CHH - Earnings call transcript Q2 2020 | Choice Hotels International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International Second Quarter 2020 Earnings Call. [Operator Instructions]. I will now turn the conference over to Allie Summers, Investor Relations Director for Choice Hotels.

Allie Summers

Good morning, and thank you for joining us today.

understanding would certain remind will predictive to you we this that be begin, its assist call, and conference or in we like you to during used results. Before company the forward-looking statements you Actual important forward-looking and results the risk Forms XX-K factors you in filings SEC that company's statements, and the affecting may other from should consult for indicated materially XX-Q, differ consider. those should information company about uncertainty our significant to that of there and Moreover, and continues of the future we would to severity be duration like the acknowledge to COVID-XX occupancy results. as the impact pandemic on levels statements speak forward-looking to we update date and them undertake no reflect subsequent These circumstances. of to or publicly as obligation events today's

referred our second and will remarks part be Pacious, our year-to-date Finance. Relations Pat on the Real They and You and can find performance. section. President XXXX Scott a quarter our Dragisich, quarter financial second to operating under morning, reconciliation and Officer, which measures in Officer; of website Estate as to of results and joined Chief is Dom the Investor press This financial speak our will our release Senior Chief earnings choicehotels.com posted at our President, Vice Oaksmith, Executive by Financial non-GAAP

remarks, Pat. Following take your glad over to turn Don's be Pat questions. and I'll to we'll call And with the that,

Patrick Pacious

business half us their and I'd you of first by our morning, good hotel healthy. and remarkable the begin efforts that everyone. We to and appreciate small hope of Allie, year acknowledging throughout join staff. the your Thanks, well to franchisee taking families you and the owners like and are the truly time

for done associates the globe. Thank guests all touched. well as and around the As you've choice communities you've for you

the change quarter of has never unprecedented greater. marked velocity has been events, and been by This

X the overall competition of STR you'll we in in industry exceeded which of change through our primary reported and segments domestic since on pleased release, outperformed second percentage compete, an points XX system-wide negative mid-March of our We're fronts. surpassed per the percentage Exhibit RevPAR rates domestic by outperformed over today, the we quarter continued system-wide points. see July. as trends XXX in the average our through by points pandemic As the July industry The as XX.X% hear week can And X the in basis that you press scale onset the several occupancy year-over-year chain these by in XX. by

daily weeks new the open more of since half the of XX% to X/X time, material the than versus past gains expected the for extended-stay, continue competition. against extended the And construction For results franchise first new XX points. Comfort of material Family, achieved Saturday. levels experienced RevPAR levels quarter, first even over for the And of local all XXX system-wide XX% their half portfolio, are middle observe occupancy through year sold Collection, which At in provide cause same experiencing of were last service In development half the the over agreements our In projects. XX the awarded each XX, Hotel further hotels, the July week occupancy stay the the optimism. Over and agreements during with Ascend Domestic index share gains north of last we over percentage second RevPAR of economy, gains to competitors our of year, XX% March. surpassed July. of share conversion we and brands hotels agreements. the of domestic select quickly our signed our domestic were

driving areas: our of new of I'd July our that to month alone. competitors This highlight performance year. signed development maintained X are against with position half agreements like second us In well the morning, for the the XX addition, the we momentum in and factors first,

franchisees. our thoughts the with quarter. and industry have partnership of And finally, we averages factors our contributing to outperformance unique on second close There the the the in Second, our are road several ahead.

months, travel, First consumed leisure is XX% which systemwide. our has in climbed strength represents in currently and recent nights room over of

the seen our fact, proportion In the June than March. from to guests of increased more compared arrivals by leisure late in as levels X/X in

for proud our turn families and the to We as of trips. vacations hotel company are road reputation

advantage in the locations proven outdoor practice is continues to more parks, to Our destinations travel the for travelers ability as appeal appeal recovery. to the our This leisure lead our to X,XXX geographic domestic these and to summer, than system travelers competitive hotels of onset since be national near to has leisure social guests a distancing. Contributing to pandemic to attractive footprint. offered our beach looking ability the

positioned, X markets, Our mile hotels are flying. to a increasingly destinations located XX of given than have we the guests to less hotel, just out of the who drive staying get exit. the X/X closer travelers In choosing their across X,XXX are of June, demand miles revenue who sign located from from capture well a came interstate traveled instead than to want home. customers of in house an right more to while that country, within our hotels growing that more to We're to

low ad their continued presence outsized road lead new to again. strong multimedia campaign prices as drive the This feel for in our travelers cars. our basis own the that remain locations provided gas safest expect will on and We performance to in

significant in website XXX increased first contribution the from was by increased More supported to The specifically, points from a believe by contribution, our we proprietary June, and our basis increases basis the hotel XXX we company which launch campaign. contribution pandemic points. the May Throughout major to our began. observed quarter, loyalty since second monthly by

the increase essential the a not and a of April. gain early to the conventions. has share the also to traveler are by consumer are second contributing from demand, week-over-week second new which past trucking, group proportion these number and Privileges workers, on outperformance first business of government, as of core a customers workers. thanks our higher compared members in our last capturing hotels more profile year. steady and We're on diamond travelers, construction customers. the in travelers leisure and attract only July ability business the in road well-known drive spent XXXX. to share market our quarter hotels, We're gaining low to is of of from our increased seen hotels meetings to benefiting nights July we business volume stays While of attracted brands per responders, and Not guest our key both We've Choice is factor larger in elite second logistics who the since room also other in This during our relative been a reliant including who've the medical months, are to but also a average and quarter. our at

Program Our members now strong, to million award-winning Loyalty is continue XX and enrollments grow.

briefly is revenue been strategy the the in each. X.X% aggregate just also X.X% and success in long-term target but despite concentrated the X right off. brands extended-stay grow the challenging increase brand's in rooms markets, to segments environment. investments brands achieved our increase in across highlight The segments, the not driving we In more right on in and paying and intense, upscale the strategic mid-scale, the units like has grow to these quarter, focus it's a second segments. to a Our I'd of right

brand. Choice the our the Hotels hotels mid-scale mid-scale, U.S. was is a and a in are founded segment First One is we leader. where company where in X

has Our our and out. brand and hotel system-wide deliver positioned well proven portfolio. upper This mid-scale mid-scale already to flagship domestic billion represent extremely a brand to value. of X/X developers is for storm, weather both this renovation our brands total looking attracting bearing Comfort's $X.X trusted travelers

brand Suites XX% nearly year-over-year WoodSpring nearly developers industry know second versus In lodging our which addition positioned pandemic our in stay the Everhome for XX%, investments revenue pipeline, will quarter. growth index achieved brand. the average. X/X in extended than increase strategic the levels. of scale. leading points and The XXXX family quarter, segment X% advantage afforded XXX XXXX our percentage was XX% next rates outpaces mid-May for onset now RevPAR rate Suites Comfort even with renovations our levels any XX us their second percentage Hotels where a stay sleek and which stronger occupancy industry the including gains upper of was to points. extended extended our local our RevPAR growth mid-March remained grew experienced RevPAR way July, end looking competitive year-over-year occupancy completed quarter, brands contributed with mid-scale returns in drive of saw by targeted come. fuel is stay their optimistic a that second WoodSpring and over to higher their potential our well about the index MainStay that of Leading the new represents of second we of the change in the the advantage the average We're gains hotels competitors. over nearly concept in Savvy demand double intense years RevPAR above of against pipeline of our and the of Suites to through experienced portfolio very X XX which local the of chain an consistent practically total average Between the in points a occupancy of points last extended-stay, the since occupancy the environment, our dual-brand in performance. to X% week with economic rates X:X, returned Comfort industry-leading quarter, the domestic significant to supply the percentage in in end percentage competitors extended-stay XX by industry overall brand by have portfolio, that Comfort

versus Contributing in growth is local As change our in unit count, allows including against XX% over X points RevPAR growth quarter, for to outperformance success which through and RevPAR to segment drive the our in increase impressive proven down our year-over-year room cycles. share the second portfolio us the upscale of upscale competitors. conversion gains percentage segment, a achieved engine,

Ascend for Collection We owners, the globe. entry over for as now proposition around Ascend see strong launched example, hotels Great to recover we the in Recession the For by and value capital significant due the costs. acquisition for largest low requirements is from and was during reduced Hotel driven the XXX industry's Collection customer crisis, opportunity brand's the brand soft Hotel XXXX with the

from the lot being we're of with strong the of last upscale first owners Our in year hotels we primarily lodging that year's awarded have benefits system. interest And Ultimately, not with these high. model, is are. our it's the The half of in contracts meet company proposition XX% with business fact, only families. businesses. who developer a I to value whom demand, remains Hotels results, resonating. small overcome many of thanks line the brand's to Choice a proof as the in brand number entrepreneurs, leisure our a sets Cambria travel what with is for brand's affiliated build legacy their apart is franchise-only regularly our qualify that

their A choice Hotels' more franchisees. soft differentiates them, ability child's business investment. make year our can Choice Therefore, than to tuition. livelihood. is hotel and their their brand whole-hearted with unparalleled For the success college their partnership It's commitment an to of afford break their their is or

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portfolio, openings many international We're of increased trust to and necessary as small we do In are help our more hotels July. XX% treat the owners of franchisees' of of where we X and see to the have so business support just end proud over own open as business in recently, capital seriously to than addition, continued operating in the consistently weather our providing by more this our demonstrating as investment we that them decades crisis. by our earned

system Congress redeployed the secure in their Congress leaders to I've every We've For across economy for the speaker franchise and soon the remained able from also company our that from XX,XXX is advocacy the and just active vote with small to for federal Nancy consultations. and to nearly in we've on at businesses be We relief front agreement on discussions. franchisee-facing the that in in business level reopens. will critical teams center administration to hope efforts owners the example, associates hotel individual yesterday in an the Pelosi recently the contact resulting help as and met economic ensure relief stimulus. with relief

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total rolled like and and housekeeping key keep rapidly not franchisees cost changing owners grab-and-go we've business lower but that breakfast, be themselves we're themselves. a but on-property with check-in demand associates, small by that offerings us to of our living travelers the as help only safety in promise For ownership. to guest business expectations metrics on franchisor example, tell not up also contactless pace for out of and enhance Two

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For Board that Directors diversity inclusion. over years, advancing diversity aimed has committee, our a and values had XX at specifically of culture a

values by enhancing history supporting veteran their throughout have a hotel and also organizations. our best-in-class the need of these We of minority long drive entrepreneurs diversity resources providing that base and owners ownership to

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industry. handing it company words the ahead, I'd Dom, to our both and road a to Before the off like few share about for

on to recovery be pandemic As sporadic fall, the impact and if closely the are return for believe mitigate are increased for to we that Even wave of we business an planning we there would factors outlook, regional. continue and our are monitoring. the the in to economic several industry and the were

wears geographically restrictions. on. to and getting localized be duration and the of any the as seem is narrower travel We scope pandemic First

our not of that have consumer factor in depend is best do which select-service have of and protective degree or to part Importantly, the of This hand virus comprised social to brings been collective a we're XX% spreads our hygiene, bars particular second distancing of focus practices which me monitoring, adoption The country. hotels will restrictions personal on equipment. restaurants, behavior. the portfolio the across around

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clean Our dedication boosting existing confidence on to is initiatives aimed building to commitment at our consumer cleanliness. to by travel

As important to transmission require decision in made the Commitment hotel an the part face guests we everyone the areas and of of safety to simple hotel take guests of COVID-XX. slowing can coverings employees Clean, to as wear by common franchised step protect help to and

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Dominic Dragisich

outlook the management our our historically thoughts from approach provides results balance allocation. delivered and color our our market as economic for ahead. the capital resilient, I'll liquidity hello, Thanks, which sheet I provide around Pat, close additional regarding our quarter stable well and and primarily to as cushion second some with continues on benefit Today, efforts, road share updates will cost model, everyone. risks. and focused degree cycles throughout Choice returns business asset-light the to from franchise of has

$XX.X subsequent for totaled for adjusted quarter domestic system EBITDA for period comparable declined marketing were adjusted excluding prior COVID-XX total For the million, XX.X% Due and impact travel its second the full the $X.XX. year. our properties on were industry revenues, the second $XX.X share fees, the quarter and million, of pandemic earnings per reservation over and the XX.X% XXXX, and the RevPAR system same to

our of As rate Occupancy trough occupancy shown the XX% early climbing occurred steadily been time, XX%. on and past Exhibit in have system-wide at release, this exceeding the press XX% rate to overall end weekend. April domestic industry rates X at of in reaching our June compared the that since of XX%

year-over-year of March, on July. continued maximize attributed addition, of the been X/X the strategies. was versus beginning Throughout to nearly through RevPAR their and advising franchisees our Since our In pricing occupancy outperformance to of the about pandemic, we the to rate. experts competition the use tools have our revenue management our best decline X/X only provide

our As a ADR efforts, we local the number competitors year-over-year. X.X% our X.X domestic in by rooms the brands of index points X.X% the these and percentage X.X% more Despite and rooms result and grew mid-scale challenging the by Across hotels extended-stay was number up by of second environment, by X% upscale, in of the we year-over-year. against revenue quarter. hotels intense our segments, increased

are to pleased following growth flagship particularly brand positive and We continued to transformation. report recent room family that unit our Comfort experience its

were lower to our our continue hotels, guests on brands commitment the occupancy to cost new they able investments our while unwavering operating ownership. return improve investment. Thanks that rate, value boost proprietary to during and crisis, deliver are company's helping and recognize efficiency and happy as their which of technology to also franchised owners our our maximize effective the the the developers of in We to to royalty total this drive we to with performance-related hotels seek their levels of to hotels their choose tools our franchisee-facing reaffirms

and the desire value the quarter increased be we XX points continued basis affiliated Our of second by the pipeline. provide is domestic their proposition rate royalty attractive year This to our in current prior same effective our with period driven to X.XX%. strong versus the brands franchisees, to

top environment, expect new revenue low revenues line anticipate franchisor the allocation current delivers of prudent that to demand year. we crisis continued hotel. large, growth seek strong due on, will capital period of owners wears of strategy. that a this for the strong lever remainder travel shelter with observe and the their despite of As Therefore, occupancy the to we Choice to our the softer sheet the balance entered a proven

approach beginning action bolstering the company impact discretionary We of strategic also business. pandemic of adopting to since a capital Every our on the improving took the was in aimed has reducing efforts discipline our position, and taken mitigation around at the the allocation. costs crisis cash exercising liquidity, alleviate

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our million also have lowered XX%. We by below which capital been historically maintenance expenditures, had $XX

will better environment. actions our cost pandemic We structure the in post expect these align

loan. well as endorsement times. turbulent The the cash in previously remains will borrowings. impact take but bolster our announced the to us was business we amid XX-year strong, senior due have of to to of new of the This which allowed by allowed XXXX our us weather new near-term strength markets senior effective offering to senior our to company's position. and In times, both long-term pandemic, $XXX not allow notes, we XXX-day, believe and credit notes exceptionally our cost our issued our profile on term a favorable significantly maturities resources the its our model to X of million capitalize and continued only the July, which note offering as we liquidity reduce unsecured stewardship debt actions existing us million While offering oversubscribed $XXX to a and that financial powerful further portion XXXX in performance repay and extend improve of competitive refinance

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quarter, despite of fact, impact initially we the the being million, lower much increased net only second worst company's debt during In expected. the approximately incurred $XX the pandemic than

liquidity leverage well our more believe debt-to-EBITDA to our We our range remain gross that to X today, adequate levels is to continue position Xx. within the environment. current weather target current of than And

Our in historic, prudent and allocation successfully the been to disciplined current has instrumental capital approach our ability to crisis. navigate

We to we aligned same approach invest strong internal ensure strategically Based investment level always investments is track the our business. in will of with come. these will for organic attractive on and activity to continue to follow look the years growth to drive continue current importantly, will opportunities environment. believe Most organic our record, our for returns we growth

We of in opportunities and developing will other overall context in capital the allocation conditions return strategy. evaluating investments capital market our be

largely of Now thoughts our XXXX what beyond as the pandemic close the and lies remainder some is of on I trajectory remains industry's ultimate business on will recovery. the with our ahead. impact and of for exact unknown, The precise

While on we transient predominantly are guests quarter currently from the weekly results trend stemming not will a significant driving impact COVID-XX that expect issuing performance of their formal to today, continued our we destinations. third travel based growth less leisure on have guidance

crisis optimistic industry, November the the by Choice's about we provide and faced updates to And continue like further strategy, while that evaluate COVID-XX since not opportunities be prospects. to the Pat next during across in questions. on immune to We and undertaken pressures and would will business, targeted this actions our focus, our long-term we'll to we At I earnings allow have continue the the and any are call. of believe to close capital we are the would by saying prudent during disciplined that Operator? will impact of allocation answer the capitalize recovery. onset time, happy to I we the us

Operator

[Operator Instructions].

from comes from Our Robin question first Farley UBS.

Robin Farley

know some I talked don't wondering in the signing? wanted but on years, the point quarter, the about missed talk in new I I the you this royalty a couple release there to follow-up I'm environment, introductory reductions addressed you're remarks know royalty In rates if on rate. the current the were can about just a the basis if Great. downturn, I after because increase. you of just and XX minutes, rate that. of the last like things agreements kind opening

So rates newly are on the royalty just looking wondering how agreements. the signed

Dominic Dragisich

Thanks, Robin.

probably for the would shorter rate in royalty It's throughout Obviously, transaction XX cetera. probably and really line in to at we of testament mid-single allowed that do What growth, continued we to about previous course very whether anyway. the over this again, that would of some of reset. royalty But that XX point which previous in XXXX, in be XXXX, in least that. that with that environment couple last would just over increase years, say we're you we probably basis conference discounting, - points course rack still the the the future, the driven some had royalty in environment of beyond months said transaction the by does I factors up and slight fact the be et is calls, burn see a to about rates. was probably of Obviously, driven we the that in yes, continued proposition. and a rate, at expect value continued more made, to by had digits. maybe growth remainder as historicals environment return the growth RevPAR other dependent effective well. year least But What right would seeing that, of, off and was talked rate strong our strong the now, that So the term, on rate we the historical growth with it, growth XXXX highly line XX that really future call in

Patrick Pacious

significant brands Robin, of were new would to discount. add amount agreements selling where just had quarter And in I we the the historically second haven't a we're

And those also and perspective. are so as that been like Comfort well from WoodSpring strong brands as has very

XX to what So less ago. years if to there similar it's Recession, to likely discounting do is a Great significantly than we be point, the to Dom's had

Robin Farley

Okay. No, that's helpful.

new you reductions kind this So increases some when will that as That's more in that year? from the roll opposed next seeing there the were Is year you're - rates limited being affect of rate into mid-single-digit said comes play? of rate agreements. to that

Dominic Dragisich

Yes.

I think look take a at... we'll

Patrick Pacious

already new Yes. in point versus impact return of ones outsized existing And were historical given contracts direction. to Dom's headed the it is We levels. coming earlier, to in, to that the expected the

Operator

comes from Bank next Kelley America. The question Shaun of from

Shaun Kelley

period and - could a of Pat franchisees percentage just of collection sort of process move collection of give period? us helpful. into from stats you is give on the some we either or How were would update sort darkest kind as there, franchisee could If did health think stable any really you just more elect that of for a Dom, the I piece here updates deferrals? or quick Just proceeding kind what be the fee here? us

Patrick Pacious

Sure.

spoke - regard close those the franchise being pretty we conversations call, to we what middle were early ended of fee the I to lot the with when deferrals. a much last or in on think end up of the

the really performance the been into on in up quarter, offer the top So that hasn't July. we the the June, that revenue May hotels been our of gave really months numbers on the the to changed. significant in of and in that franchisees that's for number we've has had line What's quarter around continued promising first particular, took and us

back that those we're follow-up? Dom, in having April the to So were of you having time level anywhere near we want conversations frame. not

Dominic Dragisich

want remarks a would Sure. there, look things very were at this, elements. We of we few the obviously, and very deferral really focused other when strategic buyers is Pat's also - in nature. were take add Shaun, I their the But don't the long-term program, only that of did fee how we we The Yes. stated opening covered some a but you surgical.

if be terms know crunch don't of You there's going to franchisees the are. another where in

driven so So deferred being then entire recovered we obviously like capital had look there in the end and be rather than $XX maybe did $XX portion as that quantitative deferrals. would occupancy that's about lower really a really, $XX that on more of overall Pat's seeing, We years speak. is you cash And about collections, would When in a to had X X it's It's fee first That at looking we net in and expectations. years of going be X-year fee of working point, think X to cliff, runway. - the like it, is what I in this recovered the what well. Shaun, $XX be X- quarter X. to the to you're million $XX we're than what talked drag million to by million call probably And million about certainly million it's seeing that some based previous yearly was then impact, is a higher to strong those talked that, burn. terms a on the the

quarter second today of the throughout burn we about actually Our better are the well. positioned that. cash much were where as was for this of quarter we year about was It is $XX Where second half than million.

you week as continue position - positive seeing cash collection collections over breakeven, cash the performance you're with stronger rates see a occupancy increase to these week. returning to continue to really the coupled that continue we're So

Shaun Kelley

as translate helpful. super that we You know us a how you same you're And - are theme, and be with - then cash and can it, about just of set and would examples Are rate kind flow think sort place about sticking of a where you your which a great also level kind of industry. do relative before does think help question, little as now look you at occupancy about of franchisees this then franchisees? of the for, That's at talked just positive? XX% follow-up, broad I you above a - at would just service? where the of bright And think we just level also debt after does the kind mix. are we your bit a helpful. unit most let's example What across economics that indicative it's maybe said, be how into, for an then really the huge or but portfolio, translate to spot like that is, the a call we

Patrick Pacious

Sure.

operating we - probably to level level, even. past, So break with hotels, our of that the at for is occupancy about we of Today, talked - you're we've XX% below. this probably service, I able think about at XX% portfolio here XX% the most debt that in or

The our is XX% most service kind - of debt on about debt. on is hotels, in positive the it's interesting. a territory. the that hotels good of loan-to-cost So Because XX% XX% and our equity

And parts the industry. lower mid-scale so than is an or from economy service of it might standpoint the other hotel of in the a debt be in

think the helped quarter Dom's the thought perform franchisees. hotels. to feeling the revenue I our where of significantly big health key the To the we on our two have you us a has good the are line to our number that pretty in outperformance for about summer relative those financial months we months And factors point, know, are So owners. significant of as were going second top

breakeven lot focusing got a So is things a Act liquidity. been and in really in at months spending CARES and I a good those franchisees being program nice hotels, is then been running this provide healthier position. early the and and able our and will we've level late of for what to additional May above that industry PPP X the to for of place having has that April, the get time on have say, bridge of all into that our a much with

regional popping is We continuation advocate seeing, leading which sporadically because this are and virus we're in before, places, our doing as mentioned and is to the for best to those all dips of we've programs up valleys.

in programs to the relief going is government for back advantage to April. year our we be our the additional half we a critically further is in of owners. health in franchisees having that can think of important hotspots of I large, the so where relative the And position take But, really have were and franchisees part strong by the early of today back Shaun, if

Operator

is from from call Bellisario Michael Baird. Next

Michael Bellisario

conversation on why are franchisees Just they specifics then And for? yesterday it last maybe the asking speaker. And on the some about just specifically? question. provide what follow-up your also with you a maybe need Can that I guess

Patrick Pacious

liability is things Sure. liquidity There's protection. One other want. they the two and is

the use And to lot issues recapitalization that so fund of of related program. are and the a PPP of obviously liquidity the

really things adapt business things again. done there's the have our significant going environment. expenses could that particularly of Secondly, code amount the a that to to industry And could be be to travel actually code to road operating new get on relative do helpful to that consumers things tax in back that for or tax the to around to owners either are supplies, there's in CapEx cleaning the are encourage,

side this that not of provide the is and something the across hotel businesses, liability is house, is harbor but small, to space, the protection. in On just large safe that

business them owners the lawsuits to don't and that putting we've the that. literally business rely putting keep a you have to struggled include so of businesses pandemic. not interruption liability Business are the pandemics related to country around are So as owners able not hard out hotel that the alive, country insurance so small and on over does

It's are relief on And issues. night leading liability industry I for things had small that Senator so it. liquidity with there efforts And the and concerned that a We business owners Senate the our the with who's speaker those are the about. about the spoke last is this the a of open Rubio, call bill lot X the key are to here. future side liability. great

have we the part an very been doing think of our travelers successful Despite in have in a has essential the out, business and hotel functioning how the run country travel As of be industry with itself the the age figured owners I And proven to essential restrictions, of the COVID. like. to that.

back we more So looking half at year spikes. if actually the see of do we're the

a jurisdictions, the good work business keep occupancy. level hotels of local how have governments owners think together state all to and out I figured to open, operating

everybody your in the hotel long standards. wash So and hands. itself distance industry your things, socially our stepped the mask, up cleanliness And wear right has does significantly as

all So that I the the things, positives. things protection to liability But just looking would out legislation. for those upcoming X I think, we're are key government that of of back and are go liquidity

Michael Bellisario

there? then you your on very latest And thinking That's you about more. it. maybe can you calls, again prior one think the versus I helpful. today at investment least have on Got provide days to mentioned offense just starting or and know anymore opportunities pencil you sharpen ago? are XX update And an but

Patrick Pacious

interest. in we to M&A I - in business, and business? our mean interest the about think has back or continued talked Relative just that I Cambria brand, drive I within mean, our our performance investment continued to

as the very, Everhome are with And there capital lot the without done haven't any very we brand well that continues very, grow our involvement. positive. owners a to WoodSpring on While side, conversations having we're

a kind that holds, so happens right of the waiting talked seller we underwrite what assets. pipe given on of front, a down asset, an may are a while are buyer extremely what - we about think just opportunities today the M&A and as sellers now, come it's or there's I either think, on I lot the with their the future to for expectations see hard to

Operator

question from next The Shojaian from comes Research. Wolfe Jared

Jared Shojaian

RevPAR are specifically Or brands? the entire And talk you you those portfolio? seeing coming the that are which for you brands brands? index then specifically or across think other are that about driving Can stay gains extended independents you? gains really primarily Is do from

Patrick Pacious

all brand, is of extended upscale It's our limited It's portfolio, the our service economy and a only our of hotels hotels. all our meetings-based which stay brand across it's our The Jared. hotels. So Clarion brand. and is

I had them there's about the it's from single XXX of other of all index from think of brands, every competitors. But coming And those. one independents share RevPAR It's gains. alike. significant coming has

within set who truly our consultation are say those are So to we These by with their market it's Choice Hotels. competitive they're set, - set by price these for owners competing not our when our points. local as

real that to are owners corners. So gains share same the other signal street it's on us seeing strong hotels a to our relative

Jared Shojaian

you a and you total the us mentioned I compares that how believe trending year-to-date But And have tell can exits it. and years? Got voluntary owner prior how year last XX% owner to retention. been

Dominic Dragisich

Yes.

X%, churn So it, when you X% house Jared, at take the to have all what and side about in you But together, really involuntary is voluntary overall at equal. you rate with look those voluntary that. unit and think we're line a is not look about X% when to is I terminations of the involuntary the put of to created X%, all and growth not trending historically

brands the about I you Comfort, us, big royalty the average always the economy revenue; adds that revenue where well. and as the take brand at really overall. one talked intense then But in segment, to really, Ascend economy growth coming from brands, you we've X the economy being economy recovery, look about the the brands. than know saw and from. being the is very Xx our think are unit when an Xx momentum of in royalty why have engine about Comfort. then the at as help multipack us particular, conversion It's part also as when growth It's Xx Cambria revenue X of transformed really the past, look decline. of to WoodSpring the Xx you that we a those that growth obviously, the about the royalty key with of as unit Suites when coming of for one in you more terminations So all net segment a unit But about which is

really very from, we're line recovery. optimistic with churn, But about part where to still And overall it's so coming historical. going how much the that's move very us it's as in forward of

Jared Shojaian

more, I if one just And may. Okay.

about local that mix brands? less I more vacations of that traveled X/X are from your way an seeing interesting of right where Or different their right think into your scales? are other of that extended you June, now more effect than have and there with away. stat. consumer you in something some sort else stay to behavior chain outperforming fundamentally was now that XX thing tends just Is I customers and who came revenue visitation finding said the extended thought everything stay than is miles

Patrick Pacious

Yes.

other It's have not brand-specific high state a it is XX% to The driver. consumer And And really travel. next behavior. we're what going travel Jared, states, number just the Phoenix not than a could own to as shift been interstate travelers, think, is we're a but But own going it is things. people think higher staying seeing up travel. to of prior if more in digits. what significantly if than proof that's higher One, I its to travelers you're several normally seeing from is a town that to more it's we used opposed a single in be sort over that summer open seeing get open to we've Flagstaff us it's your still or means to to significantly out intrastate want in I and this lot or within if state, and years. in

Operator

from Patrick comes Truist. from Scholes question Next

Charles Scholes

your that, that restrictions other reinstating net remind to as And in it. the wondering thoughts - about covenants or your regarding me, any or of up income about lending wondering I'm dividend I'm continues ramp part here, and regard? are restricted along with recover you by

Patrick Pacious

Patrick. Yes,

reevaluate basically end because of the during sort get what look depending outlays sort dividend year. you're view. the year I'm brought took said happens we a to of we've in begin the into that fresher that a on glad of looking up you then at as and we suspend really to the our quarter, long-term we're second XXXX So if going through

be franchisees through X our level fee helping deferral was this, fee of on significant quarter a and and the second X. is of the to that in focused going a we similar quarters thing amount first impact and The was it help in

dividend, and second was to environment prior And the lower of that been resizing for workforce that million. that onset us approved about $XX which to Secondly, was the see our expect and the we we up quarter. had to the in had demand done that's third set XXXX that COVID, And was a done in beyond.

the But back as putting just this thinking thinking basically for our point, the cash $XX we've and you're and mentioned, Don cash of being month, So to next about XXXX. million going about year. outlays, we're essentially that something is position said into suspend dividend as about you're a consider burn, we'll it at remainder our place the

Dominic Dragisich

those that the thing would only are the have no package there is restrictions Patrick, dividends, and - are covenant add paying on we I in And there just place. given

Operator

from Research. Longbow Stump from question Next comes Alton

Alton Stump

mentioned, up just I the what last upticked XQ. new this I course rate. just the significantly I'm Pat, percentage wanted it that of of say, from XQ curious builds, conversion kind you the know year? to ask came versus obviously conversions time in versus about over

Patrick Pacious

them into mix you can. we it's stronger me don't remarks. downturn. - going portfolio - think, relative just for just time the downturns, why the past talked - difference, go I in give year-over-year, around I'll prepared if But We it's the bit our have where to on different mean, the this is you brands about a little Dom, I all, this

the the able are If in system strong you higher particular, into Collection, convert than look that brands to royalty we're And assets the and average those brand. at drive Comfort those really to brands. that hotel Ascend do

more of mix segments conversion, going that I our to time, be, as think, and is strategy those So with I saying, helpful to locations. revenue be this very intensive intensive keep revenue

Dominic Dragisich

at take XX% XX% Pat's to historical the openings Right. to And XX% In more actually when you openings recessionary is environment actually environment. or have point a on came our saw of of a the Alton, from that And our downturn come conversions. look, we a from Recession, Great about conversions.

bit little become engines historically well. but COVID as more actually a seen So slightly what now we properties again, more that bigger with as for intense happening complete, number conversions being last that that even over more transformation of Comfort seen see above year than And the course X/X speaking. to begin especially widespread, historical, conversions in this back up months, conversion revenue was of us you've that has you rate tick Ascend X going as saw you've the to particular,

very optimistic So we're about that.

Operator

Mollins Gordon question from Haskett. Robert comes Next from

Robert Mollins

beneficiary a demand your months. year any back And in around winter should think been drag demand demand we to what the clearly over of would about the has of you're But very and how half fall of heading helpful. drive be the Choice into months? So couple doing past the leisure commentary

Patrick Pacious

Sure.

I and to stimulus, depend to on going to sports. things. schools, to depend three it's think, on Robert, going depend it's going on going it's the depend It's on

point. this at unknowns are those of X all So

youth we'll comes I a from clearer the because of say help as perspective. kind Congress administration it gets opposite. and into the opening, effect approved that take additional as help on outperform the they of of point, both industry to occupancy in sports idea months this travel. level year. out travel by now, a I the later or see have the think all have expectations and I are interesting could on key at of do from the a would overall from month schools recover schools of how the college standpoint then it's dates a interesting to is as an sports RevPAR way start it It's actually And And they to could move the continue of happens could impacts September the virtual, into are these of right well travel more well. starting go at to get or they would on later, you sports potential have pushing the have that schools becoming extension but you a gone going What go those if be which the driver some them our and have a deleterious their means where to of other in they're direction a if and unknowns, numbers our in earlier. summer think what - direction

Robert Mollins

I helpful. And That's sneak just if more. could in then one

around these conversions, heightened types past anything different of than are doing the in all the competitive activity you with to So attract deals?

Patrick Pacious

we that during here last largely as said team have my recession. a management So in I the was remarks,

we with more pipeline conversions. development there's to to shifting And what do so a regard playbook around our towards sales and

would prepared to what things. prior are we It of similar So probably do be those downturns. during some we've done to

Dominic Dragisich

would the locations, really presentation trends the investor terms what and cetera. of in we add portfolio, our just an only website of I highways, et on did mix the post of Robert, seeing the And to thing proximity a whatnot, that you're of highlights the is leisure in drive-to lot terms

see posted that this beginning So the on at website right you can as Relations of we call that well. Investor our

Operator

I queue. to the back conference question-and-answer any remarks. Pat the President Pacious, session. over and This would CEO, turn like more to There closing for questions concludes in our are no

Patrick Pacious

pleased and Thank ability in for the and again, time. thanks the to industry second our this your and first year you, half outperform with to quarter. We're the operator, the challenging overall navigate everyone, competition of

all again Have to stay I talk So great a will and all healthy, hope safe fall. you you the in and we'll afternoon.

Operator

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

disconnect. now may You

Choice Hotels International (CHH) 9 Aug 202020 Q2 Earnings call transcript