More loyalty, brand growth for Choice in Q1
More loyalty, brand growth for Choice in Q1
04 MAY 2017 3:04 PM

Choice Hotels International executives reported positive RevPAR index increases for its Comfort and Sleep Inn brands and the enrollment of more loyalty members on the company’s first-quarter earnings call.

ROCKVILLE, Maryland—Choice Hotels International started out the year strong with increases in revenue per available room, loyalty member enrollments and the growth of a few brands, executives said on the company’s first-quarter earnings call.

Choice President and CEO Steve Joyce reported the continuance of strong loyalty numbers during the call Thursday, stating that the company has approximately 30 million Choice Privileges members globally.

“We enrolled 1.1 million new members in the first quarter, outpacing our first quarter 2016 (Choice Privileges) enrollment,” he said. “In addition, (Choice Privileges) is providing value to both our guests and franchisees, it is helping us achieve a key metric to continue this success in the future, which is increasing the contributions from our proprietary channels.”

Joyce added that revenue from proprietary channels was at 64.9% in the first quarter, which is a 5.3% increase compared to the previous year.

“This is driven almost exclusively by direct reservations on our digital platforms and Choice Privileges revenue growth,” he said.

Brand growth
Choice reported domestic systemwide RevPAR increased 3.8% in the first quarter, Joyce said. The company’s Comfort and Sleep Inn brands reported 30 and 34 consecutive months of RevPAR index gains, respectively, according to an earnings news release.

New construction agreements grew 153% in the first quarter and conversion franchise agreements increased 24%, according to the release. Comfort and Sleep Inn made up nearly 70% of new construction franchise agreements for the first quarter.

According to executives on the call, Choice had 106 franchised hotel development contracts that were new approved during the quarter. The company opened two new Cambria hotels, and “advanced approximately $43 million in support of the brand's development” in the first quarter, according to the release. Choice executives have talked about the push for accelerated growth of the Cambria brand on past earnings calls.

As of press time, Choice stocks were up 17.9% year to date. The Baird/STR Hotel Stock Index was up 20.9% for the same period.

Competitive landscape
An analyst on the call asked Joyce if he was worried about the new competitive landscape for Cambria with Marriott International’s acquisition of Starwood

“I don't view the Marriott-Starwood deal as an impediment, I view it as an advantage,” he said. “I think that's going to drive more deals for us, not fewer.”

When asked if Tru by Hilton was a concern, Joyce said it’s too soon to tell.

“No, I think it's too early to tell where Tru is going to end up,” he said, “where it's actually going to be introduced in the market, where the costs per key is going to come out, and ultimately, how it's going to perform. … And developers we talk to don't have answers yet. So it's still something that I think needs to be defined in the marketplace.”

New hire
Choice appointed Dominic Dragisich, who previously worked for a telecommunications company, as CFO during the first quarter. Dragisich began his CFO role with Choice on 6 March, Joyce said.

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