ROCKVILLE, Md. — Feb. 17, 2021 — Choice Hotels International, Inc. (NYSE: CHH), one of the world’s largest lodging franchisors, today reported its results for the three months and year ended December 31, 2020.
“Despite a year of unprecedented challenges brought upon us by the pandemic, Choice Hotels drove results that significantly outperformed the industry, achieved a number of major milestones in the execution of our long-term strategy and positioned the company to continue to grow our share of travel demand in the years to come,” said Patrick Pacious, president and chief executive officer, Choice Hotels. “These results are a testament to the success of our winning strategy to grow our limited-service brands in more revenue-intense segments and the right locations. We believe that our long-term view, compelling franchisee value proposition, well-segmented brand portfolio and strong balance sheet will help us further capitalize on growth opportunities in 2021 and beyond.”
Throughout 2020, Choice Hotels provided a broad range of support to its franchisees, guests and communities while improving its overall financial and liquidity position. Highlights of fourth quarter and full year 2020 results include:
- Domestic systemwide revenue per available room (RevPAR) change outperformed the total industry by nearly 26 percentage points, declining 25.1% for fourth quarter 2020, compared to the same period of the prior year, and improved by 370 basis points from third quarter 2020. Full year and fourth quarter 2020 RevPAR performance also exceeded the chain scale segments in which the company competes, as reported by STR.
- Fourth quarter 2020 domestic RevPAR change outperformed the industry by an average of 26 percentage points per week, an approximately 600 basis points expansion since third quarter 2020 (see Exhibit 7 for weekly RevPAR trends).
- The company achieved a number of major milestones in the execution of its long-term strategy to grow its presence in more revenue-intense segments and locations, including a return to unit growth for the Comfort brand family following the successful completion of its transformation, significant expansion of its extended stay portfolio and the continued growth of Cambria Hotels.
- The company awarded 427 domestic franchise agreements in 2020, a 38% decrease compared to the prior year. Over 70% of the agreements awarded in 2020 were for conversion hotels and 28% were executed in the month of December.
- Net income was $7.9 million for fourth quarter and $75.4 million for full year 2020, representing diluted earnings per share (EPS) of $0.14 and $1.35, respectively.
- Full year adjusted net income, excluding certain items described in Exhibit 6, decreased 49% over the prior full year period to $123.9 million.
- Full year adjusted diluted EPS were $2.22, a decrease of 49% over the prior full year period, while fourth quarter 2020 adjusted diluted EPS were $0.51, a 45% decrease from fourth quarter 2019.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for full year 2020 were $241.1 million, a 35% decrease from the same period of 2019. Adjusted EBITDA for fourth quarter 2020 were $54.7 million, a 35% decrease from fourth quarter 2019.
- The company reported cash flow from operations of over $115 million for full year 2020.
Performance Trends
- Domestic systemwide RevPAR decreased 25.1% for fourth quarter 2020 compared to the same period of the prior year, exceeding the total industry by nearly 26 percentage points and outperforming the respective chain scales in which the company competes by more than 760 basis points. Full year 2020 domestic systemwide RevPAR declined 30.7%, surpassing the overall industry performance by nearly 17 percentage points.
- The company’s extended-stay portfolio continued to outperform the industry in 2020, with an average domestic systemwide occupancy rate of 69%. The portfolio achieved average weekly occupancy rates of over 70% since the onset of the pandemic in mid-March through December 31, 2020 — exceeding the industry weekly average by 30 percentage points. Specifically, the WoodSpring Suites brand achieved occupancy levels of over 70% in fourth quarter 2020, outperforming the industry by 28 percentage points, and grew RevPAR by 2% in the month of December, year-over-year. MainStay Suites gained nearly 22 percentage points on the local competition in RevPAR share in the fourth quarter, year-over-year. In addition, the Suburban brand’s occupancy rates increased by 210 basis points in fourth quarter 2020 compared to the same period of 2019.
- The company’s upscale portfolio continued to achieve domestic systemwide RevPAR share gains versus its local competitors for fourth quarter 2020, compared to the same period of the prior year, with the Cambria Hotels brand achieving gains of nearly 22 percentage points year-over-year. In addition, the Ascend Hotel Collection’s domestic systemwide year-over-year RevPAR change surpassed the upscale segment by over 20 percentage points in the fourth quarter.
- All select-service midscale brands achieved domestic systemwide RevPAR share gains versus their local competitors for fourth quarter 2020 and full year, compared to the same periods of the prior year. The Comfort brand family’s domestic systemwide year-over-year RevPAR change outperformed the upper-midscale chain scale by over 10 percentage points in fourth quarter 2020.
- In fourth quarter and full year 2020, the company continued to outperform the industry on year-over-year domestic RevPAR change and achieved RevPAR share gains versus its local competitors across all location types, as reported by STR.
Additional details for the company’s fourth quarter 2020 and full year results are as follows:
