Choice Hotels has joined with other major hotel companies in
requiring guests to wear face masks in indoor public spaces, president and CEO
Patrick Pacious said Thursday during the company's second-quarter earnings
call.
According to a Choice spokesperson: "The face coverings
requirement will go into effect on 17 August 2020, although many Choice hotels
across our international portfolio are already adhering to these requirements.
This requirement is applicable across the majority of our global portfolio. As
far as enforcement, the hotel will ask the guest to comply and then will
address on a case-by-case basis."
"As part of Commitment to Clean, we made the decision
to require guests to wear face coverings in hotel common areas as an important
and simple step everyone can take to help protect the safety of guests and the
franchise hotel employees by slowing the transmission of Covid-19,"
Pacious said. "As a member of the American Lodging & Hotel Association
Safe Stay advisory council, Choice Hotels stands united with the industry in
adopting the guidelines in the Safe Stay guest checklist, including the
required use of face coverings in common areas."
The company's quarterly results were in line with
expectations that business as measured by key indicators would be down from one
year ago, but those declines were less drastic than those of some competitors.
Domestic systemwide revenue per available room declined 49.6 per cent year over
year to US$26.27. Average daily rate was down 19.9 per cent to $67.21.
Occupancy dipped 23 percentage points to 39.1 per cent.
Choice reported adjusted net income of $6.7 million, a 90
per cent decrease from last year. Rooms increased 4.3 per cent year over year
to 597,018. The company has awarded 151 new domestic franchise agreements
year-to-date through 30 June, a 42 per cent decrease compared with the same
period in 2019.
Pacious said that the company outperformed the industry when
comparing weekly occupancy rates from mid-March through 25 July. At the low
point of the week beginning 5 April, Choice's average occupancy was 27.7 per cent
compared with 21 per cent for the industry, using STR data. For the week
starting 19 July, Choice's occupancy was at 52.5 per cent, compared with 48.1
per cent for the industry, with improvement continuing.
"Daily occupancy levels surpassed 60 per cent last
Saturday," Pacious said. "Over half of domestic hotels were north of
50 per cent during the last week of July."
Pacious added that the company is positioned for recovery
because leisure represents more than 80 per cent of its system room nights, and
"leisure travel continues to lead the recovery", noting that segment
has been mostly attributable to drive-to travel. In June, one-quarter of the
company's revenue came from customers who travelled less than 25 miles to a
hotel, he added.
Still, Choice has seen week-over-week increases in business
travel room nights since the low in early April. "This is thanks to a
profile of core business travellers who have been on the road these past
months, including first responders, medical and other essential workers,
government, trucking, logistics and construction workers," Pacious said.
Brand analysis
The company's extended-stay portfolio continued to be resilient in the second
quarter, with an average occupancy rate of 66 per cent since the onset of the
pandemic in mid-March through 30 June. Specifically, WoodSpring Suites has
reported occupancy levels above 70 per cent since mid-May and returned to
prior-year levels during the last week of July. The brand reported
second-quarter occupancy of 69.2 per cent year over year, compared with 78.2
per cent in 2019.
Choice's upscale brands have seen larger declines. Cambria's
occupancy has been hurt as the brand is marketed to business travellers, most
of whom are not yet back on the road. Second-quarter occupancy was 24.2 per cent
compared with last year's 74.8 per cent. The Ascend Collection reported 32.2
per cent quarterly occupancy, compared with 63.3 per cent for the same period
last year.
Still, the segment has seen a 37 per cent increase in room
count during the quarter, with a 24 per cent increase for Cambria and a 42 per cent
increase for Ascend. "The Ascend Hotel Collection, which launched in 2008,
is now the industry's largest soft brand with over 370 hotels around the
globe," Pacious said, adding that developer interest remains high for
Cambria, with contracts signed in the first half of 2020 in line with 2019.
Rooms pipeline
The number of Choice systemwide rooms as of 30 June increased 4.3 per cent year
over year to 597,018, with three-quarters in the United States. The number of
International rooms increased 12.7 per cent. The company's total domestic
pipeline of hotels awaiting conversion, under construction, or approved for
development as of 30 June reached more than 980 hotels and more than 78,500
rooms.