Choice Hotels International ’ s secondquarter earnings call underscored two of the franchisor ’ s major feats : its full integration of Radisson Hotel Americas , which it acquired exactly one year ago , and its continued focus and rollout of conversions on the development front , a strategy it emphasized in a high-interestrate environment . It seems to be paying off , so far .
Choice reported it hit a new quarterly record for total revenues of $ 427.4 million , a 16 % increase compared to the same period a year ago . Choice ’ s global rooms pipeline increased 10 %, including 14 % growth in the pipeline for conversion hotels versus the end of second quarter 2022 .
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At the same time , Choice said it achieved $ 80 million of annual recurring synergies through the Radisson Hotels Americas integration , exceeding the company ’ s original synergy target ahead of schedule . In July 2023 , the company onboarded the nearly 600 Radisson Hotels Americas hotels onto its reservation system and into Choice ’ s loyalty program , Choice Privileges .
Choice Hotels President and CEO Pat Pacious pointed to a “ velocity of execution ” when it came to its conversions strategy and enmeshment of Radisson .
“ Conversions move through the pipeline at a significant velocity ,” he said , “ and have a higher opening rate than new construction .” Pacious , for instance , said there are approximately 26,000
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independent upscale hotels in the U . S ., “ so there is ample conversion opportunity .”
Of Choice ’ s 22 brands , 19 are conversion opportunities , the company said .
“ It ’ s a strong value proposition for owners ,” Pacious continued , offering , with a hint immodesty , that hoteliers choose their brands over the competition .
In the second quarter , Choice drove a 28 % increase in domestic room pipeline growth for conversions from March 31 , 2023 , and said it will have 60 conversion projects open within the next three months . Of the 126 franchise agreements signed in the first half of 2023 , around 66 % have already opened . “ Some conversions never even appeared in our pipeline numbers because they opened so
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quickly ,” Pacious said .
“ Part of the pipeline is timing .” he added . “ We terminate assets that have a lower likelihood of success .” Choice ’ s overall churn is 4 % to 5 %, Pacious said , with 1 % to 2 % of owners voluntarily leaving the system .
The company ’ s global pipeline increased 10 % to more than 93,000 rooms , while the company ’ s global rooms pipeline for conversion hotels increased 14 % from June 30 , 2022 and 25 % from March 31 , 2023 . The company ’ s domestic rooms pipeline for conversion hotels as of June 30 , 2023 increased 10 % from June 30 , 2022 .
Domestic revenue per available room or RevPAR increased 50 basis points for the second quarter compared to the
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34 hotelsmag . com September 2023 |