Rockville-based Choice Hotels International (NYSE: CHH) reversed course compared to some of its competitors in the hospitality industry. The company released its first quarter 2020 financial results that bucked the trend on several fronts including having 97% of its domestic hotels remain open.
Net income was $55.5 million or $0.99 per share, a huge beat of more than $0.27 per share over average estimates of $0.72 per share but taking into account GAAP standards, the company posted $0.76 earnings per share or $42.8 million, a nine percent drop compared to last year.
Patrick Pacious, president and chief executive officer of Choice Hotels noted several pieces of good news the company experienced during the first quarter. Average occupancy has been above 30% since April 12th and franchisees have needed little assistance because of the COVID-19 pandemic. Pacious expects the leisure side of the industry — which accounts for two-thirds of Choice Hotel's revenue to rebound faster than the business side. With over 1000 domestic hotels using its 11 brands such as Quality Inn, Cambria and Ascend, franchisees did not chase revenue and lower their room rates. 60 new agreements in Q1 were in the works and mostly conversions. Each franchisee has an average of two hotels and an employee count of 5 to 25 depending on the Choice Hotels flag.
Choice Hotels did say they would continue to suspend their dividend and stock repurchase program through the end of the year and review afterwards, taking into account the current state of economic conditions at that point. The dividend suspension would allow the company to realize $25 million to its coffers. The company also took on a $250 million term loan to shore up liquidity.
Patrick Pacious along with other hotel industry CEOs such as Bethesda-based Marriott International’s (NASDAQ: MAR) President and CEO Arne Sorenson, visited the White House on March 17, 2020 to state their case for stimulus support from the Federal Government during the COVID-19 crisis.
edited: 05/12/2020 9:20 P.M.