Choice Hotels International, currently on track to fully integrate the Radisson Hotels Americas portfolio into its system, has reaffirmed its 2023 financial outlook of $255-$265 million in net income and said the company was well positioned for long-term success.
“The company continues to successfully execute its strategy of expanding the reach of its franchise business in more revenue intense segments in 2023, with new hotels added within a brand generating, on a comparable basis, an average of 20% higher royalty revenue than hotels exiting the brand,” Choice said in a statement.
In 2024, the Rockville, Md.-based franchisor said it plans to generate over 10% EBITDA growth at the mid-point YOY, driven by $20 million in incremental contribution from Radisson Hotels Americas, as well as growth in more revenue-intense markets and segments, robust royalty rate growth and other factors.
NEW OPENINGS
On average, Choice has opened over four hotels per week this year, totaling 107 hotel openings year-to-date through June 30. This was a 39% jump compared to the same period in 2022.
The growth can be attributed to the rise in conversion hotel openings of 45% and a 24% surge in new-build hotel openings.
In the first half of this year, Choice increased hotel openings across all the segments YOY. This saw an 83% surge in openings in the upscale segment, a 42% rise in the midscale segment, 50% in the extended stay segment and 11% in the economy segment.
In May, the company opened the highest number of hotels in the extended stay segment since 2020, including the record number of hotels that opened under the WoodSpring Suites brand in a single month.
Keeping an optimistic outlook toward the business growth of the extended stay segment, Choice expects the number of its extended stay units to grow at an average annual growth rate of over 15% in the next five years.
MORE OPPORTUNITIES
Choice Hotels recorded $80 million of annual recurring synergies, outperforming the company’s initial synergy target. The company is hopeful about exploring more cost and revenue opportunities for future synergies.
Choice is ahead of its schedule to achieve key milestones in integrating roughly Radisson Americas hotels. This integration process includes adding around 600 Radisson Americas properties into its reservation delivery engine and merging the two loyalty programs by the end of Q3 within a year of the acquisition.
The complete integration is scheduled for the end of this year and will boost the top-line performance and profitability of Radisson Hotels Americas franchisees.
Choice reported a turnaround of Radisson Hotels Americas’ results in 2022 and is ahead of schedule to deliver the anticipated adjusted earnings before EBITDA contribution of more than $60 million this year, which is likely to grow to more than $80 million in 2024.