Choice Hotels International, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's third quarter 2022 earnings call. At this time, all lines are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions, and please also note today's event is being recorded. Thank you. At this time, I'd like to turn the conference call over to Ali Summers, Investor Relations Director for Chase Hotels. Ma'am, you may begin.

Good morning, and thank you for joining us today. Before we begin, we'd like to remind you that during this conference call, certain predictive or forward-looking statements will be used to assist you in understanding the company and its results. Actual results may differ materially from those indicated in forward-looking statements and you should consult the company's 10Q, 10K and other SEC filings for information about important risk factors affecting the company that you should consider. These forward-looking statements speak as of today's date and we undertake no obligation to publicly update them to reflect subsequent events or circumstances. You can find a reconciliation of our non-GAAP financial measures referred to in our remarks as part of our third quarter 2022 earnings press release, which is posted on our website at choicehotels.com under the investor relations section. This morning, Pat Pacius, our president and chief executive officer, and Don Dragovich, our chief financial officer, will speak to our third quarter operating results and financial performance. Following Pat and Dom's remarks, we'll be glad to take your questions. And with that, I'll turn the call over to Pat.

Thanks, Ali, and good morning, everyone. Our third quarter results and the acquisition of the Radisson Americas business are a significant leap forward in the evolution of both Choice Hotels' competitive position and future growth potential. For 11 consecutive quarters, our RevPar growth has outperformed the hotel industry, confirming that our strategy of focusing our investments and growth on RevPar accretive hotel segments and locations is working. Our future growth is now enhanced by the addition of the Radisson Americas brands to our best-in-class business delivery engine, and we now expect to drive an incremental $80 million in recurring adjusted EBITDA from this business unit upon its full integration in early 2024. We are excited about the new growth vectors these brands will provide. Our strategy allowed us to achieve these remarkable operating results, invest in a strategic acquisition, and return over $230 million to shareholders through our share repurchase program in the third quarter, representing nearly 4% of shares outstanding. I'm pleased to report that we now expect to grow our full year 2022 adjusted EBITDA by more than 15% versus full year 2021, and by more than 25% versus our full year 2019, which was our pre-pandemic peak. This year's growth builds on last year's record results when we became the first hotel company to surpass pre-pandemic performance. Our impressive results and outlook clearly demonstrate that we are in a stronger position than ever to further capitalize on outsized growth opportunities over the long term that will continue to pay off for our owners, and shareholders alike. Thanks to our integration efforts in the first two and a half months since acquiring Radisson Americas, we have unlocked additional value drivers that we expect will fuel significant incremental growth for years to come. This upside demonstrates how the Radisson Americas acquisition complements our existing strategy and opens additional opportunities for growth. The level of enthusiasm around the acquisition from developers, franchise owners, and guests continues to be remarkable. And after getting to better know the Radisson America's brands and meeting with the franchisee community, I'm more energized than ever about the prospects for Radisson America's future as part of Choice. Finally, I want to acknowledge and thank both the Choice and Radisson America's teams whose hard work was instrumental in bringing this transaction home. Adding to our optimism is our strong top line growth fueled by sequential acceleration in quarter over quarter RevPAR growth. For comparative purposes throughout the remainder of our remarks, we will now provide RevPAR performance data that excludes the impact of the Radisson Americas acquisition. The third quarter marked our strongest quarter for RevPAR growth this year, with domestic RevPAR increasing 15.2% from the same quarter of 2019. And we expect this momentum to continue into the fourth quarter, including October RevPAR growth results, which surpassed 2019 levels by approximately 20%. We have now exceeded our 2019 REVPAR levels for 17 consecutive months. At the same time, we continue to drive REVPAR index gains as compared to 2019, again, outpacing our competitors. We've been surpassing 2019 levels for the past year and a half because of the strategic decisions and investments we have made to position us to further increase our share of travel demand. Our goal was not to simply return to our 2019 performance levels, but rather to leverage the strength of our business to capitalize on current and future investments to fuel our long-term asset-like growth in REVPAR accretive segments and locations and drive our performance to new levels. We have built on that strength throughout the third quarter and are confident that the changes we are observing in leisure and business travel behavior that favor our brands will enable us to maximize growth opportunities well into the future. As discussed on our prior calls, we've been highlighting the long-term consumer and industry trends that are driving a significant uptick in travel demand And we've been making deliberate investments to reap the benefits from them. Specifically, we are capitalizing on long-term fundamentals that we call the five R's. Remote work, retirements, road trips, rising wages, and reshoring of American manufacturing. We now know that the pandemic has accelerated these trends, each of which favors our brands and locations. As consumers continue to prioritize travel, we believe our business will continue to benefit in an outsized way from additional travel demand coming to our segments. We see these trends as strong tailwinds for our company's long-term growth. Importantly, CHOICE's resilient business model has historically delivered stable returns throughout both expanding and contracting economic cycles. Looking ahead, our optimism is further reinforced by the strengthening of our business transient and group travel segments. In the third quarter, we drove sequential quarter-over-quarter increases in our business travel bookings. In addition to continued robust leisure travel, the business travel component of our guest mix continues to approach historical levels and accounted for approximately 30% of stays in the third quarter. Furthermore, our strongest occupancy growth during weekdays in September year over year was on Tuesday and Wednesday, illustrating the strength of returning business travel. We expect business travel in our key industry verticals to increase, fueled by the additional onshoring of the U.S. supply chain and significant nationwide investments from the infrastructure bill. Likewise, we anticipate additional tailwinds from business travelers in sectors such as healthcare, technology, and professional services, especially in the context of the Radisson Americas acquisition and the our growing presence in more REVPAR accretive segments and locations. Our third quarter results demonstrate that the deliberate decisions and strategic investments we have made in our brand portfolio, value proposition, platform capabilities, and other franchisee tools are paying off. I will now provide a brief update on our key segments, excluding the impact of the Radisson Americas acquisition. First, we continue to strengthen our core portfolio of brands. The mid-scale segment generated strong developer demand with a 39% increase in franchise agreements awarded in the third quarter compared to the same period of 2021. The comfort brand has now registered 11 straight quarters of unit growth year over year since its successful refresh, and consumer confidence in our updated product has continued to drive the brand's average daily rate and occupancy index gains versus its local competitors. This performance underlies the continued attractiveness of this iconic brand to hotel developers and guests alike. Our new comfort prototype is now under development in several locations and marks the next chapter for our flagship brand. We also further invested in the extended stay segment, which continues to be a significant driver of our unit growth and RevPar growth. Specifically, in the third quarter, our extended stay domestic pipeline expanded to nearly 470 hotels. a 45% increase year over year. Our newest extended stay brand, Everhome Suites, recently celebrated the grand opening of its first hotel, and its initial performance exceeded our expectations, fueling our optimism for the brand's trajectory. This mid-scale, new construction, extended stay offering is on the cusp of major growth, gaining impressive traction across the development community, with 56 additional projects already in the pipeline, including a recent commitment from one of the largest extended-stay developers in the nation to build more than 20 Everhome Suites hotels. In addition, we expect a substantially higher number of the brand's domestic contracts for 2022 as compared to last year. Our investments in the WoodSpring Suites brand's marketing and distribution capabilities enabled us to achieve rev par growth of nearly 28% in the third quarter of 2022, compared to the same period of 2019, driven by increases in both occupancy and rate. Overall, we remain very optimistic about our extended stay segment growth. and expect the number of our extended stay units to increase at an average annual growth rate of more than 10% over the next five years. We are also pleased with our upscale portfolio, where our brands outperform the segment's REVPAR growth by over 13 percentage points versus the same period of 2019. At the same time, we increased the number of upscale franchise agreements executed in the third quarter by nearly threefold. The Cambria brand is having one of its best years ever. The brand grew by over 5% year over year, reaching more than 60 units, with an additional 69 domestic properties in the pipeline, over one-third of which are projects under active construction as of the end of September. The recently introduced Cambria Hotel prototype designed for secondary and leisure markets has been enthusiastically received by the developer community with 20 new agreements signed as of the end of the third quarter. In addition, we expect that the Radisson Americas acquisition will enable us to further build on our momentum in the upscale segment, accelerating the growth of our Cambria Hotels and Ascend Hotel Collection brands, and at the same time, allowing us to expand the Radisson portfolio. The addition of the Radisson upscale brands in the Americas increased Choice's global footprint in the upscale segment to over 74,000 rooms as of the end of the third quarter. All that we've accomplished this quarter certainly could not have been done without the strength of our award-winning culture. A central focus of our ESG efforts is our commitment to fostering an environment supportive of diversity and inclusion. I'm proud to share that Choice was recently recognized by Forbes as one of the world's best employers and one of the world's top female-friendly companies in 2022. These awards are particularly meaningful as they are based in large part on responses from our dedicated associates and franchisees. I'm also pleased to report that we recently have been recognized among the top franchise companies for our commitment to diversity, equity, and inclusion by Entrepreneur Magazine. We were the only hotel brand company to make the list. which speaks to the many initiatives our organization continues to undertake to fuel diversity and equitable opportunity across the entire hotel industry. Specifically, our fully dedicated franchise development and service team continues to drive diverse ownership of choice franchised hotels among underrepresented women and minority owners. With over 320 franchise contracts awarded, since the program began over 15 years ago. In closing, I'm confident that our effective strategic investments and commitment to our franchisees' profitability will continue to create value and deliver results for our owners and shareholders. We look forward to continuing to integrate Radisson Americas as part of the Choice family and to accelerate the growth of these brands by leveraging Choice's scale network of owner and franchise relationships, and best-in-class digital platforms. We believe we are well-positioned to build on the success achieved this quarter and that our increased earnings power will enable us to further capitalize on growth opportunities for the remainder of this year and beyond. With that, I will hand it over to our CFO. Dom?