Choice Hotels International Inc

NYSE:CHH

Earnings Call Analysis

Company Enhances Full-Year Financial Outlook

The company's unique growth strategic approach and franchising model fueled a surge to record EBITDA this quarter and an impressive 12.3% year-over-year growth, lifting the full year EBITDA guidance midpoint to $537.5 million. Revenue, excluding certain items, grew nearly 9% to $219.6 million, with adjusted EBITDA up 12% to $155.9 million and a 17% hike in EPS to $1.82. The international business witnessed a doubling in EBITDA, thanks to strong organic growth and Radisson Americas' successful integration. The company's robust balance sheet, marked by a low gross debt-to-EBITDA of 2.7 times, supports shareholder returns exceeding $390 million year-to-date and strategic acquisitions like Wyndham. Looking ahead, adjusted EPS for 2023 is set to range between $5.95 and $6.03, with an expected 10% EBITDA growth in 2024.

Expanding Portfolio and Robust Hotel Openings

The company has experienced substantial growth from its domestic hotel openings, with a noteworthy 24% year-over-year increase and 159 new hotels launched. This aggressive expansion rate, averaging over four openings per week, signifies a strong developer demand and reflects positively on the brand's equity and guest satisfaction. Particularly, the Comfort prototype and the extended stay brand, Everhome Suites, exemplify the company's innovative investments that attract developer interest and are expected to fuel future growth.

Strengthening Franchise Value and Conversion Success

The company has tripled its rewards program membership over the last decade and significantly increased direct bookings for its franchisees. These gains, amidst a diverse portfolio, enhance its dominant hotel conversion capabilities. Notably, conversions have soared with a 27% increase in the global rooms pipeline quarter-over-quarter and 11% year-over-year, propelling almost 70 additional domestic conversions expected to complete by year's end. In addition, the Radisson brand specifically shines with substantial royalty revenue, contributing to the robust pipeline and rapid market delivery.

Loyalty Programs and International Partnerships Fuel Growth

The introduction of a new co-brand credit card and a strategic partnership with a prominent hotel operator in Mexico is enhancing consumer loyalty and expanding the international offering. The latter enables members to earn and redeem points in luxurious destinations, supplementing the 14% rise in international RevPAR and evidencing potential for further international market share capture.

Financial Performance and Raised Guidance Reflect Confidence

The company's financials have strengthened, with adjusted EBITDA growth of 12% reaching $155.9 million, and a 17% increase in adjusted earnings per share at $1.82. Driven by growth in effective royalty rates and organic expansion in key segments, the company has raised its full-year 2023 EBITDA guidance to $537.5 million, expressing confidence in continued asset-light model success and projected growth opportunities in 2023 and beyond.

Positive Shareholder Returns Amidst Strategic Investment

With a low leverage balance sheet showcasing a gross debt to EBITDA ratio of 2.7 times, the company is in a strong position to continue its accretive growth trajectory. It has returned over $390 million to shareholders, including $57 million in dividends and $335 million in share repurchases. As it explores further expansion and potential Wyndham acquisition, the company remains committed to investments that enhance shareholder value.

Prospects for the Future Driven by Strategic Pillars

Looking ahead, the company anticipates a full-year domestic RevPAR growth of approximately 1% and a steady system growth in high-revenue segments as per prior forecasts. Additionally, it projects maintaining an effective royalty rate growth in the mid-single digits for the year. These projections, hinged on both organic growth and strategic mergers and acquisitions, reflect the optimism for a promising trajectory as they venture into 2024.

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to Choice Hotels International's Third Quarter 2023 Earnings Call. [Operator Instructions] I will now turn the conference over to Allie Summers, Investor Relations Senior Director for Choice Hotels.

[Allie Summers, executive]

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 the 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 [indiscernible] 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 2023 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 Scott Oksmith, our Chief Financial Officer, will speak to our third quarter operating results and financial performance. Joining us also today for the Q&A portion of the call is Don Dragisich, Current Executive Vice President, Operations and Chief Global Brand Officer and former CFO. Following Pat and Scott remarks, we'll be glad to take your questions. And with that, I'll turn the call over to Pat.

[Patrick Pacious, executive]

Thank you, Ali, and good morning, everyone. We appreciate you taking the time to join us. I'm very pleased that Scott Oaksmith is joining us on our call today following his recent promotion to Chief Financial Officer. Scott has extensive experience across our finance division and he's well known to all of you in the investment community, given his interactions over the years. I've had the pleasure of working with Scott for 18 years, and I'm confident he's the ideal person to lead our financial strategy. His appointment demonstrates the depth of our bench and the importance of thoughtful succession planning.

I'm also joined by Dom, who, as you know, served as our CFO for the past 7 years and recently stepped into a newly created operational role where he leads our brand segments, franchise development, segment services and corporate development.

Before I get into our quarterly results, I want to briefly discuss our proposal to acquire Wyndham Hotels & Resorts. We decided to make our offer public after 6 months of private negotiations, that resulted in little progress. Our goal is to resume a constructive dialogue with Wyndham's Board to make this combination a reality. We are confident that a combination with Wyndham represents compelling value for both companies' shareholders, franchisees, associates and guests. And we've heard positive feedback across these groups as well as from third parties. For Choice shareholders, our proposal provides significant financial and strategic benefits. Wyndham shareholders would receive a substantial premium and immediate value for their shares. And both sets of shareholders would have the opportunity to participate in the significant value creation that we believe a combined company would unlock.

To put this in simple and direct terms, we are interested in combining with Wyndham because we respect their business, and we see it as highly complementary to what we have built. Together, we believe we can accelerate and build upon what each company could do on its own. With an asset-light fee-for-service model, we are confident that the combined company would generate stronger free cash flow and profitability and have the financial strength to accelerate growth, quickly delever and enhanced returns to our combined shareholders. For franchisees, the companies would nearly double the resources available to $1.2 billion of spend on marketing and reservation activities, drive more direct revenue to their hotels with an even stronger rewards program and lower their operating costs.

As such, we see an even brighter future for the combined companies. We also see a clear path to completion, and we're ready to move expeditiously to negotiate terms, including ways to provide market standard protections for Wyndham shareholders. Importantly, while this transaction remains important, and highly valuable for us to pursue, we remain laser-focused and committed to executing daily on our business and enhancing the value of choice as evidenced by our strong third quarter results.

Now let's turn to our quarterly results. Our distinct growth strategy and best-in-class franchising business engine, drove our adjusted EBITDA to record levels in the quarter. And I'm also pleased to say that we raised the midpoint of our full year guidance, which represents a 12.3% increase in our adjusted EBITDA for the full year. We expect to build on this strong momentum through the rest of the year as we grow our franchise business with hotels that generate higher royalties per unit, while leveraging the investments we have made in our systems to improve our franchisees' profitability. This impressive growth is fueled by the successful execution of our key strategies, which are unique to choice.

These strategies include: executing the nearly completed rapid integration of Radisson Americas, which has already realized synergies 5% above our original plan and ahead of schedule. Driving organic growth of our brand portfolio and the quality of earnings with hotels that generate higher than brand average royalties per unit. Investing in our brands designed to appeal to the guest of tomorrow, while providing a compelling return on investment for our franchisees, increasing the velocity of hotel openings through our best-in-class hotel conversion capability.

Further bolstering our platform capabilities through strategic partnerships and other ancillary revenue opportunities and expanding our international growth where we doubled our EBITDA contribution in the quarter. Let me start with the successful acquisition of the Radisson Americas brands. When we executed this transaction, we made it clear that the Radisson Americas portfolio would be effectively integrated and contribute to our results in a timely manner. The successful integration process is tracking well ahead of schedule towards completion. Importantly, what our integration teams have accomplished with Radisson Americas further validates our capabilities to replicate this great success with the Wyndham combination.

The Radisson Americas acquisition has created a step function change in the size of our business, expanded our rewards program, extended our co-brand credit card opportunity, increased our geographic reach in the Americas region and opened up new incremental earnings streams. Thanks to our integration expertise, and strategic investments in our state-of-the-art proprietary technologies, we have achieved $84 million in annual recurring synergies, exceeding our prior target by 5%, and we now anticipate additional future cost and revenue synergies.

In the third quarter, we integrated the digital channels and rewards programs, all within less than a year of acquisition. We are now delivering improved business performance to the Radisson Americas hotels as the process of onboarding these hotels on to our best-in-class business delivery engine is well underway. At the same time, we have been able to help our Radisson Americas franchise owners reduce reliance on third-party distribution channels and as a result of our improved hotel footprint, we have recently negotiated improved terms for not only the Radisson Americas owners, but the whole toy system with 1 of the major third-party distributors. This, in turn, has helped lower the overall operating cost for our franchisees, which is so critical in a time of rising labor costs and interest rates. Across the entire portfolio of brands, our franchisees and guests are reaping substantial benefits since the digital integration. Specifically, we are driving stronger performance for the Radisson Americas brands with bookings on our digital platform increasing by over 20%, given the higher traffic and booking conversion rate on the Choice website and mobile apps.

This, in turn, lowers customer acquisition costs for franchisees. And following the integration of the rewards programs, we now have 63 million Choice Privileges members who book directly with our franchisees, pay them higher rates and return more often than nonmembers, which all translates again to lower customer acquisition costs and higher margins for our franchisees. The entire Choice system now has access to over 1,600 nationally and globally managed corporate accounts and specialty accounts and over 28,000 small to medium business accounts from which we now can provide incremental revenue growth as we move ahead. Radisson Americas properties are also enjoying access to our hotel profitability tools and Choice University, the most widely awarded learning program in the hospitality industry. As of today, at a pace faster than anticipated, we have seamlessly and effectively migrated 75% of Radisson Americas hotels onto our property management system, and we expect the remaining properties to be onboarded by the end of the year.

With the full integration moving towards closure, we expect to help further drive Radisson Americas hotel's top line performance and reduce their operating costs to bring their profitability to the next level as they leverage the power of choice's systems and tools. The excitement generated by the Radisson Americas business unit is underlined by its performance.

In the third quarter, the Radisson upscale brand RevPAR grew over 6% year-over-year, outperforming the upscale segment by 3 percentage points and achieving RevPAR index share gains versus competitors. Our future growth is now enhanced by the addition of the Radisson Americas brands to our best-in-class business delivery engine, and we believe we can provide similar benefits to Wyndham franchisees if a transaction can be consummated. Our selective organic unit growth strategy is also delivering results and enhancing the attractiveness of our brands. Over the last 5 years, we have expanded the reach of our franchise business in more revenue intense segments. The new franchises in these segments are more accretive to our earnings and are another key driver of our future growth. In fact, year-to-date through September, new hotels we added within a brand generated an average of 20% higher royalty revenue than hotels exiting the brand.

We are also executing new hotel openings at an impressive pace. Through September, we averaged more than 4 openings per week. This resulted in a 24% increase in openings year-over-year with 159 domestic hotel openings. At the same time, brand equity is elevating as we are seeing improved guest satisfaction scores and are enhancing our brand's value proposition to consumers. We also continue to invest in our business. Our recent brand investments are designed to appeal to the guests of tomorrow, while providing a compelling return on investment for our franchisees.

And these investments are already gaining traction. Our first new Comfort prototype hotel opened this quarter and marks the next chapter for our flagship brand which continues to attract significant developer demand with 136 projects in the pipeline. In addition, earlier this year we debuted the next-generation Sleep Inn prototype, and a country in an suites room refresh. And our newest extended stay brand, Everhome Suites is gaining meaningful traction across the development community with over 60 domestic projects in the pipeline, including 12 under construction.

Fueling our success is our commitment to strengthening the value proposition we provide to our franchise owners. In fact, over the past decade, we have tripled the number of rewards program members and raised the direct booking contribution to our franchisees by 50%. In the current hotel development environment, our more diverse and strengthened brand portfolio makes our core competency, a best-in-class hotel conversion capability even more impactful.

Specifically, in the third quarter, we drove a 27% increase our global rooms pipeline growth for conversion hotels quarter-over-quarter and 11% year-over-year. We expect nearly 70 additional domestic conversion projects to open by year's end. In addition, 72% of the domestic agreements awarded in the first 9 months of the year were for conversion hotels. We are especially pleased with the prospects for our Radisson upscale conversion brand given it generates, on average, 6x more royalty revenue than our economy portfolio. Through our superior speed-to-market conversion processes and best-in-class franchisee support, we are able to move projects quickly through the pipeline. In fact, the velocity of our conversion openings has been so high that some conversion hotels never appeared in our quarterly reported pipeline numbers.

Of all the domestic franchise agreements we executed for conversion hotels in the first 9 months of this year, 2/3 have already opened or are expected to open by the end of this year. And we expect our brand portfolio conversion activity to remain robust for the foreseeable future. We are also encouraged by the traction we are gaining in our efforts to expand our platform business and ancillary revenue growth opportunities.

One example we're very pleased with is the new co-brand credit card. This strategic partnership should be a long-term tailwind and given that it continues to drive loyalty to our brands as our rewards members with credit cards stay with us, on average, 4x as often as non-rewards members. On the international front, another exciting development benefiting our customers is a new strategic partnership with 1 of the largest hotel operators in Mexico which is known for its portfolio of upscale, upper upscale, luxury hotels and resorts in Mexico and the Caribbean. The arrangement will grow our international portfolio and is expected to enhance Choice Hotels Rewards program by allowing our members to earn and redeem points at these award-winning all-inclusive properties.

Beyond this strategic partnership, we also continue to improve our international business performance. Our international portfolio [indiscernible] third quarter RevPAR increased 14%, with the Americas region growing 25% compared to the same period of 2019. We believe we have a significant opportunity to further gain international market share and realize additional EBITDA growth in the coming years. The results we achieved in the third quarter confirmed the effectiveness of our deliberate approach to growing our company with hotels that generate higher royalties per unit.

We remain confident in our versatile asset-light fee-based model, which has proven its ability to generate multiple avenues of earnings growth throughout various economic environments. As we look ahead, we are well positioned to build on the success we achieved in this quarter and our powerful earnings algorithm and speed of execution will enable us to further capitalize on growth opportunities in 2023 and beyond.

I will now turn the call over to our CFO. Scott?

[Charles Scholes, analyst]

Thanks, Pat, and good morning, everyone. I'm excited to be joining you on the call today and continue to build upon the strong partnership we have developed over the last 18 years. I also look forward to working closely with Dom in his new role to drive our key financial objectives focused on maximizing long-term shareholder value.

Today, I'd like to provide additional insights on our third quarter enterprise and segment results, update you on our balance sheet and capital allocation approach and share expectations as we move ahead. Throughout my remarks today, I would like to note that all figures are inclusive of the Radisson Americas portfolio and excludes certain onetime items, including Radisson America's integration costs, which impacted the third quarter reported results.

For third quarter 2023 compared to the same period of 2022, revenues, excluding reimbursable revenue from franchised and managed properties increased nearly 9% to $219.6 million. Our adjusted EBITDA grew 12% to $155.9 million. This was driven by strong effective royalty rate growth, organic growth in more revenue intense segments and markets, the successful integration of the Radisson Americas portfolio and the robust performance of our platform, procurement and international businesses, and our adjusted earnings per share were $1.82, an increase of 17%.

Let me turn to our key revenue levers, which include our unit growth, royalty rate and RevPAR performance. In terms of unit growth, our portfolio's absolute size and the royalty revenue per hotel are key advantages. Our strategic goal has been to accelerate quality room growth in more revenue intense segments and markets by simultaneously growing our effective royalty rates, which ultimately results in an outsized increase in royalties. In addition to our mix shift strategy for the broader portfolio, we are driving more revenue intensity at the individual hotel and brand level across the system.

In fact, year-to-date through September, new hotels we added within a brand continue to generate an average of 20% higher royalty revenue than hotels exiting the brand. Our domestic system size of the more revenue-intense upscale, extended-stay and mid-scale segments for Choice's legacy portfolio grew by 1.6% for units and 1.9% for rooms year-over-year. At the same time, both units and rooms in our international portfolio increased approximately 1% year-over-year. We are particularly pleased with the growth of our international bonds pipeline, which nearly doubled in the third quarter year-over-year.

During the quarter, we also leveraged our best-in-class conversion capability. as we expanded our global rooms pipeline for conversion hotels by 27% since the last quarter. These results demonstrate that the deliberate decisions and strategic investments we have made and will continue to make in our value proposition, franchisee tools, brand portfolio and platform capabilities are contributing strong returns across all our segments. First, we strengthened our upscale franchise business. For the first 9 months of 2023, we grew our domestic upscale units by 11% year-over-year, highlighted by a 50% increase in the number of new hotel openings.

Second, we accelerated our growth in the extended stay segment. For the first 9 months of 2023 we grew our domestic extended-stay unit system size by 13% year-over-year, highlighted by a 38% increase in the number of new hotel openings. At the same time, we grew our domestic extended state conversions room pipeline by 36% year-over-year. We remain very optimistic about our extended stay franchise business growth and expect the number of our extended stay units to increase an average annual growth rate of more than 15% over the next 5 years.

Third, we continue to invest in our mid-scale portfolio. And as of the end of the third quarter, we reached over 4,300 domestic hotels. In fact, after executing a franchise agreement, our mid-scale properties open their doors as royalty-generating hotels in just under 100 days on average. And fourth, our economy segment transient hotels are continuing to benefit from the improved value proposition. As a result, in this segment, year-to-date through September, New hotels we added continue to generate an average of 20% higher royalty revenue than hotels exiting.

Our effective royalty rate also continues to be a significant source of revenue growth. Our domestic system effective royalty rate for the first 9 months of 2023 increased 6 basis points year-over-year, representing $4.4 million of incremental royalties, including a 6 basis point increase for the Choice legacy brands to 5.1%. The third revenue lever I will discuss is our RevPAR performance.

Our third quarter RevPAR increased 12.1% in the same quarter of 2019, including 13.7% growth from the Choice legacy portfolio. RevPAR was down 80 basis points year-over-year in the quarter, reflecting tougher year-over-year comps as we were a first hotel company to return to and significantly exceed pre-pandemic RevPAR levels. While we expected softness in the lower mid-scale and economy chain scales in the back half of this year, we are optimistic about RevPAR growth prospects for the coming year given the favorable long-term business and leisure trends and the initiatives we put in place to capitalize on these tailwinds.

As Pat mentioned, we continue to build on the strong momentum of our platform business. Specifically, in the third quarter, we increased our platform and procurement services fees by 8% to $15.5 million compared to the same period of last year. We believe that we can drive this strong revenue growth in years ahead as we increase the number of products and services we offer to nearly 7,500 hotels, millions of guests and other travel partners, while expanding our platform.

At the same time, as a result of our strong organic growth and the acquisition of Radisson Americas, we doubled the EBITDA contribution of our international portfolio in the quarter. I'd like to now turn to our well-positioned low leverage balance sheet, marked by gross debt to EBITDA of 2.7x, which continues to be below the low end of our target range of 3 to 4x. Year-to-date through October, we returned over $390 million to shareholders. This included nearly $57 million in cash dividends and $335 million in share repurchases. Over the past year alone, we have repurchased nearly 8% of our outstanding shares and returned over $0.5 billion to shareholders. With our strong cash flow and debt capacity, we are well positioned to continue accretively growing the company. Our strong capital structure positions us well to increase investments to further expand the scale of our business to drive franchisee and shareholder value.

It can also effectively support the acquisition and successful integration of Wyndham. Beyond our focus on continued organic earnings growth and the large strategic opportunities we have discussed, we will continue to make targeted investments in our business to drive growth focused on hotels that generate higher royalties per unit, further enhance the franchise owners value proposition while expanding our international and platform business.

I'd like to turn to our expectations for the remainder of the year. For full year 2023, we are raising the midpoint of our adjusted EBITDA guidance to $537.5 million, which represents 12.3% growth at the midpoint year-over-year and approximately 44% growth compared to the full year 2019. From a full year perspective, when assuming a like-for-like portfolio, our organic adjusted EBITDA, excluding Radisson Americas is expected to grow an impressive 8.4% over the prior year. For full year 2023, we are also raising our adjusted diluted earnings per share to range between $5.95 and $6.03 per share.

Underlying our outlook are the following assumptions for full year 2023. We are updating our expectations for domestic RevPAR to be approximately 1% year-over-year, which builds on the approximately 13% growth relative to 2019. We expect domestic system growth of the more revenue-intensive segments to be in line with our prior guidance of approximately 1%. And finally, we are maintaining our outlook for full year 2023 effective royalty rate to grow in the mid-single digits year-over-year. As we look into 2024, we continue to expect to generate adjusted EBITDA growth of approximately 10% year-over-year, driven by incremental contribution from Radisson Americas as well as organic growth in more revenue intense segments and markets, strong effective royalty rate growth and other factors. This outlook does not account for any additional M&A activity.

Today's results are a testament that our strategy is working, and we intend to keep investing in those areas of our business that will generate the highest return on our capital.

At this time, Pat and I would be happy to answer any questions. Operator?

[Operator]

[Operator Instructions] And your first question will be from Shaun Kelley at Bank of America.

[Shaun Kelley, analyst]

Scott, congrats on the promotion. I'd love to lead off, Pat, with the sort of, I think, very obvious high-level question of sort of what are the next steps here for Wyndham. So as we see it, obviously, you've taken your offer public. Is the next step, a possible proxy battle? How would you think about directly buying shares in Wyndham, is that an opportunity for you? Or is there a way to address maybe some of the very specific concerns that they put out in their detailed response, including maybe be willing to move above what I think you deemed as market standard protections. Would you be willing to go above that to get conversations to kind of further evolve here?

[Patrick Pacious, executive]

Yes. Thanks, John. I appreciate it. I think the top priority as we've been talking to our shareholders, their shareholders, our franchisees, their franchisees. The top priority is to get reengagement to come back to the table. Every issue that's been identified can be solved by coming back to the table and negotiating. But these are 2 great companies. We think combined, we would be even better positioned to deliver this incredible value to stakeholders. I think as you're all aware, we're very committed to this transaction. We've been evaluating this over the last 10 months. There's a lot of value to be created here. And the strategic rationale is just simply too compelling not to see it all the way through.

As far as seeing if there's additional value to be unlocked, there can be additional value to be unlocked if Wyndham reengages. I think as you mentioned, the -- some of these questions around how to protect the risk allocation, we're well advised and we're confident in our ability to complete this in a reasonable time frame. We are willing to offer transaction terms as we stated to them when we were talking privately that provide the appropriate level of risk mitigation and certainty for their shareholders. So a lot of these conversations are things that we want to continue to engage Windham on -- but we're going to do that with them privately. But we're well advised. We're well aware of what our options are to see this all the way through, and we're confident we'll get the transaction completed.

[Shaun Kelley, analyst]

And just to be very clear, if we kind of stay in this agree to disagree, because again, you want them back to the table, but they've been, I think, pretty clear on some sort of economic move probably needs to occur for them to do so. So I mean, again, could you give us any sense of the options of what that could entail to push that along? And again, hopefully, I think in all terms turn this conversation friendly, would you budge uneconomic terms here to help, I guess, return them to the table? Is that on the table for you?

[Patrick Pacious, executive]

Well, you're not going to be surprised, Shaun. I'm not going to have that conversation on this call, but we're happy to have that conversation with the Wyndham board.

[Operator]

Next question will be from Stephen Grambling of Morgan Stanley.

[Stephen Grambling, analyst]

I'm just going to follow up on Shaun's question with maybe a little bit more direct of a question. Just how do you think about the right level of termination fee and/or willingness to put a collar in place? Are there any comparable transactions that you look at?

[Patrick Pacious, executive]

Yes. Thanks, Steven. I mean, obviously, when you look at an opportunity like this, we've looked at what market terms look like for deals of all different sizes and shapes. A lot of it comes down to how each site is evaluating the execution risk. One of the benefits of bringing the public -- the proposal public 3 weeks ago, is we've been able to engage in pretty extensive conversations with our franchisees many of whom are their franchisees. I would say in the last 3 weeks, we've probably spoken to hundreds of franchisees across the spectrum. They're very supportive of the combination. These are sophisticated investors themselves, and they immediately grasp how a combination like this is going to improve their profitability. They see more direct bookings. They see a larger rewards programs. And they understand how that can drive down their costs and improve their profitability. So understanding the sort of execution risk around getting a deal like this completed.

The last 3 weeks, I think, have been really supportive from the input we've heard from franchisees, from shareholders and from third parties on seeing a transaction like this happened. So I think when you look at evaluating that, the last 3 weeks have really helped us understand what it's going to take. I mean, effectively, we're looking for the opportunity to have sufficient time to get through the required approvals to make this transaction occur. And I think as you said, have we looked at market terms, yes, we have. We understand what those are, and we're certainly willing to engage in those conversations with the Wyndham board.

[Stephen Grambling, analyst]

And maybe 2 quick follow-ups. One, have you then had conversations with the FTC? Or how would you frame the path there? And an unrelated M&A question, how do we think about licensing fees that you've earned from Bluegreen and the impact from the HGV transaction?

[Patrick Pacious, executive]

Yes. Let me talk about the HGV transaction. We are well aware of their transaction. We've been in discussions with them. I think it's important for investors to understand that there is a change in control provision in the existing Bluegreen agreement. And we provided a lot of benefit to that entity over the past. I think it's probably a dozen years, I think, close to a dozen years, we've had a great working relationship with Bluegreen. And we would expect that's going to continue on the -- when HGV takes control as well. So looking forward to those conversations and creating more value. As far as engaging with regulators, it's too early in the process, but it is something we've obviously looked at. We've been studying this, as I said, for about 10 months, and we feel very confident that there's a clear path to completion to get this transaction through the required approvals.

[Operator]

Next question will be from Michael Bellisario at Baird.

[Michael Bellisario, analyst]

Just 1 more question first on the topic of Wyndham. I think you mentioned or you said if Wyndham reengages. I mean you obviously have to reengage to it takes both sides to do a deal. So I guess my question is sort of how long do you let the process go in the public realm before you either say, enough is enough, and we're going to go do something different or we're going to walk away from the deal? Just trying to understand the thought process about how long it hangs out in the public market in the public realm?

[Patrick Pacious, executive]

Yes. I think, Michael, we're -- obviously, we were looking to continue the conversation at the time that they kind of surprisingly disengaged. So we are hopeful that through the conversations we can have in the future, we're going to get back to the negotiating table. I think it's important for us to realize we are aware of the calendar we have, as a company, have been very patient in our growth strategies. But when we look at what the opportunity here sitting in front of us is today, the time to execute this transaction is now -- if you look at our franchisees and you look at the costs that they are bearing with rising labor costs, rising interest rates and the pro-competitive nature of what's happening in our segments. Now is the time to get a transaction done. I think when we discussed this with the Wyndham Board and with their shareholders, everybody sees the strategic rationale of getting this transaction done. So it's just a matter of getting back and getting engagement again and realizing the issues that remain are things that can clearly be met and answered if we're able to get back into the negotiating room and solve these issues.

[Stephen Grambling, analyst]

Got it. And then just 1 follow-up on the [indiscernible] statement. I know that publicly come out and stated that they don't support the transaction. Can you maybe help us understand sort of their role and their influence in the industry, especially with your franchisees?

[Patrick Pacious, executive]

Yes, I think what's important is, we, as an organization, have 7 franchisee associations. These associations elect their own members. And those are the associations that we've been talking to this to about this transaction. They are most familiar with our programs, they're most familiar with all of the benefits we bring to them, the cost reductions that we've been able to achieve. And it's been really exciting in the last 3 weeks talking to our franchisees and seeing their enthusiasm. They see this combination not as a promise that these benefits are coming that way. It's a reality because we're achieving those cost benefit reductions to them right now through the Radisson acquisition. The cost reductions we're able to drive are going across not just the Radisson brands, but all of the Choice legacy brands. And so this is a reality that's occurring now. And so our franchisees are seeing that performance improvement on the top line, they're seeing the cost reduction on their bottom line. And ultimately, they see this combination as something that could really accelerate and be a real game changer for their brands. And as I said, many of them own Wyndham brands as well. So the response we've heard has been very enthusiastic, and they get it. They understand that this is something that's going to benefit them at the street corner level.

[Stephen Grambling, analyst]

Fair enough. And then just 1 unrelated question on the fundamental front. Just on the pipeline, kind of trying to focus on the domestic rooms here, conversions look like they stepped way up. So maybe what happened on the new construction front? And are you seeing any incremental pressures on the signings front there?

[Michelle Masters, executive]

This is Michael, thank you. Yes, we are very pleased with what we've seen on the conversion side. As you know, that's something that we're very good at as a company, driving the conversion market. Near 2/3 of our openings typically come to conversion. So we're able to grow in all market conditions. And even if -- the financing environment becomes a little bit tougher, we have the ability to grow in all market conditions. I point back to the great financial crisis, where about 90% of our our openings came from conversion. So we're pleased with what we're seeing on the step-up of conversion. So in terms of new construction, still seeing a lot of great demand there.

I think 1 thing Pat mentioned is our investment in our brands is we continue to look at ways to drive down the cost of our prototypes to make that more financeable and for the most part, our owners are more small business owners that still have access to that local level bank that is able to still drive in finance new construction of hotels. As an example, since we relaunched the Cambria brand with a lower-cost prototype, we signed 23 new agreements since its launch. So we're pleased with our ability to continue to drive conversions as well as make our new construction prototypes more affordable to continue to build in all market cycles.

[Operator]

Next question will be from David Katz at Jefferies.

[David Katz, analyst]

I appreciate all the detail on the strategic rationales and all the background. My 1 question is on the backside of this, leverage is getting up to a relatively high level, higher than I think historically you've seen, at least in my covering tenure. Just how do you get comfortable with that and talk about how long you expect that leverage level to stay there?

[Scott Oaksmith, executive]

Thanks, David. Yes. As you said, we've typically operated our targeted leverage levels are at 3 to 4, and we've typically been below that, which really shows the strength in our balance sheet, which allows us to think about a transaction like this. We don't enter into that lightly, but for such a transformative acquisition, we think it's prudent to be able to leverage up the balance sheet temporarily and then quickly delever. As you know, we are a very high free cash flow generating company as is Wyndham. And so the combination of those 2 can handle a little bit of higher debt load on the short term. We pressure tested it. We believe that even with a slightly elevated leverage, we can continue to reinvest in the business to grow as well as delever. And we kind of think we can do that within 24 months to a little over that time frame to get back to the high end of the 3 to 4 targeted ratios that we have.

[David Katz, analyst]

Got it. And would there notionally be some refinancing required and with the cost of debt involved, are you sort of comfortable that this -- where we sit today, I guess, right, the cost of debt lends itself to doing this. And before I forget, congrats on the promotion, Scott, I should really have said that at the outset.

[Scott Oaksmith, executive]

Thanks, David. No, we are comfortable. There are a few -- when you look at our bonds that are outstanding that could be rolled over in the transaction, but there will be no new debt that needs to be issued. And we're comfortable with what we see in the marketplace as far as interest rates that we'll be able to delever quickly. Our interest coverage ratios will be at least 3x coming out of the gate post-combination. So we're comfortable, again, that we can invest in the business. We've stressed it if we saw a recession and again, feel very comfortable that the businesses can handle the debt load and again, delever quickly.

[Operator]

Next question will be from Robin Farley at UBS.

[Robin Farley, analyst]

Great. Just circling back to the topic of next steps, and I know you've discussed a bit already. But if Wyndham continues to not engage and that's the public stance still, is the next thing that you have to wait until May to have something in front of shareholders. Is that something you're prepared to do sort of timing wise and that I don't know if you feel that there would be any sort of uncertainty between now and then that can impact franchisees on either side?

[Patrick Pacious, executive]

Robin, I would just say we're well advised about what the potential options are to continue to move this ball forward and get the transaction consummated. I'm not going to speculate on sort of what will happen between now and in the next several months here. But we're confident we're going to get this done. We're going to do everything we can to drive reengagement from the Wyndham side. And as I said, we're aware of what the opportunities are and the options are, and we're also aware of what the calendar looks like in order to get the transaction completed.

[Robin Farley, analyst]

Okay. Okay. And just as a follow-up, is there -- are you expecting any more removals of Radisson when we just look at the change in the number of Radisson properties among all of the brands combined from Radisson in terms of any more removals from that system from here forward more than maybe what you would think of as a typical rate, just looking at the change in the last couple of quarters? And then also just that kind of related on the total room count for the full year, if you -- your expectation for that and whether that's changed. I know the the 1% increase in the revenue intense segments but just thinking about it on a combined basis and whether that's changed since last quarter and just looking at the Radisson removals.

[Scott Oaksmith, executive]

Yes. So in terms of net unit growth, we're really pleased with when you look at our legacy Choice brands and our revenue-intensive units. They're up 1.6% year-over-year and our rooms are up 1.9%. So we're very pleased with that. And in terms of Radisson, all of the deletions that we've had at this point in time were ones we expected that we had underwritten in the deal. So no surprises at this point. We should be on the back end of that at this point in the cycle as we're now about a year on the acquisition. So we're confident that we can grow both the flagship Radisson brand as well as the Country-Inn brand. Our plans for the Radisson brand will probably most likely be to grow through with the conversion engine. So we believe we'll be able to kind of bring that back to a new unit growth coming out in 2024 and beyond.

But for country, it's going to be a mix of conversions and new construction. So the time line for growth on that may be a little bit elongated given the new construction environment. But we're very confident that both those brands that we can grow those into significant scale for the company.

[Patrick Pacious, executive]

Yes, Rob, I would just say, too, in the Radisson brand itself, the amount of refinancings that are going to occur in the next 18 months for upscale full-service hotels is fairly elevated. And that's a real opportunity for brands to come in and reflag and our development team for the upscale segment is engaged in a lot of those conversations. So we do think that sort of reshuffling of potential financing is going to lead to more opportunities for us on that conversion, upscale full-service conversion opportunity, as Scott said.

[Operator]

Next question will be from Meredith Janssen at HSBC.

[Unknown Analyst]

I was wondering if you could speak a little bit about the extended stay portfolio and how we can think about segmentation between economy and then mid-scale with Everhome and then the potential sort of white space for upscale extended stay and sort of timing or thoughts on that front.

[Patrick Pacious, executive]

Welcome, Meredith, and I'll start and then Scott can sort of fill in. I mean I think when you look at the extended stay opportunity for us, we're really excited by the 4 brands that we have in that segment. I think as we've stated publicly, we expect our compound annual growth rate over the next 5 years to be in the double digits, like 15% growth going forward. we're really excited by what we're seeing at Everhome. We had a developer summit down in Atlanta a couple of weeks ago that was standing room only for that brand. And as we mentioned, we've got 12 under construction and a lot of developer interest for Everhome in particular. We're also seeing a lot of conversions from transient hotels to extended stay hotels. And if you look at our mainstay and suburban brands and the growth that we're seeing there, those 2 are also contributing significantly.

I think when you look at the white space, as you mentioned, an upscale extended stay brand is not something we have today. It is something that, as we built our upscale capabilities with Cambria and now the Radisson acquisition, and we have our already strong competency and extended stay. That's a white space in our portfolio that could be filled with a future brand launch or potential acquisition.

[Scott Oaksmith, executive]

Yes. I'll just add to Pat. I mean, as mentioned, we're very excited about the opportunity. When you look at our pipeline of extended stay hotels, we've got over 360 hotels. The profile of that developer institutional capital. We have a we have the systems put in place with over 60 field service people to make sure that we're driving what they call as extent--tay occupancy, which is so important in that business. So we've proven out our business model with the WoodSpring brand, which has really been a great acquisition for us, and we've been able to accelerate the growth of that and developers have seen that, and we're bringing that to the mid-scale segment with Everhome. So we are very pleased with where that is today with the [ 12 ] under construction and 60 in the pipeline and see an acceleration of the demand trends if you look at the infrastructure bill and reshoring of American jobs, we see there's a huge amount of new business coming in 50 million to 100 million room nights over the next decade that really are going to feed the extended stay profile and having Woodspring brand and building out the Everhome brand, we're well positioned to capture that demand.

[Operator]

Next question will be from Patrick Souls at Truist Securities.

[Unknown Analyst]

Have you bought any shares already to establish a position in the event of a proxy battle and/or to lower your basis in the deal if you do see this through fruition?

[Scott Oaksmith, executive]

Yes, Patrick. Thanks for the question. We are a nominal shareholder of the Wyndham at this point.

[Unknown Analyst]

Okay. I wanted to move on just to actually a question on the guidance here. It looks like you took your RevPAR down slightly, but adjusted EBITDA up slightly. What's driving the EBITDA raise it sounds like something in the -- either the cost items? Is that going to be the owned hotel cost? Or SG&A coming down a little bit versus prior expectations? And then I'll have 1 more follow-up question.

[Scott Oaksmith, executive]

It's really the combination of things. As you mentioned, we did pull down our RevPAR guidance slightly. If you think about our approximately 2% RevPAR guidance, usually, there's a range and that represented a performance that was towards the high end of our range of a potential outcome. So moving our guidance to approximately 1%, just represents the lower end of the range of where we are. But if you think about our RevPAR really, it's a factor that we were so much farther ahead of recovery on the pandemic in some of our competitors. The first ones to get back to 2019 levels and exceed 2019 levels. So our full year RevPAR is still expected to be 13% above 2019 levels.

In terms of the other puts and takes, we've been very pleased with the performance of our platform revenues and our international business, which has been higher than what was expected which is offset towards that lower range on the RevPAR. And then we've done a really great job on cost containment so are coming in better than expected there. So with all that, we took the low end of our range up from [ 530 to 535 ], and which then brought up the midpoint to [ 537.5 ]. So really those puts and takes are what gave us confidence to raise the midpoint of our guidance.

[Unknown Analyst]

Okay. And then just the last question. You're actually kind of swinging back to the related to the potential acquisition and trying to compare things apples-to-apples. Every company talks about strength in their guest loyalty program. I'm wondering how much occupancy does your choice privileges, I think it's 60 million, 63 million members contribute to your typical hotel.

[Patrick Pacious, executive]

I think Patrick, the way to think about it is each segment is a little bit different. So as you move up the chain scales, the loyalty contribution generally becomes sort of a higher contributor to contribution and to occupancy. I mean, when we look across our system size, and we've talked about this before, effectively [ 4 ] out of every $10 that's coming into a hotel is coming from the loyalty program. That number has been increasing as we've added more feature functionality to the loyalty program. I think what's interesting, too, is you look at the co-brand credit card opportunity, it's really an opportunity to keep your brand relevant and in front of consumers, even when they're not traveling. And so the rewards program not only can deliver heads and beds and bring higher-rated customers and a lower customer acquisition cost but it also provides an overall brand halo for the business. So the strength of that rewards program not only delivers direct business to the hotels, but also supports the overall brand equity in the entire system.

[Operator]

Next question will be from Joe Greff at JPMorgan.

[Joseph Greff, analyst]

One thing that was noticeable to us in the third quarter was a nice reduction in adjusted SG&A, both year-over-year and sequentially. Can you talk about what's embedded in the fourth quarter? And then with respect to your $580 million, $590 million of [ '24 ] EBITDA guidance, what's contemplated as an adjusted SG&A number there? And then I have a follow-up.

[Charles Scholes, analyst]

Yes. So as we're currently working through our 2024 budget, but we feel very confident on the 10% EBITDA. In terms of during the quarter, our SG&A did decline, adjusted about $3.3 million. And really, it was mildly around a couple of things. One, just the timing of some incentive compensation that was recognized in Q3 of the prior year as well as some of is we started to step down and realize the synergies on the Radisson. So if you think about Radisson, it's about $19 million of total SG&A for the year, and we expect to eliminate about $13 million of that for for a $6 million run rate. So when you look at Q4, I would think about that to be kind of similar reduction against Q4 of last year when you're modeling that out. And then going forward, you would expect us to be able to kind of maintain SG&A growth rate in that low single digit year-over-year.

[Joseph Greff, analyst]

Perfect. And then going back to the fund with Wyndham. I believe you mentioned or maybe it came from them in conversations -- previous conversations I have with you, that you were talking about pro forma free cash flow, about $1 billion a year. Can you maybe refine that a little bit and talk about the pieces that get you there if I'm correct in that $1 billion pro forma free cash flow that I'm presuming includes a fully synergized EBITDA level in there? And that's all for me.

[Charles Scholes, analyst]

Yes. So that $1 billion is really representative of what we had available to service debt. So that was before interest expense. So if you think about kind of a synergized EBITDA multiple, EBITDA of around $1.4 billion of the 2 companies and you take out taxes, CapEx and the dividend, that gets you right around that $1 billion availability cash flow to service debt and then you would have, obviously, interest expense and then the remaining ability to delever. So that's where that $1 billion came from.

[Joseph Greff, analyst]

Got it. And so if we have interest expense stand-alone for 2 companies and then pro forma for the deal, that stands to about $500 million of pro forma free cash flow?

[Scott Oaksmith, executive]

I would say it's a little bit north of that based on what we're modeling, probably closer to the $700 million.

[Patrick Pacious, executive]

We're thinking we're going to have interest coverage of well over 3x if you think about the pro forma business.

[Operator]

Next question will be from Dan Wasiolek at Morningstar.

[Dan Wasiolek, analyst]

Two, if I may. So going back just to RevPAR guidance. I know slight revision downward. Anything in the environment that you would call out that's maybe changed over the last few months? And then I guess the second question, in your conversations with third-party owners looking to convert or sign into your umbrella. Is there any conversations of those owners looking to pause until there's some resolution with the Wyndham deal?

[Scott Oaksmith, executive]

In terms of the RevPAR guidance, really, this is a factor of tougher comps as we go through the year. When you look at -- as we mentioned on the prepared remarks, our Q3 RevPAR for Choice legacy is still up 13.7%. And over 2019, many of our competitors are under 10% against 2019. So really just that we recovered faster. So we haven't seen anything change in the business in terms of occupancy level and ADR levels. And then when you look at Q4, we had a really, really strong Q4 last year. We were about 6% higher than the prior year and then 20% higher than 2019. So really, just the deceleration of RevPAR is something that we had talked about at the beginning of the year that we expected during the year given just the tough comps. And while we're still working on our 2024 budgets, we do expect growth in RevPAR in 2024.

[Patrick Pacious, executive]

And then Dan, on the signings for new franchise agreements, I mean, Domini we're just out in Phoenix, Sunday and Monday with about 200 of our franchisees, several of our other executives were there as well. And obviously, the topic they wanted to talk about was their enthusiasm around the Wyndham combination but right on the back end of that, they want to talk about either improving their hotel or signing their next agreement with us. So we're seeing a lot of enthusiasm. A lot of this is based off of where we've gone with our brands and the value prop we've created and the return on investment that they're seeing from our existing brand portfolio. So we're not seeing anything where owners are telling us they want to pause. We're actually seeing owners who continue to be enthusiastic. And as we said in our remarks, A lot of this is a conversion game right now. And this is where Choice Hotels over the past has always sort of exceeded expectations from that standpoint just given our brand portfolio and the support we provide to franchisees who are looking to convert into our flags.

[Operator]

Next question will be from Alex Brignall at Redburn Atlantic.

[Alex Brignall, analyst]

It's really just on the Radisson deal, you're obviously ahead of schedule, and I should think that, that comes a lot into the EBITDA upgrade. Does that increase the ultimate achievable synergies that you anticipate? Or have you just been faster at extracting the synergies that you had in mind in the first instance.

[Scott Oaksmith, executive]

It's actually a combination of both. So we're about 5% ahead of the realized synergies that we initially had underwritten in the deal, and we've achieved them faster than we thought. And we're not done at this point in time. We still think there's additional opportunity to find more synergies over the next quarter or 6 months. So we've been very pleased with the ability to extract synergies, and it's really a muscle we've built as a company the WoodSpring acquisition and now Radisson. And as Pat mentioned before, it's kind of proving out in real time that that as a management team, we do know how to acquire companies to integrate them quickly and produce the benefits that we've talked about. So a combination of both there.

[Patrick Pacious, executive]

Yes. Alex, the other thing that normally I think [indiscernible] companies up in integration is the technology stack, and we took and native built our res system in the Amazon Cloud, and we did that about 4 or 5 years ago. That's provided the scalability and the extensibility that you need when you're combining with more hotel rooms, more brands and more travel partners. And so because we've made the investments in those proprietary technologies, it allowed us to do the integration of the digital platforms and the loyalty programs in 11 months which is pretty remarkable. And as I said in our remarks, that's something that we see as our ability to realize the synergies quickly in a Wyndham transaction and bring those benefits to the franchisees in a really, really short time frame.

[Alex Brignall, analyst]

Fantastic. And then just as a follow-up, on the RevPAR environment, I guess it's very easy to say that you might have known the comps kind of as we went into the quarter. And so the kind of slowdown or the reduction in the guidance is kind of just squaring off. As you look into Q4, what's your expectation of where RevPAR growth will come in for the domestic business? And then I guess if we're kind of exiting it flat or down. What are the things that will then change to make RevPAR turn positive for 2024?

[Scott Oaksmith, executive]

Yes. So in terms of Q4, we expect RevPar to be slightly negative through year-to-date, we're at about 1.4%. So to get down to the approximately 1 that does imply a slightly negative environment. But when you look at that -- if you look at kind of -- it really is still accelerating against 2019, as I mentioned earlier, 20% RevPAR increase last year over 2019. So even if we are slightly negative, we'll be ahead of the pacing of 2019 that we were in third quarter, which was close to 14% on our legacy brands. In terms of next year, we're still early in our budgeting process, but I still believe there is an ability to continue to push rate. When you look at the long-term tailwinds. I think first quarter may be a little tougher, again, back to comps given that we were a little bit stronger in the beginning of the year. But most of the prognosticators believe that leisure travel and business travel will continue to accelerate second quarter and beyond.

And really, it's a function of the economy as we kind of ride through this I think we feel like the prognosticators said we feel like we've avoided a recession and then we see the long-term tailwinds of increasing retirements of the baby boomers and 3.5 million additional retirees every year, which are a big driver of leisure travel, remote work and leisure travel continues to be strong, 30% of all business trips are now expected to have a leisure component to it. And then as I mentioned earlier, the reinsuring of American jobs and the infrastructure bill are really good tailwinds for drive in our consumers and our brands.

[Patrick Pacious, executive]

Yes. And I think that's the demand picture. And I think when you look at the supply picture, the supply growth for next, I think it's expected to be around 1%. So when you have a much more slower supply growth with that demand increase going up, it paints a nice picture for a healthier RevPAR environment moving forward.

[Operator]

Next question will be from Brandt Montour at Barclays.

[Brandt Montour, analyst]

Just everything you guys have given so far has been helpful. And most of my questions have been asked and answered. So just 1 for me and back on Wyndham from a longer-term strategy perspective, you guys have been focused on RevPAR intensive segments and sort of less on the economy segment. Whereas Wyndham is most prominently economy branded in terms of the center of their gravity and launching new brands in economy. So I guess would a combination be a change in your -- would that maybe constitute a change in your long-term strategy from a mix perspective? How do you think about sort of bridging those 2 sort of worlds there?

[Patrick Pacious, executive]

No, quite the opposite. We see enough lately strategy. I mean when you look at the natural fit and the complementary nature of the 2 companies, as we said, we respect the business that they do, we respect the brands that they have in the economy segment. And we think with a much larger footprint and the financial capacity there's opportunity here to grow the brand equity and to grow the royalty contribution coming from each hotel, similar to what we've been doing, not just in the revenue intense segments, but we've also been doing that in our economy segment. I think it's very important that investors understand that, that a revenue-intense strategy is coupled with a brand improvement strategy that's occurring in our economy brands as well. And we think there's an ability here with 2 companies together to unlock that kind of value in their brands and ours as well.

[Scott Oaksmith, executive]

If you think about just the combination and reservation fund that I know we've talked to a lot of investors and a lot of analysts about. I mean you're effectively taking what is a $600 million marketing and reservation fund on both sides of the equation, combining that probably some synergy there as well. So you're effectively sitting in a position where you deploy well [ $1.2 billion ] of marketing and reservation capability to drive traffic into these hotels. So in addition to what Pat's saying, where what we're seeing at choice is every economy product that's coming into the portfolio today is driving 20% more revenue versus what's leaving the portfolio, you're going to be able to actually drive even further performance in those brands as well as our 2 [indiscernible] segments in upscale and an extended stay. So that's a huge complement to the transaction as well.

[Brandt Montour, analyst]

That's really helpful. Actually, 1 more for me, if you don't mind. The CapEx in the quarter looks like it stepped up a little bit quarter-over-quarter and sort of, I guess, it looked like a little bit higher than the last several quarters. Anything in there that you want to highlight 1 time or otherwise?

[Scott Oaksmith, executive]

We do have some onetime costs around. We're actually about ready to relocate our corporate offices down the street here. So effective December 1, we're moving. So we've had some elevated CapEx related to the leasehold improvements on the new space.

[Operator]

And at this time, we have no further questions. Please proceed.

[Patrick Pacious, executive]

Well, thank you, operator, and thank you, everyone, again, for your time this morning. We'll talk to you again in February when we announce our fourth quarter and full year 2023 results. Have a great day.

[Operator]

Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.