Choice Hotels International, Inc.,
-- Adjusted diluted earnings per share ("EPS") for second quarter 2010
were $0.45 compared to $0.44 for the same period of the prior year.
Diluted EPS were $0.45 for second quarter 2010 compared to $0.42 for
second quarter 2009. Adjusted diluted EPS for second quarter 2009
exclude certain special items, as described below, totaling $0.02.
-- Excluding special items, adjusted earnings before interest, taxes,
depreciation and amortization ("EBITDA") were $45.7 million for the
three months ended June 30, 2010, compared to $42.0 million for the
same period of 2009. Operating income for the three months ended June
30, 2010 and 2009 was $43.6 million and $38.1 million, respectively.
-- Franchising revenues increased 2% from $66.9 million for the three
months ended June 30, 2009 to $68.4 million for the same period of
2010. Total revenues for the three months ended June 30, 2010
increased 5% compared to the same period of 2009.
-- Adjusted selling, general and administrative ("SG&A") costs for the
second quarter 2010 totaled $22.9 million which represented a 9%
decline from the same period of the prior year. Adjusted SG&A costs
exclude special items totaling ($0.1) million and $1.9 million for the
three months ended June 30, 2010 and 2009, respectively.
-- Interest and other investment income (loss) for the three months ended
June 30, 2010 declined by approximately $4.3 million from the same
period of the prior year primarily due to the decline in the fair
value of investments held in the company's non-qualified employee
benefit plans during the current period compared to an appreciation in
the fair value of these investments in the same period of the prior
year.
-- Domestic unit and room growth increased 2.6 percent and 2.2 percent,
respectively, from June 30, 2009.
-- Domestic system-wide revenue per available room ("RevPAR") increased
0.3% for the second quarter of 2010 compared to the same period of
2009 as occupancy rate increases of 130 basis points were partially
offset by a 2.2% decline in average daily rates.
-- The effective royalty rate increased 6 basis points to 4.32% for the
three months ended June 30, 2010 compared to 4.26% for the same period
of the prior year.
-- The company executed 62 new domestic hotel franchise contracts for the
three months ended June 30, 2010, a decline of 47% compared to the 118
contracts executed in the same period of the prior year.
-- The number of domestic hotels under construction, awaiting conversion
or approved for development declined 29% from June 30, 2009 to 586
hotels representing 47,056 rooms; the worldwide pipeline declined 27%
from June 30, 2009 to 683 hotels representing 55,782 rooms.
"We're pleased to report positive domestic RevPAR for the first time since the second quarter of 2008, due in large part to gains in occupancy and a gradually improving average daily rate environment from this year's first quarter," said Stephen P. Joyce, president and chief executive officer. "We expect RevPAR to continue to show improvement for the remainder of the year, however we believe the hotel transaction environment will remain difficult and thus continue to adversely impact our franchise sales results. We are squarely focused on enhancing our ability to deliver reservations to our franchisees' hotels and strengthening our range of centralized support services designed to enhance our franchisees' profitability."
Special Items
During the three and six months ended June 30, 2010, the company recorded employee termination benefits charges (reversals) of approximately ($0.1) million and $0.2 million, respectively. These amounts did not have an effect on the reported diluted EPS for the periods reported.
During the three and six months ended June 30, 2009, the company recorded employee termination benefits of approximately $0.4 million and $0.8 million, respectively. During the three and six months ended June 30, 2009, the company also recorded a $1.5 million charge related to the sublease of a portion of its office space. These special items represent diluted EPS of $0.02 for both the three and six months ended June 30, 2009.
Outlook for 2010
The company's third quarter 2010 diluted EPS is expected to be $0.57. The company expects full-year 2010 diluted EPS to be between $1.70 and $1.72. Adjusted EBITDA for full-year 2010 are expected to be between $167.5 million and $170 million. These estimates include the following assumptions:
-- The company expects net domestic unit growth ranging from 1% to 2% in
2010;
-- RevPAR is expected to increase approximately 6% for third quarter of
2010 and range from flat to an increase of 2% for full-year 2010;
-- The effective royalty rate is expected to increase 6 basis points for
full-year 2010;
-- All figures assume the existing share count and an effective tax rate
of 35.8% for the third quarter and full-year 2010;
-- Projections assume that the company's existing credit facility remains
in place for full-year 2010.
Use of Free Cash Flow
The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.
For the six months ended June 30, 2010 the company paid $21.9 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.
During the six months ended June 30, 2010, the company purchased approximately 0.2 million shares of its common stock at an average price of $31.75 for a total cost of $6.9 million under the share repurchase program and has authorization to purchase up to an additional 3.6 million shares under this program. No shares were repurchased under the repurchase program during the three months ended June 30, 2010. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 43.1 million shares of its common stock for a total cost of $1 billion through June 30, 2010. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.1 million shares through June 30, 2010 under the share repurchase program at an average price of $13.33 per share.
Our Board previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets. Recent market conditions have resulted in an increase in opportunities to incent development under these programs. As a result, during the six months ended June 30, 2010, the Company has advanced approximately $10.2 million pursuant to these programs (of which $5 million has been repaid to the Company subsequent to June 30, 2010). In addition, during the three-months ended June 30, 2010 a $1.0 million loan guarantee issued in 2007 related to the development of a Cambria franchise expired. Subsequent to June 30, 2010 and through July 27, 2010, the Company advanced an additional $7.6 million under these programs.
Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. The amount and timing of the investment in these programs will be dependent on market and other conditions. Our current expectation is that our annual investment in these programs will range from $20 million to $40 million. Notwithstanding these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.
Conference Call
Choice will conduct a conference call on Wednesday, July 28, 2010 at 10:00 a.m. EDT to discuss the company's second quarter 2010 results. The dial-in number to listen to the call is 1-866-730-5770, and the access code is 71416248. International callers should dial 1-857-350-1594 and enter the access code 71416248. The conference call also will be Webcast simultaneously via the company's Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. EDT on July 28, 2010 through August 27, 2010 by calling 1-888-286-8010 and entering access code 10540629. The international dial-in number for the replay is 617-801-6888, access code 10540629. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.
About Choice Hotels
Choice Hotels International, Inc. franchises more than 6,000 hotels, representing more than 490,000 rooms, in the United States and more than 35 other countries and territories. As of June 30, 2010, more than 580 hotels are under construction, awaiting conversion or approved for development in the United States, representing more than 47,000 rooms, and approximately 100 hotels, representing approximately 8,700 rooms, are under construction, awaiting conversion or approved for development in 20 other countries and territories. The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels.
Additional corporate information may be found on the Choice Hotels International, Inc. Web site, which may be accessed at www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.
Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 1, 2010. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Statement Concerning Non-GAAP Financial Measurements
Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States ("GAAP"), such as diluted earnings per share, operating income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.
Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the company's financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.
Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the three and six months June 30, 2010 and 2009 as well as a loss on the sublease of a portion of the Company's office space during the three and six months ended June 30, 2009. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.
Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.
(C) 2010 Choice Hotels International, Inc. All rights reserved.
Choice Hotels International, Inc.
Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended June 30,
---------------------------
Variance
2010 2009 $ %
---- ---- --- ---
(In thousands,
except per
share amounts)
REVENUES:
Royalty fees $57,443 $54,929 $2,514 5%
Initial
franchise and
relicensing
fees 2,655 3,993 (1,338) (34%)
Procurement
services 6,611 6,772 (161) (2%)
Marketing and
reservation 80,389 75,296 5,093 7%
Hotel operations 1,109 1,179 (70) (6%)
Other 1,641 1,174 467 40%
----- ----- --- ---
Total revenues 149,848 143,343 6,505 5%
OPERATING
EXPENSES:
Selling, general
and
administrative 22,824 27,076 (4,252) (16%)
Depreciation and
amortization 2,220 2,032 188 9%
Marketing and
reservation 80,389 75,296 5,093 7%
Hotel operations 808 829 (21) (3%)
--- ----
Total operating
expenses 106,241 105,233 1,008 1%
Operating income 43,607 38,110 5,497 14%
OTHER INCOME AND
EXPENSES, NET:
Interest expense 675 1,265 (590) (47%)
Interest and
other
investment
(income) loss 1,103 (3,173) 4,276 (135%)
Equity in net
income of
affiliates (195) (225) 30 (13%)
Total other
income and
expenses, net 1,583 (2,133) 3,716 (174%)
----- ------ ----- ------
Income before
income taxes 42,024 40,243 1,781 4%
Income taxes 15,013 14,740 273 2%
------ ------ --- ---
Net income $27,011 $25,503 $1,508 6%
======= ======= ====== ===
Weighted average
shares
outstanding-
basic 59,592 60,467
====== ======
Weighted average
shares
outstanding-
diluted 59,676 60,598
====== ======
Basic earnings
per share $0.45 $0.42 $0.03 7%
===== ===== ===== ===
Diluted earnings
per share $0.45 $0.42 $0.03 7%
===== ===== ===== ===
Six Months Ended June 30,
-------------------------
Variance
2010 2009 $ %
---- ---- --- ---
(In thousands,
except per share
amounts)
REVENUES:
Royalty fees $98,464 $98,370 $94 0%
Initial franchise
and relicensing
fees 4,567 6,642 (2,075) (31%)
Procurement
services 9,856 10,162 (306) (3%)
Marketing and
reservation 139,229 137,338 1,891 1%
Hotel operations 1,976 2,297 (321) (14%)
Other 3,177 2,692 485 18%
----- ----- --- ---
Total revenues 257,269 257,501 (232) (0%)
OPERATING
EXPENSES:
Selling, general
and
administrative 44,640 48,537 (3,897) (8%)
Depreciation and
amortization 4,392 4,147 245 6%
Marketing and
reservation 139,229 137,338 1,891 1%
Hotel operations 1,564 1,614 (50) (3%)
----- ----- --- ----
Total operating
expenses 189,825 191,636 (1,811) (1%)
Operating income 67,444 65,865 1,579 2%
OTHER INCOME AND
EXPENSES, NET:
Interest expense 1,296 2,805 (1,509) (54%)
Interest and
other investment
(income) loss 26 (2,341) 2,367 (101%)
Equity in net
income of
affiliates (548) (443) (105) 24%
Total other
income and
expenses, net 774 21 753 3586%
--- --- --- ----
Income before
income taxes 66,670 65,844 826 1%
Income taxes 23,866 24,033 (167) (1%)
------ ------ ----
Net income $42,804 $41,811 $993 2%
======= ======= ==== ===
Weighted average
shares
outstanding-
basic 59,553 60,499
====== ======
Weighted average
shares
outstanding-
diluted 59,639 60,708
====== ======
Basic earnings
per share $0.72 $0.69 $0.03 4%
===== ===== ===== ===
Diluted earnings
per share $0.72 $0.69 $0.03 4%
===== ===== ===== ===
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share December
amounts) June 30, 31,
2010 2009
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $70,926 $67,870
Accounts receivable, net 50,342 41,898
Deferred income taxes 7,980 7,980
Other current assets 20,982 10,114
------ ------
Total current assets 150,230 127,862
Fixed assets and intangibles, net 136,763 133,999
Receivable --marketing and
reservation fees 58,508 33,872
Investments, employee benefit plans,
at fair value 20,868 20,931
Other assets 23,839 23,373
------ ------
Total assets $390,208 $340,037
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and accrued expenses $73,177 $70,933
Deferred revenue 57,226 51,765
Revolving credit facility 291,100 -
Deferred compensation & retirement
plan obligations 2,461 2,798
Other current liabilities 17,648 6,310
------ -----
Total current liabilities 441,612 131,806
Long-term debt - 277,700
Deferred compensation & retirement
plan obligations 33,348 34,956
Other liabilities 12,283 9,787
------ -----
Total liabilities 487,243 454,249
-------
Common stock, $0.01 par value 596 595
Additional paid-in-capital 89,130 90,731
Accumulated other comprehensive income
(loss) (850) 333
Treasury stock, at cost (871,211) (870,302)
Retained earnings 685,300 664,431
------- -------
Total shareholders' deficit (97,035) (114,212)
--------
Total liabilities and
shareholders' deficit $390,208 $340,037
-------- --------
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
(In thousands) June 30,
----------------
2010 2009
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $42,804 $41,811
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization 4,392 4,147
Provision for bad debts 1,637 743
Non-cash stock compensation and other
charges 5,297 6,601
Non-cash interest and other (income) loss 307 (2,107)
Dividends received from equity method
investments 148 488
Equity in net income of affiliates (548) (443)
Changes in assets and liabilities, net of
acquisitions:
Receivables (10,061) (1,774)
Receivable -marketing and reservation
fees, net (17,996) (19,513)
Accounts payable 9,043 1,523
Accrued expenses (6,601) (7,167)
Income taxes payable/receivable 11,492 20,093
Deferred income taxes (55) -
Deferred revenue 5,475 6,083
Other assets (4,307) 1,574
Other liabilities 577 (3,685)
--- ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 41,604 48,374
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (12,249) (4,989)
Acquisitions, net of cash acquired (466) -
Purchases of investments, employee benefit
plans (1,204) (2,464)
Proceeds from sales of investments,
employee benefit plans 836 1,171
Issuance of notes receivable (8,008) (1,329)
Collections of notes receivable 37 125
Other items, net (361) (246)
---- ----
NET CASH USED IN INVESTING ACTIVITIES (21,415) (7,732)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving
credit facility 13,400 19,700
Excess tax benefits from stock-based
compensation 12 2,033
Purchase of treasury stock (9,242) (36,350)
Dividends paid (21,924) (22,321)
Proceeds from exercise of stock options 1,315 4,603
----- -----
NET CASH USED IN FINANCING ACTIVITIES (16,439) (32,335)
------- -------
Net change in cash and cash equivalents 3,750 8,307
Effect of foreign exchange rate changes on
cash and cash equivalents (694) 823
Cash and cash equivalents at beginning of
period 67,870 52,680
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $70,926 $61,810
======= =======
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Six Months Ended June 30,
2010*
---------------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $73.44 49.5% $36.33
Comfort Suites 81.05 50.5% 40.92
Sleep 66.93 47.3% 31.68
Midscale without Food &
Beverage 74.48 49.4% 36.79
----- ---- -----
Quality 64.10 42.6% 27.31
Clarion 72.34 39.1% 28.27
Midscale with Food & Beverage 65.80 41.8% 27.52
----- ---- -----
Econo Lodge 51.21 40.7% 20.87
Rodeway 47.06 40.7% 19.14
----- ---- -----
Economy 49.95 40.7% 20.34
----- ---- -----
MainStay 64.20 59.3% 38.06
Suburban 38.47 62.4% 24.01
Extended Stay 45.47 61.5% 27.98
----- ---- -----
Total $67.31 46.0% $30.98
====== ==== ======
For the Six Months Ended June
30, 2009*
-----------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $75.01 50.5% $37.90
Comfort Suites 85.14 51.2% 43.56
Sleep 68.94 49.6% 34.20
Midscale without Food &
Beverage 76.57 50.5% 38.70
----- ---- -----
Quality 66.15 43.3% 28.64
Clarion 75.98 40.5% 30.76
Midscale with Food & Beverage 68.10 42.7% 29.08
----- ---- -----
Econo Lodge 52.68 40.3% 21.24
Rodeway 50.41 40.0% 20.16
----- ---- -----
Economy 52.03 40.2% 20.93
----- ---- -----
MainStay 70.90 55.3% 39.19
Suburban 42.76 53.9% 23.05
Extended Stay 50.68 54.3% 27.51
----- ---- -----
Total $69.57 46.5% $32.37
====== ==== ======
Change
------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn (2.1%) (100) bps (4.1%)
Comfort Suites (4.8%) (70) bps (6.1%)
Sleep (2.9%) (230) bps (7.4%)
Midscale without Food &
Beverage (2.7%) (110) bps (4.9%)
------ ---- --- ------
Quality (3.1%) (70) bps (4.6%)
Clarion (4.8%) (140) bps (8.1%)
Midscale with Food & Beverage (3.4%) (90) bps (5.4%)
------ --- --- ------
Econo Lodge (2.8%) 40 bps (1.7%)
Rodeway (6.6%) 70 bps (5.1%)
------ --- --- ------
Economy (4.0%) 50 bps (2.8%)
------ --- --- ------
MainStay (9.4%) 400 bps (2.9%)
Suburban (10.0%) 850 bps 4.2%
Extended Stay (10.3%) 720 bps 1.7%
------- --- --- ---
Total (3.2%) (50) bps (4.3%)
====== === === ======
* Operating statistics represent hotel operations from December
through May
For the Three Months Ended
June 30, 2010*
--------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $75.22 55.9% $42.04
Comfort Suites 82.40 56.9% 46.88
Sleep 68.54 53.3% 36.51
Midscale without Food &
Beverage 76.13 55.8% 42.44
----- ---- -----
Quality 65.93 48.0% 31.62
Clarion 74.37 44.2% 32.85
Midscale with Food & Beverage 67.70 47.1% 31.89
----- ---- -----
Econo Lodge 52.44 45.7% 23.95
Rodeway 48.32 44.8% 21.63
----- ---- -----
Economy 51.20 45.4% 23.24
----- ---- -----
MainStay 65.04 66.3% 43.09
Suburban 39.51 65.8% 25.98
Extended Stay 46.65 65.9% 30.74
----- ---- -----
Total $69.01 51.7% $35.69
====== ==== ======
For the Three Months Ended
June 30, 2009*
--------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $75.86 55.0% $41.72
Comfort Suites 85.67 55.0% 47.12
Sleep 70.10 54.1% 37.94
Midscale without Food &
Beverage 77.38 54.9% 42.46
----- ---- -----
Quality 67.27 47.3% 31.83
Clarion 77.52 43.8% 33.96
Midscale with Food & Beverage 69.29 46.6% 32.28
----- ---- -----
Econo Lodge 53.54 43.5% 23.30
Rodeway 51.07 42.8% 21.87
----- ---- -----
Economy 52.83 43.3% 22.89
----- ---- -----
MainStay 70.76 59.7% 42.25
Suburban 42.89 55.7% 23.90
Extended Stay 51.05 56.8% 29.02
----- ---- -----
Total $70.53 50.4% $35.58
====== ==== ======
Change
------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn (0.8%) 90 bps 0.8%
Comfort Suites (3.8%) 190 bps (0.5%)
Sleep (2.2%) (80) bps (3.8%)
Midscale without Food &
Beverage (1.6%) 90 bps (0.0%)
------ --- --- ------
Quality (2.0%) 70 bps (0.7%)
Clarion (4.1%) 40 bps (3.3%)
Midscale with Food & Beverage (2.3%) 50 bps (1.2%)
------ --- --- ------
Econo Lodge (2.1%) 220 bps 2.8%
Rodeway (5.4%) 200 bps (1.1%)
------ --- --- ------
Economy (3.1%) 210 bps 1.5%
------ --- --- ---
MainStay (8.1%) 660 bps 2.0%
Suburban (7.9%) 1,010 bps 8.7%
Extended Stay (8.6%) 910 bps 5.9%
------ --- --- ---
Total (2.2%) 130 bps 0.3%
====== === === ===
* Operating statistics represent hotel operations from March through May
For the Quarter For the Six Months
Ended Ended
6/30/2010 6/30/2009 6/30/2010 6/30/2009
System-wide
effective
royalty rate 4.32% 4.26% 4.33% 4.26%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
June 30, 2010 June 30, 2009
------------- -------------
Hotels Rooms Hotels Rooms
------ ----- ------ -----
Comfort Inn 1,446 113,677 1,461 114,531
Comfort Suites 621 48,200 576 45,056
Sleep 392 28,586 376 27,576
Midscale without Food &
Beverage 2,459 190,463 2,413 187,163
----- ------- ----- -------
Quality 984 88,453 941 86,675
Clarion 175 25,188 163 23,444
Midscale with Food &
Beverage 1,159 113,641 1,104 110,119
----- ------- ----- -------
Econo Lodge 785 48,543 796 49,596
Rodeway 381 21,473 362 20,840
--- ------ --- ------
Economy 1,166 70,016 1,158 70,436
----- ------ ----- ------
MainStay 36 2,798 37 2,866
Suburban 63 7,608 64 7,657
Extended Stay 99 10,406 101 10,523
--- ------ --- ------
Ascend Collection 32 2,646 22 1,444
Cambria Suites 21 2,453 14 1,540
--- ----- --- -----
Domestic Franchises 4,936 389,625 4,812 381,225
International Franchises 1,138 100,858 1,102 98,603
----- ------- ----- ------
Total Franchises 6,074 490,483 5,914 479,828
===== ======= ===== =======
Variance
--------
Hotels Rooms % %
------ ----- --- ---
Comfort Inn (15) (854) (1.0%) (0.7%)
Comfort Suites 45 3,144 7.8% 7.0%
Sleep 16 1,010 4.3% 3.7%
Midscale without Food & Beverage 46 3,300 1.9% 1.8%
--- ----- --- ---
Quality 43 1,778 4.6% 2.1%
Clarion 12 1,744 7.4% 7.4%
Midscale with Food & Beverage 55 3,522 5.0% 3.2%
--- ----- --- ---
Econo Lodge (11) (1,053) (1.4%) (2.1%)
Rodeway 19 633 5.2% 3.0%
--- --- ---
Economy 8 (420) 0.7% (0.6%)
--- ---- --- ------
MainStay (1) (68) (2.7%) (2.4%)
Suburban (1) (49) (1.6%) (0.6%)
Extended Stay (2) (117) (2.0%) (1.1%)
--- ---- ------ ------
Ascend Collection 10 1,202 45.5% 83.2%
Cambria Suites 7 913 50.0% 59.3%
--- --- ---- ----
Domestic Franchises 124 8,400 2.6% 2.2%
International Franchises 36 2,255 3.3% 2.3%
--- ----- --- ---
Total Franchises 160 10,655 2.7% 2.2%
=== ====== === ===
Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Six Months Ended
June 30, 2010
------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 3 13 16
Comfort Suites 8 1 9
Sleep 2 - 2
Midscale without Food &
Beverage 13 14 27
--- --- ---
Quality 1 31 32
Clarion - 6 6
Midscale with Food & Beverage 1 37 38
--- --- ---
Econo Lodge - 22 22
Rodeway 1 19 20
Economy 1 41 42
--- --- ---
MainStay 3 - 3
Suburban 1 - 1
Extended Stay 4 - 4
--- --- ---
Ascend Collection - 3 3
Cambria Suites 3 - 3
--- --- ---
Total Domestic System 22 95 117
=== === ===
For the Six Months Ended
June 30, 2009
------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 2 15 17
Comfort Suites 5 1 6
Sleep 7 2 9
Midscale without Food &
Beverage 14 18 32
--- --- ---
Quality 2 64 66
Clarion - 14 14
Midscale with Food & Beverage 2 78 80
--- --- ---
Econo Lodge - 29 29
Rodeway 1 28 29
Economy 1 57 58
--- --- ---
MainStay 1 1 2
Suburban 2 - 2
Extended Stay 3 1 4
--- --- ---
Ascend Collection - 2 2
Cambria Suites 2 - 2
--- --- ---
Total Domestic System 22 156 178
=== === ===
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 50% (13%) (6%)
Comfort Suites 60% 0% 50%
Sleep (71%) (100%) (78%)
Midscale without Food &
Beverage (7%) (22%) (16%)
---- ----- -----
Quality (50%) (52%) (52%)
Clarion NM (57%) (57%)
Midscale with Food & Beverage (50%) (53%) (53%)
----- ----- -----
Econo Lodge NM (24%) (24%)
Rodeway 0% (32%) (31%)
Economy 0% (28%) (28%)
--- ----- -----
MainStay 200% (100%) 50%
Suburban (50%) NM (50%)
Extended Stay 33% (100%) 0%
--- ------ ---
Ascend Collection NM 50% 50%
Cambria Suites 50% NM 50%
--- --- ---
Total Domestic System 0% (39%) (34%)
=== ===== =====
For the Three Months Ended
June 30, 2010
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 2 5 7
Comfort Suites 6 1 7
Sleep - - -
Midscale without Food &
Beverage 8 6 14
--- --- ---
Quality - 20 20
Clarion - 3 3
Midscale with Food & Beverage - 23 23
--- --- ---
Econo Lodge - 12 12
Rodeway - 8 8
Economy - 20 20
--- --- ---
MainStay 1 - 1
Suburban - - -
Extended Stay 1 - 1
--- --- ---
Ascend Collection - 1 1
Cambria Suites 3 - 3
--- --- ---
Total Domestic System 12 50 62
=== === ===
For the Three Months Ended
June 30, 2009
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 2 8 10
Comfort Suites 4 - 4
Sleep 5 2 7
Midscale without Food &
Beverage 11 10 21
--- --- ---
Quality 1 41 42
Clarion - 8 8
Midscale with Food & Beverage 1 49 50
--- --- ---
Econo Lodge - 20 20
Rodeway - 21 21
Economy - 41 41
--- --- ---
MainStay 1 - 1
Suburban 2 - 2
Extended Stay 3 - 3
--- --- ---
Ascend Collection - 2 2
Cambria Suites 1 - 1
--- --- ---
Total Domestic System 16 102 118
=== === ===
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 0% (38%) (30%)
Comfort Suites 50% NM 75%
Sleep (100%) (100%) (100%)
Midscale without Food &
Beverage (27%) (40%) (33%)
----- ----- -----
Quality (100%) (51%) (52%)
Clarion NM (63%) (63%)
Midscale with Food & Beverage (100%) (53%) (54%)
------ ----- -----
Econo Lodge NM (40%) (40%)
Rodeway NM (62%) (62%)
Economy NM (51%) (51%)
--- ----- -----
MainStay 0% NM 0%
Suburban (100%) NM (100%)
Extended Stay (67%) NM (67%)
----- --- -----
Ascend Collection NM (50%) (50%)
Cambria Suites 200% NM 200%
--- --- ---
Total Domestic System (25%) (51%) (47%)
===== ===== =====
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 7
DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION,
AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT
(UNAUDITED)
A hotel in the domestic pipeline does not always result in
an open and operating hotel due to various factors.
June 30, 2010
Units
-----
New
Conversion Construction Total
---------- ------------- -----
Comfort Inn 33 69 102
Comfort Suites 1 136 137
Sleep Inn 1 101 102
--- --- ---
Midscale without
Food & Beverage 35 306 341
--- --- ---
Quality 41 11 52
Clarion 15 5 20
--- --- ---
Midscale with
Food & Beverage 56 16 72
--- --- ---
Econo Lodge 35 2 37
Rodeway 26 3 29
--- --- ---
Economy 61 5 66
--- --- ---
MainStay - 39 39
Suburban - 26 26
--- --- ---
Extended Stay - 65 65
--- --- ---
Ascend Collection 3 4 7
Cambria Suites - 35 35
--- --- ---
155 431 586
=== === ===
June 30, 2009
Units
-----
New
Conversion Construction Total
---------- ------------- -----
Comfort Inn 37 110 147
Comfort Suites 1 227 228
Sleep Inn 3 139 142
--- --- ---
Midscale without
Food & Beverage 41 476 517
--- --- ---
Quality 57 15 72
Clarion 25 5 30
--- --- ---
Midscale with
Food & Beverage 82 20 102
--- --- ---
Econo Lodge 36 4 40
Rodeway 48 2 50
--- --- ---
Economy 84 6 90
--- --- ---
MainStay - 35 35
Suburban - 32 32
--- --- ---
Extended Stay - 67 67
--- --- ---
Ascend Collection 2 1 3
Cambria Suites - 48 48
--- --- ---
209 618 827
=== === ===
Variance
--------
New
Conversion Construction
---------- -------------
Units % Units %
----- --- ----- ---
Comfort Inn (4) (11%) (41) (37%)
Comfort Suites - 0% (91) (40%)
Sleep Inn (2) (67%) (38) (27%)
--- ----- --- -----
Midscale without
Food & Beverage (6) (15%) (170) (36%)
--- ----- ---- -----
Quality (16) (28%) (4) (27%)
Clarion (10) (40%) - 0%
--- ----- --- ---
Midscale with
Food & Beverage (26) (32%) (4) (20%)
--- ----- --- -----
Econo Lodge (1) (3%) (2) (50%)
Rodeway (22) (46%) 1 50%
--- ----- --- ---
Economy (23) (27%) (1) (17%)
--- ----- --- -----
MainStay - NM 4 11%
Suburban - NM (6) (19%)
--- --- --- -----
Extended Stay - NM (2) (3%)
--- --- --- ----
Ascend Collection 1 50% 3 300%
Cambria Suites - NM (13) (27%)
--- --- --- -----
(54) (26%) (187) (30%)
=== ===== ==== =====
Variance
--------
Total
-----
Units %
----- ---
Comfort Inn (45) (31%)
Comfort Suites (91) (40%)
Sleep Inn (40) (28%)
--- -----
Midscale without
Food & Beverage (176) (34%)
---- -----
Quality (20) (28%)
Clarion (10) (33%)
--- -----
Midscale with
Food & Beverage (30) (29%)
--- -----
Econo Lodge (3) (8%)
Rodeway (21) (42%)
--- -----
Economy (24) (27%)
--- -----
MainStay 4 11%
Suburban (6) (19%)
--- -----
Extended Stay (2) (3%)
--- ----
Ascend Collection 4 133%
Cambria Suites (13) (27%)
--- -----
(241) (29%)
==== =====
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING
REVENUES AND ADJUSTED
FRANCHISING MARGINS
(dollar amounts
in thousands) Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Franchising
Revenues:
Total Revenues $149,848 $143,343 $257,269 $257,501
Adjustments:
Marketing and
reservation
revenues (80,389) (75,296) (139,229) (137,338)
Hotel
operations (1,109) (1,179) (1,976) (2,297)
Franchising
Revenues $68,350 $66,868 $116,064 $117,866
------- ------- -------- --------
Franchising
Margins:
Operating
Margin:
Total Revenues $149,848 $143,343 $257,269 $257,501
Operating
Income $43,607 $38,110 $67,444 $65,865
Operating
Margin 29.1% 26.6% 26.2% 25.6%
---- ---- ---- ----
Adjusted
Franchising
Margin:
Franchising
Revenues $68,350 $66,868 $116,064 $117,866
Operating
Income $43,607 $38,110 $67,444 $65,865
Employee
termination
benefits (119) 399 233 774
Loss on
sublease of
office space - 1,503 - 1,503
Hotel
operations (301) (350) (412) (683)
$43,187 $39,662 $67,265 $67,459
------- ------- ------- -------
Adjusted
Franchising
Margins 63.2% 59.3% 58.0% 57.2%
---- ---- ---- ----
CALCULATION OF ADJUSTED
SELLING, GENERAL AND
ADMINISTRATIVE COSTS
(dollar amounts in Three Months
thousands) Ended Six Months Ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Selling, general
and
administrative
costs $22,824 $27,076 $44,640 $48,537
Employee
termination
benefits 119 (399) (233) (774)
Loss on sublease
of office space - (1,503) - (1,503)
Adjusted Selling,
General and
Administrative
Costs $22,943 $25,174 $44,407 $46,260
======= ======= ======= =======
CALCULATION OF ADJUSTED NET INCOME AND
ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
(In thousands, except per Three Months Six Months
share amounts) Ended Ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Net Income $27,011 $25,503 $42,804 $41,811
Adjustments:
Employee termination
benefits (74) 250 146 485
Loss on sublease of
office space - 941 - 941
--- --- --- ---
Adjusted Net Income $26,937 $26,694 $42,950 $43,237
------- ------- ------- -------
Weighted average shares
outstanding-diluted 59,676 60,598 59,639 60,708
Diluted Earnings Per
Share $0.45 $0.42 $0.72 $0.69
Adjustments:
Employee termination
benefits - - - -
Loss on sublease of
office space - 0.02 - 0.02
--- ---- --- ----
Adjusted Diluted Earnings
Per Share (EPS) $0.45 $0.44 $0.72 $0.71
----- ----- ----- -----
Adjusted EBITDA
Reconciliation
(in millions)
Q2 2010 Q2 2009
Actuals Actuals
-------- --------
Operating Income (per GAAP) $43.6 $38.1
Employee termination benefits (0.1) 0.4
Loss on sublease of office
space - 1.5
Depreciation and amortization 2.2 2.0
Adjusted Earnings before
interest, taxes,
depreciation & amortization
(non-GAAP) $45.7 $42.0
===== =====
Adjusted EBITDA
Reconciliation
(in millions)
Six
Months
Ended Six Months
June Ended
30, June 30, Full-Year
2010 2009 2010
Actuals Actuals Outlook
------- ----------- ----------
Operating
Income (per
GAAP) $67.4 $65.9 $158.7 - $161.2
Employee
termination
benefits 0.2 0.8 0.2
Loss on
sublease of
office space - 1.5 -
Depreciation
and
amortization 4.4 4.1 8.6
---
Adjusted
Earnings
before
interest,
taxes,
depreciation &
amortization
(non-GAAP) $72.0 $72.3 $167.5 - $170
===== ===== =============
First Call Analyst:
FCMN Contact: david_peikin@choicehotels.com
SOURCE: Choice Hotels International, Inc.
CONTACT: David White, Senior Vice President, Chief Financial Officer &
Treasurer, +1-301- 592-5117, or David Peikin, Senior Director, Corporate
Communications, +1-301-592-6361, both of Choice Hotels International, Inc.
Web Site: http://www.choicehotels.com/
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