After a second quarter that featured a slower demand rebound than executives said they expected, Choice Hotels International said it now projects 2024 revenue per available room to decline year over year, executives said during a Thursday call.
Second-quarter Choice systemwide RevPAR declined 0.5 percent year over year to $60, far better than the first quarter—when it dropped 5.9 percent from 2023 levels—but still below what the company expected, CEO Patrick Pacious said on the call.
"In line with the industry, the pace of acceleration was slightly slower than we had previously expected," Pacious said. "And therefore, our outlook for the remainder of the year has moderated."
Choice now projects 2024 RevPAR to decline 1.5 percent to 3.5 percent year over year, down from its prior forecast of a flat percentage to an increase of 2 percent. Choice joins competitors Hilton Worldwide, Hyatt Hotels Corp., Marriott International and Wyndham Hotels & Resorts, in lowering projected full-year 2024 RevPAR.
The results also illustrate a pervasive 2024 hotel demand trend, in which lower tiers struggle to attract leisure travelers watching their wallets due to persistent inflation but higher tiers perform better, helped by increasing business travel. Choice has many midprice and economy brands, but second-quarter RevPAR at its burgeoning upscale tier increased 4.4 percent year over year.
Pacious called the environment a "normalizing" process of post-pandemic demand, and suggested economic trends offered optimism for a better 2025. He cited the better-than-expected growth of the U.S. gross domestic product—which, he said, typically translates into solid RevPAR in the subsequent six months—and the U.S. labor market.
"The really positive news in there was [the] labor force participation rate went up." Pacious said of the July U.S. jobs report, released last week. "This is reverting back to the norm. When we look at our consumers, when consumers have a job, they tend to travel. They have more confidence to travel, sometimes they travel for business, but they definitely drive leisure travel. And [the] labor force participation rate is one of the most highly correlated factors we look at with regard to RevPAR lift."
Choice Q2 Metrics
Choice's systemwide second-quarter occupancy increased 0.1 percentage points year over year to 60.3 percent, and average daily rate decreased 0.6 percent to $99.46.
Total second-quarter revenue increased 1.8 percent year over year to nearly $435.2 million, while net income increased to $87.1 million from $84.7 million.
Choice's pipeline as the end of the second quarter increased 22 percent to more than 114,000 rooms, a second-quarter record for the company, it said. Choice as of June 30 had nearly 7,500 hotels totaling more than 630,000 rooms, according to the company.
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