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Choice Hotels CEO Steve Joyce on the company’s expansion and the potential dividend tax hikes.
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Percent -- What we hear from businesses all the time -- say they aren't expanding in the US because of uncertainty and slowing economy but we did find a CEO whose company is expanding right here in the US also brought.
And joining us now is that CEO he's president of Choice Hotels International Steve Joyce was here breaking ground on three brand new high here and hotels so.
We have to believe that there is a customer out there ready to open up the wallet and pay for these higher expense rooms.
Absolutely in spite of all the conversation business for us is really good as so we we broke ground on 33 new -- suites hotels.
In a 24 hour period which I think is a first.
We are expanded rapidly were put -- some of our own money into the deals we've got great partners.
The first one White Plains will be open next may we've got wanna Chelsea one in Times Square really great -- great people great operations that'd be a great thing for our company.
Cambridge suites -- first movement in the upscale space.
And we're very excited about we did -- Camry is upscale but you also have some of -- that cheaper sites like comforting ends in a Connell lodges and every does it could.
Does it hurt to have two different brands that are that appeal to different time is it difficult to find one brand for your company and make it stick.
Well what happens is you've got a lot of folks that are focused on value and that is our war -- -- were were mostly moderate term below.
And we give away free parking free Wi-Fi free breakfast for most of our brands.
And that is our core client but depending on where customers -- are we a lot of demand for our folks that we wanna go to New York City for example.
We don't have a lot of product New York City it's hard to develop a lower and brand New York City -- moderate your hotels hard to make those numbers work.
Cambridge suites -- -- upscale and the rate will be a little higher.
Will be still of value alternative for our costs what's your average rate on -- -- let's say that king room not a suite at a basic room.
-- so basic room in in in New York in the in Manhattan for us.
You know it's gonna -- somewhere in the low two hundreds.
But remember that's very recent yeah that's that's of value compared -- the five -- 600 dollars -- -- -- in a lot of the -- upper upscale -- financing all this development because credit is tough to get these credits up but the good thing is -- getting better and it's gotten better urban markets started last year and this year it's really improve has that changed your your plans has major more aggressive -- -- -- -- -- should think -- a great time to build because we think the hotel business and continue expand for the next several years.
New York's obviously one of the hottest markets in the country.
It's a great place for us to launch a brand because it's everybody's here all the travel managers -- here when they see those hotels were hoping they're gonna book -- our other hotels.
And so we believe the time is right to build.
-- -- -- little to the top which is why we stepped in with our balance -- to fill in some of that capital stack.
That's working well the deals that we've been working -- last three or four years.
Last year they started happen this year -- common in a hurry were really gaining momentum.
And it's exciting were put -- were put in a thousand jobs into the city.
You know 641 rooms were investing 141 million dollars and it and it and then and the numbers on the returns the partners -- terrific.
It all looks great but one of the things that you did was joined the push up to the fast track dividend party -- all of the many companies more than 200 who have pushed up their dividend to before the end of the year.
You've announced your quarterly dividend instead of being payable in January will be payable December 27 -- just weeks squeaking and other Goliath.
Clearly you worry about tax implications after the first of the year if you have the president's -- what.
As a CEO -- -- eating jobs would you say to him because these -- the exact types of leaders we need like you what what we're seeing at this point.
Is were hoping that some some rational conversation comes of that -- particular around dividends.
Because we are big believer return to shareholders.
We we.
We believe that you know if it moves a little bit -- in effect could you stomach up to 20% 25 -- -- -- -- little -- we're -- and we we accelerate -- -- special -- this summer.
We pattern over 600 million dollars for share world's.
Because we think taxes are never going to be lower -- that high yield markets have never been positioning -- it.
That and choices that generates a lot of cash so we'll be back to investment grade within eighteen months.
But yet what what we -- what we would say the president them and and we're pretty active on the -- as well is look give us something we can work with.
Don't radically change that dividend picture because folks depend on those dividends that's an important part of the stock -- that this -- Lot more important -- market depreciation we're getting in previous years so we we believe strongly returning capital share -- but if they push.
That to the to the marginal rate.
You know that doesn't that's not an efficient way -- -- could go capital 300%.
300%.
-- threefold increase in in the dividend tax so.
That's that's a little high for you yet so we're gonna examined but what we did which is what a lot of other companies are doing and and we we believe it's a prudent strategy as we paid our our dividend.
In December we have -- soon because under the rules we had to get it done.
And that buys us time to watch and see what they do when Washington.
And the war -- -- based on what to do will decide what our dividend strategy will be going for thank you for creating jobs they'll.
I would say yesterday's Citigroup what 111000 go you're adding 1000 well there's a lot of positive things going on in is good in the hotel but I Steve Joyce Choice Hotels thank you so much thank you see -- -- -- covenant.
