Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's Second 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 would 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 second 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 second quarter operating results. While Scott Oaksmith, Chief Financial Officer, who 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. I'm pleased to report that in the second quarter, Choice Hotels drove our adjusted EBITDA to $162 million, our adjusted EPS, 5% higher year-over-year, and raised our full year adjusted EPS guidance. Over the past several years, we have created a stronger, more versatile company with multiple earnings drivers and a proven growth strategy. The increased versatility of our business model, combined with projected unit growth acceleration, provides us the confidence to achieve our expected adjusted EBITDA growth of 9% at the midpoint of our outlook range for 2024 even as the domestic RevPAR environment has started to normalize. By increasing our system size, network of franchisee relationships and customer reach, we have significantly increased our future growth opportunities. Importantly, we continue to grow our portfolio of revenue-intense hotels with domestic franchise agreements, up 8% year-over-year. These agreements are expected to continue to fuel a significantly higher RevPAR premium in our pipeline compared to our existing base of hotels. Our global pipeline of approximately 115,000 rooms set a record for the second quarter and represents a 22% increase year-over-year. We also accelerated the velocity of moving hotels from our pipeline to open hotels, executing 20% more global openings year-over-year in the second quarter. At the same time, we expanded our international portfolio by increasing the number of rooms by 1.6%. As we had anticipated, we saw a sequential improvement in domestic RevPAR performance in the second quarter versus both the prior year and pre-pandemic levels. In line with the industry, the pace of acceleration was slightly slower than we had previously expected. And therefore, our outlook for the remainder of the year has moderated. As the travel trends normalize when compared to 2019 levels,…

Thanks Pat and good morning everyone. Today, I will discuss our second quarter results, update you on our balance sheet and allocation of capital, and comment on our outlook for the remainder of 2024. For second quarter 2024 compared to the same period of 2023, revenues, excluding reimbursable revenue from franchised and managed properties increased 14% to $258.9 million, and our adjusted EBITDA grew 6% to a record $161.7 million. This was driven by a combination of the successful integration of the Radisson Americas portfolio, organic growth in more revenue intense segments and markets, strong effective royalty rate growth, and the robust performance of our non-RevPAR-dependent programs. Our second quarter adjusted earnings per share also reached a record reporting $1.84 per share, a 5% increase year-over-year. Let me first discuss our key levers for franchise fee growth, which include our unit growth, royalty rate, and RevPAR performance. In terms of unit growth, our strategic goal has been to accelerate quality room growth across more revenue intense brands and markets while simultaneously growing our effective royalty rates, which ultimately results in an outsized increase in royalties. For the second quarter, we reported domestic unit growth of 1% year-over-year across our more revenue intense, upscale, extended-stay, and mid-scale portfolio. Supported by our expanded domestic pipeline, which has increased 11% 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%. At the same time, we increased the number of domestic franchise agreements for our revenue-intense brands awarded in the second quarter by 8% over the prior year. We also executed new hotel openings at an impressive pace. Through June, we averaged over 4 openings per week in the US. This resulted in a 10%…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question is from Dany Asad from Bank of America. Please ask your question. Q – Dany Asad: Hi, good morning, Pat and Scott. I just wanted to like start with the outlook change. So if we just look at your back half implied RevPAR based on the new guide, kind of implies a sequential downtick from the RevPAR growth we saw in Q2. So can we maybe just start by walking through the puts and takes of what got you to this new outlook, please?

Sure. Thanks, Dany. When you look at our second half of the year, we effectively looking it's going to be very similar to the first half. We're going to see sequential improvement from Q3 into Q4. But because we're seeing the travel behaviors in the first half of the year, it looks pretty similar to what we saw in 2019, our expectations for the second half of this year are pretty much influenced by that pattern. So when we step back and look at kind of the long-term trend of what performance has looked like since 2019, we're really right in line with that long-term historical trend of an average, call it, yearly RevPAR growth of between 2% and 3%. And that's really a factor of the normalization that we talked about in our remarks. The day of week travel that we're seeing over the last couple of years with the pandemic has sort of reverted back to the normalization that we saw in 2019. The booking window is closer in similar to what it looked like in 2019. And we're really seeing a reversion of locations where urban was sort of the last market to come back, and that has come back significantly. And that's just an area that we -- our portfolio under indexes. We're also seeing some different regions of the country that outperformed where we under index. So it's -- a lot of it is driven by what we saw in the first half of the year and the similarities we see to the 2019 travel patterns that consumers were exhibiting back then. And that's why we sort of described this as more of a normalization back to what it looked like prior to the pandemic and the sort of ups and downs we've seen over the subsequent years. Q – Dany Asad: Got it. Thank you very much. And in your prepared remarks when you're talking about the -- like the international like conversion agreements that you've been signing. Can you maybe just dig on the unit economics there? And how do these contracts look relative to your existing contracts that you have?

Yes. So I think as you're well aware, we go to market with two models, a direct franchise business, which has really changed since the Radisson acquisition. We have a much larger footprint and a new capability in the Americas region. We have a direct business now in Canada, which we didn't have before. It was just a joint venture. We still have that as well. And then we have a much more robust direct franchise business and the rest of the Caribbean and Latin America. The unit growth that we're seeing there and then the unit growth that we mentioned in France, these are direct franchise markets that are driving some of that growth. We're also seeing in our MFAs, we mentioned the Japanese partnership, which has been a long-standing really successful partnership for us over the years, adding units there as well. So it's really coming in both flavors. But I would say, the vast majority of the weight of that is coming in the direct markets.

Got it. And just one last one follow-up. But can you just remind us of the current mix of your -- in your pipeline today, what's new build versus conversion? That’s it for me. Thank you.

Yes, I think that's really a pretty remarkable story. I mean if you look at our current pipeline, about 36% of the domestic pipeline is conversion. And that's really been the key driver during a time where interest rates are elevated. 80% of our openings this year, year-to-date have been conversions, 84% of the agreements we sold in Q2 were for conversion. And when you look at the conversion agreements in mid-scale in particular, those agreements are up 31% year-to-date. So it's a pretty significant driver. And that's why we really want investors to understand the importance of velocity because a lot of these hotels, they might stay in the pipeline for three months because we have a pretty good capability of getting new conversion agreements into our pipeline and then ultimately open in a very, very quick period of time. We're seeing that also as we mentioned in the remarks in the Park Inn by Radisson, with five open already when we effectively relaunched that in May. It's -- and that's five open in the quarter, by the way. It's really a reflection of the speed of the velocity we can push through there. The exciting thing about the remainder, the other 64% of the pipeline, the new construction is. As we said in our remarks, we are seeing some green shoots. We're seeing interest in getting new construction contracts. We're seeing construction costs starting to moderate. And the last piece that needs to fall into place is hotel financing, which is a function of interest rates coming down. So if we do see that in the coming months, we do expect we'll see that new construction pipeline start to move more rapidly than we've seen over the last 18 months.

Thank you very much.

You’re welcome.

Thank you. Your next question is from Stephen Grambling from Morgan Stanley. Please ask your question.

Hey, thanks. I guess, I'd love to have a little bit more color on free cash flow and how investors should be thinking about some of the discrete factors that might be impacting that in the first half. And then I guess an unrelated or maybe it is a related comment, it's just really around, I think you have the affiliate sales in your I guess, is there still capital that's outstanding that can be recycled or sold? And is that -- or should there be any expectation in the second half for that to come to fruition?

Thanks, Stephen. I'll take that one. In terms of free cash flow, we were really pleased with what we saw in the second quarter. So our operating cash flow for the full year was about $114 million and a strong second quarter, delivering that. We still feel we're on target on our general free cash flow conversion that we talked about on our last call. Excluding key money, the way we measure it, which is operating cash flows, less our maintenance CapEx. The last couple of years, we've been about 65%, and we're still targeting that for the full year of 2024. In terms of recyclable capital, when you do look at those numbers, we had about $74 million gross investments in that during the quarter in terms of some of the hotel development we're doing, JV investments and mezzanine financing. And as you mentioned, we did recycle about just under $18 million for the sale of one of our joint venture interest. Currently, supporting both the Cambria and the Everhome program, we have about $0.5 billion outstanding in a mix of owned assets, joint ventures and loans. As we have been doing since we started those programs, we are active recyclers of that capital. In fact, since we started the program, we've recycled over $300 million. So we're opportunistic in that recycling. We are not long-term holders of that real estate. Really, the idea of those programs is to accelerate the growth of our brands. And so as those opportunities come available, we will look to recycle that. Typically, our hold periods are three years to five years. Some of them have been a little bit elongated given the impacts of the pandemic and some of the financing environment. But we are seeing, as Pat mentioned, some green shoots from the financing environment. And if that occurs, we'll find more opportunities to recycle that capital.

And I think you touched on this a little bit, but as a follow-up, just to be clear, I guess, since free cash flow, you're excluding key money, what are you seeing in terms of key money, both for new development and conversion deals? And what's the expectation as we go forward throughout this year and maybe even looking longer term into next year?

Yes. As we've talked, our key money is up slightly year-over-year, but it's really more a reflection of where openings are. So our key money is up about 13% year-to-date and our openings are up pretty similar to that. So it's really a reflection of openings accelerating. We talked in our previous calls about our key money being slightly higher than where we were last year. Last year, we were about $90 million. We think it will be slightly over $100 million this year. We are seeing more opportunities as we talk to more developers as the development environment improves. So to the extent that there are opportunities in the back half of the year, that could go up. But at this point in time, we're still in line with the guidance we previously gave.

Great. I will jump back into queue. Thank you.

Thank you.

Thank you. Your next question is from David Katz from Jefferies. Please ask your question.

Good morning, everybody. Thanks for taking my questions. I wanted to just go back to the international domestic split. And if you could color in just a little bit more around the sort of fee intensity or revenue intensity of international versus domestic becoming more important with international growth continually growing a bit more? Thanks./

Yes. It's an area that we're -- I would just say we've renewed our focus post-Radisson acquisition, David, and it's -- I think the one thing that's a key differentiator in the revenue intensity of the international hotels versus domestic is the room size of what we have internationally. These are generally larger hotels. So that sort of revenue intensity, as we've mentioned before in our domestic business, and we talk about what's in the domestic pipeline, 40% higher rooms versus the current system base. We're definitely seeing that on the international front as well. So whether it's our direct markets or our master franchise markets, those hotels are generally sort of larger hotels. The effective royalty rate really depends on direct market versus MFA. And I think the mix, Scott, is currently at….

Yes. MFA is about -- now two-thirds of it is MFA and about one-third it's direct for us. When you think about the effect of royalty rate versus direct markets, it's about a percentage or so below where we are in the US. I think the other thing I'll point out is when you look at the portfolio mix of where we are in terms of chain scale segments, the international portfolio is much heavier weighted to our revenue intense brands. So really about 96% of the portfolio is in the mid-scale and above.

Very helpful. Thank you.

You’re welcome

Thank you. Your next question is from Daniel Hogan from Baird. Please ask your question.

Hi. Thanks for taking my question. So I guess just looking into 2025, where the drivers there? I know it's early to talk about. But in terms of controllables besides changes in RevPAR, what looking out, whether it be further Radisson lift, the credit card fees, what controllables are there that could be growth tailwinds?

Yeah. I mean, as you mentioned, it's kind of early. We just kicked off our planning process here in the coming weeks. But when I look at the macro, we did see in the US GDP growth last quarter and RevPAR reflect -- usually has a bit of a kind of six-month lag on that. So a positive GDP result in the second quarter generally translates into a healthy RevPAR environment. I think secondly, and it's so interesting because a lot of people focused on last week's job report. The really positive news in there was labor force participation rate went up. So again, this is reverting back to the norm. When we look at our consumers, when consumers have a job they tend to travel. They have more confidence to travel, sometimes they travel for business, but they definitely drives leisure travel. And labor force participation rate is one of the most highly correlated factors we look at with regard to RevPAR lift. So as we are thinking about 2025, as long as those trends continue, I do think you're going to continue to see the RevPAR and the travel environment continue to be supported.

Great. Thank you. And then just quickly then on the follow-up for 2Q, it looks like G&A was higher in the quarter adjusted G&A. Was there any onetime in that, any drivers there?

Yeah. In terms of our SG&A, we're still on track for our full year target of being up about mid-single digits. In terms of year-over-year comps, we did have some credit recoveries in the prior year quarter, which made the SG&A look a little elevated quarter-over-quarter. We also during the second quarter have our annual franchisee convention. Costs were a little bit elevated on that, but they were offset by additional revenues during the quarter, so really just a comp issue. We still remain on track for our full year targets for SG&A.

Great. Appreciate it. That’s helpful. Thanks.

Thank you.

Thank you. Your next question is from Robin Farley from UBS Securities. Please ask your question.

Great. Thanks. I just wanted to understand a little bit better with the RevPAR guided down in EBITDA unchanged. You mentioned some non-RevPAR drivers. If you could give a little bit more color on that? Thanks.

Sure, Robin. I'll start and then Scott can kind of fill in the color. I mean, effectively, a lot of this is really just a reflection of the versatility of the business model that we have created and its ability to drive growth. The key driver here is effectively the unit growth in this more revenue intense brands is accelerating. On top of that, you put the effective royalty rate growth that we talked about the robust performance of our non-RevPAR dependent programs. And then effectively, the outperformance that we're seeing or above expectation performance that we're seeing on the revenue synergies that we are realizing from the Radisson integration, and those things are really now embedded across the company. So they're showing up in our co-brand credit card. They're showing up in some of our strategic partnerships as well. So we've created a business that's effectively less reliant on US RevPAR only. The business or the system mix from the standpoint of larger room count hotels, higher effective royalty rate hotels is really a factor that's continuing to support the financial performance of the company and making us as a business less sensitive to U.S. RevPAR, it's still a key factor, but it's not as large of a factor as it has been in the past.

Yeah. Just to add to that, as Pat mentioned, we shared with our building blocks before how we got to that midpoint of our guidance of being around 9% growth. And really everything other than RevPAR has remained intact. And we've seen the acceleration, as Pat mentioned. So -- on the core royalty fees, we still are growing our effective royalty rate mid-single digits and our unit growth of 2%. So that's effectively driving about 3% of EBITDA growth. Our platform and procurement businesses on our core business continue, which this includes our co-branded credit card continue to perform well. That's producing about a 2% growth in EBITDA. Our international and owned hotel portfolio continues to be aligned with our original targets of growth about 2%. And really, where we've seen the outperformance to offset the RevPARs are is really the acquisition of Radisson -- it continues to provide significant growth to our EBITDA in our initial guidance. Now we thought that, that would be about a $20 million lift, which is accretive to our EBITDA by about 4%. Given our success in unlocking some of those revenue synergies, we're now revising that estimate up to contributing about 6% EBITDA. So that outperformance there is offsetting anything on the RevPAR side.

Great. That's very helpful. Thanks. And then just one quick follow-up, just looking at your -- the adjustments you made to get to adjusted EBITDA. Is there -- it looks like more franchise agreement acquisition costs like compared to last year. Is there anything you'd call out there is different than what you said about key money?

No, it's really just a reflection, as we talked about since the pandemic, seeing openings return to more pre-pandemic levels as our key money is tied to opening of hotels. So as we see that increase, the key money gets issued to match the fee stream. So that amortization just follows the flow of he cash flow that's been going out.

Okay. Thank you.

Thank you. Your next question is from Joe Greff from JPMorgan. Please ask your question.

Good morning. You'd mentioned that the reduction in RevPAR growth in the guidance and its impact on EBITDA was offset I think you mentioned less discretionary investments and better ancillary revenues. I was hoping, you can quantify that amount of incremental EBITDA benefit from those two items. And then, how sustainable are those levels of lower investment spend and ancillary fee generation? How sustainable they are going into next year?

Yeah. So as I was just saying with Robin's question, so when you think about that, taking about 4% EBITDA growth on the Radisson piece, up to 6%, really that's about $1 million to $2 million there of what we're seeing better flow-through from being able to plug the Radisson franchisees into our overall services and things like growing our co-branded credit card. So really, we should be able to continue to grow those revenue streams as we continue to grow the size of the portfolio. So I would expect those to kind of grow in line with both RevPAR and unit growth going forward. In terms of the discretionary investments, it is a minor amount of discretionary investments, as I mentioned, we're still on track for the mid-single digits. So given a little bit softer environment, we've trimmed a few discretionary investments we had if the market gets better in RevPAR returns, we can add those back. But really, the majority of it was the better performance on the synergies we're seeing from the Radisson integration.

Great. Thank you.

Thank you. Your next question is from Patrick Scholes from Truist Securities. Please ask your question.

Hi. Thank you. I know in the past, you've talked about expectations for high single digits EBITDA growth, I believe, next year and possibly beyond. Still feel comfortable with that expectation? Thank you.

Yes, Patrick, I think at this point, it's kind of too early to start talking about 2025. I think when we look at the back half of the year and the sort of uncertainties in the economy and uncertainties in the forecasting that you see from both economic forecasters, STR and the like. We kind of want to get a read into how the next six months is going to play out. I mentioned some of the key factors that will be drivers at the macro level of new development, particularly as everybody knows, it's interest rates will eventually lead to more hotel financing. But that's really the kind of key question, I think that we'll get a lot more clarity between now and the end of the third quarter.

Okay. I mean, I guess a little bit of pushback. I mean, I understand that, but that was a forecast that you gave several quarters ago. I mean, do I sense that there's some hesitation in maintaining that?

No, I would just say we haven't -- I'm not sure we've given you 2025 before. But if you look at the long-term trends, as we've spoken about in the past, we do expect to kind of continue over time to deliver the type of EBITDA growth that we've delivered in the past, which has been that sort of high single digits. There have been years where we've taken investment years to kind of accelerate that growth and had double-digit EBITDA growth percentage years like we've done in the last couple of years as well. But our long-term strategy and when we look at our long-term strategic plan, it's expected to drive that sort of high single digits EBITDA growth in the coming years.

Okay. Fair enough. Thank you.

Yes.

Thank you. Your next question is from Brandt Montour from Barclays. Please ask your question.

Hi. Good morning everybody. Thanks for taking the question. So one clarification in the actual 2Q report. If we look at the marketing and reservation system revenue and expenses, and see the delta there and then look at that line and the adjusted EBITDA walk, it applies like a $15 million good guy for the quarter, you had $12 million last quarter. So that step up, I'm assuming is what you're calling out in terms of the better ancillary, which is what improved. So I guess my question is, is that for all -- is that revenue ancillary services for all of your system? Or is that just specific to Radisson? Anything else you can tell us about that line because that is higher than I think you were looking for $10 million to $12 million for the rest of the year and that quarterly for that line.

Yes. It's reflective of the entire system. But I would say the growth that we're seeing is plugging the Radisson hotels into that. Our system has outperformed where we had thought. So as we talked about in the previous calls, being able to integrate the Choice and Radisson platforms at the beginning of the fourth quarter of 2023. We had that opportunity to unlock some ancillary incremental revenue streams. And so as we kind of work those in and take a look at how those roll out, we have been able to drive more revenue than we expected. You have to -- it's not quite $15 million. There are a couple of puts and takes to that, but it is slightly higher than where we thought when we gave the guidance of $8 million to $10 million on the last quarter. So probably this quarter, we were closer to about $12 million on that. and we would expect something similar in the third quarter. And then we did start this program change in the fourth quarter of last year, so we'll then start lapping the comps in Q4.

Okay. That's super helpful. And then your share repurchases accelerated to a pretty meaningful number in the 2Q. Can we -- should we read into that as sort of like a signal that large M&A isn't something that's immediately available to you or -- and/or just a reflection of what is out there that you think you can go after on the M&A front?

I think it's a reflection of the attractiveness of the shares. Historically, and this continues to be our policy. We've been more opportunistic in share repurchases. We effectively look to buy in the shares when we see a market dislocation. And certainly, we believe that's been the case for the first seven months of the year. I would say, from an M&A perspective, everything we look at comes with EBITDA, so its ability to be financed and is something that we're not looking to actually go out and purchase something that we then have to start from scratch and grow. I mean if you look at the two acquisitions we've done in the last five years, we've gotten them at very attractive prices, and we've certainly returned a lot to shareholders in significant growth as a result of both. But I'd look at the health of our balance sheet, as Scott mentioned and walked everybody through in his remarks, it puts us in a very healthy place in the kind of lower end of the three or four times, which gives us dry powder to do acquisitions. There's not a lot of transformational acquisitions out there that are in significant size, mostly what's out there are things we could either do on our balance sheet or do it in a very measured way with regard to leverage.

Okay. Thank you so much.

Thank you. [Operator Instructions] Your next question is from Dan Wasiolek from Morningstar. Please ask your question.

Good morning, guys. Thanks for taking my question. So kind of intermediate-term question here as we're entering a more normalized RevPAR growth of about 2% to 3% historically. Anything different this cycle with the industry or your competitive positioning, US infrastructure, your revenue intense mix that otherwise that we should think about from an intermediate term standpoint, like where maybe you guys might end up within that 2% to 3% range, positive drivers, maybe headwinds, just to think about. Thanks.

Yeah. I think one of the positive drivers and that's really reflected in sort of when you look at the revenue intensity of the brands that we're selling, it's beyond RevPAR. It's the effective royalty rate and the room counts in these hotels are driving higher royalties as a result. So I think you have to be thoughtful about kind of where the mix shift is going. It's why we're super excited and Scott walked through the numbers about the extended stay segment. There is a huge amount of supply and demand imbalance there where purpose-built supply is significantly under the demand for extended stay room nights. And we talked in our remarks, WoodSpring Suites brand is effectively 70% of the new construction that's going on across the industry in that economy extended-stay segment. So we feel really good about the value prop we have there, the brand we have there, which is a proven model, proven prototype, proven operating performance and proven exit for a developer. So those are the things that we see long-term trends continuing to fuel growth in extended-stay. And then secondly, upscale continues to be real positive trend line for us, both in our development pipeline and in our openings that we're seeing. And I think the Radisson acquisition is going to really help fuel that growth because those are brands that are sought after in the upscale segment and above. So we're -- as we look at sort of the next five years of growth, those two growth vectors in addition to our traditional core segment, give us a lot of confidence that we're really playing into the areas that are going to grow from a consumer demand perspective in the next five years.

Okay. Thanks for the color.

Thank you. Your next question is from Alex Brignall from Redburn. Please ask your question.

Good morning. Thank you very much for taking my questions. Just two pieces. Firstly, on the Japan deal. Could you talk about the royalty rates you expect to get that broader international business if there's another thing special or different about it? And then in your comments, you talked about not doing some discretionary cost spends this year and that to help protect the EBITDA. Discretionary content are not doing the costs yet. So could you just talk about what they are and whether we should then think about them being part of the cost base for next year that sort of being pushed back.

And on the Japan deal, those are part of our master franchise agreement. So there -- when we have those deals were the master franchise partnership works is we do sublicense our brands to local partners and then grow them. So the royalty rates will be slightly lower than where you would see both in the US and the direct franchising market, but there are no cost to support it. So the EBITDA flow-through was quite higher. So thinking kind of the 1% to 2% range on the royalty rates for those hotels. But as I mentioned, no cost, so straight to an EBITDA flow-through on those. On the SG&A piece, really, it wasn't, as I mentioned earlier, a material from the SG&A, really just matching up some of the initiatives that we had to the environment we're in. As Pat mentioned, we do see some green shoots on new construction and I think that's coming up. That's probably a little bit longer to come back than we thought earlier in the year. So we just pared some of our spending related to when hotels are going to open. Our opportunities are to sell more deals. So I would say if there are more SG&A coming in the future period still be offset by incremental revenues. So, shouldn't affect the margins of any incremental spend. But largely, we remain in line with where our overall SG&A targets were for the year.

Okay. Thanks a lot. Maybe as a follow-up, the net unit growth or total reported basis was a little. I know that's not a focus of yours. But do you kind of have any idea of where that might end up and how we should model existing? And then part of that is obviously Radisson where the number of runs just drop down again quarter-on-quarter and what we should expect for that? Thank you.

Yes, I'll start with Radisson then Scott can speak to the broader net unit growth trends. You look at Radisson, as we said on prior calls, we underwrote into the acquisition, a number of hotels that either were already on a path to terminate or ones that we looked at and said, they don't fit with the brand anymore. What we've said in past calls and we continue to stick to that guidance. We expect the Radisson, GreenSign brand to return to unit growth next year and Country Inn & Suites, which is primarily a new construction brand to be a 2026 unit growth story. We're seeing the -- as we mentioned in our remarks, the applications and the interest in the brand and the value prop improvement, attracting developer interest. So we feel pretty good when we look at what's in our pipeline and what we're seeing from an application perspective to stick to those two time frames for both the Radisson, GreenSign and the Country Inn & Suites by Radisson brand. I also would include Park Inn, which is a Radisson brand we acquired, and that's just in its early stages. And I think as we get to 2025 and start putting out guidance there, we'll have a clearer picture of what kind of contribution that brand can deliver on unit growth.

In terms of the pace of overall net unit growth, we're right along the plan that we had for the year. We had expected more of our openings to come in the back half of the year. So we're still feeling very confident or approximately 2% of our revenue intense brands that we talked about. And as a reminder, those every 1% growth on those revenue intense brands is about $4.5 million of incremental royalties to us. So we're pleased with what we're seeing there in line with where we thought. But it was always a more back-end weighted of those openings throughout the year.

Got it. Thank you so much.

Thank you.

Thank you. There are no further questions at this time. I will now hand the call back to Pat Pacious for the closing remarks.

Thank you, operator. Thanks again, everyone, for your time this morning. We'll talk to you again in November when we announce our third quarter results. Have a great rest of your day.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines. Goodbye.