Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's Third Quarter 2024 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 first quarter 2024 earnings press release which is posted on our website at choicehotels.com under the Investor Relations section. This morning, Pat Pacious, President and Chief Executive Officer, will speak to our third quarter operating results; while Scott Oaksmith, Chief Financial Officer, will discuss our financial performance and 2024 outlook. Following our prepared remarks, we'll be glad to answer your questions. And with that, I'll turn the call over to Pat.

Thank you, Allie and good morning, everyone. We appreciate you taking the time to join us. Choice Hotels delivered yet another quarter of strong earnings results. We drove our adjusted EBITDA 14% higher our adjusted EPS, 23% higher year-over-year and raised our full year adjusted net income and EPS guidance. This strong performance resulted in raising of the midpoint of our adjusted EBITDA range by $5 million to an expected 10% year-over-year growth. Through the successful execution of our strategy, we've expanded the versatility of our business model which, combined with our projected continued unit growth acceleration and our ability to drive better-than-expected RevPAR performance provides us confidence in our new growth outlook. Our global hotel pipeline of over 110,000 rooms set a record for the third quarter, an 11% increase year-over-year. Importantly, 99% of rooms in our global pipeline are in our more revenue intense brands which means that the pipeline represents a meaningful RevPAR premium compared to our existing portfolio. We also accelerated our global unit growth, both domestic and international, as we increase the velocity of moving hotels from our pipeline to open hotels, opening 75% more hotels globally in the third quarter compared to the prior year. Notably, we realized a 1.8% year-over-year net increase in global rooms across our more revenue intense brands, including a 4% net increase for our international room portfolio. A key addition to this growth story is the performance of the Radisson Americas brands. The significant improvement in digital traffic and booking conversion rates since the integration are attracting new hotel development commitments which in the third quarter led to a 10% year-over-year increase in the number of rooms in the pipeline across the global Radisson Americas portfolio, including a 53% increase in new construction rooms. We are also pleased to…

Thanks, Pat and good morning, everyone. Today, I will discuss our third quarter results, update you on our balance sheet and allocation of capital and comment on our outlook for the remainder of 2024. For third quarter 2024, revenues, excluding reimbursable revenue from franchised and managed properties increased 17% to over $256 million and our adjusted EBITDA grew 14% and to a record $178 million year-over-year. This was driven by a combination of global rooms growth in more revenue intense segments and markets, strong effective royalty rate growth and the robust performance of our non-RevPAR dependent programs. Our third quarter adjusted earnings per share also reached a record, reporting $2.23 per share, a 23% increase year-over-year. Let me first discuss our key levers for franchise fee growth which include our unit growth, RevPAR performance and royalty rate. For the third quarter, our domestic unit growth improved sequentially and increased by 1.3% year-over-year across our more revenue intense, upscale, extended-stay and midscale portfolio, supported by our expanded domestic pipeline which has increased 10% year-over-year. We expect to see an acceleration of our growth for the remainder of the year and continue to anticipate achieving our full year growth target of approximately 2%. We opened 190 new hotels year-to-date through September, a 19% increase in domestic openings year-over-year, our best performance since 2019. We are pleased to see our new hotel construction starts in the third quarter are on track and we have seen an increase in new construction hotel openings over the prior year. Our deliberate decisions and strategic investments in our franchisee tools, brand portfolio and platform capabilities are delivering results across all our brand segments which is evident in our third quarter performance. First, we continue to strengthen our presence in the upscale segment, nearly doubling our upscale domestic…

[Operator Instructions] The first question comes from Shaun Kelley at Bank of America.

Pat or Scott, just can we start with what's going on with sort of the net reimbursable side, I think we're getting a number of questions on this but on the net reimbursable revenues, they accelerated pretty meaningfully this quarter. Can you just help us think about that? How much of that may be either timing or what's a good run rate to think about? And then -- more importantly, I think, Scott, as we lap the Radisson deal and some reclassification kicks in here, can you remind us of the timing of that and how to think about this piece as we move into 2025?

Thanks, Shaun. Yes. As we've talked about in the prior calls, really, we're able to integrate fully the Choice and Radisson platforms at the beginning of last year at Q4 2023. So since then, we had that opportunity to unlock some more ancillary incremental revenue streams. So for the first couple of quarters of this year, we were around that $10 million to $12 million in incremental EBITDA from those programs, was a little bit higher in the third quarter of around about $15 million. Really, that is a reflection more of the seasonality of some of the programs that we have given that third quarter is one of our largest quarters in terms of our guest traffic through our hotels. So through the first 3 quarters of the year, we're about around $35 million of incremental revenue. As we discussed before, we will lap those comparisons beginning in for Q4. Last year, that was around between $8 million and $10 million in revenues in the fourth quarter. So you should think about these going forward being kind of outside of the Q3, we're a little bit higher between $10 million and $15 million of quarterly incremental EBITDA which as we go forward should grow in kind of concert with the size of the system as well as other opportunities we'll have to continue to have further penetration to grow those revenue streams.

Great, Scott. Just to clarify, it moves out of the add-back piece beginning in Q4 as you lap it? Or does that not start until calendar year 2025?

Yes, we'll reclass those revenues beginning in Q1 of 2025 when we have full year comparability. But for Q4, they'll still be sitting in the same reimbursable line item.

The next question comes from Michael Bellisario of Baird.

Just first question for me, just on your own hotels and CapEx and thanks for splitting those lines in the cash flow statement. I think that's helpful. Can you just remind us how many 100% owned hotels are on your balance sheet today? How many are under construction? Maybe what do you expect to start next year and beyond? And then if you have those same numbers for the JVs, too, I think that will be helpful to provide some context on the capital spending front for owned hotels.

Sure, Michael. So we have 10 hotels that are open and operating at this point in time with a handful of other ones under construction. So as we've talked in the past, our capital support programs are primarily related to growing our Cambria and Everhome brands. Really, those thought processes is to use our balance sheet to accelerate the growth of newer introduced brands to prove out the performance of those brands and then to recycle that capital. So if you think about this program, we've been at it a little bit longer for Cambria. And we've put out about $800 million around the Cambria brand but we've recycled about $300 million of that. So constantly, we're in the process of launching these new hotels and then selling them. So as that opportunity awaits us, we will continue to look for those recycling opportunities. So today, we have just a handful of hotels under construction on the Cambria and Everhome brands and maybe 5 to 7 JVs that are currently under construction.

Got it. That's helpful. And then just switching gears on your RevPAR commentary. Can you maybe quantify the hurricane benefit that you saw in October? And then you mentioned a pretty big step-up in group and business transient. What percentage of your total room nights are group and business transient?

Yes. Thanks, Michael. I think when you just step back, October was up basically 5% in RevPAR, some of that was hurricane related but we want to make sure investors understand it was not primarily a hurricane-driven event. We're seeing strength in a variety of areas outside of the impacted regions. So if you look at Texas, Louisiana and New England, those states which are sort of outside of the impact area, those also saw a pretty significant outperformance for us regarding our expectations. I think the broader RevPAR story is really, you look at the Radisson brand family performance as a whole, that was up 1%. The upscale segment, Scott mentioned at Radisson, itself was up 4.3%. The Cambria brand was up 3.3%. So the upscale segment outperformed our expectations. And then the third element is the extended-stay segment which has continued to be a really strong performer for us. When you look at the -- your second question around the business transient piece, these are primarily a -- in the quarter, it's kind of hard to sort of designate how much is sort of the normal expectation. But it's basically back to almost the 2019 levels which speaks to this theme we're seeing which is kind of a return to the normalization of what it looked like back in 2019 prior to the pandemic impact. So the growth in both business transient and in group is pretty impressive. It's interesting because the business versus leisure mix in the quarter for us was 65% leisure and 35% business which is really a reflection which is pretty high for us on the business transient side, pretty high given now that we have the Radisson brands as a component of our total hotel inventory, we're able to drive more business travel as a percentage of the overall rooms count. So it is expected for us to be a key driver for us as we move forward.

The next question comes from Stephen Grambling of Morgan Stanley.

I just wanted to touch on expenses a little bit. How would you be generally thinking about inflation, SG&A or just overall SG&A expense growth as we think about 2025 and beyond?

Yes. So on the SG&A front, we're pretty pleased with our ability to manage the SG&A this year in the quarter. Our adjusted SG&A was up just about 4%. We're around mid-single digits for the full year, about 6%. So given that we are a scale business, it is something that we think we can continue to maintain our SG&A growth in that mid-single digits. And so we've been pretty successful over time.

And then, I guess a follow-up on free cash flow. A couple of questions have touched on this a little bit but I guess how should we be thinking about free cash flow conversion heading into next year? Is there -- have you front-loaded any of the capital spend into some of this growth and that should ease off? Or are you anticipating that things are going to continue into next year?

Yes. In terms of free cash flow as the year ends -- as you know, we're a seasonal business. So year-to-date, our cash -- our free cash flow is about 62% [ph], we expect to be around that number for the full year. And I would expect a similar free cash flow conversion into 2025 percentage. Just as a reminder, that excludes the recyclable capital that we've talked about where we're investing and growing our brands. At the end of the day, those are being invested in hotels that are open that we have the ability to recycle. Through this year through the year-to-date, we've spent about $135 million and we've had some recycling opportunities already in the fourth quarter. So we expect that to be a similar pace, about $135 million for the full year on our recyclable capital. We're still working through our 2025 planning process but we would expect probably a similar level of that into 2025. And then 2026 and beyond, we should start seeing some more meaningful recycling of that capital.

So just to be clear, another $135 million, I guess, investment into next year, net outflow?

Yes. Roughly, it should be about the same as this year.

The next question comes from David Katz at Jefferies.

I apologize if I missed this but I wanted to sort of talk about the overspend/underspend in the marketing funds. I know that there can be timing differences as we move through the year but we usually think about kind of getting to the end of the year approximately flat. Is that an expectation that we should change? Or any color there would be helpful.

Yes. Thanks for the question, David. For our marketing reservation, we obviously operate these over a very long-term period and our contractual obligation to our franchisees is to ensure that we break even over the long term. But if you go back and take a look at our history, we've had more of an investment in the repayment cycles versus operating these every year around breakeven. So if you were to go back the last couple of years, we ran some pretty hefty surpluses, especially through the pandemic when some of the marketing with more elevated leisure travel wasn't needed. And so we've come into this year with a pretty hefty cumulative surplus. So this year, we're expected to be in a deficit of just under $40 million but we're still in a net surplus for that fund, we should end the year somewhere between $25 million and $30 million surplus. So over time, as we look for areas of investment which makes sense to continue to drive our value proposition capabilities, we may overspend that going forward. But that's something we take usually 5-year viewpoints and outlooks on how to manage that to ensure that we're balancing in your investments with really continuing to grow long-term abilities for us to provide value to our franchisees.

Understood, 5 years. And if I can -- just as my follow-up, we're noting some increasing focus incrementally on group. And intuitively, that seems as though it's commensurate with moving upscale or up the RevPAR scale. Is that the right way to think about that? Or is there some sort of focused strategy to that, that we should consider also?

Yes, David, it's actually more broad-based than that. If you think about the extended-stay segment, the ability to drive group business that's focused on a particular project, it might be a commercial customer that's bringing together a team for 3 weeks to work on a specific project and they need long-stay accommodations. It's certainly true, as you mentioned, in the upscale segment, larger meeting spaces in the hotels. The hotels are located in more urban markets as well; so that's a key driver. But the real highlight and where our largest footprint is in that sort of midscale and upper midscale segments and we did see a pretty significant pickup in group travel there. I mentioned the SMERF business; the social, military, education, religious and fraternal. So those are small groups but still a good driver of business and those tend to stay in our sort of upper midscale and midscale hotels. So it's more broad-based than just upscale and it impacts a significant amount of our total portfolio. Thanks very much.

Your next question comes from Robin Farley at UBS.

Just going back to your commentary about Q4 RevPAR being positive. Some others are calling out November being kind of a weak month because of the election period. So just understanding that your October came in strongly, how much visibility do you have through kind of second half of November and into December and maybe extended-stay business gives you more visibility. But just maybe compared to others being cautious about November.

Yes. So I think just, Rob, when you start and look at the macro, we're seeing trends that are correlated with the broader macro trends. And so if I look at the macro, consumer confidence is high. It's actually the highest it's been in a number of months. GDP growth which correlates very highly to RevPAR has been 3% the last 2 quarters. Labor force participation rate which is back to almost 2019 levels. When people have a job, they travel. And then you're not seeing that sort of new supply growth coming in. It's expected to be muted kind of less than 1%. So the broader macro trends are pretty positive for our segments and our type of traveler. Regarding November, when we look at what we're seeing on the books for November, it is higher than it was at this point last year which is giving us more confidence that what we saw trend-wise in October will continue into the month of November as well.

Okay. Great. And then also, I don't know if you said when you were talking about investing in new growth. What percent of your new growth additions involve key money?

In terms of key money, each deal we look at, it's predominantly in new constructions where we're the primary heavier users of key money. And really, that's to help the cost of construction to make sure that deals get done. But then we do selectively use those as part of our revenue intense strategy to bring higher rated units into our system. So we haven't disclosed the exact amount of key money we use per project but it's typically in our midscale and above hotels where we use it as a customer acquisition tactic that helps bring on more higher revenue intense hotels at a faster pace.

Would you say kind of as a percent of total units, you're talking about growth that is growing compared to previous levels, in other words, not so much the dollar amount of key money per deal but just total percent of deals in which you invest on kind of key money, has that generally trended up a little bit?

Yes, there has been -- just given the competitive environment and the tougher new construction environment, there has been an increase in the use of key money. You can see that in our dollars. Most of that is around the revenue intensity of our hotels. Obviously, usually key money is sized based on the revenue that those projects will bring to Choice. So we have seen an elevation of our key money just simply because we've moved more up the chain scales but there has been an increased need to use key money on more deals maybe that we previously had experienced. But we think that's really more of a cycle where we are, just given the muted supply growth, we would expect long term that to be back to where it has been historically.

The next question comes from Lizzie Dove at Goldman Sachs.

I guess, bigger picture question, looking into 2025. I think there's been several benefits this year in terms the Radisson synergies and some of the underspend and I think some early termination fees. High level, I know you've talked longer term in the past about kind of high single-digit EBITDA growth. I'm curious with those kind of different factors that I talked about that's been a benefit this year, how you do think about kind of that outlook, especially for 2025 going forward?

Yes. Thanks, Lizzie. We'll give our 2025 outlook in February as our normal practice. And I think when you look at kind of what's next for the company, it's really kind of 3 key areas. It's the realization of the pipeline we spoke about, 30% RevPAR premium of hotels that are sitting in that pipeline and the realization of that. Second is the growth of our international business which we've doubled that EBITDA from that business and we had a really strong international growth in the third quarter. And then finally, continuing to grow our ancillary revenue business. Scott mentioned the co-brand credit card, some of our partnerships and the like. These are things that are growing outside of that sort of RevPAR -- domestic RevPAR environment. And I do think those are things that will be key drivers of growth for us in the coming years.

Got it. That makes sense. And then I just wanted to follow up, especially on the kind of extended-tay side of things, given that we've seen Hilton, StudioRes going more in that area, is there anything you've been seeing in terms of competitive pressures there?

No, I think when you look at our four brands in those segments, we have both new construction and conversion. The conversion opportunities for both MainStay and Suburban are significant. I think we crested the 100 open suburbans recently. And we are seeing on our new construct brands, if you look at the WoodSpring brand and investors looking for a proven prototype, a proven operating model and a proven exit. And we've been able to demonstrate that in very significant and robust ways for the WoodSpring brand. The WoodSpring brand is actually 2/3 of all economy extended-stay new construction projects that are going on in the country right now. So we're actually seeing more interest in our brands and the ability of our company to stay on top of that and stay in front is something that's a key focus for all of our teams.

The next question comes from Joseph Greff at JPMorgan.

I have a question that has been similarly asked and you answered it in different ways. But if we think about your longer-term growth drivers and longer-term growth algorithm and we think about it before, any kind of consequence of net reimbursable excesses or deficits, how closely do your fee or EBITDA stream match the compounding of RevPAR growth and net rooms growth?

So, I think in terms of kind of -- speaking to the algorithm, Joe?

Longer term, right, not necessarily if you want to be more specific. But if we were to look at beyond this year, if we were to look at RevPAR growth of X, net growth of Y, G&A growth of Z and we kind of put them in the blender, how closely does EBITDA fee growth match those 3 drivers before the consequences making adjustments for the reimbursable stuff?

Yes. So obviously, the royalties is still the lion's share of our revenue. So that algorithm of rooms growth, royalty rate and RevPAR will still drive a significant lift to our EBITDA. But as we become a more versatile business over the last several years and particularly since the Radisson acquisition, our ancillary fees are allowing us to grow our top line revenues even in all different types of RevPAR environments, so certainly, the size of the system will still be important in terms of the more rooms you have, the more opportunities you have to leverage that for those ancillary revenues. But that metric of RevPAR royalty rate and room still remains intact. The other thing I'll just remind you is as we move more upstream, there is a multiplier effect as the hotels we're bringing into the system are 20% more valuable than the ones that are exiting. So as you get that growth in the higher-rated chain scale segments, there should be an accelerator on the royalty side. But I still think if you look at the building blocks for Choice this year, you can still kind of build through those levers.

Yes, Joe, I think you look at that unit growth and effective royalty rate, this quarter effectively offset the RevPAR decline that we saw. Then you add to that, international being up about 4% platform and procurement was up. Co-brand in particular, as Scott mentioned, was up 9%. And then I think the real focus here is that the Radisson revenue synergy opportunity is continuing to be realized and we do expect that, as Scott said, those units are now going to flow through some of the procurement partnership and co-brand opportunities that we have. So it is an -- it's a factor that I think is going to help sort of flow through from RevPAR unit growth ultimately into those ancillary revenue streams. And then you add to that the international component.

The next question comes from Meredith Jensen at HSBC.

I was hoping you might sort of look out 5 years or so. And if you could give us an idea of what your, in ideal world, the chain scale might look like versus, say, the end of last year or whatever point makes sense and sort of the breakout in chain scale and also how it may look in leisure and business and international, just as things play out towards your more revenue-intense strategy.

Yes, Meredith, we look at the long-range trends that are going to impact our business and the segments where we operate. Let's start with retirements. 35% of wealth in the country is held by people 55 and older and a number of the trend towards retirement by the end of this decade, 1 in 5 Americans will be retired. So that traveler has a lot of net worth, that traveler has a lot of discretionary time. And they're spending that and prioritizing travel over other things. We're seeing in the research we're doing the increase in people traveling for sporting events and for music events and for a variety of other sightseeing things. Road trips is our second one that we see continuing to be a key driver for the brands that we operate in, particularly our midscale brands. About 5,000 of our hotels are within a mile of a highway exit. So being where travelers want to go and being the stop along the way, we do see road trips continue to be a long-term driver. I look at remote work, while it's not as robust as it was 2, 3 years ago. There are a number of jobs that have moved to that type of status. And so people have flexibility in the day of week when they can travel. So we are expecting that to be a long-term driver of growth for us as well. And then finally, when you look at our extended-stay segment, we do expect to continue to see the rebuilding of American manufacturing plus the infrastructure investments that are going on in the country to be a key driver of that segment. And if you look at that segment alone, we have 500 extended-stay hotels today, 350 -- over 350 in the pipeline. So to your point, as you look out in 5 years, we feel like our portfolio is very well positioned to take advantage of some of these pretty significant macro tailwinds that will drive lodging demand in the next 5 years.

And one quick follow-up on international and the growth you're seeing there and outside of potentially Radisson into Asia and other areas, what kind of the fee structure should we think about for those international pipeline adds in the business in general?

Yes. It really depends on the market and the type of franchise agreement we have in place. So as you're well aware, some of our markets are master franchise agreements. So if you look at Japan, the Nordic countries, Brazil in particular, India, those are master franchise agreements. Where we're doing direct franchising though is where we usually get higher effective royalty rate. And so what we're seeing on that front is, as we mentioned, EMEA continues to grow for us. We've added new hotels in France and in Spain. And then here in the Americas, there's excitement around the Park Inn brand by Radisson in Canada. There's interest in our Radisson kind of green sign and above brands in the Latin American and Caribbean market. And what's exciting about those hotels is they're generally larger hotels than we might see domestically. So from a unit perspective, the revenue intensity of those units generally tends to be higher than what we see domestically.

The next question comes from Patrick Scholes at Truist Securities.

When we think about your raised guidance for the rest of the year, certainly sounds there's something organic in there and then there's some hurricane positive demand tailwinds. When you break out that point -- that extra point of RevPAR for the full year which certainly will be greater for the fourth quarter, how would you break that down between that point hurricane impact versus sort of the organic improvement you've mentioned?

Yes. I think, Patrick, the thing we've really looked at in Q3, that's a really positive and that's a broad-based increase we're seeing in occupancy quarter-over-quarter, up 1%. So as everybody knows, occupancy sort of leads rate. So when occupancy is going higher, the franchisees have an opportunity to follow that with rate with muted supply growth. We do expect that, that's going to continue to be a key driver for RevPAR as we move into the fourth quarter. I think when you try to break out the hurricane impact, it's not that easy to do. It is certainly impacting the length of stay as families need to relocate for renovations and the like. But I think when we sort of bake it into our numbers, the full year hurricane impact will probably be about 40, maybe 50 basis points of impact. And so if you take a look at that and you look at the overall pickup that we are guiding to, we're seeing strength outside of that region. We're seeing strength outside of the segments that normally get impacted by the hurricane. So this is not just a hurricane impact story. We are seeing the trending moving in the right direction which gave us confidence to move the RevPAR guidance in a positive direction.

The next question comes from Brandt Montour at Barclays.

I just want to circle back to the $15 million in the third quarter, the ancillary unlock. Can you break that out between Radisson and legacy Choice?

Yes. It's a mix of both, Brandt. So as we talked about, part of it was the realignment of our contracts as well as the Radisson bringing that in. So it's probably 75% Choice, 25% Radisson if you did the allocation there. Where we've really seen an opportunity is not only unlocking that but obviously to sell more services across a larger portfolio. For instance, one of those revenue streams are our property management system. We've been able to roll that out not only to the Radisson properties that we've acquired but also expanded into additional segments for Choice. So for now, all of our extended-stay brands are now using our Choice Advantage proprietary management system which they had not previously. So it's a little bit of a mix of both. But we're excited not only that we were able to realign the contracts but to find additional ways to grow those revenue streams through our broader-based system.

Great. And then just a follow-up question on RevPAR. Looking at the RevPAR that you guys report for midscale and upper midscale, it looks like it was down about 300 basis points year-over-year. The STR for those segments was flat. And so I'm curious if that -- if there's a reason why you saw underperformance in those 2 segments and then I know that things got better for you sequentially. So did anything slip from the third quarter into the fourth quarter and why that might not be the case or if you're still sort of seeing that -- seeing some sort of relative drag versus what STR would be seeing?

No. Brandt, it's really a factor of where our midscale hotels are located and the regions they're located in. If you break out the STR numbers by region, where we have a significant amount of our inventory, those regions did not perform as well as regions where we under index. So it's primarily a regional story as to what drove that.

The next question comes from Dan Wasiolek at Morningstar.

So just wanted to dig a little bit more into the Infrastructure Act. You referenced that you have 5,000 hotels within a mile of interstate. Just kind of -- I believe some of the states have begun to allocate funds here. And I'm wondering in those states and those locations for the whole hotels that you have, if you've seen any incremental room night benefit coming from infrastructure stays? And if so, if you can maybe offer some quantification just kind of wondering how to think about this over the next few years. Thanks, Dan.

Thanks, Dan. As you mentioned, I mean, the infrastructure bill is certainly starting to roll out. Our opinion will be kind of a more phased rollout throughout the country as different states are more advanced and how quickly they can allocate that into projects. What we've seen is overall construction spending is up about 4% year-over-year across the country. But really, there's really some top 10 states that have received most of the infrastructure dollars today. And about 38% of our hotels are actually located in those top 10 states. So we are starting to see that come through in particular into our extended-stay product. We've also seen some good increased business in the oil markets, where we've got a decent share there. So we are starting to see that infrastructure. It won't be -- because it's rolling out so much regionally, it will be more of a regional play as we see that come through. But certainly, we are well positioned to capture that increased demand that, that spending will drive.

Okay. And so is -- should we think about kind of the 500 extended-stay hotels currently that you have as being the main beneficiaries versus kind of maybe the broader portfolio that's near the interstate or is it kind of a combination of both?

Yes, it will really be a combination of both. As we've stated many times, while the extended-stay product is perfect for that type of stay occasion, it's definitely an undersupplied segment. So there's 2x the demand than the supply. So as there aren't extended-stay products located next to all these projects, we certainly see that in our economy and midscale hotels which are net beneficiaries of those travel occasions.

And Dan, I would say while the work crews may be staying in the extended-stay product, the project managers and the architects and design folks and the engineers, there's a variety of other incremental room night occasions that occur that might not be on site full time but come in every couple of weeks. And those tend to benefit our more transient-oriented hotels.

And the next question comes from Christopher Stathoulopoulos at Susquehanna.

Just want to make sure I have this right and start to go back to this again here, 40 to 50 bps impact from the hurricanes on full year RevPAR, did you quantify or size up so far as election impact and the calendar shift which I think you alluded to in the prepared remarks?

Yes. I think the calendar shift, I mean, I think in Q2, we had -- sorry, Q3, we had 2 less weekends. So that's a factor that impacted us by about a 90 basis point drag, Christopher. So calendar shifts do have a meaningful impact on the quarter. And obviously, you make it up on the -- in the full year. When you look at the election, we actually have seen pickup in markets like Wisconsin, Minnesota, so those are -- hopefully, the election will be over tomorrow. But when these elections drag on, that does drive a tailwind business as well. So we have seen some of that as well. I think the other thing that we're seeing broad-based is I mentioned people are traveling for sporting events. The realignment of college football is driving a significant amount of fan bases traveling to the markets they normally had not to travel before. So Texas and Georgia and Austin, that occurred at the same time around the F1 race. And so a market like Austin really picks up business. When Oregon goes to Michigan and Ann Arbor to play, those fan bases travel and they're not the local fan bases. So we are expecting that, that's going to continue to be a driver at that sort of local market level of the sporting events and music as well. When Taylor Swift goes to Miami, you do see a pickup in business. So that is a trend that we do think is going to continue more of the sporting and music event-driven travel. We're seeing it in the consumer research and we're seeing it in the actual numbers as well.

Okay. And as a follow-up, if you could just put a finer point, I realize you're still in your planning process for '25. But generally speaking, as we think about leisure business, group transient, domestic, international, high-level thoughts, it sounds like on the business side, transient grinding higher. We do have a updates to RTO policies, group solid. Is there a reason on the leisure piece domestic that we should expect anything at this point beyond seasonally in line with perhaps a downside bias to that? Anything -- just some color here as we're thinking about the segments, if you will, for '25.

Yes. I think if you just step back and look at the macro, the RevPAR in the U.S. generally grows between 2% and 3%. And if you look at our RevPAR going all the way back to 2019, we're up -- I think it's 9%, Scott, right, in the quarter. So that if you're looking at the long-term trends, that's a normal sort of growth rate for a normal year. We'll give our guidance when we get to February. But I step back and as I mentioned, I look at the macro that generally correlates well and that RevPAR to GDP correlation usually has a lag effect. So when GDP grows, you see the RevPAR pickup, not immediately but in the coming months. And so the fact that the last 2 quarters for GDP have grown is important because the economy is growing. That means business travel is going to grow. We mentioned some of the other key drivers, the infrastructure bill, this reshoring of American manufacturing which is continuing to drive both construction projects and then ultimately long-term business in certain markets. That's really helping the extended-stay segment and I do think it's going to be a long-term demand driver for that as well. So those are the macro things we look at that tend to correlate well with RevPAR. And as I said, we'll give our guidance for 2025 in February.

We have no further questions. I will turn the call back over to Pat Pacious for closing comments.

Great. Thank you, operator. Thanks, everyone, again, for your time this morning. We will talk to you again in February when we announce our fourth quarter and our full year 2024 results. Have a great rest of your day.

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