Michele Allen: Yes, Brandt, I don’t think it’s actually a slight decel. I think when you look at the net room growth in 2022, you have to remember, there’s 88 basis points of growth in there from the tuck-in acquisition of the Vienna House. So I think we delivered at 3% on an organic basis. And the midpoint of our guide this year would imply 3%. I would say we’re looking for 20 to 30 basis points of improvement every year in the retention rate. And then — and that 3% is a rounded number. So it could be the 3.2%, it could be 3.3%. It could be 2.8%, but we’re expecting it to be 3% or better at the midpoint. And so I think if you target a retention rate of, let’s say, 95.5% and you’re looking at 3% net room growth then that would imply that you’re driving somewhere between 8% and 9% in gross opens.
Operator: Our next question comes from Ian Zaffino with Oppenheimer.
Ian Zaffino: You had another question on guidance here. When do we expect the impact of the government spending on the infrastructure build, other bills to kind of flow through in 2023? I don’t know if you really can do this, but any kind of magnitude you might be able to give us or at least directionally what we should expect?
Geoffrey Ballotti: Sure. We would expect in the back half of the year, if you follow everything that’s being put out by the congressional budget office that next round of the $1 trillion will set the fund in late ’23. There certainly are many preexisting and time-sensitive projects that have moved forward. The $350 billion highway reauthorization Act is a good example of that with $40 billion already being spent on bridges. In terms of the size, I think we said in our prepared remarks that it’s over a $3 billion revenue opportunity for our franchisees over the next 5 to 8 years, which would mean another $150 million-ish of incremental royalties over that period. We’re super excited about it. And we have been making investments in people for a while in processes and technologies.
We’re adding more sellers to win a greater share of these federal and state allocations, and we’re creating a dedicated business-to-business sales team to identify the biggest opportunity targets out there. There are 1.8 million infrastructure company businesses in the United States today, and we’re leveraging our relationships with our third-party partners. Our travel management companies, like CLC, who have over 1,400 buying centers across the country. And we’re sending our teams to events and conventions and conferences that have never been to before like the American Society of Concrete Contractors and calling on companies we haven’t called with before. So look, this has been a competitive strength of ours forever. We’re continuing to invest heavily in it.
The best is yet to come. And for the seventh consecutive quarter, we’ve seen a pickup in terms of what our franchisees are experiencing. We were up 16% in this business in the third quarter, and that accelerated to 21% in the fourth. So we’re really excited about what’s to come.
Michele Allen: Add to that really quick. We’re generating about $17 million a year from this part of our business. So if it just continued to increase in the double-digit category would be about $3 million of incremental EBITDA. And of course, we’re not looking just for continued share capture, we’re looking for an expansion in the size of the pie once the spend actually hits the market.
Ian Zaffino: That’s really good color. And then just as a quick follow-up. On the room growth projections, can you give us any of the puts and takes on like what you’re assuming with rates going higher, maybe a softening in the economy. How does that algorithm change with those two factors?
