Choice Hotels CEO: Road Trips Will Remain Popular Among Americans in 2021
During Choice Hotels International Q4 earnings conference call on Feb. 17, Patrick Pacious, President and CEO, gave a very upbeat performance review of his company for the previous quarter. During the call, he mentioned how the brand’s domestic systemwide RevPAR outperformed the overall industry by nearly 17 percentage points for the full year, declining 30.7% from the prior year.
Additionally, Choice Hotel’s fourth quarter 2020 domestic systemwide RevPAR “surpassed the industry by nearly 26 percentage points, declining 25.1% from the same period of the prior year and improved by 370 basis points from the third quarter,” Pacious noted. “In addition, our results exceeded the primary chain scale segments in which we compete, as reported by STR, by over 5 percentage points for full year 2020 and nearly 8 percentage points for the fourth quarter.”
However, when looking to the future, Pacious was very optimistic about 2021 mentioning that he believed the company’s momentum will continue into the first quarter and beyond.
For instance, he observed that customers are beginning to plan their travel further in advance, supported by noted improvements in the company’s 31-day plus bookings since November 2020. Additionally, the company believes that “long-term consumer trends such as remote work and virtual learning will likely continue to provide American's flexibility in where and when they travel for leisure.”
Additionally, Pacious pointed out that during the fourth quarter, Choice Hotels generated significant quarter-over-quarter growth in its proprietary revenue contribution mix, which drove its full year results to match its prior year's strong performance.
“More specifically, our website contribution increased by 150 basis points, ending the year with the three strongest months in 2020, while our loyalty program increased its contribution by 280 basis points quarter-over-quarter,” he explained. “In addition, we continued to benefit from our most loyal customers, Choice Privileges Diamond Elite members, who contributed an even higher percentage of overall revenue for full year 2020 as compared to the prior year.”
And according to Pacious, these results helped drive RevPAR index share gains of more than 600 basis points in the fourth quarter versus Choice Hotels’ local competitors. And, for the past 46 consecutive weeks through mid-February, Choice has observed significant RevPAR share gains against the competition “giving us further optimism about our future revenue trajectory.”