Choice Hotels International’s third-quarter revenue per available room and occupancy slipped year over year alongside lean average-daily-rate growth, the company reported Tuesday. Meanwhile, Choice remains confident it will complete its proposed acquisition of Wyndham Hotels & Resorts, Choice president and CEO Patrick Pacious said Tuesday during an earnings call, despite the opposition of Wyndham’s board.
Choice made its $7.8 billion bid to acquire Wyndham public in October following stalled negotiations between the two hotel companies. Since then, Wyndham late last month detailed its “well-substantiated reasons” to decline the offer during its third-quarter earnings call, reasons that Choice executives said Tuesday they can remedy at the negotiation table.
“The top priority is to get reengagement, to come back to table,” Pacious said, adding that “every issue that’s been identified can be solved by coming back to the table and negotiating.”
Choice remains “very committed” to this transaction, according to Pacious, calling it “too compelling not to see it all the way through.” There “can be additional value unlocked if Wyndham reengages,” he said, and he is “confident we’ll get the transaction completed.”
One benefit to Choice making its Wyndham bid public has been what Pacious called encouraging conversations with franchisees who “support” the potential acquisition. One group of franchisees, the Asian American Hotel Owners Association, stated it “doesn’t support the deal” in a statement on its website in October.
Following its 2022 acquisition of Radisson Hotel Group Americas, Choice has migrated 75 percent of Radisson Americas’ properties onto its program, and of the company expects that process to be complete by the end of the year, Choice executives said on the call.
The Radisson Americas acquisition experience shows Choice “knows how to acquire companies and get them integrated,” Choice CFO Scott Oaksmith said during his first earnings call with the hotel company since being promoted in August.
Q3 Results
In Q3, Choice’s systemwide average daily rate was $103.33, up 1.3 percent year over year. The hotel company’s occupancy slipped 1.3 percentage points to 62 percent.
Also down slightly was revenue per available room. RevPAR in Q3 was $64.02, a 0.8 percent decrease year over year, but still up from 2019 levels.
The company still believes there is the “ability to push rate” Oaksmith said, highlighting that business transient will continue to accelerate through the “second quarter and beyond” next year. “It’s a function of the economy as we ride through this … the prognosticators said we feel like we avoided a recession,” Oaksmith said.
Choice’s total revenue in Q3 was $425 million, up from $414 million in 2022 but down from the company’s “quarterly record” of $427.4 million in Q2. The hotel company’s net income was approximately $92 million in Q3, down from $103.8 million in 2022.
Business Performance
The company continued to improve its international business performance; a sector Choice eyed as “white space” for growth opportunities last quarter.
“Our international portfolio-wide third-quarter RevPAR increased 14 percent, with the Americas region growing 25 percent compared to the same period of 2019,” Pacious said, adding that the company believes it has a “significant opportunity” to grow international market share.
The company also highlighted its pipeline growth, with new hotel openings growing 24 percent year over year.
Extended-stay hotel openings grew 13 percent year over year, according to Oaksmith, and conversion properties grew 36 percent year over year. Two-thirds of the company’s hotel openings come from conversion, hotel executives said on the call.
