Ladies and gentlemen, thank you for standing by. Welcome to the Choice Hotels International’s Fourth Quarter and Full Year 2022 Earnings Call. At this time all lines are in a listen-only mode. I will now turn the conference over to Allie Summers, Investor Relations Senior Director for Choice Hotels.

Good morning, and thank you for joining us today. Before we begin, we’d like to remind you that during this conference call, certain predictive or forward-looking statements will be used to assist you in understanding the company and its results. Actual results may differ materially from those indicated in forward-looking statements, and you should consult the company’s Forms 10-Q, 10-K and other SEC filings for information about important risk factors affecting the company that you should consider. These forward-looking statements speak as of today’s date, and we undertake no obligation to publicly update them to reflect subsequent events or circumstances. You can find a reconciliation of our non-GAAP financial measures referred to in our remarks as part of our fourth quarter and full year 2022 earnings press release, which is posted on our website at choicehotels.com under the Investor Relations section. This morning, Pat Pacious, our President and Chief Executive Officer; and Dom Dragisich, our Chief Financial Officer, will speak to our fourth quarter and full year operating results and financial performance. Following Pat and Dom’s remarks, we’ll be glad to take your questions. And with that, I’ll turn the call over to Pat.

Thanks, Allie, and good morning, everyone. We appreciate you joining us. 2022 was a landmark year for Choice Hotels. We delivered step function growth while successfully closing the most significant transaction in our company’s history and further accelerated our long-term strategic plan. Our distinct growth strategy drove our full year 2022 adjusted EBITDA 19% higher than the prior year and 28% higher than full year 2019. We expect this momentum to carry into 2023 and beyond as we continue to grow our brand portfolio with hotels that generate higher royalties per unit, and we leveraged the new capabilities we have built to improve the profitability of each franchise. I’m pleased to report that we expect to grow our full year 2023 adjusted EBITDA by approximately 11% at the midpoint of our guidance year-over-year, representing an approximately 42% increase compared to 2019. Clearly, we have transformed Choice Hotels into a company that is in a stronger competitive position and has significant long-term growth potential. Our selective unit growth strategy is delivering results and improving the attractiveness of our brands. Over the past two years, the new hotels we have added to our portfolio have generated, on average, twice the revenue as hotels leaving it. This is a trend we expect to continue. In 2022, we grew the system size across our 20 brands in the higher revenue segments by approximately 10% year-over-year and saw an outsized increase in royalties driven by this growth. In addition to our traditional strength in the Upper Midscale and Midscale segments, the company has well-established brands with significant growth potential in the two segments with the highest developer and guest demand: Extended Stay and Upscale. These segments are more accretive to our earnings, and they have been and will continue to be a key driver of…

Thanks, Pat and good morning, everyone. Today, I’d like to provide additional insights on our fourth quarter and full year results update you on our balance sheet and capital allocation approach and share expectations for what lies ahead. Throughout my remarks today, I would like to note that our 2022 financial results, unit growth, pipeline and franchise agreement figures are inclusive of the Radisson Americas portfolio, while our RevPAR performance and effective royalty rate results do not include impacts from the acquisition. All outlook figures are inclusive of the Radisson Americas portfolio. For full year 2022, a combination of impressive RevPAR performance, unit growth from our higher revenue brands, strong effective royalty rate growth, successful execution of the Radisson Americas integration and robust performance of the platform business drove full year adjusted EBITDA nearly $9 million above the top-end of our previous full year guidance. In fact, our full year adjusted EBITDA increased 19% compared to the same period of 2021 and grew 28% compared to the same period of 2019, which was our pre-pandemic peak. This growth builds on our record results in 2021 when we became the first hotel company to surpass pre-pandemic performance. Our 2022 adjusted EBITDA figure represents a new record for our company, eclipsing the one set last year. From August 11 through the end of December, the Radisson Americas portfolio contributed $18.3 million in adjusted EBITDA. Even excluding this adjusted EBITDA contribution from Radisson Americas, our adjusted EBITDA for full year 2022 grew 14% year-over-year and 23% versus 2019. For the fourth quarter 2022 compared to the same period of 2021, revenues excluding reimbursable revenue from franchised and managed properties were $186 million, a 33% increase. Our adjusted EBITDA grew 18% to $112.5 million, and our adjusted earnings per share were $1.26 for the…

Thank you. [Operator Instructions] Your first question comes from Dany Asad with Bank of America. Please go ahead.

My question is on unit growth. You guys gave a decent amount of color on expectations for the unit growth on the higher-tiered chain scales in the year. So can you just maybe start by helping us bridge to like the broader systems growth, including where your thoughts are on the economy brands in your portfolio?

Yes, Dan, it’s a great question and I think it’s really important from the standpoint of understanding the total unit growth story. I think as we described in our remarks, the brand portfolio today is 22 brands with the Radisson acquisition. So when you look at the 20 brands that now represent everything outside of economy, we’re really looking at a unit growth percentage this year of around 1%. And as Dom mentioned in his remarks, that translates to about $4.5 million of earnings growth. On the economy side, our goal there has been to bring in better hotels, which we’ve been doing. Every Econo Lodge we’re adding today is driving about 25% higher than the brand average as far as royalty growth. And that segment is not expected to shrink with regard to our total royalties. So our unit growth will be flat. Our royalties will be flat on the sort of broader Econo Lodge growth. But as the segment is shrinking, what we’re doing is really refilling the brand with higher quality hotels, which leads to that sort of royalty flat projection that we have. So as you think about our business, we really have these 20 brands in these more higher revenue-intense segments. We have two brands in the economy segment. And that’s really how we’re thinking about unit growth in the long-term. As we look forward into 2024 and beyond, we do expect that more revenue-intense group, those 20 brands, to kind of return to more of our historical norm be 2% to 3% growth as we move forward. And we’re really excited, as I mentioned in the call, about what we’re seeing with upscale, with Cambria’s growth. We’re seeing it in Extended Stay with the just spectacular growth we’re seeing in the WoodSpring brand and now with our Everhome Suites brand as well. So a lot of really positive momentum in our pipeline that we think is going to fuel that revenue intense growth in the future.

Understood. Thank you. And my follow-up is for your underwriting of $60 million of EBITDA for Radisson in 2023, can you help us kind of understand what’s the implied unit growth outlook in that brand?

Yes. So, I think broadly speaking, what you’ll see in the short term, Dany, is really just a stabilization of that portfolio. One of the things that we’d talked about was onboard these assets, take a look at the Radisson portfolio much the same way that we’re looking at our existing portfolio with regards to revenue intensity, high quality assets. When you take a look at the Country Inn & Suites brand in particular, obviously, primarily new construction, so you would expect to see that unit growth probably picking up more in the 2025 timeframe. But broadly speaking, a lot of the synergy has been identified at this point in time. We do expect, candidly, to actually exceed our original synergy target, and these are both top-line revenue synergies as well as cost synergies. So that $80 million that we guided to in the last quarter probably feels a little closer to $85 million-plus as we look ahead to 2024.

Got it. Thank you very much.

Thank you.

Your next question comes from Michael Bellisario with Baird. Please go ahead.

Thanks. Good morning everyone.

Good morning, Mike.

Just on your 2% RevPAR growth guidance, can you maybe provide a breakdown between what Choice legacy might be and what your expectation is for Radisson Americas, presumably adding in Radisson now is a tailwind to this number? And then do you assume any top-line synergies from Radisson in that 2% expectation?

So let me just talk broadly about our RevPAR projection for the year, Michael. I think when we look at where we sit today, we’re 15% higher than we were in 2019. And by guiding to an additional 2% growth this year, we really think that, that’s a really positive on top of what will become tougher comps as we move throughout the year. But as we look out at the economy, we look out at the growth of our business and we look out at really this portfolio mix shift that’s occurring as well as the business we’re delivering into our hotels, we’re not modeling RevPAR declines at this point in any of the quarters that we’re looking out as we move in. But the comps will get tougher. And I think Dom wants to kind of talk about sort of the components of Choice legacy versus Radisson.

Yes, Mike, when you take a look at the Choice legacy portfolio, you would be pretty close to that 2%, broadly speaking. So just on an apples-to-apples basis, we’re expecting to see that 2% growth on top of already 15% RevPAR growth versus 2019. So, I think it’s really important to understand, just at the jump-off point, it’s pretty impressive already, and we still are not underwriting any sort of flat lining of RevPAR as we look ahead to 2023. I think on the Radisson side of the house, we would expect to see probably anywhere from 30 basis points to 40 basis points of tailwind associated with that Radisson portfolio. In 2023, we’re looking at RevPAR growth probably closer to 5%-plus for Radisson. We’re not anticipating or underwriting any sort of lift, just given the full integration is going to happen probably sometime in that back half of the year. So, we’re probably a little bit conservative in terms of the tailwinds that the platform on the Choice side will provide to those Radisson brands. So, I would say that there’s probably a little bit of upside to that plus 5% on the Radisson side.

Got it. That’s helpful. And then just sticking with Radisson, the prior $80 [ph] million of contribution that you had expected next year. Now it’s obviously going to be higher based on your comments. How much of that is revenue synergy? How much of that is expense synergy?

So, I think the way to think about it is when you look at the sort of expertise our company has developed on integrating hotels into our system, when we bought the WoodSpring Suites brand back in 2018, we’ve really had just spectacular RevPAR growth in that brand. I think in the fourth quarter, it was up over 33% when you look at the comp back to 2019 levels. So our integration team has really developed a core competency here in driving these synergies quickly and really identifying areas where we’re able to deliver more business to our owners in a much more rapid fashion. And that’s an accelerant factor from the investments we’ve made in our pricing management tools for our franchisees, the promotion tools that our franchisees now have at their hands. So a lot of that is what we expect to bring to the Radisson side of the house. As Dom mentioned, a lot of that integration is going to occur beginning in Q3, so we’ll expect to see, mostly in 2023, a lot of cost synergies that will take place with the revenue synergies really being realized probably in the latter months of the year this year and then really taking off in 2024. So that’s really where – this is a timing issue at this point, but also I think the really just significant prowess that our integration team has developed has really allowed us to move the integration time line, timetable forward as well as identify additional opportunities for cost synergies. And we expect the revenue synergies to really start to show up in the last couple of months of the year and then well into 2024.

Got it. That’s helpful. And then just last one for me on the Circus Circus deal. There’s a ton of rooms there that you just added. For a deal like that, is the royalty fee lower than average? Is the contract length shorter? Any important characteristics for a deal like this that we should be aware of?

So broadly speaking, Mike, we’re not at liberty to give contract specifics for deals like that. What I would tell you is on a kind of a unit basis, those – the expectation is that those royalties will be significantly higher than the royalty of our existing hotel. Obviously, there’s multiple components of that in terms of the distribution and whatnot, but we’re not at liberty to talk about individual contracts in terms of the effective royalty rate.

Thank you. That’s all for me.

Thanks.

Your next question comes from Robin Farley with UBS. Please go ahead.

I have two topics. One, going back to your comment about the economy units kind of staying stable, is that more due to removal rate not being as much as what we’ve seen in the last couple of years? Or is it still that removal rate by just being offset by new units? And then also, just looking at the economy units, removals from your system, are they generally going to conversion brands from competitors? I know there are a couple of companies out there looking at or launching economy and midscale brands. And so just kind of wondering where your removals are going? Thanks.

Yes, Robin, so I’ll talk about kind of where these hotels when they leave our system go. For the most part, they go independent. They sort of get to a place where I mean, these may be owners that have a 40-year-old hotel where the asset is – the mortgage is paid off, they’re just cash flow in the asset, and they don’t care if they operate at a 70% RevPAR index. So what they’re looking at is, are the fees associated with being part of a larger system worth it for them. And so when they choose not to do that, they generally go independent. There’s also been a trend which we talked about on prior calls that some of these hotels are going to alternative use. There are specific states in the U.S. that are paying for economy hotels to turn them into housing. And so that’s also been a trend we’ve seen in the last couple of years. But by and large, these are hotel owners that just don’t want to associate with the brand anymore, given the expected returns they want and ultimately what they’re hoping to do with their asset in the long term.

Yes. And Robin, just to clarify on the actual net unit growth side of the house on economy. I think the past point, the expectation is the trends that you’re currently seeing just from an absolute net unit growth perspective, we expect to see those continue in 2023. But what’s impressive is the story of strategic development and just onboarding just more revenue-intense, higher royalty product, you’re going to see a scenario here where in the economy segment, even with a decline year-over-year, your royalty associated with those two brands is expected to at least remain flat, if not grow marginally. And so the revenue intense strategy is even working within brand and segment. It’s just – it’s not just a brand mix shift story.

Yes. And I think on top of that, just when we look at the performance of our economy brands, we’ve gained significant RevPAR index share for those brands over the past three years. So during the pandemic, when they got hit by pandemic, then last year, they got hit by labor shortage, this year hit by inflation. We’ve been able to help our hotels perform better and take share from their competition. So, we feel like we’ve built a very nice franchisee success system, not just for our revenue-intense brands, but also for the economy segment, and that’s allowed us to attract higher-quality owners and higher-quality assets.

Great. Thanks. And then just one quick clarification. Your 2% RevPAR guidance, that includes the mix benefit, correct? In other words, that’s not a same-store 2% growth? I just wanted to clarify. Thanks.

That is correct.

Yes, that’s correct, Robin.

Okay, thank you.

Thank you.

Your next question comes from Stephen Grambling with Morgan Stanley. Please go ahead.

Hi, thanks. I’m not sure if I missed this, but I would love you to just touch on your capital plans and any key money that we should be thinking about in 2023 and maybe even beyond as we think about this move to the Upper-Upscale and Upscale segments.

Yes. Thanks for the question. When you take a look at key money, what I would say at this point in time, Stephen, is really the key money should be in line with or possibly up marginally versus 2022 levels. So if you think about just modeling out for 2023, a lot of it depends on obviously how successful our development team is. So if we see slightly elevated key money, that means that the development team is probably doing something right in terms of this revenue intense strategy. I think on the CapEx side of the house, you could see it tick up slightly year-over-year. I think our maintenance CapEx has historically been anywhere in that kind of $25 million to $35 million range. We are in the process of moving our office locations so you could see CapEx up marginally versus what the historical levels have been. But in terms of the actual key money incentives, I think using 2022 as a proxy for 2023 is probably a pretty good starting point.

Great. And then one other housekeeping item. The other fee line was a little bit stronger in the fourth quarter, I think, than we were anticipating. Curious if you can give us a little bit more of a breakdown of what’s been impacting that line and how we should think about that specifically into 2023?

Yes, I would expect to see that other fee or other revenues line item, obviously, it increased this year as a result of just bringing back certain programs following the pandemic. You have some of the QA that we do at the hotel level baked into that other revenue line item, term awards, those types of things. And so what I would expect in the future is that, that other revenue line item would probably grow fairly close to kind of the overall top-line revenues. But in quarter four, in particular, when you take a look at the comp versus 2021, a lot of that was due to the reinstatement of several of these programs.

Helpful. Thanks so much.

Thank you.

Your next question comes from David Katz with Jefferies. Please go ahead.

Hi. Good morning everybody. Thanks for taking my question and congrats on your quarter. I wanted to just go back to Radisson a little bit, and I know there was some discussion about CapEx, broadly speaking. But just looking for a little more insight with respect to Radisson and whether it’s corporate CapEx or franchisee or owner CapEx with respect to Radisson, what is that branded system like in terms of its need?

So, I think it’s important, David, to kind of look at the portfolio. The vast majority of the hotels are Country Inn & Suites, which is a brand that performs very well and really slots in nicely in our portfolio just below where our Cambria brand is. The quality of those assets, the Radisson team did a very nice job of keeping the brand consistency there. A significant majority of the hotels are at their generation four prototype. So from the standpoint of the brand owners and that brand investing, and as I mentioned, that’s the vast majority of the hotels here. They’ve done a nice job of keeping the brand quality and keeping the product quality fairly high. As we look at growth in that segment, as Dom mentioned, we’re going to be leaning more into new construction than necessarily conversion. That doesn’t mean 100% one way or the other. But it is a real opportunity for us to drive more new construction in that brand, which sits at about 450 hotels today. If we can drive that to the same unit count as where our Comfort brand sits today, that’s a significant growth opportunity for us and for owners, who are in the brand today and others who want to invest in it. So from that brand, we feel very, very confident that we have a really good starting point. The Radisson full-service brand is a little bit of a different story. There’s only about 66 some-odd hotels in that brand in the United States. There’s obviously a greater footprint of it outside of the U.S. and the Americas that are now part of our system. But that’s one that we are taking a close look at. It’s a segment that, over time, has had some challenges to it. But if we look into that portfolio, we really see an opportunity to kind of re-inject some higher-quality assets into the brand. And as we get out in the marketplace and talk to owners of existing assets in that segment, there’s a lot of interest in what we’re doing here and the opportunity to convert their hotels, put in some capital to drive them higher is something that those owners are considering. So, I think as we get further into the year and have a little bit more of a viewpoint from the developers we’re working with, we’ll have a better sense of what their capital requirements are going to be in order to perform at the level we want to see that brand achieve.

Okay, perfect. And you gave us a lot of detail so I just want to ask about one other, if I may. You talked about $170 million, I think, of recycling in the year. I apologize if I missed it, but have you sort of broken out how much – is that – should we – is that practically all Cambria? Or are there other things in there? And should we think about – we’ve notionally thought about $500 million kind of out there outstanding. Does that mean that there’s still $330 million outstanding with that?

Yes. So to answer your first question, yes, that’s – all of the recycling is through the Cambria brand. When you think about that balance sheet commitment, in the past, we had talked about having an authorization up to the $725 million. When you think about the recycle, some of the capital that we’ve extended over the course of the last several months, our current balance is about $380 million broadly. So, you’ve seen that come down significantly, just given some of these capital recycling events. But again, we are seeing the flywheel now at this point where we’re deploying the capital, we’re putting 20 year to 30 year franchise agreements that are very sticky on these assets upon sale and we’re continuing to see kind of that capital being recycled. And so broadly, that $379 million kind of breaks down when you take a look at just the owned assets going forward, almost half of that, a little more than half of that is on the owned assets. So, you’re going to continue to see recycling in the future as well. And I would not anticipate seeing that $380 million push up against that $725 million authorization, David.

Understood. Thank you and congrats again.

Thank you.

Thanks.

Your next question comes from Dori Kesten with Wells Fargo. Please go ahead.

Thanks. Good morning. With respect to the new credit card, can you give us a sense of the upside there year-over-year? And does this fall into other revenues?

So I think when you look at what we are doing broadly, Dori, with regard to our consumer, as the portfolio mix is getting stronger and our competitive position is getting stronger, we add to that the fact that travel has become kind of a top spend priority for most of our consumers. We’re really looking at ways we can continue to invest in their future growth. I look at what we talked about on the call here, travel is occurring more in different months of the year. So Q1, Q2, traveling’s occurring at different days of the week. We’re seeing more Sunday and Thursday night travel, which is extending the weekend. So that tells us that our consumer is looking to do more with us. They’re engaging more with us. So really what we wanted to do with the co-brand card was to allow our members to engage with us beyond hotel stays. And so that’s really the exciting opportunity we now have with Wells Fargo and Mastercard is to continue to drive that spend and that engagement in a more experiential level as that consumer we have today is growing in income and is growing in the amount of stays they’re doing with us. So as we mentioned on the call, we are expecting this year to see about a $5 million incremental fee from the co-brand credit card as it rolls out. And as we get traction, we expect that incremental to go to $10 million in 2024. So I think it’s an accelerating factor here for us. And I think it’s really a nice complement to the joining of the two programs of Choice Privileges and Radisson Americas and the opportunity that we see as we’re moving into more of a higher spend consumer across our broader portfolio.

And then just tactically, Dori, you would see that flow through to your royalty licensing and management fees line item on the P&L. Obviously, it’s a licensing agreement in a lot of ways, so you’ll see it flow through that top line.

Okay. And just when we think about capital allocation decisions this year, you mentioned you’re at two and half times gross debt to EBITDA, target three and four. I guess just when we think through share repurchases versus a higher dividend or brand acquisition is – I guess, does the acquisition of Radisson make you lean away from brand acquisitions this year as you integrate that?

No, not at all. I mean, I think if we look at the capital allocation, we’ve always been prudent allocators of capital. We entered the pandemic with the strongest balance sheet, I think, of probably anybody in our industry, and that’s helped us invest. It helped us invest in our brands, which has driven this 28% earnings increase we’ve seen over the last three years. It allowed us to do an acquisition of significant size with the Radisson deal. It allowed us to continue to pay a dividend and it allowed us to repurchase shares when we look at the marketplace and see that there’s dislocation between our intrinsic value and what we’re seeing in the marketplace. So 2022 is, interesting enough, a year where we deployed really all the levers. We invested in our business. We invested in our people. We invested in our brands. We acquired brands, and we returned capital to shareholders through both dividends and share repurchases. And all the while, our leverage targets remained effectively below where we target. So it gives us the capacity to do more if the right opportunity from an M&A perspective or the right opportunity for an investment shows up for us this year.

Okay, thank you.

Thank you.

Your next question comes from Brandt Montour with Barclays. Please go ahead.

Hey, everybody. Good morning. Thanks for squeezing me in. I just wanted to circle back on Robin’s question and ask it in a slightly different way. Specifically with regards to Hilton’s new Spark brand, which is aimed at the upper economy, lower mid-scale for conversions, and I’m sure you know it well. I’m just curious what – if you’re seeing any competitive pressure early on from that brand. And if you could remind us, for your Midscale segment, how much of your gross adds in that segment is conversion related? And how those conversion-ready brands within your midscale portfolio stack up against Spark from a cost perspective or anything else you can kind of help us compare the two?

Yes. I think as we mentioned, we look at the quality of what we’re delivering to our hotels, and we look at that marketplace, be it midscale or the economy segment. We are winning the better-quality hotels that are out there, be that Econo Lodge, be it Quality Inn or any of our midscale brands. So from the standpoint of the competitive nature, we’re winning the hotels that we want to win into our system, and you’re seeing that in the selective unit growth strategy that we’re deploying. I think when you look at what owners in that segment want to do, there – it has to pencil for them. If you’re asking them to renovate their hotel and put capital into it, they have to be able to see the rate premium that you can drive. And in many of these markets, that rate opportunity is limited by the surrounding product. So I think there’s a – it’s a segment that we know well. I think we’ve worked well with our owners. We’ve improved what we’re delivering to our hotels. And there are a lot of brand options in these segments. So there are a lot of brands that play in midscale, that play in the economy segment. We’re not seeing competitive pressure in that. And in fact, the underpinning of our strategy here is we’ve been able to attract better hotels to our franchise success system, and that’s because of the investments we put in place to help our owners, particularly in the last three years, overcome a pandemic, overcome labor shortage and now overcoming inflation. So all of those are key things that we have spent decades as a company focused on, and we feel very confident in our ability to continue to grow on that front.

And then when you take a look at just the conversion, it’s historically around two-thirds of our opens in that space come from. Conversions versus new construction, again, what we’re seeing kind of in the marketplace in the past point, we’re seeing very little if any pressure whatsoever on our existing conversion brands.

That’s really helpful. Thank you for that. And then just a quick follow-up. You guys gave the 2% RevPAR growth for 2023. You also gave sort of ex-Radisson EBITDA growth on a comparable basis of 7%. I’m just curious if – and I know you guys gave us the sensitivity for royalty fees to a number of different levers. But is that the right flow-through that you sort of think about this business going forward on a sort of comparable basis is that 2% to 7% sort of ratio?

Help me understand the 2% to 7% ratio, Brandt?

Sorry, 2% RevPAR growth, 7% EBITDA growth, ex-Radisson.

I think that’s probably [indiscernible] I mean, when you take a look at just the historical growth rate of this business, the RevPAR growth has been anywhere from kind of, call it, 2% to 3% on average, and our EBITDA growth typically year-over-year is right around that 7% to 8%. So obviously, as we expand the platform, we have the opportunities like you saw today with Wells. You have some of those other revenues that have continued to flow through. Could you see that 7% accelerate? Absolutely. The business just continues to get stronger year by year. A lot of it also has to do with the other two revenue levers, right? I mean, it’s not just a RevPAR play but an effective royalty rate play. And as we continue to improve the value proposition of this business, the price that a franchisee is willing to pay and the value that we’re driving continues to increase. We see a potential tailwind on the Radisson side as well on that as Radisson’s effective royalty rate is somewhere in that 4% range. And so as we continue to improve that value prop, that could continue to be a tailwind for us as well. And then obviously, we’ve talked a lot about the net unit growth algorithm of the company throughout the call.

Perfect. Thanks so much guys.

Thank you.

Your next question comes from Joe Greff with JPMorgan. Please go ahead.

Good morning. I have two questions, one question and one follow-up with respect to your 2023 outlook. Dom, what’s embedded in the outlook for adjusted G&A for the year and what’s the cadence of that throughout the year?

I think we’ve – obviously, in Q3 of this year, we saw some elevated SG&A. I think a lot of that had to do with the noise, quite frankly. If you think about the transition, the integration of Radisson. When you look forward, the legacy Choice brand, I think we’re at a point now where I can safely say that adjusted SG&A would grow kind of in the low single digits, which is in line with our historical. I think you’re going to continue to see slightly elevated SG&A. On the Radisson side, obviously, as we continue through the integration, I would say right now, Radisson SG&A probably going to add about $20 million to $25 million. A lot of that has to do with the fact that we did not have the portfolio onboarded throughout the whole year. So you’re looking at a stub period last year from August through December. Obviously, January through August, we’ll elevate that SG&A. And then in the future, as we integrate the Radisson portfolio, I would say kind of that low single-digit SG&A growth would be a great way to model the combined entity.

When I look back at the fourth quarter adjusted G&A in the mid-40s, how much of that would you allocate to core Choice and how much of it would you allocate to Radisson?

Yes. So I think what I would say, when you take a look at fourth quarter, and it’s probably better to look at it in kind of full year, but fourth quarter in particular, Radisson SG&A was about $5 million. So almost all of the SG&A increase year-over-year in the fourth quarter was actually driven by the Radisson acquisition. The core legacy brands actually only added about 1% of SG&A growth year-over-year. In Q3, there were a lot – like I said, a lot of puts and takes. Radisson was one of them. As we continue to outperform variable incentives, et cetera, that elevated the SG&A as well in Q3. But in Q4, we did see kind of that more consistent 1% to 2% core SG&A growth.

Great. And then I have a clarification question on your 2023 EBITDA outlook. And maybe you talked about it and I didn’t quite hear it, and I know we’re talking about sort of comparable issues and noncomparable issues. But in 2022, you did $460 million of non-Radisson EBITDA, and then you indicated that you would expect to grow that 7% in 2023. And then if you do $60 million or more of Radisson, that gets you above the upper end of your full year 2023 EBITDA guidance range. Can you help us understand that math?

Sure, absolutely. So when you take a look at the overall guide, the overall guide is $520 million to $540 million. We talked about the fact that on a comparable basis, we were driving core growth of that 6% to 7% or so. That $530 million is inclusive of the $60 million of Radisson EBITDA, which would essentially take you to kind of the core of $470 million. We did have two pretty substantial onetime impacts that were very strategic in nature. We made the decision to terminate the WoodSpring assets that we received a significant LD associated with that. We also are recycling the capital, which has depressed our EBITDA year-over-year by $7 million. So when you look at that $20 million of onetime impact, the core business continues to grow at about 7%.

So the $460 million base adjusted for Radisson in 2022 is really $440 million is what you’re saying?

That’s correct.

Great. Thank you.

Thank you.

There are no further questions at this time. Please proceed.

Thank you, Operator. Thanks everyone, for your time this morning. We’ll talk to you again in May when we announce our first quarter results. Have a great rest of your day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.