CHH - Earnings call transcript Q4 2021 | Choice Hotels International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's Fourth Quarter and Full Year 2021 Earnings Call. At this time, all lines are in a listen-only mode. 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.

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

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

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

Pat Pacious

and RevPAR morning, our you previously and was to reported join adjusted a Thanks, performance everyone. us. our We Allie year, taking EBITDA and both XXXX Hotels. guidance. Choice remarkable good appreciate the levels XXXX A time year surpassed for

full that segments we XXXX. outperformed EBITDA our X% We gained grew in and drove results Our XXXX. full RevPAR all compared year materially compete. across year full compared year XXXX XXXX adjusted XXXX which industry X.X% for And the share increased to to RevPAR

RevPAR last XXXX. of of was year. same This in stronger RevPAR driven an in was our were than quarter exceptional, before from continued quarter and set to XXXX performance and strengthen, year. seven deliberate increasing performance fourth the of Hotels Our by the exceeding company emerging we marking Throughout the the resulting actions strongest during Choice for growth XX.X% RevPAR XXXX, as of months pandemic, a XXXX the quarter even our the levels with

the As led the previously of beginning year. in reported, economy quarter the second recovery segment our

and the segments quarter quarter pandemic. we the and Omicron variant. upper quickly followed, have since levels of XXXX, rates to surpassing onset the Our RevPAR to first our XXXX growth mid-scale improve expect the into continue mid-scale third momentum in our continued the In despite quarter-over-quarter

our January In results levels XXXX RevPAR fact, approximately exceeded XX%. by

stay. the of for our length the pandemic, the on investments that in about we are long-term are designed and continue favoring accelerated longer have limited-service have trends consumer will of hotels These because optimistic We our and very capitalize made growth travel, to make runway business. investments leisure during to

long-term for We leisure in retiring performance time five expect in these of were increase more more levels to be to segments, pre-pandemic domestic to trends levels brands. disposable strong, expected segment compared the pre-pandemic the company. U.S. customer our the to The than taken to and our boomers, of to trips travel. income baby Prior workers pandemic, from tailwinds continue for have the to the continue purposes. And is out rate fuel the as our of tripled one leisure and key growth travel of U.S. has and four

to temporary flexibility pre-pandemic that is benefit in remote vacations, favor positioned by relocations consumer of have household trends for increases million from strategically will next stay extended for expected from the our to leisure. of workers, how Choice addition, long Furthermore, driven when in travel stay a extended to XX greater in level to length as and increase five have domestic expanding they we and where longer travel, whose work In number footprint, assignments. Hotels remote years, XX million

bookings, business work our Speaking and we increases with quarter-over-quarter continuing progression throughout assignments, sequential in witnessed XXXX, of overall demand to levels. steady revenues back travel XXXX the

and business portfolio. as for serve to further travel and expect catalyst a group demand We strengthen our our

observing business travel that also favorable our are believe to are We trends we brands.

well accelerated travel key with North XX% likely We industry travelers. indicated increase verticals of trend At already business expect travelers nearly operations. onshoring from we that with to travel, to benefit wanting locations. to a their expect recovery the investments business has will of manufacturers chain. our This upcoming survey that production business the A to are among add business their time, private from consistent over in holiday the recent positioned U.S. supply contributed we to favor re-shore business infrastructure same are and to business travelers our the report XX% of mainstream study additional recent of trips. travelers, bill leisure the American our becoming a more And

to Finally, surveyed highest saying over two have the seen travel over among of travelers levels the years. ready with XX% we they are last American

are in beyond. EBITDA us and confident and trends tailwinds allow growth XXXX continued adjusted these We and segment-specific RevPAR deliver that will to

I position but are outline we XXXX. is current were now is Hotels our future on more performance goal and to simply and to will than that why to exceed Our investments in stronger confident not a RevPAR fuel growth we our drive Choice rather XXXX performance specifically levels to new in long-term capitalize levels.

past blocks foundation come. in to two we continued the solid with years growth our During that sustained us for key a driving the established will years, building provide strategic

core of First, brands. we strengthened our portfolio

in transformation. consecutive continued demonstrating the and two successful reinvested have Comfort registered unit portfolio it's versus the our competitors, of this local We hotel developers of brand guests has brand of index alike. growth gains to iconic modern RevPAR generate year-over-year it's years mid-scale brand to move refresh, and attractiveness to future the with Since comforts

owners in versus period a Our during with opened continues demand leader potential same we a of demand hotels. United brand, RevPAR increase the the segment to Quality Inn and open fourth developer maximize hotels be assets X,XXX more XX.X% a quarter quarter to mid-scale brand number profitable exited for in in strategically this the strong the of to attractive States Due underperforming to in over market the new order the in with for and fourth significant the markets XXXX. developer

to three Our the also another with Clarion this it's Clarion continued XX years since U.S. in In Pointe hotels Pointe conversion brand just awaiting launch, open grow. has year. expanded to hotels XX

stay We is in also of extended significant a which further the growth. our invested driver segment

XXX continued portfolio Suites we expansion levels our expanded four WoodSpring it's developer Since brand the acquiring of drove impressive and Last RevPAR exceeded XX%. year's it's over ago, Our pipeline domestic have years grown hotels for and extended XXXX stay stay our brands interest strong growth. rapid we domestic extended portfolio hotels. to by

to pipeline with capabilities WoodSpring growth the Suites fourth compared expect reflected of construction website nearly in nearly year breaks XXXX. the XX% XXX% XX domestic the in increase XX% and Last brand's alone, exceed booking the since projects XXX quarter enabled reached ground we year-over-year the XXXX, nearly nearly brand's investment started and in this brands XXXX levels. to XXXX properties, brand's increase the a Our year achieve distribution RevPAR us revenue in marketing to

currently for year with and XX of under newest to awarded for number The new Suites, in this development our franchise significantly extended last Everhome In the product contracts addition, stay hotel domestic agreements appeal summer. the grow is a this to construction for open community higher first and expected scheduled brand, continues XXXX.

and unit to four Consumer also the momentum, be year system. positive and We Collection. growth growth the drove upscale brand hotels driven XX additional fourth and revenue portfolio, it's continued the already open, expanding expected current at XX quarter upscale both Cambria continued for and breaks brand's projects the of we ground expansion proposition the XX to outperformance upscale are the products the in construction in RevPAR great under vector, is alone. of up across further and Hotel local XXXX pleased Cambria another for versus end units prospective demonstrates active the of Hotels segment December Cambria shaping intensity with other their competitors these the confidence attractiveness our our to are with of The upscale value our owners. Hotels by Choice the in open properties to country. over Once expect Ascend fuel

our to deliver forward future royalty owners capabilities XXXX while capturing rate, us continued domestic enabled to in to year-over-year. which by improving propel we our continue the more our agreements effective value proposition franchise franchise also We grow to

target Specifically, customers. drive our our market pricing their enabling owners revenue are optimization further to and additional capabilities merchandising reach top and line capture effectively share,

tools in contributing this our recognized tool, management the for technology. the to reflected experiencing. prestigious industry's innovative enterprise brands introduced our outperformance leading-edge recently we award are most leadership in have area received is we revenue as are the The Our

that most rate occupancy as compared gains the years, In been we fact, drive the higher What's performance XXXX past and strong gains. during is significantly continue competition. both through than our RevPAR to two to have share impressive

We gains expect to moving maintain forward. share

As what a our drive are of ability with our locations revenue-intense results The long-term ample profitability achieved This in improving progress, confidence stronger segments XXXX years. to to working. such more in runway further in result the confirm for that us our our future, well strategy. of we ahead our positioned we as execute of we in is is revenue coming delivery and to on gives results focusing our while growth franchisees, the us exceptional in high continue strategy

up to recognize to we are ESG the commitments our our are which, to to want In strategy, our addition long-term making live performance, like efforts focused. I

we nearly XXXX, team in departments to Our over owners. reduce franchisees and a underrepresented minority ago. to pleased With the management franchised waste protect in costs. ownership to water years began continues operating will take not especially hotels which year energy, program women were utilities drive bringing XX usage opportunities since entrepreneurs. track that piloting level only note at XX and franchise this total identify am to among also fully the diverse help but service can our the that underrepresented hotel dashboard I efforts owners To next and contracts to for and agreements conservation XXX level, enable total franchise our our awarded among began XX executed dedicated X to the Choice and additional over within awarded agreements executed development minority environment the of their sustainability property

amenities best to make year-end across our have published outlined brands commitment polystyrene sustainability in a We're year out have bathroom live was I'm by up employers belonging. standard XXXX. efforts our by recently and and could award-winning especially everything our done domestic domestic XXXX by the brands dedication our we've to year-end consecutive regarding it not culture year. Choice commitments that to of proud Further bulk the associates across long-standing phasing diversity, to and strength also but single-use for pleased report. and certainly without equity named of Forbes recently diversity our fourth we our the to announced the accomplished We on of this are one details focused to recently products ESG of say

In for a work of one our continued the diversity for deliver LGBTQ effective year second results value comparably our by best through by best the shareholders rights to year. create One for the to impressive in performance. places ability equality of companies confident and for campaign the strategic a and row straight and in closing, XXth I'm owners our for and investments human

to I'll we on our we growth further achieved hand XXXX to the are opportunities XXXX well CFO. in begin over and that to power confident year, that, on are build and earnings in it new As positioned Dom? we capitalize beyond. this increased our With success

Dom Dragisich

liquidity Thanks, everyone. capital our I'd updates full on you allocation outlook share you like year that all the ahead. Pat road thoughts results, to our you families additional and hope Today, are quarter with well. profile good provide for your fourth morning, our and details and for and on and I

XXXX we offers financial believe in As performance more for analyzing basis a we've to RevPAR which growth trends. meaningful previous discussed comparing the are quarters, and we our

XXXX, For release. comparisons please refer today's to earnings press to

levels. rate management For coupled cost RevPAR resulted full combination XXXX, Choice and exceeding full intense EBITDA with disciplined revenue impressive year in adjusted a strong performance, growth, year royalty XXXX Hotels' of effective unit growth

compared full end our top our exceeded period even EBITDA and incremental adjusted fact, increased in the to the XXXX of investments with the full year year X% quarter. In same fourth guidance, previous of

expanded XXXX five year an full adjusted These for in of both for records and increase XXXX. points figures our XXXX to compared over EBITDA adjusted for margin our EBITDA XX%, EBITDA margin adjusted company. new nearly to are percentage Our

our will share increased the these This continue with Given cash results, of than follows reinstatement combined we our impressive optimism flow our that pre-pandemic. strong in confidence repurchase to previously announced our future the prospects, dividend a growth generate we program. to quarterly higher level and recently

to For system million. an marketing total were the $XXX.X XXXX, increase grew XX% the fourth quarter XXXX adjusted same fees, period reservation EBITDA compared X% and excluding million, of to and revenues, $XX.X

an a our rate. X% versus As key turn to of result, like three with period $X.XX the share were now royalty our earnings quarter, XXXX. for per same increase fourth adjusted revenue beginning of I'd the levers to

Our source growth. significant effective royalty of rate to our a continues be revenue

Our to fourth from year the our and current further brands behalf royalty pipeline. X% on provides our increasing proven year and validation franchisees. exceeded reflects also domestic strengthening promising full future performance attractiveness points for XXXX, our XXXX effective investments in the rate basis quarter of seven full franchise and proposition long-term of owners, of our It prospects the past, our year-over-year. of our value both by the continued This

digits continue to top line consistently return reducing as total on royalty We revenues maximize cost while rate investment proven in mid-single that Choice of expect strong our seek XXXX capabilities Hotels' the to to grow continue in owners ownership. deliver effective their to

Our industry by percentage XXXX. domestic the year, increasing the RevPAR outperformed system-wide XX period points the of overall same X.X% versus for full

occupancy driven a more versus the RevPAR in fourth daily quarter XXXX, two percentage of For and increased our quarter, rate by than domestic growth point fourth X.X% average system-wide XX.X% increase levels.

addition, STR which points reported in by the continue compete to by segments we chain XXXX. percentage for as In primary year seven our full nearly results scale outpace

midscale. more calls, segments, As on and strategy across intense discussed focused value higher the driving is we've growth prior extended-stay in brand our upscale, and revenue

us enabled of brands Our to investments XXXX and have in share versus our competitors continue segments local outperform our materially industry the versus strategic growth to RevPAR these across in XXXX. gain all in

over competitors XXXX, to points as full percentage by reflecting local growth continued we weekday index. For RevPAR year both compared index weekend increased and our RevPAR versus in four XXXX,

we growth index rate revenue system including during than award-winning that achieved rate significant an management to we revenue daily an local across tool management out a and gained industry. competitors of investments This made right increasingly with our average we versus our the exit consultants, from The franchise year. provided helping the are average pricing last owners result pandemic, and advice stronger during Specifically, capabilities environment. important share daily them inflationary and is quickly strategy, key the rolled successfully our along our to determine expert tools factor

and to in will upcoming drive share enhancements XXXX further revenue and that We management our expect to beyond. tool allow us growth rate rate

of lever like growth, discuss revenue advantages. unit hotels portfolio to sized I'd are and where our third absolute The is is the it's revenue key intensity

unit twice new system. in a unit In our exiting a fact, generated average Choice the Hotels on XXXX as revenue system entering the

remain strengthen providing Given demand our the impressive community, the performance, portfolio. our continued brands further us in franchise high from opportunity to our

royalties, below exit a strategic result, lower within primarily underperforming As and fourth the economy generated a quality we during portfolio. to XX made decision that the long-term just assets were quarter, standards over brand and our

underperforming provide increase royalty improved we us from will short-term enable We hotels an since believe and were quality on minimizing can will revenue terminations expect replace guests. these these assets for quickly, units to more by higher Furthermore, our primarily conversion revenue-intense targeted our that brands, terminations with we royalties. these our the impact experience replacing these

acquisition. the In relationship termination of addition during to the AMResorts due terminations, strategic domestic exit of our it's XX from growth fourth these quarter figures following include with unit to Ascend AMResorts collection our the our

of impact Although revenues immaterial. these unit the growth, subtraction company's it's the overall was on properties impacted

with not the partners Furthermore, these incremental we future long-term entered that properties been these may other As provide. can properties in and are during we fully they replace pandemic opportunity the the platform from revenue and capture resorts revenue system the potential realized. these our has confident

by these hotels. Excluding versus as intense XXXX. the portfolio, the and brands their departures revenue year-end the of improve brands from to Developers our continue X%, hotels grew their of nearly the value our seek to boost they to compared operations long-term competition choose

value and XXX over aided RevPAR new awarded XXXX, XXXX. conversion period same of franchise XX% in our increased continued year a brands our XXXX our year-over-year, full for by strong agreements, For proposition performance. we by Demand the XX% domestic increase

As stronger our we openings momentum of that momentum XXXX, during growth for December close gives and agreements year confidence the were the us in December's XXXX than XXXX further strong continued with the total in the prospects This levels. X/X executed saw month and beyond. for

Our developers the optimistic are of lodging increasingly also about long-term the industry. fundamentals

XX% construction In in the fact, for an were one new nearly three fourth increase prior contracts, quarter year. of domestic in awarded franchise quarter agreements same of the the versus representing

XXXX, why we stronger in gain to balance of our than to Let now strength today the giving were us one an continue share, even are travel we in demand to the our sheet. major reasons confidence ability company me turn of

result specifically, doubled resources performance As company line liquidity $X.X XXXX top of it's allocation has the from and further through billion revolving cash quarter drive nearly year-end, outperformance, to to it's credit to bolstered of at XXXX. of available effective a our it's strong borrowing company the and capacity end facility More the position. XXXX fourth

also capabilities. investments are a flow the were in further X/X or achieved the these over versus year operations quarter million $XXX in million XXXX, we and total a from our cash importantly, results XX% for year our value full Most was despite strengthening XXXX. alone. pleased where fourth We generated report Nearly brands of $XXX to of our proposition, increased increase

improved along our for X.Xx We needed the to in in then best-in-class by of rate our shareholders additional and than a excess and we dividends returned debt-to-EBITDA cash, our flow value form over our ability future. proposition common cash leverage our us growth. sheet $XX.X end level the to cash flexibility our due shareholders positioned our returned sheet provides These the profitability to lower pre-pandemic stock, maintain to repurchases This debt XXXX. and strong followed to generate January position, $XX collections improved of and net year, results an our grow and impressive business liquidity our as million the are at of Last of in balance with reflects higher XXXX. as into utilize to million continue we range of to balance Xx to to levels a well return back targeted to our of gross with levels below additional to well leverage mean Xx leverage confidence continue EBITDA shareholders

quarter announced a to Board dividend During XXXX, to invest X% company's the year, business million. of of to to core adapt growth continuing the in pandemic, we while opportunities. expect increase ancillary this over the the for dividends Directors the our $XX Throughout annual deploying ability we demonstrated and fourth and totaling pay capital

to continue will We investment drive utilize returns for our for the come. leverage years opportunities to in expect to invest and growth, to continue environment position to strong monitor to attractive

As expect our all at we of XXXX, fully enter disposal. we have levers allocation our to capital

Before questions, turn opening up our lies it to ahead. expectations for for to I'd what like

the the pre-pandemic for trends adjusted for and year full somewhat for precise levels are continued year RevPAR recovery still exceeded XXXX EBITDA full company While XXXX, uncertain.

XXXX We expect an segments. continue this To within macro opportunity capture our the previously, on demand, investment us. the for outperformance of drive mentioned brand share consumer trends and a year be larger to and continue to travel demand will capitalize to

As to back expenses expect year-over-year in thereafter. to XXXX revert rates such, higher growth we historical and incur SG&A

in XXXX year expect EBITDA to with growth we elevated XXXX, and investments. year even continued full planned RevPAR these compared full to drive both For adjusted

answer balance and these our resilience trends, will We In allocation I disciplined want our during strong further and We allow May approach growth next believe investments broader in model. strategic accordingly the in sheet reiterate Operator? level combined years drive time, call. this it's business would with of provide our long-term strategy our closing, will earnings our further our confidence capital in and recovery any us outsized questions. of to the and be the returns At Pat on environment ahead. happy capitalize the continue monitor strengths with updates to to to I and we'll opportunities adjusting

Operator

from Farley go comes [Operator UBS. Robin first Instructions] Please with question Our ahead.

Robin Farley

Great, thanks.

comments you plans? fit liquidity. your about M&A Can the you how on made circling Just back the increase to in talk into your might

Pat Pacious

Robin. Sure,

external I the internally at. think M&A as on organic we've always one total done acquisitions. Obviously, that that of discussed look levers allocation, is around some has company we're a growth. We've invested we capital also our

for tuck-in acquisitions sense So we that do continue for make us. could to look

talked do yet in world. we've about space calls, we some the that as prior have think upscale play primarily upper our in I world, extended-stay white domestic upscale, don't in portfolio, we in

opportunities that, at. internationally, model. and right markets some if out came then we types look when are areas that the Those And growth for as in an the we've along. we are similarly, M&A there the acquisition So brands that look are franchising there favor our historically of perspective, looked opportunity from

return it's continue something along to for the for the come our litmus benefit can right And can which improve and the of the if investment that I is, test I grow do. meet on so brand our we'll opportunities shareholders. the And franchisee

opportunities So those any to generally two tests, M&A applied key are litmus we look at. we that the

Robin Farley

-- quantify Okay, your share one other of the trying A share companies, I of get conversions. to to assume bread-and-butter that -- kind is a way lot market companies a of kind don't for on and your all in larger hotel great. you that's this is market for have how if was other question but like that? is to you in that whether, the compares other a it what I XXXX? environment. more of a conversions sense on pie while, competitive a focusing of Can little of know also the signed I getting guess been lot And XXXX

Pat Pacious

Yes.

construction that do year construction. X/X, new mean Let between we do conversion about is every conversion, me deals new X/X, so we X/X about -- our X/X upmarkets I the mix and in historically,

last what's normalized year more of generally it of we for health and the more to what shifts happened I interesting impressive, think, had XX% During year. is really a And conversions. our brands, downturns, is Robin,

more in to is construction XXXX, the an given conversion, which back X/X X/X that new shifted new we construction So we're place XX% be, to we a of healthy have. XXXX, us but conversion, that for really we -- to in XX% brands

getting share of conversions in, the the the we entries we're I entries say, that new I think mean multiple. system into our was versus a at if of Regarding remarks, our we are the look mentioned them, the yes. I or quality fair as bringing would Xx I exit in

of a So intensity twice exited And we versus you at lot what -- brought that again, is revenue conversions. the look when of that's was what exited. what in driven by profitable highly

we're the are So there. in of I the market conversions. total that go bringing conversions analysis. right of the standpoint know do understanding I would don't and from have somebody share out that guess to

Dom Dragisich

conversions take thing only both broader you portfolio I that very contracts the the about optimistic were XX%, for just speaking, for four, the year feel both quarter a at the when and conversion almost our growth well add as Broadly even would the the we we're look full seeing up as Robin, contracts on element. your in is of side house.

so XXXX look than And to more domestic openings conversion The continues fair our had higher we frankly, when you had market in alone, than the as a eight capture market. number of we've continue to last in at family the share, the Comfort especially years. expand, we

that's dating So to XXXX. back

prospects continuing see about feel to rates mid-scale, our see good last conversion XX% mid-scale, that continue growth in this We tremendous a take look the share, very segments, upper in particular, the of a to you we lot year. at when activity, take future well. as where versus So we

conversion And you're significant momentum space, hearing that activity Ascend too, brand well. to in if a our that's soft see lot with of we're probably conversion pretty continuing Some as about upscale upscale about you the brands, that think etcetera. of

about very good is where So company the feeling positioned.

Robin Farley

Okay, great. much. you Thank very

Pat Pacious

you. Thank

Operator

Allen comes Thomas Our go question next Stanley. from Please with Morgan ahead.

Thomas Allen

and us about growth Can the Thank for you XXXX you. net thereafter? unit help think

Dom Dragisich

Sure.

think growth. So Thomas, best way to think revenue-intense is it about I unit the that

under What unit we those what is terms, growth talked revenue-intense XXXX, X%. in about well as the if unit grew I trend that we would that continue. you just to revenue-intense say So we as terminations strategic expect AMR exclude see growth is

I the think the previous even it's units those as as -- revenue in units coming gives made us the that Pat the optimism Xx into which exiting more the is are what intense system was point system. question

to we're you when extrapolate that like a more seeing what historical like, our it's growth X%-to-X%-unit So that unit today. looks growth

units your you're at are Xx. that to So saying basically going grow next revenue-intense year,

see expect also to to so speak. Xx multiplier, that We

We expect increase XXXX. actually in to see that

So looking again, units, contribution X% that, be historical X% the revenue of at well within to you're from those range. that going to

Pat Pacious

to opportunity to some a of more we in mass. And that of about drive brand royalty particularly market we've the do revenue It's I at is we're ultimately the intense with to to the higher basis. taking what just an for on looking to Yes. and accretive. our intense been that's add us. time, it's that And critical our the did really that opportunity a hotel practice is and have would doing market contributor system. what what to that unit to a really really continuing that opportunity we're because brands say -- some end see that And a have That's Thomas, That's profitability for growth And quarter hotel optimizing fourth regular we earnings in that specific strategic the over going more to for do an as terminations, just continue move we forward. units we're the perspective from are market. if accretive have we

Thomas Allen

of think certain help Can parts about versus businesses already franchise my relicensing segment on and us fees, XXXX just and about initial levels. the those then, you And just Helpful. are owned XXXX profitability above procurement services follow-up. XXXX, as think we

up. of certain think catch I

help just those you can So of lines? about us things each

Pat Pacious

and then volume over the Yes. speaking, fill that we year proposition have Thomas, detail. and some relicensing pretty the it I let speaks Dom both had improving when look the we've I had, we to that can at I been just robust mean, the me that think broadly years. again, a opportunities in start we of value think And from perspective.

come it that of up on they another the sell kind a opportunity shareholders. relationship they way us when So our hotel and is to opportunity the do franchisee a to gives beneficial their to more reset franchisees that where relicensing in

value I prop charge has gotten better, the we're think sort higher as able fees. to of

we're so that in numbers well. our And seeing as

then we've both contract world. So looked and increased as that a it's a been also value per at volume

I by -- is lot think business a driven this of that procurement, is on occupancy.

we XXXX we RevPAR seven were said as XXXX, last back months with So the levels. of to

lot revenue driven towels sheets how for that really So the you hotels. of many a in like are and line is and But again, us. and by it's a -- that's your guests building that have soaps really

Dom Dragisich

Yes.

of Just terms point twice in finer you in in XXXX. we look that volume when putting the relics were particular, about just the we at data, XXXX a saw in the

So due is trends we're the would The over see recognition recovery thing the the caution contract, item. flow straight to you life the to line amortized one of I are the through continuing relic revenue those line essentially the relics now standard. new

with would on I grow services grow when And your line broadly out, So say at model the house, loyalty then with minimum, you as basically you side well. speaking. would want would of that to growth, system procurement it revenues those you in the a

in line obviously, As Pat rates. with mentioned, occupancy

our good that. about provide, feel very we etcetera. our select to we're services grow But that continuing vendors, we So

your higher I to think opportunity in least an frankly So the that short to services, than revenue. at procurement midterm, royalty there's even grow

Thomas Allen

you. Thank Helpful.

Pat Pacious

you. Thank

Operator

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

David Katz

revenue of that or we The at the around is If you or adds quite my for I math than the everyone those each smaller them. bit look you're overall? or intensity is with to everyone. question. were Cambria system to assume any a but Thanks intensity can you're noteworthy. afternoon, morning, the brands around Is discussion Good us incremental greater they're there adding what Ascend adding, albeit upscale taking help

Pat Pacious

absolutely that's David, Yes, right.

I economy. times a feel think even or because midscale pretty of your a WoodSpring we've it that Comfort We an about, segment product. the you intense associated the a economy as When years constant. revenue and of shared the more is than economy as at WoodSpring revenue ago of an ratio more hotel like about be transient you look could at count. brand alone very upwards be this something the basis XX product When still economy intensity Cambria, royalty of as too, brand high with Xx higher well couple as could a extended you like look as greater upper well. product an good with stay on a revenue is fee like extended Xx room intensity stay hold

what's that churning So biggest happening averages Econo you're press about most economy see takes, is at terms talked you is the and today we take the puts coming to particular, in those in release it look that's Xx you because and pressure. when products. those of a When about what's exhibits, in is where churn in of all versus out at Roadway what Lodge look you'll see

expect So see actually we to increase to we do Xx to focus this as Xx not continue that continue we strategy. that but revenue-intense on only see expect

David Katz

that, mean that the word of to XXx the be And Does the definition intensity. clear hypothetically a, generates Cambria revenue? about just

Pat Pacious

to Yes. from Dave, We value. look a more back we company. it more at net the it at present value from intensity look Yes,

brand. of a vary the the royalties factor driven. rate length And by of royalty the it's lengths contract, So effective the those that are and

have you a and agreement, And a value so a our what count that RevPAR has Cambria are factors contract system. has room we the higher for understanding if and a go believe into higher which XX-year is that the has market those

David Katz

sort just help help at us can more of you economy rather much M&A, think and Got more. whether ask so set level looking be it. With size would that? than about in Where how respect upscale you would any And if terms I you this point. us can to one boundaries of

Pat Pacious

Yes.

balance I our very -- a mean in sheet is healthy position. think I

opportunity, given So the anything the size I see us. out for there. what of that's large too believe is don't We

we our things thoughts long at moving to when revenue-intense in think strategic That's strategy as in look a of categorize I that fashion, looking where unit the go us that are far more beneficial be accretive as of more revenue-intensive we would term. type growth in what as of for M&A categories. our those

David Katz

very Understood. much. you Thank

Pat Pacious

Thank you.

Operator

comes Our go Michael next ahead. with from question Bellisario Please Baird.

Michael Bellisario

Good everyone. Thanks. afternoon,

Pat Pacious

Michael. afternoon, Good

Michael Bellisario

the your hotels? that hotels, makeup up of to moving you some help those the how again brands, of versus and the speak? there kind And the you hotels I for to really brands? the and does customer have curve, franchisee so but developer and of Just legacy overlap opening. along and more same that exists differs higher-end for also, you're the Can then higher-end but the understand the deals differ lines to us trying potential as ADR I on of newer and focus synergy how a kind kind that on question understand signing want makeup

Pat Pacious

Yes.

And nicely when when our Michael, Ascend that opportunities so been midscale well at growing segment fit research look our on a that look the customers are service current core upscale that hotels something think, that Cambria, there's you upper front. and product, we've that in in customer that been we've growing, at top brands. the Collection extended When with we they done I lot of both we know when our at brands stay we've staying look overlap on is you as is select currently the today. of

economy our in people length we larger our stay staying who of transient in So hotels. have do segment, economy are

which extended more so And you bit franchisee going because at WoodSpring our of customer institutional set. or a investors in we interesting are that's a makeup, situation brand, capital look that When there's common our in be already a to our investing the always stay. suburban upscale our had economy barbell it's very tend brand, customer now where developers with on, really

we and capital when brand that something segment to significantly. had into looked so ultimately ability the bring grown into we acquisition that the it's that now And at was because the were institutional was looking always WoodSpring at

existing both you of segment, at stay there's mid-scale of in our a developers sort upscale into developers. the synergy move and Cambria. to our economy-extended bread-and-butter When them So look nice we're see starting

starting development as of Cambria larger some our do Comfort with Inn well. more So developers to we're

the both customer segments. brand leveraging bases the of So grow and customer existing I we're those think both in developer side to side,

Michael Bellisario

then, helpful. Got those other it. maybe of forward? or dollars, you And brands Cambria? investments sheet left? a remaining for That's you How your just balance where going whether it's basis guys And -- with can earmark any on for where you much Cambria are us net is remind

Dom Dragisich

Michael. Yes,

up broadly there. speaking, out that break it we When our assets. So we of about down, half of owned have to or that million probably those investment authorization you have so $XXX $XXX million. Obviously, is in

capital of coming money expect to in deploy the in And Most a key future of brand of typical brand. just we the and is form continue so Cambria against Cambria level investments. that growing the the to

I you So then some really broadly think see those growing in critical. that's in think And strategic elevated I speaking, could money key segments.

it story, If to that from revenue-intensity our on We by further. value growing that balance sheet expect look money again, that you you do a think at be perspective. the to about, will portfolio derived key use just back

elevated just recovery 'XX You saw are a maybe money we it 'XX fact in a $X expected, to key from was be which environment year-over-year. is increase slightly million given but the about to that only

we see trends into continuing expect to would those So the future.

Michael Bellisario

you. Thank

Pat Pacious

Thank you.

Operator

ahead. Please Scholes Patrick Truist. Our with next from go comes question

Patrick Scholes

Good afternoon, Hi. everyone.

Pat Pacious

Patrick. afternoon, Good

Patrick Scholes

they out, I a the to Hyatt. thing think I given I color to road? probably get the as when from give broad was contracts that. more, had with there on Can sale guess, their the that could concurrent exit in you the Or know, the some guess about onetime you be AMR out? amount franchise down You see that Do hotels wrapping I option material

Pat Pacious

I before in that really Collection the Ascend those literally were joined acquired then of this year. the was they hotels fourth hit mean Patrick, quarter month the Yes, pandemic onetime and a a event.

a So they be to never really much of contributor were able us. to revenue

was around by acquired company. being exit hotel the so And another really

an there's there inclusive to make to sense owners there other guests are And So into I for with send out the that our us way. it about future. would in there think product. this would it we work opportunity know an more of

think So we going there's find type term us opportunity in an the similar probably for relationship to here do medium forward. a

Dom Dragisich

Yes, speaking, at unit Patrick. to there's when left add, One you is just is thing growth I the clarify, international to reality no as well, AMRs broadly I look to mean, terminate. would want the

AMR. But impacted was all that rooms by expect an to would to be the we opportunity growth, So point. in that particular, Pat's international

associated growth internationally So with if the again would you terminations were to onetime have flat which positive. eliminate nature. slightly The AMR been rooms actually in

And to a a forward. that generating the was I of think to given, impacts from perspective, and that see point expect opportunity that's revenue just revenue not pandemic again, important be a ton really so an going we .

Patrick Scholes

Okay.

don't mean negative dwell the on I question to Another here. apologies, and

should would portfolio percentage What that XX or said think forward? something net XQ. of in system that a had leaving You you loss unusual? Or that leave is going of expect would sort Was XX, you as was think ongoing as termination you year? the the we say an we should about rate assets underperforming of sort every

Pat Pacious

think, what doing. market X%. We termination should see financial historically, our and here. hotels be looked I recovering is to Patrick, they the performance rate a of X% those about We at

mentioned in I levels or of XXXX at months earlier back above. the were last remarks, we my the As seven year,

money. making were owners the So

So are a demand and open the the probably look robust primarily And we for terms Inn up they're, that as bit where at an markets it XX That's brands. well, their saw some b, opportunity brand and going get for if seeing we not serving ahead a, paying some are little to came their fees here to the because those that. guests or, not of economy game we out Quality of. of

see it to do in of our of more maximize let's markets marketplace so we of those now terminations specific was profitability system. -- the And we a opportunity the given and the recovery see these here

end to just rate opportunity markets. this And to to probably would about ahead So of in on took those continuing the the of X% an quarter development that rate. at get be we termination the as at year the future fourth I X% think game

Patrick Scholes

great color; that's for the you Thank Okay. [ph].

Pat Pacious

Thank you.

Operator

Loop with Please Our ahead. next go comes Capital. Adam question Daniel from

Daniel Adam

Thanks in. Hi, for everyone. me squeezing

a this So that in question is less core your that but all to any the might the impact traveler years might be X question to or be read hope your the might business XX bit customer? little event, In ridiculous. considered given ridiculous markets, when vehicles actually transcript seem you eventual investors respect especially the with drive of two is, just self-drive a what exposure have at

Pat Pacious

business. for It something strategic a I mean, be plan could think things question. it's long-range Dan, people might we had a is there, that I've will like, our hey, in pandemic. about and planning the XX And not this been we we do years always ridiculous yes, to our be be a there company for writing about happen. and threat that would And never

things happen the do we for these So do long term. and out look

is to phenomenon, a a that variety sleep really When you when question their we go hotel, look going at think go there, car. for reasons. of in to it want a someone I you to of if

are trips, are about to. the them going United when I that people the at markets replacement a about be be upscale always amenities the way. many want beach past, And it's travel in our about in there's country the think States at how this footprint interest our we national during are as cars, why stay? our look going reasons extended upper shower. like I we've not self-driving And In at to expect if a locations the our for look across be the at lot contributor. be You park, to or stay of to continue mid-scale a hotels look it to and look of to I as in our sitting pandemic, is a sitting business travel at road a our at we to to people the to. And It's a just along want think and and hotels, people well. the at said that I there talked hotels portfolio, business We I of points stop really

as to launched is replacement that thought don't through we've back a but we is at year can the something look Airbnb as a stay. something it this hotel Airbnb. iPhone. I the see same So was

always around the for replace I dampened to And hotel accommodation version going it hotel has time. been an long it that not a has think space. is and demand well, It's people So of alternative the have said, business.

something for hotel something it So as looked at it we've replacement but see a a stay. is not that is I

Daniel Adam

Okay, great. That's super helpful. Thank you.

Pat Pacious

Sure.

Operator

[Operator Instructions] Please Dan Morningstar. from next comes question go with Wasiolek ahead. Our

Dan Wasiolek

Hi guys, thanks the taking for question.

XX-unit is I that of about? you is that unit and just to we an a thought is margins just -- of earlier growth. saw one is that two, a clarification question you're the range And X% EBITDA EBITDA So one in Or X% kind is to beyond? in figure? talking kind that can the Were that this And potential heard kind of something beyond XXXX revenue look durability that accurate? response we adjusted an margins the intensity was on I of for actual then XXXX second maybe year. the the see out investment first as

Pat Pacious

address thanks I So will then and it. perspective, about we clarification unit certainly to for is revenue-intense From try growth. unit a what talked

that which of side as X% we grow portfolio portfolio the or the AMR. terms this economy on term the those in year were ex at is that's less as where X% below strategic well just approximately onetime would So events

with perspective unit speaking, we what a not from from X% multiplier. talk in but NPV talk an we that's each to as expect in about approximately growth, What revenue XXXX. to is Xx a the intense. X% royalty happened broadly was the perspective, When well, intense. only coming about is as unit that really So we perspective And about revenue royalty Xx is

company. be to translates it So when the speaking coming about what's you for exiting, historically versus in, apply on that X%-to-X%-unit growth, a multiplier what's would what

actually in Xx so XXXX that we that to increase -- that expect well. And as and see helpful? Is multiplier,

Dan Wasiolek

comment I margins Yes, if on longer you then it is, could definitely. term? maybe, EBITDA of the durability guess, just And

Pat Pacious

it's question our when It's great our line top XXXX because look in investment at a think, do opportunity plans see really and focus beyond, robust for that expect revenue. think a I we I we Dan, the on a we business.

mentioned, units we've our in strategies as bringing And so valuable we're terminating. than we're that work

level. record Our margins a are at

an record we've the had. month royalty of our January is month effective Our was best level, rate ever of January effective

record. a that's So

balance healthy a have We sheet.

to our can now brands, to They we platform we things of strengths proposition have that significant value opportunity in in to really franchise, leverage look things leverage that our business. in invest are things invest So right the in the we these a amount our scale. grow our believe are our really and And and in that then earnings.

margin somewhat our -- is that so And at to to something something shareholders. growth that expectations as us long-term that growth. order for that's the the compress look in XXXX, here opportunity that in business we're we maybe for long-term mean running is in do invest an of I really

world a on those income making onetime taken that's where or today, the we've works statement. your investments, the -- So of transitory lot way

some margin that the that customers. So is we new that's often have and with ourselves and thought some really are it. something you we this segments compression. play year a maybe and have as that here have do to new of given establish way company the about doing bit considering that we've the really opportunities And little And we opportunity

Dom Dragisich

margin function business, some you In Yes. I events, really those XXXX, T&E, like we right? about record to marketing, would end probably mean and that expect top is returning a Things at talked see level coupled of etcetera. the meetings the day, to of of of the a recovery, the higher cost structure changes some previously. the with quicker line costs

the expect we're term long eliminated bets. And function paused see very right the to business we're margin right or the the confident the the that, we're these for short outsized of years. frankly, you if would just place you bets. of important, it's expand the itself, term, continuing think point, willing that model In in to rate to longer place think Dan, growth. during I costs long-term Some were run To invest pandemic the more I term, Pat's in

Dan Wasiolek

Okay, Thank very you. helpful.

Pat Pacious

you. Thank

Operator

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

Pat Pacious

today operator you Have May. Thank again afternoon. we everyone, you, of healthy and time. and all your to for safe great hope all you I rest will and stay talk in thanks, again, your a

Operator

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

disconnect. now may You

Choice Hotels International (CHH) 16 Feb 222021 Q4 Earnings call transcript