Choice Hotels Expects 10% Growth In 2024 Adj. EBITDA At Midpoint & More

Choice Hotels International Inc CHH provided an update on its strategy and 2023 and 2024 guidance. 

Growth Strategy: The company continues to expand its franchise business in more revenue-intense segments in 2023 and added new hotels, generating an average of 20% higher royalty revenue (on a comparable basis) than the existing hotels brand.

Radisson Hotels Americas Integration: CHH attained annual recurring synergies of about $80 million, exceeding its target. 

The company is ahead of its schedule to complete key integration targets, such as onboarding the nearly 600 Radisson Americas hotels in its reservation delivery engine.

CHH is on track to derive the expected Radisson Hotels Americas adjusted EBITDA contribution of over $60 million in 2023 and $80 million in 2024.

Store Openings: YTD through June 30, 2023, CHH opened 107 hotels (+39% Y/Y), with a 45% rise in conversion hotel openings and a 24% in new construction hotel openings. 

In May, CHH executed the highest number of hotel openings within the extended stay segment since 2020.

2023 Outlook Reiterated: CHH reiterated guidance for adjusted net income at $292 million – $302 million, adjusted EBITDA of $525 million – $540 million, and adjusted EPS of $5.70 – $5.90 (vs. consensus of $5.92). 

2024 Guidance: The company expects to generate adjusted EBITDA growth of over 10% Y/Y at the midpoint, mainly led by the incremental contribution of around $20 million from Radisson Hotels America, organic growth in more revenue-intense segments and markets, and higher effective royalty rate growth.

Concerning new hotel openings, CHH expects the number of its extended stay units to increase at an average annual growth rate of over 15% in the next five years.

Repurchase: In H1, CHH bought back around 1.8 million shares worth over $220 million. As of June 30, 2023, the company had 2.8 million shares remaining under the current share repurchase authorization.

Also Related: Choice Hotels Eyes Wyndham Hotels & Resorts: Report

Price Action: CHH shares are trading higher by 3.78% at $124.78 on the last check Tuesday.