Dive Brief:
- In the first quarter of 2025, Choice Hotels International grew its global system size by 2.8% year over year, with the extended stay category driving results, according to a Thursday earnings report.
- Choice’s domestic extended stay portfolio grew 10.8% year over year in Q1, supported by strong RevRAR fundamentals. The company’s global upscale, extended stay and midscale rooms portfolio, meanwhile, increased 3.9% for the same period, per the report.
- On a Thursday earnings call, CEO Patrick Pacious said he anticipates demand and development momentum for the extended stay category to remain strong. However, Choice downgraded its 2025 RevPAR growth outlook amid mounting economic uncertainty.
Dive Insight:
Despite a “weaker than anticipated macroeconomic environment,” per CFO Scott Oaksmith, Choice posted 2.3% year-over-year domestic RevPAR growth in Q1. Its domestic extended stay portfolio performed “exceptionally well,” with RevPAR up 6.8% year over year, outperforming the industry by more than four percentage points, Oaksmith said on the call.
These results were supported by solid travel fundamentals, primarily from the business segment, Pacious shared.
“Our business travel segment grew 10% year over year in the first quarter, driven by both group and business transient travel,” Pacious said on the call. “Business travelers have a relatively resilient profile. These are guests whose job cannot be accomplished without travel.”
However, reflecting worsening economic conditions, Choice lowered its 2025 RevPAR growth outlook to a -1% to 1% growth range, down from its previously forecast 1% to 2% range.
Choice competitors Marriott International, Wyndham Hotels & Resorts and Hyatt Hotels also downgraded their RevPAR growth expectations during Q1 earnings calls.
Extended stay remains a beacon for Choice, though, Pacious noted. Choice has “established brands with significant growth potential in the two segments with the highest developer and guest demand: extended stay and upscale limited service,” he said.
“Historically, in periods of economic uncertainty, our differentiated positioning has enabled us to outperform our peers, gain market share and emerge stronger,” Pacious added.
Franchisees remain optimistic about future opportunities, particularly in the extended stay category, Pacious said. In Q1, Choice’s domestic extended stay pipeline stood at more than 40,000 rooms, according to the report, though that was down sequentially.
