SMEs drive business travel growth at Choice Hotels

Small and midsized companies offset broader RevPAR softness and highlight resilient demand segments

Business travel contributed to a modest revenue increase for Choice Hotels International in the first quarter, with small and midsized enterprises (SMEs) emerging as the primary growth driver. SME-related revenue rose significantly, supported by continued employment growth in sectors such as healthcare, construction, and utilities. At the same time, overall performance metrics like RevPAR showed slight declines, partly due to external factors such as hurricane impacts. The results point to a mixed environment where demand remains resilient in specific segments despite broader pressures.

Key takeaways

• SME demand growth: Revenue from small and midsized businesses increased 14 percent year over year, making it the strongest contributor to business travel growth.
• Group segment resilience: Group revenue rose 9 percent, driven by recurring, event-based demand such as youth sports and local gatherings.
• Value positioning advantage: Choice’s focus on value-oriented brands is helping it capture demand from cost-conscious travelers and workforce-related travel segments.
• RevPAR pressure: Systemwide RevPAR declined 0.8 percent due to slight drops in ADR and occupancy, reflecting broader market softness and external disruptions.
• Hurricane impact distortion: Around 20 percent of the portfolio was affected by hurricanes; excluding these properties, RevPAR would have grown 1.8 percent.
• Extended stay momentum: Extended stay continues to be a major growth driver and now represents 40 percent of the U.S. development pipeline.
• Loyalty program expansion: The Choice Privileges program surpassed 75 million members, supported by more accessible tier thresholds.
• Stable full-year outlook: The company maintained its guidance, expecting full-year RevPAR to range between a 2 percent decline and a 1 percent increase.

Source: BTN

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