Earnings roundup: Choice, big REITs report

Here is a roundup of major hotel companies reporting second quarter 2022 earnings on Wednesday and Thursday.

Choice Hotels International reported that second quarter domestic RevPAR exceeded 2019 levels by 13%. It said RevPAR for full-year 2022 is expected to increase between 11% and 13% over 2019. Choice also awarded 122 new domestic franchise agreements in the quarter, a 10% increase from the same period of 2021. Its domestic development pipeline was ~84,000 rooms, up from ~77,800 last quarter and nearly back to 4Q19 levels. It also stated it expects to close this month the acquisition of Radisson Hotels Americas. Choice sold in July the 255-room Cambria Nashville Downtown for US$109.5 million and in June the 175-room Cambria Southlake DFW North for US$24 million to partially fund the Radisson acquisition. The company’s domestic effective royalty rate was 5.04% for the three months ended June 30, 2022, and 5.05% for the six months ended June 30, 2022, an increase of 3 basis points and 4 basis points over the comparable 2021 periods, respectively. For full-year 2022, the company’s domestic effective royalty rate is expected to increase by approximately 5 basis points, compared to full-year 2021. Total revenues increased 32% to US$368 million for second quarter 2022, compared to the same period of 2021. Total revenues excluding marketing and reservation system fees increased 25% to US$178.6 million for second quarter 2022, compared to the same period of 2021. Net income increased 24% to US$106.2 million for second quarter 2022, representing diluted earnings per share (EPS) of US$1.89, a 24% increase over second quarter 2021. Second quarter adjusted net income, excluding certain items, increased 17% to US$79.9 million from second quarter 2021, representing adjusted diluted EPS of US$1.43, a 17% increase from second quarter 2021.

Host Hotels & Resorts reported strong second quarter operating results, surpassing 2019 RevPAR. It also announced the second consecutive doubling of quarterly dividends to US$0.12 per share. During the second quarter, RevPAR was US$219 representing a 3.7% increase over the second quarter of 2019, and the first time its quarterly RevPAR exceeded 2019 levels since the onset of the pandemic. Host stated that it saw significant improvements across markets and business mix during the quarter, driven by an increase in business travel and improvement in group revenues. Host generated GAAP net income of US$260 million in the second quarter, an increase of US$142 million from the first quarter, driven by the improvement in operations. GAAP operating profit margin for the quarter was 23.7%, an improvement of 480 basis points compared to the second quarter of 2019. All owned hotels achieved EBITDA of US$510 million and adjusted EBITDAre of US$500 million, both of which exceeded 2019 second quarter results. The strong improvements in rate combined with a reduction in hotel expenses compared to 2019 led to all Owned Hotel EBITDA margin of 37.1% for the second quarter, exceeding the second quarter 2019 margin by 480 basis points.

Park Hotels & Resorts reported 2Q earnings with pro-forma RevPAR at US$173.03, an increase of US$94.29, or 119.7%, from the same period in 2021 and a decrease of 10.2% from the same period in 2019. Pro-forma occupancy was 71%, an increase of 19.4 percentage points from the first quarter of 2022 and a decrease of 14.6 percentage points from the same period in 2019. Adjusted EBITDA was US$207 million, an increase of US$125 million, or 153.1%, compared to the first quarter of 2022. Year-to-date, Park has sold its interests in five non-core hotels for total gross proceeds of approximately US$268 million, or 14x the hotels’ combined 2019 Adjusted EBITDA (or 13.1x when excluding anticipated capital expenditures), and at an average capitalization rate of 6.2% on the hotels’ 2019 net operating income (or 6.7% excluding anticipated maintenance capital expenditures).

Hersha Hospitality Trust beat the Street in Q2 with funds from operations of US$25.7 million, or US$0.56 cents per share compared to US$0.50 consensus. The company said it had net income of US$2.1 million, or 5 cents per share. Hersha posted revenue of US$123.3 million in the period, also exceeding Street forecasts.