieve our to steps environment. help taking lower ways plused Clean by effort. have proactive share but training And online occupancy their through with of a would housekeeping crisis number and to reduce are additional which franchisees a and costs to practices. Commitment retained we highlights initiative, not Choice team not a business owners they in that outreach, robust in the town of halls appropriate this professional support guests new operating

has this level The as year. from relationship retention of of with voluntary feedback high provided support always franchisees XX% during the crisis by received our overall rate we've owners every awarded and proportion The the positive. been our strong, about returning new and demonstrated to been agreements owners overwhelmingly our has we existing franchise

paid in of long our their show, history approach rates occupancy our franchisee-first a investment during off most As time. difficult

and COVID-XX. those for on with in at our to of our time also committed country, or have is we're their rooms support rates why, which by affected guests, the together discounted complimentary need. difficult basis owners back is This giving to franchisees Many a communities a

levels stepping Homefront. members our to previous great to at are various Privileges American up crisis, in our CP program several well. Operation as making Choice the loyalty As own addition organizations, matching in including and to Cross Choice is member donations Red contributions help

on hopeful and to virus, contain signs regarding remains course of beginning are that travel While lifting states economic the the broad the of the consumer. restrictions tangible there uncertainty virus, the the impact are

near-term recovery Our sporadic expectation regional. that be and is will the

are, There demand will to our franchisees conditions to improve. as reasons well several be capture however, positioned believe

is of comprises travel, faster the about to than X/X recovery business and lead our which room nights, expected leisure travel. First, rebound

point expect for lead The American, Second, type return location X and right the who past at of our will these to the traveler travel: our are road resourceful weeks and been customer. who's core we brands price on the the

in air ability orders We allow for appetite the to travel, road. on did low lavish concern we the that return. locations opportunity are trips capture cycles, in lower these strong of and an expect of taken as get will together, speaking getaways, pent-up of drive-to travel safety prices presence share gas outsized demand an us our heightened and drive folks down to will, replace cost guests about road, stay-at-home they back lifted. presenting believe travel will when And their with we choose previous for Americans As the our portfolio expect when

than do While on horizon. we be see development agreements do franchise we to expect lower year, opportunity new the last

restrictions pace a to domestic During The the industry conversions, the QX, X% X% the representing pipeline Great first faster quarter grew hotels, supply through year-over-year than increase. our a for quarter, nearly March. half awarded which on Further, in of and new X conversion XX the of contracts weighing approximately pandemic were in were In year-over-year grow increased X/X hotel Despite hotels. Recession, first nearly the we COVID-XX conversions. of X/X travel we nearly agreements which X,XXX are weeks the industry, last we continued the of to in awarded overall

to awareness And with and high environment, Comfort brand highlight portfolio developers are for for domestic of expected positions local The few. looking both installed well positioned has that the competitors signage the I'll brand the quarters. know of expected attract for brand over they The grow and experience recovery. the travelers new the past to continued a gains Comfort's now is this identity. us a X past trust their deliver modern Comfort value. in proven hotel hotels brand completed consecutive versus company's half well to renovations Comfort and nearly exterior the index RevPAR refresh several years brands to demand

April. amid even XX% of was lower Comfort's the environment, a Finally, in month loyalty demand contribution

XX% demand cycle-resistant of investment a Suites extended-stay unfolded us longer-term to Our by stays. brand, In on our the and the prior WoodSpring segment crisis construction period to hotels competitive allowing first same as year. by X% than WoodSpring advantage number grow for pipeline grew and the over of we its more the by quarter, new strategic capitalize focus the on Suites afforded us the

to any We back January industry the brand, of in launched practically in hotel fastest-growing another one on newest to Everhome opportunity returns help franchisees with and environment. capitalize drive the our economic of segments provide Suites,

which to their owners costs acquisition customer Ascend improve attract and improve upscale their XXX hotel growth boutique independent tools. management interest and the strong Collection, globally, from Hotel The saw is today last reduce looking hotels delivery, during recession and initial will reservations its likely revenue

modern the the of for for our on quarter. with traveler, upscale chain opportunity as business Hotels brand, outperformed also which, designed our a There's hotels Cambria also first being demand same-store in Cambria scale result travel over upscale affiliated indexes while the leisure system.

growth Taken franchisor upscale XXX demand that like together, low STR. on, points the as brands set their We RevPAR to and quarter reported will Choice. our period first occupancy competitive rates new affiliate as better of current anticipate XXXX, experienced the with seek wears a in by proven basis travel owners than of large,

In and emerged brands, closing, this XX-year focus, franchisee have long-term associates. each Hotels in our we always weather history, Choice our supporting in confident base through broad our and challenging ability been given we while high-caliber proven times has storm before franchisees. are time, stronger to our

proud Dom, I around I weeks. Hotels' these to it to who working want Before how have am tirelessly of been world, over Choice team the X say past I the entire hand

exactly when our Our to and crisis move with And do. what company's what our the our purpose of to incredible do at speed knew support statement this people began, franchisees center we puts owners.

to have commitment they've turn, largely demonstrated done the XX,XXX Choice small owners Hotels' appreciate resilience, do continue help at to greatly associates who and focus Dom? fly and we business every flag. and the Our all

Dominic Dragisich

historically to benefit echo provided company. free and a to expenditure from flow. capital asset-light significant everyone. morning, and for stable resilient, I'd which the model, Choice low earnings incredible like sentiment franchise-focused requirements stream, its Good business their thank our to contributions Pat's has primarily cash continues continued Choice associates

in liquidity on our to to ahead. our outlook into a Today, performance, addition close and cost thoughts I road first approach our by quarter management allocation. will delving efforts I'll provide insights capital around for the deeper profile, sharing the bit more

$XX.X quarter million, first excluding and million. adjusted share marketing For EBITDA and the adjusted per totaled Adjusted $XXX.X reservation system earnings were were fees an per total $X.XX XX% of EBITDA XXXX, revenues, representing share. margin

its year guidance. the domestic RevPAR February, first high crisis RevPAR the Our end XX% subsequent industry. period the Through our domestic declined of and at prior the COVID-XX of the previously trended compared provided on system-wide impact for due travel quarter to to same the

XX% occupancy March, over averaging year-over-year RevPAR domestic declined XX% occupancy week levels the system-wide fell in for softening the pronounced The month, However, occurred last as of most XX%. month. below the

in system-wide observed weeks X domestic declined continued last consistent the we competition. month While RevPAR daily with in April, outperformance versus XX% our year-over-year of improvement occupancy the

mid-last Rising which the began. occupancy rates we crisis environment, trends occupancy scale mid-March since perform to continued of XX% with and have highest challenging chain reached week, into May brands compete. when our in segments continued Despite the of average XX% the the primary ahead

X.X% our In performance, growth unit hotels quarter of first X.X% number domestic rooms we year-over-year. room terms of the by and increased and by

able X.X% quarter, with grow of XX% year-over-year XX% Ascend also and increase. domestic pleased room respectively. by XX%, our to expansion upscale with counts by were our the Cambria increasing their count room a We first hotels portfolio extended-stay to We are XXX the in year-over-year and particularly

report our room as we are unit Comfort the stages. brand growth posted final Finally, pleased enters to that its positive transformation family journey and brand's

Our increased the of period prior basis points year rate the first quarter domestic versus X.XX%. royalty in same XX the to effective

our continued remainder proposition observe Given we strong of to growth despite for our provide affiliated and be year this to expect of desire attractive the franchisees, with lever the to environment. pipeline, the their continued we the softer brands value current

Xx. with which of liquidity by a gross our sheet crisis to highlighted position target leverage this below balance entered We range strong of and approximately X long-term ratio X.Xx, is a

senior the material maturities we our all of push in senior prudently a mid-XXXX. notes with note addition, This refinanced to to allowed new interest of year rate the take low last quarter offering advantage environment debt us offering. fourth to In XX-year

will increase the our As uncertain and evolved, strengths steps through this financial time. carry flexibility we current to situation us decided precautionary our take to ensure

XX, credit our million of at senior Specifically, on we million unsecured XXXX. borrowed cash and hand $XXX $XXX March $XXX in had revolving facility million

liquidity We $XXX also possibility XXX-day to loan our X-year term a a position. with extension the obtained million in April, enhance of further

million borrowing this a improved over facility, As revolving revolving credit remaining our which through facility. our result includes current liquidity our $XXX capacity in as now action of under credit we $XXX cash position available the capacity million as well and

preparation SG&A cost In reductions demand of lower structure, adjust we've taken the approximately company's environment, a resulting in also XXXX for consumer steps cost to XX%.

more post-pandemic structure measures the environment. will optimally We cost expect these align our in

to our capital would approach. allocation I to now turn like

activity As prudent the decision-making unchartered or follow delaying we reducing investments we includes will navigate spending waters, we all the and through This to ensure current of continue and a to with aligned reassess investment and as priorities. disciplined environment. level is scrutinizing approach

million million a approximately and dividends returned first $XX.X quarter the our the crisis, approximately XXXX combination of $XX to of back share million we repurchases. prior In shareholders through COVID-XX in to $XX.X cash and in

of announced the of in this that we at cash the a XX April dividends suspending was the payout remainder which on dividend per We future company to on year. the for declared XXXX stock are addition, common least crisis. share, of In of paid $X.XXX response its previously

million, this approximately will flow expect already We balance our increase cash decision by reinforcing sheet XXXX our position. strong $XX

addition, and repurchase In under suspended have announced, previously temporarily share our we as stock repurchases program.

factors largely the and macroeconomic year the travel of consumer second such I'd some our Both the is government the in as confidence offer what dependent our business the virus control, itself, to like exact pandemic closing, on quarter lies and backdrop. as mandates, of recovery. is the overall thoughts trajectory ahead. ultimate nature on our unknown, are industry's many outside beyond to of XXXX impact The precise and Before on full

guidance COVID-XX quarter impact today, issuing formal versus second of not on significant for the be performance are currently first our expect we to we the XXXX. more While quarter the

travel some the we optimistic government in see of anticipated degree sequential uncertainty, remain Despite the year, improvement demand. by will the pent-up that half stimulus the of back and spurred we the

the will evaluate the further next August call. updates in to We across will of business earnings our continue COVID-XX during impact provide and

financial the a we pressures and levels. the immune we While are this low with strong not entered to industry, foundation crisis by faced leverage

business we restrictions this done through manage to past, a to and prepare in our As uncertainty, necessary our guests continue of future we steps will conservatively recover. period listening lift and and post-pandemic franchisees markets as for have the keep take to travel

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

Operator

Instructions]. [Operator

Our comes question Bank first Shaun with from Kelley of America.

Shaun Kelley

have of performed us you that's made just If a little market you seen guys rebates maybe unit after talk somewhat saying So to it an last Dom, to how to you and activity and that of kind last some as it unique throughout about throughout strong the you specific of be rate, initial in things but to I a that it's -- just in condition. pretty the growth would cycle down. Can 'XX perform not that recall give you about the accelerate couple or comment talk some of metric us royalty discounts to years. cycle? bit like expect development growth or that franchisees slows tends kind I'm And not on how correctly, Choice do interesting

there? can remind cyclically, just of of some the behavior you So us

Dominic Dragisich

Absolutely.

back rate forward. those a wouldn't if from you digits. on in growth that mid-single that point those call agreements to, about XXXX. what to see So would earlier year et effective think prepared going expect basis see what I if value low based already comments, we expect moderating continued this it's we're increase that would in talked through we the that have see royalty on We XX to Obviously, you cetera, that to it perspective, pricing to it, we about clear signed Shaun, go it the I back the a think seeing been and pipeline have based today, prop,

slows tend development some discounting. environment activity where in little Now bit, a to an you see

the guidance what might and now can't think you see royalty formal is rate on years. So beyond. obviously, on pressure some right rate royalty effective we effective that we out in to give XXXX be going But that

Shaun Kelley

think, of the that in then this hotels other would program. Pat's prepared And back deferral said are I be some question I of XX% fee your in you my to, but and Great. believe -- goes the comments the remarks,

And available specifically for looks us color thank that that. what give what consists quantifying fees bit what Could deferral? it overall the are -- -- could on it Or the other more does most rate? components I impact, you subcomponent Or be like, of So does a is this importantly, impact program royalty either this you of? think some little it for system of fees?

Patrick Pacious

Sure.

Shaun, things franchise So speaking, looked fees of the is in fees those the we what the like marketing XX% that so we fixed this our took the tailored strategic we on of were portfolio the of did our XX% to regard we program. discount at and and management ones things franchisees, fees, that occupancy. like. nature. With a to a are lot in performing revenue is offering And included that broadly more a above

needed everybody not relief. So

this we approach what a do more to wanted so in And is strategic fashion.

So a of type doing more deferral of we we're -- say more it doing program. targeted of more rather we than is a when tailored, -- are programmatic,

system marketing a it so be mix if And those fees. of franchise or fees, could or

like. to and we back. what in period So given focus a And here what it quarter And term. fourth pay also, in about downturn of our to recovery it be more and on impact differently we've needs happens jagged their can Again, the have liquidity thinking both. a longer done franchisees another we was the is also near have the then we if time we've needed the

real cash and we we strategic on be more to with to want thinking the a focus more franchisees' position. So be term, wanted long

on one question set of your entering to than this item we Just would other I with prior had Dom. last We're downturn time. answer different brands a the

discount don't on So we WoodSpring.

last increased. was XX rack versus of all ago We the that where royalty if three look years our also that's which brand back on the over we've on And is, royalty have raised brands years. Collection, the rate is rate you rate where -- our at today, then it Ascend

So brand the we prior it apples-to-apples, value downturn in during is from comparing it's higher downturn. overall the of the demand an different sort this in is because different than and brands portfolio of really our had

Dominic Dragisich

question not rates, fees. that fee. given would on Yes, the just address or these royalty lot and royalty on Shaun. on reservation your impact deferrals on And see and -- deferral fact you marketing expect the of revenue waivers on effective the either royalty are the rate, effective that to comes not to necessarily A the an

overall, collected it's it, fairly expect those we a drag you X, there years over million capital million you to so. when net but may X next $XX be, working from it call so and see, anywhere that at take immaterial a look $XX see fees And the to or X, being do

that so overall on of immaterial revenues. royalty scheme in the expect effective we fairly the but no things, And grand or whatsoever rate impact royalty

Operator

Our from Baird. with Michael next question comes Bellisario

Michael Bellisario

those guess, out place guess limit near can in offense? And thinking about because of both loan perspective the when a think your credit of in but context also a your the on are the bit, little I new term How might any question aspects on big invest strategic it from in restrictions offense? your you asking Just in go to of I I'm agreement we of should going both ability picture is, term? that that

Patrick Pacious

Yes.

both I both model said in construction. demand the portfolio. calls, well have is, we've think a of conversion new portfolio our as all other or don't all of number can number because brands brands mean to multiple offense, on construction of a cycles, conversions. also are that shift We over A our as this and our uprising play as I business this demand is lowering

I different they the on entity left, a on the think during both lungs, as of of, the it's sort it X keep and continued right, X about moving would So periods. X entire

year, mid-scale growing growth mean, been the So brand we've the brand I think I last in segment. I highest -- quality from that -- in was always we're think, our standpoint,

of a construction the same -- we significant were conversion. new portfolio our and as At portfolio time, a in that's building well. Comforts So XXX%

rather conversions market market the even conversions, same you times. or do probably recover thing owners it's that during is and true in good portfolio are are interested have contributor that on over have sides in the years COVID-XX. more that our So you be approaches because new downside couple larger will others to a construction as interested a that in unit much And a from the the just the is of we next both growth

Dominic Dragisich

just you terms it loan, Okay. fully of question facility had but today on frankly, versus when of our by because the our And term extend then seen it have in what fairly gave the -- this loan balance liquidity. when not little and under covenants end sheet we compare and us had the loan take you mean day, the term industry. to Overall, a a term was credit And It's have did precautionary a I it you similar on the at we we cheap, the to, a more really the look had Michael, year. an with others that covenants. across at The option lens. mentioned

So it X of certainly liquidity. years give us could the

of for of that, so any given ask day, the the mean, covenant at I not had have relief. the we And fact to end sort

positioned well at as Net from a to X.Xx. is immediately, that strong offensive you regard. a from sitting where like feel we're we're about very position balance the go think we perspective on still in so maybe about sheet debt And if

leverage position. good our really feel about we So

Michael Bellisario

drive prior That's $XX that term? anything cash least might could outflows every in to question, in sheet, that operating helpful. are then in And Any balance you the million other offsetting capital impact one that it. from Got near just recurring month? follow-up be that working the else million inflows, that the net at Or cash the $XX maybe coming referenced. flows

Dominic Dragisich

remarks, take. and for SG&A It's would reduce it's those $XX to my perspective, we were CapEx a in also it don't Well, at net or of From year. so, When mentioned you able little more CapEx our when that almost those the for well. call include a it, I -- a forecast reduced charges company, take prepared you as if by some if about million between, call than million the capital a actually net to about the $XX out, million charges. of look XX%, XX%. think you anywhere it, severance $XX you the and we we year that by restructuring standard That's other severance XX% our and closer

So to capital drop a Everything XX%. we really, maintenance expect and see is that else intents from discretionary. all below it's for purposes, perspective

that that obviously the we'll so term, So shareholders prudent being the of prepared internal about talked either in of where returning and against capital. strategic opportunities long to certainly the or we any how are. to continue be have capital we disbursing in environment, doing And prior to ability prudent deploy to that the we monitor remarks in capital disciplined very we and in terms

Operator

question comes from UBS. Robin Our next with Farley

Robin Farley

strength about could whether extended-stay in a in if for potential more interest you talk wonder brands. obviously I here It have you seems to big the portfolio. be acquiring the

do enough demand? in Or potential past. are have you the you in growth capture the acquisitions made brands feel to that You've like

Patrick Pacious

We've for Robin. space white past the about, clearly, in upscale an in brand. Thanks, our portfolio there's talked extended-stay

do be to really suburban, over last something in and weeks. in that of I excited it's And type of January, this about particularly there Everhome for really So space. opportunity the may environment. of mean the introduction the an WoodSpring, we're X performance mainstay tailor-made

of purpose-built the think, extended-stay in extended-stay together business. done And XX% the the nights is segment the that that something Last the expertise It's room for so our U.S. that's analysis. segment in was, the mid-scale brand in we've brings and I -- a year, it

supply the that. opportunity, tailor and to above, only space that really allows believe, of X% new accommodation. Our for workspace purpose-built segment but is and living and first the stays mid-scale And we ever big the in there's guests fresh night for in are a something is the actually

really So downturns. bullish we this we're think during grow downturn it on as Everhome. We us have for even will opportunity to an prior during be

Robin Farley

extended and in not acquisition So stay? then interested -- sorry, I'm anything necessarily front on the

Patrick Pacious

And WoodSpring, pass got the if litmus at this always brand followed same we point. to the look I everything really improve the benefit two, look it. X our acquisition asset our It's owner? shareholders? I've that said And at. of grow at ROI look test along. One, to at you And those at past, Not perfectly. look Hotels something that mean, available, it's in And can I litmus we would path I tests. to of think that comes we if the as Choice were can it

the So that's answer how of question. sort M&A I would

Operator

Jared question comes with Wolfe Our from Shojaian next Research.

Jared Shojaian

way probably see to that what idea? But about think are the paid intact? expectations what how about early like during in the transition fees evidence talk just you talk around and remaining you of too looks we to should about brand you And process can your any it's of foreclosures. that terms can So

Patrick Pacious

about Jared, talking you this through it downturn? might Are that is hotels that your... make not

Jared Shojaian

That's Yes. correct.

Patrick Pacious

Okay.

Dominic Dragisich

So the go would think way ahead. -- about it that I

Patrick Pacious

No. Dom. Go ahead,

Dominic Dragisich

way of The that think about our I franchisee. it's would it, the really Jared, profile

franchisee hotels. equity. So primarily It's owns on with than financed average, our X fewer

that's possibility see assets. And so these into injected than equity our it's higher not to XX%

few the low. So the foreclosure Great risk in Even very our portfolio. saw portfolio is in the Recession, foreclosures during we very

something Obviously, strong regard. not risk avoid that seeing we very immaterial to But So to That's we're overall position continue a with feel like we're our that. franchisees portfolio. work our would to that. in from like overall,

Jared Shojaian

travel. other X/X type dynamic help maybe better? roughly these of And your differs is people traveling the talk full-service-oriented more that us like Can Can implying little traveler? properties? from by And usually get I air some then to X/X said so are you travel, leisure of a you bit you to just that just brands? how that business about think business Okay. And the understand

Patrick Pacious

Yes. drive-to. it's Jared, -- more certainly it's more

an folks. lot portfolio from I only and even stay cargo the those airline have We railroad that of support X% markets, that's types you've hotels. and we that it's say logistics of market. When trainers in of about think in But people everybody a truckers, business, those -- transportation, professionals, is crews actually IT in crews those airport airline got are

space high traveling We and of have travel health services. also education level a in the business care nurses from

you than jobs space the at business as had those core contributors. X/X, people the one that look our hospitality they country keep the job in others. Obviously, in are the was far what's of when customer as moving. side actually, So travel all those, But report, happening segments of actually largest the losses that on fewer the

do And business lion's at to what hotels the so staying share We X/X really to of weeks. been that's our X up travelers. that the continue last over they've stay with but expect us, makes them

Jared Shojaian

even there I all? sense Okay. cash one you environment for at quick thinking And burn may. your terms you about your burn burn, And of is one, to number can us April? just RevPAR there's in give of how more monthly this a Do if if month of the any have That's sort be helpful.

Patrick Pacious

Yes.

Let at this three in. looked fill environment, to me revenue give Dom then years get just the we have pace. can at at it without I -- enough we're I'll structure. of if and ability a a looking move changes mean to revenue headline, In through we had we've really years this you cash of two us operating -- to zero additional doing environment,

do is a Dom, liquidity place. in that? add to position cash strong want you to the So

Dominic Dragisich

coming the that, would divide Yes, call no with your XX-month obviously, where I by if million and The cash expenses, it Jared. you you it it close to that $XXX in period. which of capacity the the is ballpark in gets it, that million $XX figure, to, take of way door revenue is somewhere think about

slightly months. bit a actually little So than XX higher

see the seen you've that X which trends a the it, obviously, things environment seeing three you're the the X.X million so, to $XX more occupancy X continued that probably year draconian through continuing net even to that's call environment or expect like a or those revenue assume no is low what don't to we month, out in months to years either time. today, putting or of you you of that last, per month very period If in happen, so which

by rise And last so, occupancy levels basis XXX or week XXX, seen points. XXX, so XXX, obviously, the we've those in

that So cash million that of would only burn. reduce further $XX

Operator

Our Allen Morgan with next from question comes Stanley. Thomas

Thomas Allen

the trend on occupancy commentary positive is going you're Any future? to on pricing for And the is seeing. in how for color expectations the any Thanks pricing improvements trending? how

Patrick Pacious

about it's and about since beginning sort X/X Yes. with that X/X of of REVPAR, the March, slide occupancy it the an of decline was In has been which been so has whole of rate franchisees demand tried rate. to important lowering out as that not positive occur. see our to And recovery have be to to there chase really wasn't started is that really going been by that's has

X So RevPAR Thomas, in as we've occ, the weeks. mix rate of X/X it's X/X really seen been about last the over

Thomas Allen

of demand it when how help and you in kind of closed for labor then think your like properties And expenses of and the what kind typical Helpful. of kind when us is Okay. one then franchisees through this they're can flexible are environment? just

Patrick Pacious

Yes. on Obviously, segment you're Sure. depends the in. it

Inn to could all has, got Cambria to that might X hotel up than it, have the a equivalents have WoodSpring Comfort slightly that that more XX You've full-time call a a way that.

in depends flex their seasonality based owners salesforce So housekeeping on lot -- they and of and is the markets. a their that their on see our staff, that

moving and depending changing demand a target, environments. it's So they're on to flexing used

periods mean one in to the set -- probably week of Christmas up at lowest lowest we sort by March, demand that normally of so that's but of used year, all themselves of the happening our weren't hotel One the is surprised occupancy being and that. a I used middle to They they're this in like for where hotel's time. to one having is And in point, the sort New Year's. that are between sector

loans of is X-week those So are loans. through you loans significant. their this helping PPP window they and of get that ability get EIDL them to flex have The payroll pretty one sort when

also workforce. on and how flexibility at options the back the with return, the for programs and out hang their owners is what demand are the does is been there sort level But to at of their give work that when because regard people meet general federal owners' helping and don't really be that they sense when demand to -- know they just a you many state relief it there that's hotels of And at return. important want is are there staff So to to able to level going labor.

Operator

Our David Jefferies. comes next with from question Katz

David Katz

and Cambria some development, issue in past development it's wanted I the about back an in particular, out. that recognize to we've efforts I just capital where you to go put discussed

on I bit that what think about you capital there Can is. talk where usually give balance what's an that stands a you in and update us today?

Dominic Dragisich

Sure, David.

So view. capital $XXX it's thanks for at the XX,XXX-foot million. just at to right question. the last quarter north we Right around -- about similar now, outstanding sits It's talked what very of the net

that. see did you increase slight in a So

say, the portion similar last good time I will said of what One the are to I things is, of assets. that a owned

the over sits that portfolio remainder we took the the year, and it, key XX% is assets, last mezz about call $XXX in So that loans. a little percent are down XX% owned money, of JV XX-or-so million

of the XX feel say, or David, would that. is. currently so to the things and is in over where XX going this that Cambria One brand at are vertical good we XX above that pipeline I the open, hotels that another point really in about time, XX are

run in Everything talking where what this discretionary. more of was else So $XX is those is our really -- I comments, consistent is earlier and about CapEx rate. my that's one our areas, of million

But overall it's is talked we got and for against, out us to deploy there that that We solid that project we during to runway to a It up flexibility the certainly environment. this that that. one feel XXX. always do Cambria flex -- down can those we XX want gives is this levers is that. there we about if The portfolio can capital do So of scale.

and You or open just see construction pipe in today. what's under the what's that

So make and you again, we that full down, flex just understood and to that $XXX up million. that wanted sure can certainly I

David Katz

a your Good the assume level. breakeven corporately, companies really is far? can would you've have I changes question In apply is a hear. that of suppose, then made number it at better to And Yes. case, quickly hotel I earnings occupancy level. based And the both if I so on follow-up where neutral talked the about on

Patrick Pacious

David. Yes,

it you level to our economy a about Quality, on occupancy. system-wide probably occupancy Obviously, Cambria. it that XX% a If at brands, it's at hotel look an we XX% talking Comfort, about versus Lodge, basis, of an had system-wide, largest look on breakeven. But really Econo changes you're around depending

Now that's the inclusive of debt service.

have that hotels owners So the also mortgage. have off the you paid -- we have

So tailored like. move as depending running about what been occupancy. regard last in XX% my a segment. again, higher on we've system-wide their segment. really into where of that's mortgage obviously, to is every is owner sort But different with It's the back you the that they for for up, mid- is about a approach their here, land, scale to paid little place, a bit weeks what Cambria several But breakeven point the and

Operator

Anthony comes Powell Our question from next Barclays. with

Anthony Powell

this And mentioned You expect long you changing financed? financing see cash the the fully equity impact reserves Cambria hotel does strategy? you in you had or And the your required hotels that how Are how required? just those that XX run? to pipeline. market Do see do event over more

Dominic Dragisich

vertical. breakdown, give to just are open. that there's So are a XX are going that XX There you

that which are are of obviously in pipeline, there's ones a the obviously, additional vertical So portion going are financed. the financed, and XX-plus

to somewhere lenders lending in hesitancy reducing saw more so. certainly, what it, And of down like from, would today, call to you very the once in that that some going this seen the we XX% reevaluate feeling tail we a of pre-COVID Obviously, XX% we're what environment. where we've said, overall, the so I saw LTCs vertical end overall, just was XX this. little we money And on are the get we the comfortable. have But have or

of the this that But most too about under future still of to In at think is to terms the construction. XX, be, tell now given point. are little right LTC those fact feel early are we we good out of those what the really going that financed

Anthony Powell

intensity years. the Got to you couple do you high-end Do convert in lot it. And there? conversions want as the of environment? chain revenue in revenue in more up seek scale? How past Or properties of you you about intensity talked kind any what's pushing that approach this keep a

Patrick Pacious

Yes.

I a I think to going And are segments at where locations higher still and company. be it's there. opportunities revenue really us think looking are those the those as for

in where amount by will, to there's at is also push construction our opportunity, is time, continuing RevPAR the significant And And that see average having on locations. Comforts over hotels think, revenue also entire I we I pipeline standpoint higher in lot that that a the new these across of approach. construction the into our under that they're a the from higher improve of what's opportunity Comfort, mean revenue-intensive I now. of because think portfolio that's intensity there markets of still in then segments the WoodSpring. a

Operator

time, At conference back the for there Instructions]. are Pat closing no this would [Operator Pacious like remarks. I turn over to any additional questions. to

Patrick Pacious

We are Thanks challenging Operator. your second franchisees the are into quarter the morning. as going forward conditions but as this undoubtedly are you, see there capture time well. again opportunities These to economic several demand Thank our positioned times, for better than approve. those reasons

and hope you summer. healthy, all again you we'll care. Take to I stay safe this will and talk So

Operator

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

now may You disconnect.

Choice Hotels International (CHH) 11 May 202020 Q1 Earnings call transcript