Scott Oaksmith: In terms of the RevPAR guidance, really this is a factor of tougher comps as we go through the year. When you look at – as we mentioned on the prepared remarks, our Q3 RevPAR for Choice legacy is still up 13.7%. Over 2019, many of our competitors are under 10% against 2019. So really just that we recovered faster. So we haven’t seen any change – anything change in the business in terms of occupancy level and ADR levels. And then when you look at Q4, we had a really, really strong Q4 last year. We were about 6% higher than the prior year and then 20% higher than 2019. So really, just the deceleration of RevPAR is something that we had talked about at the beginning of the year that we expected during the year given just the tough comps. And while we’re still working on our 2024 budgets, we do expect growth in RevPAR in 2024.
Patrick Pacious: Yes. And then, Dan, on the signings for new franchise agreements, I mean, Dom and I were just out in Phoenix, Sunday and Monday with about 200 of our franchisees. Several of our other executives were there as well. And obviously, the topic they wanted to talk about was their enthusiasm around the Wyndham combination. But right on the back end of that, they want to talk about either improving their hotel or signing their next agreement with us. So we’re seeing a lot of enthusiasm. A lot of this is based off of where we’ve gone with our brands and the value prop we’ve created and the return on investment that they are seeing from our existing brand portfolio. So we’re not seeing anything where owners are telling us they want to pause.
We’re actually seeing owners who continue to be enthusiastic. And as we said in our remarks, a lot of this is a conversion game right now. And this is where Choice Hotels over the past has always sort of exceeded expectations from that standpoint just given our brand portfolio and the support we provide to franchisees who are looking to convert into our flags.
Dan Wasiolek: Perfect. Thank you.
Operator: Thank you. Next question will be from Alex Brignall at Redburn Atlantic. Please go ahead.
Alex Brignall: Hi. Thank you for taking the question. It’s really just on the Radisson deal, you’re obviously ahead of schedule, and I should think that, that comes a lot into the EBITDA upgrade. Does that increase the ultimate achievable synergies that you anticipate? Or have you just been faster at extracting the synergies that you had in mind in the first instance? Thank you very much.
Scott Oaksmith: It’s actually a combination of both. So we’re about 5% ahead of the realized synergies that we initially had underwritten in the deal, and we’ve achieved them faster than we thought. And we are not done at this point in time. We still think there’s additional opportunity to find more synergies over the next quarter or six months. So we’ve been very pleased with the ability to extract synergies, and it’s really a muscle we’ve built as a company, first with the WoodSpring acquisition and now Radisson. And as Pat mentioned before, it’s kind of proving out in real time that, that as a management team, we do know how to acquire companies to integrate them quickly and produce the benefits that we’ve talked about. So a combination of both there.
Patrick Pacious: Yes, Alex, the other thing that normally I think turn companies up in integration is the technology stack. And we took and native built our res system in the Amazon Cloud, and we did that about four years, five years ago. That’s provided the scalability and the extensibility that you need when you are combining with more hotel rooms, more brands, and more travel partners. And so because we’ve made the investments in those proprietary technologies, it allowed us to do the integration of the digital platforms and the loyalty programs in 11 months which is pretty remarkable. And as I said in our remarks, that’s something that we see as our ability to realize the synergies quickly in a Wyndham transaction and bring those benefits to the franchisees in a really, really short timeframe.
Alex Brignall: Fantastic. And then just as a follow-up, on the RevPAR environment, I guess, it’s very easy to say that you might have known the comps kind of as we went into the quarter. And so, the kind of slowdown or the reduction in the guidance is kind of just squaring off. As you look into Q4, what’s your expectation of where RevPAR growth will come in for the domestic business? And then, I guess, if we’re kind of exiting it flat or down, what are the things that will then change to make RevPAR turn positive for 2024? Thank you.
Scott Oaksmith: Yes. So, in terms of Q4, we expect RevPAR to be slightly negative. Through year-to-date, we’re at about 1.4%. So to get down to the approximately 1% that does imply a slightly negative environment. But when you look at that – if you look at kind of – it really is still accelerating against 2019. As I mentioned earlier, 20% RevPAR increase last year over 2019. So even if we are slightly negative, we’ll be ahead of the pacing of 2019 that we were in third quarter, which was close to 14% on our legacy brands. In terms of next year, we’re still early in our budgeting process, but still believe there is an ability to continue to push rate. When you look at the long-term tailwinds, I think first quarter may be a little tougher, again, back to comps given that we were a little bit stronger in the beginning of the year.
But most of the prognosticators believe that leisure travel and business travel will continue to accelerate second quarter and beyond. And really, it’s a function of the economy as we kind of ride through this. I think we feel like – the prognosticators said we feel like we’ve avoided a recession and that we see the long-term tailwinds of increasing retirements of the baby boomers and 3.5 million additional retirees every year, which are a big driver of leisure travel, remote work, and leisure travel continues to be strong, 30% of all business trips are now expected to have a leisure component to it. And then as I mentioned earlier, the reassuring of American jobs and the infrastructure bill are really good tailwinds for a drive in our consumers and in our brands.
Patrick Pacious: Yes. And I think that’s the demand picture. And I think when you look at the supply picture, the supply growth for next, I think it’s expected to be around 1%. So when you have a much more slower supply growth with that demand increase going up, it paints a nice picture for a healthier RevPAR environment moving forward.
Alex Brignall: Brilliant. Thank you so much for taking the questions.
Operator: Thank you. Next question will be from Brandt Montour at Barclays. Please go ahead.
Brandt Montour: Hi, good morning, everybody. Thanks for squeezing me in here. Just everything you guys have given so far has been helpful. And most of my questions have been asked and answered. So just one for me and back on Wyndham, from a longer-term strategy perspective, you guys have been focused on RevPAR intensive segments and sort of less on the economy segment. Whereas Wyndham is most prominently economy branded in terms of the center of their gravity and launching new brands in economy. So, I guess, would a combination be a change in your – would that maybe constitute a change in your long-term strategy from a mix perspective? How do you think about sort of bridging those two sort of worlds there?
Patrick Pacious: No, quite the opposite. We see [indiscernible] strategy. I mean when you look at the natural fit and the complementary nature of the two companies, as we said, we respect the business that they do, we respect the brands that they have in the economy segment. And we think with a much larger footprint and the financial capacity, there’s opportunity here to grow the brand equity and to grow the royalty contribution coming from each hotels, similar to what we’ve been doing, not just in the revenue intense segments, but we’ve also been doing that in our economy segment. I think it’s very important that investors understand that, that a revenue intense strategy is coupled with a brand improvement strategy that’s occurring in our economy brands as well. And we think there’s an ability here when the two companies come together to unlock that kind of value in their brands and ours as well.
