Choice doubles international pipeline within a year

With Choice Hotels International still pursuing an acquisition of fellow US firm, Wyndham Hotels & Resorts, the Maryland-based group has revealed more pipeline rises.

Its development expansion is particularly notable internationally, as it has nearly doubled this pipeline room count between end Q3 2022 and the same period in 2023.

Mexican boost

The upcoming international key total includes over 30 properties representing approximately 6,000 rooms associated with Choice’s strategic alliance with one of the largest hotel operators in Mexico known for its portfolio of upscale, upper-upscale, luxury hotels and resorts in Mexico and the Caribbean.

The group’s overall pipeline grew 6% in the latest quarter, to over 99,000 rooms. The global pipeline for conversion rooms increased 11% year-on-year and 27% quarter-on-quarter.

Domestic totals

Choice’s domestic US pipeline reached nearly 86,000 rooms as at the end of Q3 2023. Around 55% of this total was for the extended stay sector, with the amount increasing by 12% to over 47,000 rooms since the end of Q3 2022. 

Of the total domestic franchise agreements awarded in the nine months ended 30 September 2023, 84% were for the company’s upscale, extended stay, and midscale brands, and 72% were for conversion hotels. 67% of conversion hotel franchise agreements awarded in this period have already opened or are expected to open by the close of the year.

Opening uptick

The company executed an average of more than four hotel openings per week, for a total of 159 hotel openings year-to-date through 30 September 2023, a 24% increase compared to the same period of 2022.

For the first nine months of 2023, Choice grew hotel openings across all segments, increasing these in the upscale segment by 50%, the extended stay segment by 38%, the midscale segment by 14%, and the economy segment by 27% compared to the same period of 2022.

Portfolio expansion

The group’s domestic upscale and extended-stay portfolio grew by 11% and 13%, respectively, in the last year, driven by an increase in the number of Cambria Hotels, Ascend Hotel Collection, WoodSpring Suites, MainStay Suites and Suburban Studios units. The company’s total domestic system size was over 6,200 hotels and 490,000 rooms as of end Q3.

Choice’s total international system size approached 1,200 hotels as of 30 September 2023. The total number of international upscale hotels increased 13% year on year.

Record quarter

Patrick Pacious, president and CEO of Choice, commented: “We generated another record quarter of impressive financial growth, driven by our best-in-class business delivery engine, the successful integration of Radisson Americas, and organic growth of our brand portfolio focused on hotels that generate higher royalties per unit.

“We believe we are well-positioned to effectively grow our business in the current hotel development environment with a superior hotel conversion capability. We will continue to execute our robust organic earnings growth strategy and pursue inorganic growth to drive long-term shareholder value.”

Conversion speed

He further told investors on Choice’s Q3 earnings call:  “We expect nearly 70 additional domestic conversion projects to open by year’s end. In addition, 72% of the domestic agreements awarded in the first nine months of the year were for conversion hotels. We are especially pleased with the prospects for our Radisson upscale conversion brand given it generates, on average, six times more royalty revenue than our economy portfolio. Through our superior speed-to-market conversion processes and best-in-class franchisee support, we are able to move projects quickly through the pipeline.

“Of all the domestic franchise agreements we executed for conversion hotels in the first nine months of this year, two-thirds have already opened or are expected to open by the end of this year. In fact, the velocity of our conversion openings has been so high that some conversion hotels never appeared in our quarterly reported pipeline numbers.”

Brand updates

On brand design and development, Pacious noted: “Our first new Comfort prototype hotel opened this quarter and marks the next chapter for our flagship brand which continues to attract significant developer demand with 136 projects in the pipeline. In addition, earlier this year we debuted the next-generation Sleep Inn prototype.

“And our newest extended stay brand, Everhome Suites, is gaining meaningful traction across the development community with over 60 domestic projects in the pipeline, including 12 under construction.”

Wyndham deal

Regarding the current state of the Wyndham acquisition proposal, he summed up: “At its core, our proposed combination with Wyndham is about the natural fit of the two companies coming together to accelerate value creation for all stakeholders. We made our proposal public so that all groups could evaluate its benefits.

“For Wyndham shareholders, we provide a substantial premium and immediate value for their shares with participation in the future value of the combined entity. For Wyndham franchisees, we provide a proven model to lower costs and increase direct revenue to their hotels. We urge the Wyndham board of directors to resume discussions for the benefit of both companies’ franchisees, shareholders, associates, and guests.”