Choice Hotels Earnings: Traveler and Third-Party Owner Demand Continues; Shares Fairly Valued

We don’t plan to materially change our Choice $127 per share fair value estimate as traveler and third-party owner demand for the hotelier’s brand (source of its narrow moat) is tracking near our forecast. First-quarter revenue per available room, or revPAR, was up 6% year over year, representing 119% of 2019’s level, near the 120% reported in the fourth quarter. Choice reiterated its 2023 revPAR growth guidance of 2%, near our 3% forecast. Beyond this year, we see a mid-single-digit revPAR average annual increase in 2024-27, as the company benefits from remote work flexibility and a U.S. onshoring and infrastructure rebuild, which could add 50 million to 100 million in incremental industry demand the next several years, benefiting its interstate and extended-stay portfolio.