Choice Hotels International Inc CHH

Choice’s Revenue per Available Room Growth Moderating After Strong Recovery

While the coronavirus had a material impact on Choice's 2020 demand, the company's U.S. leisure-based portfolio (which represents around 70% of nights) saw a full return to 2019 revenue per available room levels in 2021. We expect the narrow-moat company to gradually expand room share in the hotel industry in the next decade, with its keys increasing 2% on average annually, above the 1%-2% supply lift we estimate for the U.S. industry during that time. This growth is supported by a rejuvenated Comfort brand (27% of 2023 total domestic rooms), newer Cambria, Ascend, and Everhome concepts (7% combined), its extended-stay brand WoodSpring (6%), the acquisition of the Radisson brand in 2022, and a solid loyalty program with 64 million members as of Dec. 31, 2023, up from 44 million at the end of 2019. Overall, Choice holds around 2% global hotel revenue share, ranking it sixth in the industry.