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01/10 18:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A indicate a positive outlook. The company is expanding internationally, particularly in Canada and Asia-Pacific, and leveraging AI for efficiency. Although RevPAR expectations are flat, the company sees growth in demand from key demographics. Ancillary revenue and international contributions are strong, with optimistic guidance for 2026. The strategic focus on conversions and limited supply growth supports net room growth. Despite some unclear responses, the overall sentiment is positive, likely resulting in a 2% to 8% stock price increase.
Adjusted EBITDA $190 million, up 7% year-over-year. This increase reflects the strength of higher revenue brand mix, a surge in small and medium business traveler and group's business revenue, continued momentum across partnership revenue streams, and accelerating earnings contribution from expanding international business.
Net Global Rooms Increased by nearly 2.5% year-over-year. Growth was led by continued expansion in higher revenue segments, which grew by nearly 3.5%, along with higher revenues per hotel across all segments.
International Adjusted EBITDA Achieved 35% growth year-over-year in the third quarter. This growth was fueled by a 66% year-over-year increase in hotel openings and expansion of the international portfolio by over 8% year-over-year.
Canadian RevPAR Increased 7% year-over-year in the third quarter. This reflects the transition to a direct franchising model and growing franchisee interest across brands.
U.S. Extended Stay Room System Size Grew 12% year-over-year, highlighted by a 14% increase in openings. This growth reflects the expansion of the U.S. extended stay portfolio and strong demand in the segment.
U.S. RevPAR Declined 3.2% year-over-year in the third quarter. This decline was primarily due to softer government and international inbound demand.
International RevPAR Increased 9.5% year-over-year in the third quarter. Growth was led by the EMEA region with an 11% increase, and the Americas and Asia Pacific regions each posted 5% growth.
Average U.S. Royalty Rate Increased by 10 basis points year-over-year in the third quarter. This reflects a strategic focus on higher revenue brands and a stronger franchisee value proposition.
Partnership Revenue Increased 19% year-over-year in the third quarter. Growth was driven by strong co-brand credit card fees and increased suppliers and strategic partnership fees.
Adjusted Earnings Per Share (EPS) $2.10 for the third quarter 2025 compared to $2.23 in the prior year quarter. The year-over-year comparison reflects impacts from the acquisition of the remaining 50% interest in the Choice Hotels Canada joint venture, higher amortization expense, temporary increase in income tax expense, reevaluation of previously held ownership interest, and unrealized foreign currency adjustments.
Everhome Suites brand expansion: 23 hotels open, 16 opened this year, 40 more U.S. projects in the pipeline, including 12 under construction. Expanded into fast-growing markets like San Antonio, Texas.
MainStay Suites in Australia: Launched mid-scale extended stay brand, marking the first expansion outside North America with nearly 600 rooms.
Ascend Collection in China: Onboarded nearly 80% of the more than 9,500 anticipated upscale rooms within 5 months, with the remainder expected by year-end.
International expansion: International portfolio expanded by over 8% year-over-year, surpassing 150,000 rooms outside the U.S. Growth fueled by a 66% year-over-year increase in hotel openings.
EMEA region growth: Portfolio grew to nearly 64,000 rooms, up 7% year-over-year. Significant progress in France with plans to onboard over 4,800 mid-scale rooms under direct franchise agreements by year-end.
Caribbean and Latin America: Expanded footprint by nearly 50% over the past 3 years to more than 25,000 rooms across 20+ countries. Entered Argentina with Radisson Blu in Patagonia and Radisson RED.
Asia Pacific: Launched Ascend Collection in China and MainStay Suites in Australia. On track to add 10,000 mid-scale rooms in China over the next 5 years.
Technology investment program: $60 million investment nearing completion, transforming technology stack into an intelligent ecosystem to optimize rate and revenue management, streamline operations, and enhance franchisee success.
Business travel strategy: Business travelers now represent 40% of stays. Group revenue rose 35% year-over-year, and small and medium business revenue grew 18%.
Loyalty program enhancements: Revamped loyalty program launching in January to accelerate member growth, increase co-brand card revenue, and strengthen direct bookings.
Portfolio optimization: Strategically replacing lower-performing assets with higher quality, more profitable hotels, lifting guest satisfaction and brand equity.
Focus on higher revenue segments: 90% of global portfolio consists of higher revenue-generating rooms. Pipeline includes 98% higher revenue brands, expected to be 1.7x more accretive than current portfolio.
Extended stay segment growth: U.S. extended stay portfolio expanded by over 20% in 5 years, now exceeding 55,000 rooms. Everhome Suites brand gaining traction with 40% of economy and mid-scale extended stay rooms under construction belonging to Choice brands.
Interest Rate Environment: The current interest rate environment poses challenges for new construction and hotel transaction markets, potentially impacting growth and capital recycling activities.
U.S. RevPAR Decline: U.S. RevPAR declined by 3.2% year-over-year in Q3 2025, reflecting softer government and international inbound demand, which could impact revenue growth.
Economic Uncertainty: The macroeconomic environment remains dynamic, which could affect demand and operational performance.
Construction Challenges: The challenging new construction environment for the industry could slow down the development of new hotels, particularly in the U.S.
Regulatory and Tax Impacts: Potential impacts from government shutdowns and changes in tax recognition timing could affect financial performance.
International Expansion Risks: While international operations are growing, entering new markets like Africa and Argentina carries risks related to market acceptance, operational challenges, and geopolitical factors.
Technology Investment Risks: The $60 million technology investment program nearing completion carries risks related to implementation, adoption by franchisees, and achieving the expected ROI.
Franchisee Performance: Strategic exits of underperforming assets and reliance on franchisee success could pose risks if franchisees fail to meet performance expectations.
Full Year Adjusted EBITDA: The company has raised the midpoint of its full-year adjusted EBITDA outlook to range between $620 million and $632 million, reflecting confidence in the growth of its global business.
U.S. RevPAR: The company expects U.S. RevPAR to range between -3% and -2% for the full year, with fourth-quarter comparisons impacted by elevated hurricane-related demand in the prior year and potential government shutdown effects.
International Adjusted EBITDA: The company expects to generate more than $50 million in international adjusted EBITDA by 2027, doubling from its 2024 baseline.
International Portfolio Growth: The international portfolio expanded by over 8% year-over-year in the third quarter, surpassing 150,000 rooms outside the U.S., with a 66% year-over-year increase in hotel openings.
U.S. Extended Stay Segment: The U.S. extended stay portfolio has grown by more than 20% over the past five years, now exceeding 55,000 rooms. The company expects continued strong demand fueled by manufacturing and data center build-outs.
Pipeline and New Construction: 98% of rooms in the global pipeline are in higher revenue brands, with new construction franchise agreements and openings expected to grow in 2026.
Technology Investments: The company is nearing completion of a $60 million technology investment program, expected to conclude next year, aimed at enhancing franchisee success systems and driving durable RevPAR growth.
Loyalty Program Enhancements: A revamped loyalty program launching in January 2026 is expected to accelerate member growth, increase co-brand card revenue, and strengthen direct bookings.
Demographic Trends: The company anticipates significant demand from retirees and near-retirees, who represent nearly 30% of revenue and are expected to drive travel demand well into the future.
Dividends and Share Repurchases: Year-to-date through September, we returned $150 million to shareholders in dividends and share repurchases.
Share Repurchase Program: Year-to-date through September, we returned $150 million to shareholders in dividends and share repurchases.
The earnings call summary and Q&A indicate a positive outlook. The company is expanding internationally, particularly in Canada and Asia-Pacific, and leveraging AI for efficiency. Although RevPAR expectations are flat, the company sees growth in demand from key demographics. Ancillary revenue and international contributions are strong, with optimistic guidance for 2026. The strategic focus on conversions and limited supply growth supports net room growth. Despite some unclear responses, the overall sentiment is positive, likely resulting in a 2% to 8% stock price increase.
The earnings call summary provides a mixed sentiment. While there are positive aspects like record-high EBITDA, global room growth, and rewards program expansion, the guidance for RevPAR is weak and unchanged, which could negatively impact the stock price. The Q&A section highlights management's optimism but also reveals concerns about international travel softness and government travel. Without strong positive catalysts or significant negative factors, the overall sentiment remains neutral.
The earnings call summary shows strong financial performance with positive growth in adjusted EBITDA, EPS, and RevPAR across various segments, coupled with a significant increase in shareholder returns. The Q&A session highlighted confidence in guidance and international growth opportunities, despite some uncertainties in leisure travel trends. The overall sentiment is positive due to robust financial metrics, market share gains, and strategic expansion plans, suggesting a likely stock price increase of 2% to 8% over the next two weeks.
The earnings call summary indicates strong financial performance, with growth in global rooms, domestic RevPAR, and extended stay segments. The company has a strong cash position and has returned significant value to shareholders. The Q&A session revealed confidence in guidance and market share gains, with optimism from franchisees and positive consumer trends. Despite some challenges in April, the overall sentiment is positive, supported by strategic growth initiatives and optimistic guidance. The lack of market cap data suggests a neutral to positive reaction, leaning towards positive due to strong fundamentals and strategic positioning.
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