Q3 2025 Choice Hotels International Inc Earnings Call
Speaker #3: Ladies and gentlemen , thank you for standing by . Welcome to Choice Hotels International s third Quarter 2025 Earnings Call . At this time , all participants are in listen only mode .
Speaker #3: Following the prepared remarks , we will open the line for questions . I will now turn the call over to Allie Summers Senior Director of Investor Relations .
Speaker #3: Please go ahead .
Speaker #4: Good morning , and thank you for joining us . Before we begin , please note that today's discussion includes forward looking statements as defined under US securities laws .
Speaker #4: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied . For more information , please refer to our filings with the SEC , including our most recent forms 10-K and 10-q .
Speaker #4: These statements speak only as of today , and we undertake no obligation to update them . A reconciliation of any non-GAAP financial measures referenced in today's remarks is included in our earnings press release , available on the Investor Relations section of choice .
Speaker #4: Hotels.com . Today's remarks also include projected non-GAAP adjusted EBITDA contributions from our international operations . We are unable to provide a reconciliation to comparable net income projections without unreasonable effort , as the necessary adjustments cannot be reasonably estimated for the period .
Speaker #4: The impact of this unavailable information could be significant relative to our expectations . Due to the inherent difficulty in focusing certain items . Joining me this morning are Patrick Pacious our President and Chief Executive Officer , and Scott Oaksmith , our chief financial officer .
Speaker #4: Pat will discuss our business performance and strategic progress . And Scott will review our financial results and outlook . And with that , I'll turn the call over to Pat .
Speaker #5: Thank you . And good morning , everyone . We appreciate you joining us today in the third quarter , we drove adjusted EBITDA 7% higher to $190 million , reflecting the strength of our higher revenue brand mix .
Speaker #5: A surge in our small and medium business traveler and groups business revenue continued momentum across our partnership revenue streams and the accelerating earnings contribution .
Speaker #5: Now coming from our expanding international business . The strength of these earnings drivers allows us to raise the midpoint of our full year earnings outlook and tighten the range , reinforcing our confidence in the growth of our global business going forward .
Speaker #5: During the quarter , we increased our net global rooms by nearly 2.5% year over year , and growth was led by continued expansion in higher revenue segments where we grew by nearly 3.5% , along with higher revenues per hotel across all segments .
Speaker #5: Today , 90% of our global portfolio consists of those higher revenue generating rooms . Further strengthening the value we deliver to guests , franchisees and shareholders .
Speaker #5: The future growth of our portfolio is compelling , fueled by robust developer interest with global franchise agreements awarded up 54% year over year .
Speaker #5: And today , 98% of rooms in our global pipeline are in higher revenue . Brands , as shown in our investor Supplementary Materials .
Speaker #5: These hotels are expected to be 1.7 times more creative than our current portfolio , driven by their Repar premium , higher effective royalty rates and larger average room counts .
Speaker #5: This pipeline strength underscores our ability to continue to elevate our earnings per unit by adding accretive hotels to our platform . Our pipeline is important not only for its size , but also for the quality of the hotels within it and the velocity at which we are able to convert signings into openings .
Speaker #5: In fact , the number of hotels that opened over the past year without ever appearing in our global pipeline accounted for approximately 1% of the systemwide unit growth .
Speaker #5: As we look ahead , we're optimistic about the next phase of the US lodging cycle and its impact on new construction openings in the US .
Speaker #5: We expect last week's lowering of interest rates , continued investments in the build out of AI infrastructure , and a constructive regulatory environment will drive stronger demand , especially for our travelers .
Speaker #5: Combined with low industry supply , growth , continued favorable demographic trends and significant demand catalysts such as the 2026 World Cup , the US 250th anniversary , and the route 66 Centennial .
Speaker #5: These tailwinds are expected to generate incremental travel across our markets and set the stage for stronger repar growth in the years ahead , backed by the strength of our core travel base , retirees , road trippers , and America's blue and gray collar workforce .
Speaker #5: Our purpose built hotel portfolio is well positioned for sustained growth as we look for signs as to when the cycle in the US may turn positive for our business .
Speaker #5: Two indicators are moving in the right direction . First , our economy transient segment occupancy performance has begun to improve year to date and has shown year over year growth in each of the last two quarters , excluding the impact of the third quarter 2024 hurricane , this segment was also the first to recover after the last period of demand softening , followed by the Midscale segment .
In the third quarter alone, we achieved 35% growth in adjusted International EBITDA, and we expanded our international portfolio by over 8% year over year, surpassing 150000 rooms outside the U S.
That growth was fueled by a 66% year over year increase in hotel openings.
In EMEA, our portfolio grew to nearly 64000 rooms up 7% year over year.
We're especially encouraged by the progress in France, where we expect to onboard over 4800, midscale rooms under direct franchise agreements by year end nearly doubling our presence.
This milestone highlights our ability to continue to scale, our direct franchising markets.
We also recently entered Africa with our first development agreement, including our flagship property in Kenya's Maasai Mara game reserve, marking the start of broader expansion across central and Southern Africa.
In the Caribbean and Latin America, we expanded our footprint by nearly 50% over the past three years to more than 25000 rooms across more than 20 countries.
Just two weeks ago, we hosted our first choice hotels Kalla convention in Mexico, where we saw tremendous enthusiasm for our upscale and mid scale brands.
Our targeted business travel strategy is reshaping the guest mix with about 60% of stays in the region now business related driving weekday demand higher spend and long term loyalty.
We also entered a new direct market, Argentina with the opening of a radisson Blu in Patagonia and recently signed an agreement for a new upscale Radisson red.
This follows the successful opening of the Radisson Red Sao Paolo a couple of months ago further strengthening our upscale and upper upscale presence in the region.
Elsewhere in the Americas following the full consolidation of choice Hotels', Canada, we've transitioned to our direct franchising model and are already seeing impressive results from the 355 Canadian hotels with third quarter, Canadian Revpar up 7% year over year and growing.
Franchisee interest across our brands.
In Asia Pacific since launching our ascend collection in China, just five months ago, we've already on boarded nearly 80% of the more than 9500 anticipated upscale rooms with the remainder expected by year end.
We are on track to add roughly 10000 mid scale rooms over the next five years significantly expanding our reach among Chinese travelers and driving valuable outbound traffic to our hotels and the rest of Asia and beyond.
We also successfully launched our Midscale extended stay brand.
Mainstay suites in Australia, marking the first expansion outside North America.
This direct franchise agreement adds nearly 600 rooms and marks the first step in extended stay growth across the region.
All of this exciting progress around the world has positioned our international business as our fastest growing segment.
Our second fastest earnings growth segment is extended stay in the U S.
Over the past five years, we've expanded our U S extended stay portfolio by more than 20%.
Now exceeding 55000 rooms.
We have delivered nine consecutive quarters of double digit system size growth outpacing the industry.
Today. This cycle resilient segment represents nearly half of our U S pipeline offering longer average days.
Our margin.
And stable revenue streams.
Despite a challenging new construction environment for the industry are ever home suites brand continues to gain traction.
We now have 23 hotels open 16 of which opened this year and 40 more U S projects in the pipeline, including 12 under construction.
In the third quarter, we more than doubled ever home openings year over year expanding into fast growing markets like San Antonio, Texas, a key emerging data center hub.
Nationwide the manufacturing of data center build out is fueling strong long term demand for extended stay.
And with 40% of all economy and mid scale extended stay rooms under construction belonging to choice brands, we're exceptionally well positioned to maintain segment leadership.
Our strategic expansion into higher revenue generating segments is also strengthening our economy transient brands.
Through deliberate portfolio optimization, we've been replacing lower performing assets with higher quality more profitable hotels lifting guest satisfaction and brand equity.
As a result, our economy transient hotels are outperforming comparable hotels within their chain scale, and revpar growth and gaining Revpar index share.
This strong performance is attracting developer interest driving a 35% year over year increase in our U S economy transient rooms pipeline and a 27% year over year rise in U S franchise agreements awarded in the third quarter.
Importantly, the new hotels entering our system are expected to generate on average higher royalty revenue than those we strategically exited.
In our Midscale segment developer interest remained strong with our global pipeline up 5% year over year.
The redesigned country Inn and suites by Radisson prototype engineered for cost efficiency and ease of conversion has reinvigorated the brand in.
In the third quarter, we doubled the U S franchise agreements awarded and grew the U S pipeline by 15% year over year, reflecting renewed developer confidence.
And we remain on track to deliver a year over year growth and brand openings in 2026.
In our upscale category, we continued to expand rapidly increasing our global system size by 21% year over year to 118000 rooms, and driving a 33% increase in U S franchise agreements executed during the quarter.
As I mentioned earlier, the velocity with which we move hotels through our pipeline remains a key differentiator.
On average our conversion hotels open within three to six months about 80% faster than new construction, allowing both choice and our franchisees to capture revenue earlier.
Choice remains the leader in the share of conversion hotels in its segment.
In the third quarter, our U S conversion franchise agreements increased 7% year over year, and we expect conversions to remain a core growth driver through year end and to account for approximately 80% of total U S openings in 2025.
Now, let's turn to the exciting investments, we are making in our franchisee success system.
Choice continues to have the best technology team in the business.
We're especially proud that Forbes recently recognized choice as one of America's best employers for Tech workers.
A testament to our culture of innovation and talented teams shaping the future of travel through technology.
Today, we're building on our leadership in cloud computing and data to evolve choices technology stack into an intelligent always on ecosystem, one where autonomous agents continuously help franchisees optimize rate and revenue management streamline operations and free franchisees to focus on delivering.
Exceptional guest experiences.
Our systems are advancing from a tool to a true teammate reflecting choices long standing commitment to helping owners succeed from day one.
Backed by our $60 million technology investment program now nearing completion and on track to conclude next year. This transformation will mark a pivotal step forward and how our platforms empower franchisees to achieve more.
These next generation systems will understand intent reason across data sources and take accident autonomous Lee equipping our owners with predictive insights automated workflows and real time decision support to unlock new levels of efficiency profitability and growth.
As part of our technology investment program. We're also expanding our reach in business travel and deepening guest loyalty driving higher customer lifetime value and further strengthening our competitive edge.
The transformation is designed to deliver durable revpar growth expand Revpar index share and support long term rooms expansion.
We're already seeing measurable impact with year to date occupancy share gains versus competitors through September.
And business travel, we strengthen our position by expanding and elevating our global sales capabilities.
Business travelers now represent roughly 40% of stays creating a balanced mix that supports rate stability across economic cycles.
In the third quarter group revenue rose, 35% year over year, while small and medium business revenue grew 18%.
Importantly choices U S business traveler base continues to provide steady demand made up of guests, whose jobs require travel representing industries, such as construction utilities health care staffing logistics and manufacturing.
Today, we manage more than 1600 global business accounts and serve a strong SMB and smart base underscoring our role as a trusted partner for business group and event travel.
Next year, we'll launch a dedicated digital platform for small and medium businesses tapping into a $13 billion opportunity to grow midweek occupancy and extend our corporate reach.
In addition, we're developing new AI enabled RFP management and sales tools designed to streamline group sales accelerate responsiveness and drive more high value bookings.
Let me now turn to the exciting progress, we're making in the types of guests we serve.
Across our portfolio the quality of our guests continues to rise.
Half of our U S gas now have household incomes above $100000 and one in five exceed $200000, representing an increasingly attractive customer base for both our franchisees and partners.
Our choice privileges rewards program now exceeds 73 million members up 8% year over year.
Recent enhancements in 2025 are delivering results.
Loyal members stay nearly twice as many nights spend more per se than non members and are seven times more likely to book direct driving greater customer lifetime value for choice and our franchisees.
Just yesterday, we announced new benefits launching in January this meaningful transformation of our program is designed to accelerate member growth increased co brand card revenue and strength in direct bookings further deepening engagement and fueling demand.
The last time, we revamped the program, we achieved a 700 basis point increase in loyalty contribution, giving us strong confidence in this next evolution.
The enhancements in our rewards program are designed to further activate the expanding core demographic that we expect will drive demand well into the future retirees and near retirees.
This growing demographic now represents nearly 30% of our revenue and continues to be among the most valuable and active travelers on the road.
They spend more at our hotels and are twice as likely to be members of our rewards program.
This year alone more than 4 million Americans are reaching retirement age the largest cohort in U S history entering their peak leisure travel years with record levels of disposable income.
By 2031 in five Americans will be 65 or older representing an expanding base of affluent travel ready consumers, who spend more on travel than younger generations.
Studies show that spending by this Golden generation is expected to increase by 70%, reaching nearly $15 billion over this time period.
With gas prices at multiyear lows and expect it to go lower next year choices uniquely positioned to serve these travelers.
Courted by our extensive portfolio of convenient drive to locations that appeal to the millions of road trippers hitting the open road for new experiences.
Our next generation loyalty program is built to capture this growing demand given these high value guests, even more reasons to stay with choice.
And then in AI, driven world travelers will gravitate towards brands, they know and trust and those they have real relationships with.
That's why our loyalty evolution is focused on deepening those connections positioning choice to capture this next wave of demand.
Together these initiatives are driving greater demand and creating higher customer lifetime value for our franchisees.
We're confident these investments and those still to come we will expand our growth opportunities and create meaningful long term shareholder value.
Importantly, we're positioning choice for enhanced performance and sustained growth.
Our technology forward strategy and disciplined execution combined with an asset light fee based model have meaningfully strengthened our growth trajectory even in a dynamic macroeconomic environment.
We continued to generate substantial free cash flow.
Labeling is to reinvest in high return initiatives that fuel growth, while delivering sustainable value to our shareholders.
We are confident that our strategy will continue to unlock scalable growth opportunities expand market share and drive long term returns with that I will now turn the call over to our CFO Scott.
Thanks, Pat and good morning, everyone. Today, I will cover three key areas, our third quarter financial results, our balance sheet and capital allocation and our outlook for the remainder of 2025.
We delivered record third quarter, adjusted EBITDA of $190 million up 7% year over year, Despite a softer U S revpar environment.
This performance underscores the strength of our diversified revenue streams and the early returns from our strategic investments.
Our record quarterly performance was driven by system wide rooms growth and our higher revenue extended stay and upscale segments.
Our average royalty rate.
Continued expansion of our international business, including the introduction of our brands in new markets and strong partnership revenue.
Let's turn to the three drivers of royalty fee growth unit growth Revpar performance and royalty rate.
In the third quarter, we grew our global rooms to 3% year over year led by a three 3% growth across our higher revenue segments upscale extended stay and mid scale.
Each segment delivered strong results in the third quarter, reflecting the benefits of our deliberate investments and disciplined portfolio focus.
Our U S extended stay rooms system size grew 12% year over year.
Weighted by a 14% increase in openings.
At the same time, we awarded 30% more franchise agreements in the U S year over year.
We strengthened our position in the Midscale segment, our global pipeline, increasing 5% year over year.
Specifically, our flagship comfort brand saw U S. New construction franchise agreements doubled year over year with the new construction U S pipeline accelerating quarter over quarter.
In the upscale segment, we expanded our global rooms portfolio by 7% quarter over quarter and attracted strong developer demand.
Our some collection now exceeding 72000 rooms worldwide.
Six fold increase in global openings and twice as many franchise agreements awarded in the U S versus last year.
Even in a challenging construction environment, we awarded more U S. New construction franchise agreements than last year.
And opened 15% more U S. New construction hotels in the third quarter year over year.
Our focus remains on elevating the quality of our portfolio.
We continue to strategically exit select assets that under index on our portfolio and failed to meet our requirements, while maintaining system wide growth clear evidence that our portfolio optimization strategy is working.
Turning to our Revpar performance, our global Revpar for the third quarter was flat compared to the prior year led by strong performance from our international markets.
We achieved third quarter revpar growth across every region outside the U S with overall international Revpar up nine 5% year over year.
On a constant currency basis International Revpar growth was led by the EMEA region, which delivered 11% year over year increase.
The Americas and Asia Pacific regions, each posted 5% year over year Revpar growth.
We're particularly pleased with the performance of our Canadian operations, where Revpar increased 7% in the third quarter.
Our U S third quarter Revpar declined three 2% year over year, primarily reflecting softer government and international inbound demand.
Even so we achieved year to date occupancy share index gains versus our competitors driven by strategic investments that enhance customer lifetime value for our franchisees.
Our extended stay segment in the United States outperformed the industry Revpar by 20 basis points in the quarter and delivered a one 4% year to date growth through September.
At the same time, our U S transient economy segment outperformed its chain scale revpar by 310 basis points.
<unk> gained revpar index share versus competitors and year to date through September.
Looking ahead, we remain confident in our ability to deliver sustained revpar growth and expand our Revpar index share.
This confidence is grounded in our disciplined high return investments that broadened our business travel base.
And loyalty engagement and position us to capture long term demand supported by favorable demographic trends, particularly the expanding retiree leisure segment, and Americas Blue and gray collar workforce.
Moving to royalty rate, our third lever of royalty fee growth in.
In the third quarter, the average U S royalty rate increased by 10 basis points year over year, reflecting our continued strategic focus towards higher revenue brand and a stronger franchisee value proposition.
We remain confident in the future growth trajectory of our system wide royalty rates.
Ported by ongoing investments that improve reservation delivery to our franchisees and our robust development pipeline.
This pipeline reflects contracts with higher royalty rates larger average room counts and a revpar premium all of which provide a clear path for long term revenue growth.
Turning to our partnership business, our focus remains on strengthening relationships with our strategic partners and suppliers.
Which was evidenced in our 19% year over year increase in revenues this quarter.
Growth was driven by strong co brand credit card fees as well as increased suppliers and strategic partnership fees.
As we've enhanced our franchisee facing service offerings adoption has continued to rise driving steady growth in our non revpar related franchise fees across the broad range of services we provide.
Expanding our partnership revenue streams and non Revpar franchise fees remains one of our key priorities and represents a meaningful opportunity for continued earnings diversification and growth.
We continue to focus on driving our top line growth, while enhancing associate productivity and operational efficiency.
We see meaningful opportunities to deploy labor saving technologies that will deliver significant productivity gains across the enterprise and help mitigate SG&A growth as.
As a result, we continue to expect adjusted SG&A to increase at a low single digit rate from our 2024 base of $276 million.
Finally, our adjusted earnings per share were $2 10 for third quarter 2025, compared to $2 23 in the prior year quarter.
The year over year comparison reflects the impact of our acquisition of the remaining 50% interest in the choice Hotels' candidate joint venture, which resulted in higher amortization expense related to the acquired intangible assets.
A temporary increase in income tax expense expected to reverse in the fourth quarter.
The reevaluation of our previously held ownership interest in the joint venture.
And unrealized foreign currency adjustments across our broader operations.
Excluding these items third quarter adjusted EPS would have been $2 27 reps.
Representing a 2% year over year increase.
Now, let's move to the balance sheet and capital allocation.
As of September 30, we generated $185 million in operating cash flow through September including $69 million in the third quarter.
This strong cash generation and a healthy balance sheet underpinned our capital allocation priorities investing in growth initiatives and accretive acquisitions, while returning capital to shareholders.
Year to date through September we returned $150 million to shareholders in dividends and share repurchases.
We continue to deploy capital selectively to scale Cambria hotels, <unk> suites, while maintaining a disciplined approach to recycling that capital at the right time.
In the third quarter, we generated $25 million in net proceeds from recycling activities and year to date, our hotel development related net outlays in lending declined by $53 million.
We expect 2025 to be the final year of developing new company owned Cambria hotels, followed by ever home suites in 2026 with investments expected to be completed in 2027.
As the interest rate environment continues to improve and the hotel transaction market recovers we also.
Our capital recycling activity to accelerate.
We ended the quarter with a net debt to trailing 12 month EBITDA of three times and liquidity of $564 million.
Finally, I'd like to discuss our outlook for the remainder of the year.
For the full year, we now expect U S revpar to range between minus 3% and minus 2%.
As a reminder, fourth quarter comparisons will be impacted by elevated hurricane related demand in the prior year and we continue to monitor potential impacts related to the government shutdown.
We are tightening our full year adjusted EBITDA with the midpoint up by $1 million.
We now expect adjusted EBITDA to range between $620 million and $632 million.
We are adjusting our full year adjusted EPS guidance to range from $6 82.
To $7 five.
Primarily reflecting additional amortization expense related to the intangible assets from the choice Hotels', Canada acquisition.
Which was not included in prior guidance.
As well as lower equity earnings from joint ventures, due to the timing of hotel openings.
Our fourth quarter recurring effective income tax rate is expected to be approximately 21%, reflecting the timing of tax recognition between the third and fourth quarters as previously discussed.
Our full year effective recurring rate guidance remains at approximately 25%.
We now expect full year 2025 franchise agreement acquisition costs to be lower than in 2024.
Our outlook excludes any additional M&A share repurchases after September 30th or other capital markets activity.
Our third quarter results demonstrate the success of our strategy and highlight the benefits of our expanded scale and diversified business model, even in a softer U S revpar environment.
We will continue to invest in high return areas that enhance our long term trajectory and drive meaningful shareholder value.
Looking ahead, we remain confident in the durability and strength of our fee based business model, we expect growth to be driven by higher revenue hotels.
Average royalty rate growth.
Expanding partnership revenues sustained international momentum and strategic initiatives designed to enhance customer lifetime value for our franchisees.
Pat and I are now happy to take your questions operator.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your Touchstone sound you will hear from that your hand has many race should you wish to decline from the appalling practice. Please press the star followed by the number two if you are using a speaker phone.
Please lift the handset before pressing any key.
One moment. Please for your first question.
Your first question comes from Michael Bellisario.
With Baird. Please go ahead.
Thank you good morning, everyone.
Good morning question for you.
First on this.
Ever home joint venture that you guys announced in July.
Just in the past you had mentioned that you were going to recycle owned assets I know Scott you provided some comments there too I think we all assume that means those assets get sold to a third party and use of cash but in this joint venture deal you still own 80%, then youre sort of committing to owning and developing hotels for longer or at least more of them.
Medium term holding period, I guess help us understand the motivation thought process here and how the economics of this deal or maybe better or different than previously owning and developing assets on your balance sheet.
Yeah, our preferred vehicle has been.
Develop hotels through the joint ventures that we have and so what you saw in this transaction was really more of a timing of the transaction. So we had started a few hotels.
On our own balance sheet owning them that were always intended to go into the joint venture just thought it had not been fully set up at the time. So when you take a look at the overall transaction. There were some sales from an accounting perspective, but were treated as proceeds from sales, but ultimately it was a way that transaction worked that netted us about $25 million recycling.
This doesn't change in terms of our long term viewpoint on holding assets as I've always said, we're in the moving business not the storage business and we have developed ever homes really to launch that brand to get it to scale. So that's 100% franchised brand so.
Even in this this joint venture are we've either expect our JV partner to buyout our interest at some point in time or to go to market and sell those two additional.
Additional third parties are encumbered with long term franchise agreement as.
As we talked about in the remarks, we're at towards the tail end of our capital investment in both Cambria and never home.
We expect to wrap up with no new no new development in Cambria after this year.
And then finishing the ever home development in 2026.
Our net capital outlays will.
It will be significantly lower in fact, if you look at our Q3 results. This year were actually about $50 million less in capital being used on our.
Development of the hotels. So we're at the tail end of that and as the transaction environment and interest rate environment improves we do expect to be.
<unk> of those hotels, whether theyre on our owned assets or in these jv's.
Okay. That's helpful and then just similarly on capital allocation.
What was the rationale for not buying back stock during the quarter, especially when it was down so much versus levels, where you had previously been repurchasing stock and that's all for me. Thank you.
Yeah, Mike I'll be nothing we look at our capital allocation hierarchy to invest in the business to do accretive M&A and then return capital to shareholders through dividends and share repurchases. We bought the other half of Canada, we did not own in the third quarter. So that capital outlay was sort of the kind of.
Steve rises higher from that standpoint as to what creates more long term value for shareholders.
I would say if you look at our pace of sort of how we've been deploying capital.
We're effectively on pace through the third quarter with the acquisition and the share repurchases. We did in the prior part of the year, but yes, absolutely. It's at a very attractive price at this point.
That was the.
The way, we deploy our capital in the third quarter.
Yes.
Thank you.
The next question comes from Neil <unk> with Goldman Sachs. Please go ahead.
Hi, guys. Thanks for taking the question I just wanted to ask about the longer term outlook for rooms growth, particularly in the U S. It's been tracking down every year at least when you kind of strip out Westgate from there and so as we move forward over the next kind of year or two what's the kind of base case expectation and what are you kind of seeing in the development environmental conversion environment.
Really in the U S.
To drive that thanks.
Sure. So if you look at our pipeline and where we've been focused really for the last five years is on bringing higher quality product into the pipeline and therefore moving that into the system and that that is going to continue if you look at the makeup that we talked about in our remarks about 98% of what's in the pipeline today is in those higher value says.
<unk>.
What we've been opening and as we've mentioned in the remarks, there's actually because we're doing a lot more conversions. They open anywhere between three and six months on average, but that also means we're opening hotels in less than three months since so many of those show up as openings, but never even show up in the pipeline and that's really as we mentioned in the remarks.
1% of our unit growth.
I'm from.
The hotels that opened that quickly. So when you look at the pipeline, it's not only the size of it but it's also the quality of the hotels that are in there, but as importantly, as the velocity with which because we've been doing conversions as a company for so many years, we're able to get these hotels opened quickly for owners and that allows them.
To capture revenue early and us as well and so as I think as we look into next year, just given the limited supply growth that's been going on in the U S from a new construction perspective I.
I would expect that trend to continue well into 2026, so that that's sort of probably how we would think about the setup for the conversions coming out of the pipeline and the net rooms growth in the U S.
Got it that's helpful and then on to the Revpar environment I. Appreciate the comments you made with some of the Green shoots and also welcome from next year I'm curious how you would think about just how much of what's going on at the lower end is structural or cyclical, especially in terms of competition from conversion brands like spark premium economy things like.
That the K shaped recovery anything you can share that or is that how you think about the longer term trajectory to be able to potentially grow domestic revpar again longer term. Thanks.
Yeah sure, let's say from our perspective this is a cyclical business.
Ben that choice for 20 years and is probably the third one of these we've been through.
The Green shoots you do look for is when does occupancy stopped dropping.
Then gives owners.
Confidence when they set price.
And so that's the kind of early indicators that we've seen where the cycle starts to turn in that.
In fact, what we're starting to see in our in our chain scales in our segments and our brands and.
And we're pretty excited with what we're actually seeing the economy segment, which again is the segment that usually leads you out of one of these cyclical downturn. So.
Feel pretty good about sort of what we're seeing on that front I'd say on the consumer front.
This is that.
It's sort of question around this case shape recovery.
I think it's missing the fact that you've got a ton of being 75% of the people who work in this country work for a small and medium sized business and we're seeing that surge in the SMB business in our hotels, it's because of the types of travelers that are the labor force is effectively shifting towards the types of travelers to stay in our hotels.
Construction utilities.
Medical staffing, which is traveling nurses. Unlike there is a.
Pretty significant tailwind that we see from our business travelers perspective. The other is what we talked about which is our retirees and road trippers and about 30% of our business today are those folks who are 60 years old and older.
They are sitting on tremendous wealth in their homes. They are sitting on very attractive stock portfolios and they've got discretionary income and the time to travel. So we are seeing that traveler on the road and we expect to see more of them.
The investments, we're making our loyalty program that are that are going to kick off here on the first of January are really designed to drive more of that business and we know that those are the folks who spend more than our hotels. They stay more often and they booked direct which is all a real positive from a unit economics within the hotels themselves. So we felt pretty good about how the setup.
<unk> is coming for 2026, and those core demographics, the road trippers and retirees and then those blue and Gray collar workers. Those are expected to be demand drivers and those are the folks who are in our hotels today and we would expect we will get more of that share as we move forward.
Thank you.
Thank you.
Our next question comes from David Katz with Jefferies. Please go ahead.
Yes, hi.
Good morning, Thanks for taking my question.
Two things if I may I, just wanted to get whatever early perspectives, you can share with us regarding 2026.
No I understand your business, obviously in the booking window as short.
But any any thoughts on how we might use 2025 as.
A platform off of which to measure 2026, and then I have one quick follow up please.
Yeah, David I would look at the two things I just spoke about I mean, I think when you look at our share and we talked about that in the remarks of those 60 year old travelers and above the research shows they call them the golden travelers because.
They've got all this time and they've got all of those wells.
And they are traveling more this year and that number that cohort is going to grow we've talked about by 2031 in five Americans is going to be at retirement age and so over the next five years that cohort only continues to grow and we over index for that type of traveler in our portfolio today and we into.
Tend to lean in on that and then I think on the business travel side. When you look at our business travel or mix I know you've been around the stock a long time, we used to be 70, 30 leisure business. We're now 60 40 and that small business traveler is a much more resilient traveler because they have to travel for their jobs and what we're seeing.
Particularly with what AI is doing to the workforce, we're going to see more people who are in that sort of blue in great travel segment. When you look at the job gains.
And you look at the small business formation, that's occurring there in the segments of the travel in our hotels and so when we look at that overall.
Total available market for small medium business, it's about $13 billion of travel on an annual basis, and I think our ability to capture more and more of that share as another positive that we're looking forward to so.
On top of that I would just add our groups business revenue, which again is up 35% this year.
That's a function of the fact that we have put more sellers out there.
We have about 20% more sellers, who are selling into our business category and our groups business and.
And so those are the things that I would point to as.
Opportunities that choices leaning into where the Tam is getting larger.
David what I'd add to that.
And when you when you step back and look at the broader business unit for 2026, obviously, we're still working through our planning process, but as we talked about on our remarks are in.
Our national business, we feel really strongly about the continued growth there and believe we are on pace to double that EBITDA contribution of the base year of 2024. So we do expect strong growth from international next year. In addition from both our partnerships.
Services business and our platform and ancillary revenues as we've talked in the past. We do think we have a very good base to grow off in that mid to high single digit growth on those and we also believe that we can continue to keep.
Our cost.
Relatively contained especially with all the new tools and AI tools that are really driving cost efficiency throughout the business. So.
We're very optimistic on 2026.
Understood and if I can just ask one follow up.
So much of the industry has evolved.
And in terms of growth on ancillary fees, non revpar foods, particularly around cards and I know that you have some.
Can you just elaborate on what the strategy or the vision for that is over time.
Yes.
Yes, I mean, when you look at the scale of our business. David So you look at 7500 hotels.
We probably have somewhere around 36 million.
Room nights every year and you've got multiple people staying in those room nights. So we have a significant.
Opportunity too.
Provide more services to our customers to our guests in our hotels and that is everything from co brands, what we do on the timeshare side in the gaming side as well.
And so that that's a real opportunity for us we do see those trends growing and that is reflected in our in our numbers.
I'd say on the franchisee side of the house, we are offering more services to our franchisees and the adoption rate of those services is increasing so those are those are the drivers that are impacting the.
The owner side of the house, the franchisee side of the house. So both of those trends the consumer growth in the franchisee growth and our ability to sell more services into both of those customer basis are we from a strategy perspective, those are things that we're leaning into and have been pretty earnings accretive over the last several years and we would expect them to be so in the.
Future.
Thank you.
You're welcome thank you.
Thank you.
The next question comes from Stephen Grambling with Morgan Stanley. Please go ahead.
Hey, Thank you I know, it's early to be putting <unk>.
Tend to paper for 'twenty, 'twenty, six expectations, but with all the moving parts on expenses and I know you talked about AI opportunities.
How should we be thinking about the run rate or baseline for SGA. This year and then what the growth rate might look like next year, particularly if revpar does.
Does start recovering.
We as I mentioned, we continue to believe we can maintain SG&A at a low single digit growth rate. If you look at our results. So far through this year our year to date SG&A is about up about 3% and when you take out the acquisition of our Canadian joint venture, it's about about two 5%.
As we mentioned, we're finding a lot of labor saving tools and efficiencies with.
The AI tools that we've already.
Brought into the system and so I would say going forward.
Are you able to model something around that low to mid single digit SG&A going forward.
Yes, Stephen it's pretty exciting that the tools, we've already deployed across our workforce and the things that we are working on today.
We implemented a new ERP system that went live a couple of months ago, but the intelligence in that system is reducing a huge amount of manual processes and helping our folks in the finance group for instance.
They have to do as much exception.
Reporting that type of stuff because the system is providing that information to them. We're seeing it in our software development group, we're seeing significant productivity gains for our folks who build that these tools that we deploy to our franchisees and so it's a pretty exciting time.
Time for workforce productivity.
And youre going to see that number reflected in lower.
Lower SG&A growth I would expect as we move forward in the in the coming years.
That's helpful and maybe one follow up on.
Are you currently providing any inventory to AI partners are large language models, such as German charged to your others.
And maybe how do you how do you think about the opportunity to partner from some of these channels and what maybe the cost of that channel looks like versus things like Google ads or otas rather.
Yes, Stephen it's a great question and it's a I think at this point when we look at the distribution landscape and Ai's impact on it. The players are still taking the field right now and so there's a lot of testing and learning and we are doing some of that.
With some of these some of these partners.
Behind the scenes really to kind of say, it's just going to work for us.
To be successful in this new World you got to have two things that we have both of them. The first is all your systems need to be in the cloud and the second is you need to have.
Control of and in a high quality level of your data.
And most companies don't have that choice hotels does it's an area that we've invested in significantly all of our systems are in the cloud now we don't have any data centers anymore that are that are company owned and all of our data is accessible through the cloud as well and so those are the two things that these <unk> are looking for.
If you build the right scaffolding around your data, which we have done.
Then have the ability to communicate with these L. L M zone.
And work through the ways that consumers, who are starting their search for hotels, if that's where they're going to start we want to be able to to be able to provide our inventory rates and availability.
Through those models as well and so I would say at this point. The answer is we are we are exploring.
I'm sure many others are but I feel like it's a pretty exciting opportunity for us because of the investments we've made over the last three or four years in particular to make ourselves AI ready.
And we've actually been using AI in our tools for our franchisees for about 10 years it used to be called robotic process optimization automation and it was called machine learning.
We're using it in a number of our franchisee facing tools already but this next step function change that we're working on I think is going to be really exciting because the tools that they have today effectively help them record what theyre doing.
Where we're moving to is a world where the tools that they will be using are going to help them understand what's the recommended next best action I should take with regard to my right with regard to my channel management, whatever it might be in.
And we're really excited about the future for that because it's their choice. We've always kept those sort of franchisee facing systems in house.
So we're able to sort of take the benefits of AI, the productivity gains and the tools that are available and really bring them to our owners in a in a meaningful way and so we've got some interesting things, we're going to be launching with them in the coming months and so from an excitement perspective, we really feel like the AI boom, that's going to help our owners make more money and it is.
To help our shareholders do so as well.
Thank you.
Thank you.
The next question comes from Dan <unk> with <unk>.
P. Morgan. Please go ahead.
Good morning, everyone. Pat Scott I was wondering if you could talk about the key money environment. It sounds like Youre, taking the expectations there for 2025 to be a little bit lower.
Year over year, but you know maybe puts and takes into 2026 and it seems like other competitors are still looking increasingly grow their presence in that in that mid scale segment in particular.
Yeah, as we mentioned on the call, we do expect our key money to be lower than <unk>.
Where we were in 2024.
I think that's a reflection of just the quality of our brands.
In terms of the competition. So we believe that we're driving topline revenue to our franchisees and our brands are very valuable. So when people are looking to convert.
Seeing that we don't need to use as much key money is how our competitors to win those contracts in fact, our average kimani per deals, but down about 11% for.
For the first nine months of the year. So yes. It is a competitive environment, but we do believe that our brands, especially in that mid scale and upper mid scale space. We're really choice has been a leader for many years, we do understand what our franchisees need what it takes to run a very successful business and capture those customers that Pat talked about a little bit earlier so.
We're optimistic that the key money environment should be kind of hitting a peak year as interest rates come down and hopefully we will see a turnaround on the revpar front, our that'll be needed less to win to win deals. Yeah. I would just add you know since labor day I've been out at five franchisee events that collectively.
Probably about represent about 500 hotels. So these are all owner meetings that we do for a couple of days and without fail our owners are telling us that.
They value our brands and some of them who moved to try. These other brands have come back and said you know we made a mistake.
Our performance is down when you look at the value of a brand that has the awareness of our quality inn or comfort in those things are driving guests and we own those guests we own those midscale traveler. So.
The need for key money in in the ability to win these contracts.
Not as necessary when you have strong powerful brands, particularly in the Midscale segment.
Got it and then in terms of just free cash flow conversion was there anything kind of nuance in the quarter.
As it relates to that and then can we think about what's the best way to think about full year 25 that level that you might be able to convert.
Yeah, there was some temporary timing differences in the quarter that drove the free cash flow a little bit lower particularly as youll see in our 10-Q, we did purchase some.
Investment tax credits during the quarter that will have a reduction of our.
Federal taxing federal tax rates going forward, but the timing of the payment of those versus the realization of the taxes will be between the third and the fourth quarter. So as I mentioned in my remarks are our.
Third quarter rate was a little bit higher than where it will be for the full year, but that caused a little volatility. So we would generally believe that will be in a free cash flow conversion more similar to where our percentages where last year in that 60% to 65% range.
Got it thanks, so much.
Thank you.
The next question comes from Danny Assay with Bank of America. Please go ahead.
Hi, Good morning patent Scott.
Look your international growth strategy, he seems to be picking up steam so Mike.
My question is just can you give us a sense for how much rooms growth, we could expect in the coming year on the international front and then any color you can give us on key regions that would be driving that growth would be super helpful. Thank you.
Yes, So let me just start with I mean, when you look at our current business as we sit here today, it's about 3 billion in annual gross room revenue outside of the U S.
And so we have a real significant opportunity to capture more of the fees from that from improving our value proposition and so that's really the upside that we've been experiencing and if you look at the supplemental materials.
That we put in the on the website, we've really transformed that business over the last couple of years moving to now a 40% direct franchising business, which is up 20% moving about 1400 hotels, which is about 203 hotels from 2022, and then getting our EBITA margin up over 70 per.
<unk>. So those are all really positive healthy metrics and we now have the talent and the brands and.
The business model to be successful in all three regions of the us.
The world. So just looking at to your question looking at the Americas bring.
Bringing the other half of Canada into our onto our platform and being owned by Us now.
Real huge opportunity for us we have 355 hotels up there.
And we now have the opportunity to unlock more value there and it's important to recognize that the quality of the product up there and as is true throughout the world, but when you look at Clarion and quality in for instance, you are talking about three and four star hotels outside of the U S. So the revpar at those hotels were able to generate is significantly higher.
Just down in Mexico, a couple of weeks ago, with our Caribbean and Latin American teams, we had about 110 franchisees down there.
Who would who came to the event and we've grown our rooms portfolio down there by 60% over the last four years, we're now in 21 countries and the excitement around our brands, particularly the Radisson brands that we have down in that part of the world is pretty significant when you shift over to EMEA.
We've really got to focus on two key markets, it's France, and Spain and the teams out there have done a really remarkable job.
In bringing more new direct franchise agreements in we doubled our presence in France. This year.
Which is a really healthy market and we're continuing to grow in Spain, as well and we've mentioned a few of the new markets that we've entered into in EMEA as well and then when you shift to Asia Pac We've always had a strong business in Australia direct franchisee and we just.
Introduced the mainstay suites brand there with seven hotels opening.
And additional pipeline for more with the.
Developers of the largest extended stay brand in Australia. So we've got a really strong partnership there, but a good opportunity to bring extended stay to Australia, and New Zealand and then as we mentioned in China. We now have a really significant growth partner upscale hotel company.
I think they are probably the fifth largest in China.
But we've already onboard at about 80% of the 9800 rooms, there with a long term agreement to grow somewhere mid scale brands in China. So we really feel good about the sort of across the world. We've laid the foundation all we need to do now is execute and I feel like with the talent, we have the new business model that we have.
Having some of these markets and the brand strength that we have.
That's a that's a very achievable goal for us going forward.
Okay. Thank you very much.
Thank you.
The next question comes from Robin Farley with UBS. Please go ahead.
Great. Thanks My question is on.
The growth in international units.
How should what should we expect for fee revenue in 2026, and you have a full year of them.
Kind of Master franchise, a lot of the other countries are direct franchise. So are the franchise fee percentages the same end.
When you give the royalty rate increase I think thats only for your domestic property. So will you start including international or giving us international separately. Just so we can think about.
Franchise fees per room from the international and whether that will look different in kind of.
Fees cheaper in the U S.
Thanks.
Yeah, Robin we will going forward, probably we get to February will be giving you more of a kind of a global revpar.
Number to look at the.
The growth we've seen this year is not like an anomaly of the growth is something that has been present in our in our business and so.
What we're seeing with the kind of lack of international inbound is a lot of those travelers are staying home and traveling in their domestic markets and our presence in a lot of those markets has always been focused on the domestic traveler, whether it be Canada, or Mexico, or France, or Spain. So we feel like we're well set up for.
The trends that are that we would expect to see on a go forward basis I think when you look at the royalty fee. That's the that's the opportunity for US is the value proposition gets better.
In the U S. We have that sort of effective royalty rates north of 5%.
We have in our direct franchise markets.
Something less than that and then on the MFA markets. It's even smaller so as we shifted from MFA to direct we're picking up that.
Active royalty rate gain and we would expect that to grow as we invest more in the value proposition you know I talked to in our remarks about this $60 million investment that we have we're almost through the end of it a lot of that capability is global in nature, So whether it's rate management or our revenue management tools are these.
Platforms, we have for capturing small and medium business travelers.
These are tools not just for the U S market. They are they were built to be global in nature, and we do expect as we deploy those in these regions, we're going to improve the value prop, which will then be constructive towards moving the franchise fees higher interest.
And just to add to that Robin you took at our direct franchising business internationally, the effective royalty rates there around two 7% for.
Our direct franchising and that's really where we've been focused as we've talked about and we've seen a 21 percentage point increase in the <unk>.
Percentage of our business, that's direct versus master franchise agreements. So certainly an area that we're focused on and really what I look at as Pat mentioned really focusing on continuing to improve our value proposition, Canada, which we recently acquired is probably where we're the most advanced in terms of our capabilities.
In terms of delivering business and that royalty rate is closer to 4%. So we have a lot of opportunity across the other markets as we continue to increase our business delivery to be able to raise the effective royalty rates on those contracts.
Okay, Great. That's super helpful. Thanks, maybe just as a follow up.
You gave some pretty big increases for U S economy pipeline.
<unk>.
It doesn't seem like broadly there's a lot of new construction going on in the U S economy segment.
Is there something is it is it just that it's a small basis, making a large percent change or what is it that you were seeing with new construction for U S economy rooms that were kind of not seeing broadly. Thanks.
Yes, the economy segment has been our conversion market for a number of years.
So what youre seeing there is the value prop as it has gotten better for the entire system.
The value prop within the economy segment has benefited as well and so I think a lot of people have interpreted our revenue intense strategy means we are not focused on the economy segment.
Far from very far from the truth, what we've been doing in the economy segment is improving the product quality and so as owners see that we are exiting hotels that no longer stick up or stick to the brand standards or unable to.
They're seeing that we're not letting our economy brands.
Deteriorate that we're actually improving the likelihood to recommend scores the product quality.
And that's important for the types of guests that we serve that we keep that Prada.
Product quality moving in the right direction, and that's what's increasing the owner interest and that's what's increasing the franchise agreements being awarded in the pipeline being higher and that's really illustrated by the Revpar performance. We saw both in the quarter for the economy segment as well as the full year, we outpaced the STR economy segment by 180 180 basis points in the.
Quarter and were up 310 basis points year to date is really speaks to the quality of that.
Segment for us.
Okay, great. Thank you very much.
Thank you.
Next question comes from Brent <unk> with Barclays. Please go ahead.
Great. Thanks for sneaking me in here.
So just a quick question on the accounting and the revenue side, you guys talked about ancillary and credit card being.
Being helpful and I was just hoping you could help us with some of the geography because partnership line grew 20% I think that I thought that was with credit card.
But the other revenue line sort of doubled.
Year over year on a restated basis and I just wanted to understand what was in that if there's anything one time that we need to think about on that other line.
Hey, Brett to your point, our Cobranded credit card as well as our procurement business there's another.
Our timeshare businesses those are all on the partnership line item on our financial statements. So that's where you're seeing the significant growth in those revenues. Our other revenues include more kind of event driven onetime items at times. So there was some timing of recognition during the quarter. In addition, there were some items that really were grossed up pass through type expenses.
And revenue so you'll see about about $3 $5 million of that other revenue line item was offset by the increase in SG&A in the quarter. If you took a look at our SG&A in the quarter. It was a little more elevated relate mainly due to those pass through items. So I'd say the other revenue is up due to some pass through items and some some onetime event driven revenues.
But overall, we're still on track to hit the full year forecast.
Okay. That's really helpful. And then another question on business travel you guys gave some helpful stats business travel, 40% I think that's a global basis of mix and SME grew 18%, which is which is obviously a huge number for revenue. If you could just square that those data points with with Revpar overall.
In the U S being down.
Two plus percent and the only way I can really do this SME is a really small piece.
Business travel overall, but maybe you can just sort of help us.
Where that yeah.
Yes, I think part of this is the business or the product mix that we are shifting towards so we are shifting towards more products that is appealing to business travelers. So it's not just we're attracting more of them, but with the product mix has shifted particularly with this extended stay segment growth that we have here in the U S. It's a.
There's a lot of business travelers that are in those hotels for weeks.
And so that that's a key driver of that overall, our business travel was up.
About two 5%.
And within SMB.
And that in particular.
<unk> has grown pretty significantly by by 18%. So we're really leaning in on those types of travelers.
Because of the product that we now have in locations. We now have.
And that's where they're going they're going to the secondary and tertiary markets, where they have to travel so.
When I look at the mix of that in there.
Significantly higher total available market being $13 billion.
We are not yet at our fair share of that and we expect that to grow as we get better at our sales tools and we get better.
RFP responses.
That our that our owners are doing and so I would expect to see that percentage growth continue into the future.
The other thing I would just add to that is when you think about the headwinds. The two areas that are offsetting that are really in government travel, which was down about 20% for us during the quarter and then inbound travel from the Canadian travelers has continued to be down since the first quarter. So that was down about 30%. So those two things have brought down revpar, even though we've seen.
Our success in growing our business travel.
Okay, great. Thanks, everyone.
Thank you.
The next question comes from Meredith Jensen with HSBC. Please go ahead.
Thanks, Good morning, I was hoping.
Thank you might take a little bit more on the international growth that I know you've spoken a lot about it.
But in terms of building sort of they need to support infrastructure for this really strong growth that we expect could you help us.
Walk through some of the associated investments that might be necessary or how do you view that expense ramp and relatedly as you weigh those kind of.
Investment that needs to be made in certain complex regions.
I know you've discussed direct versus Nance your franchise.
Metrics before but given the investments you may need to make just sort of how that may evolve over time. Thank you.
Yes, Meredith I think what's what we want to emphasize here is most of those investments are things we've done in the last four years.
If you look at the exhibit we put on our Investor website. Today, you can see the margin growth that we've had over that timeframe. So the investments are not in adding people or in adding systems. We have a lot of the systems that we have put in place are already there.
And the investment I talked about that's going to effectively start deploying in early 'twenty six and throughout next year.
Those investments are in the in the rearview mirror for the most part so what we have to do internationally is execute.
And so there is a real opportunity here to do that they're bringing the other half of Canada.
And to the full company was really.
An opportunity for us to bring all that we do here in the U S.
Our hotels that are that are in Canada, and so it's not a new market for us we've been in Canada for 70 years.
Operated as part of those 70 years with a very good joint venture partner for 30 of those years. So we know these markets very well and whether its Canada or Australia, New Zealand, Mexico, Caribbean and Latin America EMEA.
EMEA, we've got we've got people who've been in those markets for a significant period of time. Our development teams are based in those markets. We run the market's effectively as domestic market. So theyre not relying on U S inbound.
For their growth and so the autonomy that that has allowed them to have.
Has given them the opportunity to build the talent and really protect the brands I think I think the other thing that's really important for shareholders to understand is.
Outside of the U S. The business traveler mix is 60% and 40% leisure in many of our markets. So we have a much more resilient and higher paying customer base and our brands the quality and brand the quality behind the clarity brand in particular are of higher quality. There. They are usually three and four.
Star hotels, so it's a very different business outs.
Outside of the U S and so.
The opportunity for us to continue to grow there is significant but we just have to execute it. So it's an opportunity for us to grow our value prop and therefore grow the effective royalty rate, we're able to drive in those markets.
Okay.
Thanks, So much that's super helpful and one other quick attention to sort of follow on to let Lindsey ask about it.
We've been following the cost pressures on the franchisees and I hadn't noticed that some of the grand.
Hyatt I think are working.
Our brand standards.
They have more flexibility to take on limited service franchise sort of <unk>.
Less ability to invest at this point.
Are you seeing any of that in the market raising the competitive environment, especially as you are collateral here your franchisee base or.
If youre seeing any of that dynamic or if it's different in terms of pets than in the past. Thank you.
Yeah, No. It's a great question and I think when we talk about the country and in suites brand in particular.
We redid that prototype with that franchisee margin compression in mind.
To make sure that the hallmarks of the brand or being preserved, but as you as you think about the.
Types of changes that we would need an owner who is converting or newbuild to build one of our brands. We are constantly looking at that it's a reason why choice has always been the leader in conversion hotels.
The flexibility to make sure that our Pip is.
Portable for the owner it makes sense for the markets and preserves the brand hallmarks. Those are the three things that we look to do that's something that we always do as a matter of course, it's not new for choice.
So I think when you look at.
Our ability to continue to grow our business in good times and bad.
That's a that's a key factor in driving all of that.
Super clear thank you so much.
Youre welcome.
Thank you.
Alright, there are no further questions at this time.
I will now turn the call over to <unk>.
For closing remarks. Please go ahead Sir.
Well, thank you operator, and thanks, everyone for joining us. This morning, we look forward to speaking with you again in February when we report our fourth quarter results have a great day.
Okay.
Thank you ladies and gentlemen.
Concludes today's conference call. Thank you for your participation you may now disconnect.
Yes.
Okay.
Yes.
Okay.