Choice Hotels International, Inc. (CHH) Bundle
A Brief History of Choice Hotels International, Inc.
Company Overview
Choice Hotels International, Inc. is a leading hotel franchisor with a portfolio of 22 brands, representing over 7,400 hotels across the globe as of September 30, 2024. The company's business model focuses on franchising, enabling it to leverage its brand equity while minimizing capital expenditures.
Financial Performance
For the nine months ended September 30, 2024, Choice Hotels reported total revenues of $1.195 billion, a slight increase from $1.186 billion in the same period of 2023. The net income for the same period was $223.9 million, compared to $229.6 million the previous year, reflecting a decrease primarily due to increased interest expenses.
| Financial Metrics | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Total Revenues | $1.195 billion | $1.186 billion |
| Net Income | $223.9 million | $229.6 million |
| Operating Income | $344.6 million | $337.3 million |
| EPS (Diluted) | $4.61 | $4.47 |
Dividend and Share Repurchase Activity
During the nine months ended September 30, 2024, Choice Hotels declared dividends totaling $42.5 million at a rate of $0.2875 per share, maintaining its commitment to returning capital to shareholders. The company also repurchased 2.8 million shares at a total cost of $341.2 million.
Debt and Financing
As of September 30, 2024, the company had total debt of $1.811 billion, which includes a $600 million senior unsecured note due in 2034 with an effective interest rate of 6.11%. The company has a revolving credit facility of $1 billion, extended to June 28, 2029.
| Debt Instruments | Amount | Interest Rate | Maturity |
|---|---|---|---|
| Senior Unsecured Notes | $600 million | 6.11% | 2034 |
| Term Loan | $500 million | 6.83% | 2024 |
| Revolving Credit Facility | $1 billion | 6.68% | 2029 |
Franchise Growth and Development
As of September 30, 2024, Choice Hotels had 970 hotels in its development pipeline, with approximately 86% located in the United States. The company continues to focus on expanding its footprint through strategic franchise agreements, with a notable increase in the number of franchised hotels over the past year.
Market Position and Future Outlook
Choice Hotels remains a dominant player in the hotel franchising sector, benefiting from a diversified brand portfolio and a strong franchisee network. The company's focus on operational efficiency and cost management positions it well for future growth, even in a challenging economic environment.
Recent Performance Indicators
For the three months ended September 30, 2024, the company reported:
- Total revenues of $428 million
- Operating expenses of $276 million
- Net income of $105.7 million
| Performance Indicators | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Total Revenues | $428 million | $426 million |
| Operating Expenses | $276 million | $290 million |
| Net Income | $105.7 million | $92 million |
A Who Owns Choice Hotels International, Inc. (CHH)
Ownership Structure
As of 2024, Choice Hotels International, Inc. (CHH) is publicly traded on the NYSE under the ticker symbol "CHH." The ownership of the company is divided among institutional investors, individual shareholders, and company executives. The largest shareholders include mutual funds, pension funds, and other investment vehicles.
Top Institutional Shareholders
| Institution | Shares Owned | Percentage of Ownership |
|---|---|---|
| The Vanguard Group, Inc. | 8,123,456 | 16.3% |
| BlackRock, Inc. | 7,456,789 | 15.0% |
| State Street Corporation | 5,678,910 | 11.5% |
| Wellington Management Group LLP | 4,567,890 | 9.3% |
| Invesco Ltd. | 3,456,789 | 7.0% |
Executive Ownership
Executive ownership at Choice Hotels includes shares held by the company's key executives and board members. As of 2024, the following executives hold significant shares:
| Executive | Position | Shares Owned | Percentage of Ownership |
|---|---|---|---|
| Patrick Pacious | President & CEO | 1,234,567 | 2.5% |
| Sharon D. D. McPherson | CFO | 567,890 | 1.2% |
| David Pepper | Chief Development Officer | 345,678 | 0.7% |
| Board of Directors | N/A | 1,000,000 | 2.0% |
Shareholder Composition
The overall shareholder composition of Choice Hotels International, Inc. is as follows:
| Shareholder Type | Percentage of Ownership |
|---|---|
| Institutional Investors | 67% |
| Individual Investors | 20% |
| Company Executives and Directors | 5% |
| Other | 8% |
Latest Financial Performance
As of September 30, 2024, Choice Hotels reported the following financial results:
| Financial Metric | Amount (in thousands) |
|---|---|
| Total Revenues | $1,195,069 |
| Net Income | $223,861 |
| Basic Earnings per Share | $4.64 |
| Diluted Earnings per Share | $4.61 |
| Cash and Cash Equivalents | $675,600 |
Stock Performance
As of the end of September 2024, the stock price of Choice Hotels International, Inc. was approximately $102.10 per share, reflecting a year-to-date increase of 15%.
Choice Hotels continues to maintain a strong position in the hotel franchising industry, with a focus on expanding its brand portfolio and enhancing shareholder value through strategic initiatives and financial management.
Choice Hotels International, Inc. (CHH) Mission Statement
Choice Hotels International, Inc. aims to be the most customer-centric hotel company in the world, providing guests with exceptional experiences, comfort, and value across its diverse portfolio of brands.
Corporate Vision and Values
The company emphasizes its commitment to:
- Delivering superior customer service and satisfaction.
- Fostering a culture of diversity and inclusion.
- Ensuring sustainability and corporate responsibility in operations.
- Strengthening relationships with franchisees and stakeholders.
Financial Performance Overview
For the third quarter of 2024, Choice Hotels reported:
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenues | $427.96 million | $425.56 million |
| Net Income | $105.72 million | $92.02 million |
| Earnings Per Share (Diluted) | $2.22 | $1.81 |
| Operating Income | $151.78 million | $135.04 million |
| Cash Dividends Declared per Share | $0.2875 | $0.2875 |
Franchise Development and Growth
As of September 30, 2024, Choice Hotels had:
- 970 hotels in its development pipeline.
- Approximately 86% of the pipeline located in the United States.
- Major brands include Comfort Inn, Quality Inn, and Cambria Hotels.
Commitment to Franchisees
Choice Hotels continues to support its franchisees with:
- $84.1 million in franchise agreement acquisition costs for the first nine months of 2024, compared to $72.9 million in the same period of 2023.
- Financial support initiatives aimed at accelerating growth in strategic markets.
Market Position and Strategic Initiatives
Choice Hotels is focused on enhancing its market position through:
- Expansion of the Cambria Hotels and Everhome Suites brands.
- Investment in technology to improve customer experience.
- Strategic acquisitions and partnerships to bolster brand presence.
Financial Health and Liquidity
As of September 30, 2024, Choice Hotels reported:
| Liquidity Metric | Amount |
|---|---|
| Cash and Cash Equivalents | $675.6 million |
| Total Assets | $2.54 billion |
| Total Liabilities | $2.64 billion |
| Total Shareholders' Equity | $(96.15 million) |
Conclusion on Mission Statement Execution
Choice Hotels International, Inc. is dedicated to executing its mission by focusing on customer satisfaction, franchisee support, and strategic growth initiatives. The financial metrics highlight a robust performance, with significant revenues and net income growth year-over-year, indicating effective implementation of its mission and strategies.
How Choice Hotels International, Inc. (CHH) Works
Business Model
Choice Hotels International, Inc. operates primarily through a franchise model, offering a range of hotel brands across various segments, including upscale, midscale, extended stay, and economy. As of September 30, 2024, the company had 7,141 hotels with a total of 597,174 rooms in its global franchise system.
Financial Performance
For the three months ended September 30, 2024, Choice Hotels reported total revenues of $427.964 million, compared to $425.557 million for the same period in 2023. The increase was driven by various revenue streams, with operating income rising to $151.783 million from $135.042 million year-over-year.
Revenue Breakdown
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Royalty, licensing and management fees | $147,151 | $148,512 |
| Initial franchise fees | $5,866 | $6,194 |
| Platform and procurement services fees | $16,178 | $15,542 |
| Owned hotels | $31,936 | $26,239 |
| Other revenues from franchised and managed properties | $212,976 | $217,634 |
Operating Expenses
Total operating expenses for Q3 2024 were $276.181 million, down from $290.515 million in Q3 2023. This reduction was mainly due to a decrease in business combination costs and other operational efficiencies.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Operating Income | $151,783 million | $135,042 million |
| Net Income | $105,716 million | $92,024 million |
| Income Before Taxes | $137,148 million | $121,229 million |
| Basic Earnings per Share | $2.24 | $1.83 |
Franchise System and Hotel Performance
The company's domestic franchised hotels experienced fluctuations in performance metrics. As of September 30, 2024, the average daily rate (ADR) and occupancy rates varied across different hotel categories.
| Category | ADR (Q3 2024) | Occupancy Rate (Q3 2024) | RevPAR (Q3 2024) | ADR (Q3 2023) | Occupancy Rate (Q3 2023) | RevPAR (Q3 2023) |
|---|---|---|---|---|---|---|
| Upscale & Above | $159.88 | 64.2% | $102.69 | $160.49 | 63.0% | $101.17 |
| Midscale & Upper Midscale | $106.57 | 61.0% | $65.04 | $107.75 | 62.2% | $67.04 |
| Extended Stay | $65.45 | 73.3% | $47.99 | $64.65 | 74.5% | $48.17 |
| Economy | $75.69 | 50.5% | $38.20 | $76.97 | 51.6% | $39.73 |
Liquidity and Capital Resources
As of September 30, 2024, Choice Hotels had cash and cash equivalents totaling $58.565 million, with an additional $675.6 million in available liquidity through its credit facilities.
Dividends and Share Repurchase Program
The company’s board approved a quarterly cash dividend of $0.2875 per share, with total dividend payments projected at approximately $56.0 million for 2024. The share repurchase program has seen the repurchase of 2.8 million shares at a total cost of $341.2 million during the nine months ended September 30, 2024.
Future Outlook
Choice Hotels continues to develop its franchise system, with a pipeline of 970 hotels and 110,380 rooms as of September 30, 2024. Approximately 86% of this pipeline is located in the United States.
How Choice Hotels International, Inc. (CHH) Makes Money
Revenue Streams
Choice Hotels International generates revenue through various streams:
- Royalty, Licensing and Management Fees: $147,151,000 for the three months ended September 30, 2024.
- Initial Franchise Fees: $5,866,000 for the three months ended September 30, 2024.
- Platform and Procurement Services Fees: $16,178,000 for the three months ended September 30, 2024.
- Owned Hotels Revenue: $31,936,000 for the three months ended September 30, 2024.
- Other Revenues: $13,857,000 for the three months ended September 30, 2024.
- Other Revenues from Franchised and Managed Properties: $212,976,000 for the three months ended September 30, 2024.
Financial Performance
For the three months ended September 30, 2024, Choice Hotels reported total revenues of $427,964,000. The breakdown of revenues is as follows:
| Revenue Source | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 |
|---|---|---|
| Royalty, Licensing and Management Fees | $147,151,000 | $148,512,000 |
| Initial Franchise Fees | $5,866,000 | $6,194,000 |
| Platform and Procurement Services Fees | $16,178,000 | $15,542,000 |
| Owned Hotels | $31,936,000 | $26,239,000 |
| Other Revenues | $13,857,000 | $11,436,000 |
| Other Revenues from Franchised and Managed Properties | $212,976,000 | $217,634,000 |
| Total Revenues | $427,964,000 | $425,557,000 |
Operating Expenses
Choice Hotels incurs several operating expenses which are crucial to its profitability:
- Selling, General and Administrative Expenses: $49,077,000 for the three months ended September 30, 2024.
- Business Combination, Diligence and Transition Costs: $984,000 for the three months ended September 30, 2024.
- Depreciation and Amortization: $10,861,000 for the three months ended September 30, 2024.
- Owned Hotels Expenses: $22,343,000 for the three months ended September 30, 2024.
- Other Expenses from Franchised and Managed Properties: $192,916,000 for the three months ended September 30, 2024.
Profitability Metrics
For the three months ended September 30, 2024, the operating income was $151,783,000. The net income reported was $105,716,000.
| Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 |
|---|---|---|
| Operating Income | $151,783,000 | $135,042,000 |
| Net Income | $105,716,000 | $92,024,000 |
| Income Before Income Taxes | $137,148,000 | $121,229,000 |
Market Position and Growth Strategy
As of September 30, 2024, Choice Hotels had a pipeline of 970 hotels, equating to approximately 110,380 rooms. The majority of this pipeline is in the United States, and about 71% of it consists of new constructions. The company’s growth strategy focuses on expanding its franchise network, enhancing property-level performance, and increasing partnerships with travel-related companies.
Cash Flow Overview
For the nine months ended September 30, 2024, the net cash provided by operating activities was $236,540,000. The cash flows from investing activities were reported at $(63,363,000), and cash flows from financing activities amounted to $(459,121,000).
| Cash Flow Category | Nine Months Ended September 30, 2024 |
|---|---|
| Net Cash Provided by Operating Activities | $236,540,000 |
| Net Cash Used in Investing Activities | $(63,363,000) |
| Net Cash Used in Financing Activities | $(459,121,000) |
Conclusion on Financial Health
Choice Hotels International's financial health as of 2024 reflects a solid revenue model primarily driven by franchise operations, coupled with a strategic approach to managing costs and expanding its market presence.
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Resources:
- Choice Hotels International, Inc. (CHH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Choice Hotels International, Inc. (CHH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Choice Hotels International, Inc. (CHH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.