Choice Hotels International, Inc.
"We are pleased that our first quarter results exceeded analysts' expectations," said Charles A. Ledsinger, Jr., president and chief executive officer. "Strong royalty fee performance was driven by gains of 4.9% in revenue per available room (RevPAR), domestic unit growth of 2.2% and solid improvement in the effective royalty rate of four basis points. Our technology investments are beginning to pay off handsomely. Profit Manager, our proprietary property and yield management system, is now installed in more than 2,400 hotels. The yield management component of this system is operational in more than 1,600 of our properties, generating premiums of greater than 3% over the Smith Travel market set on average for each hotel."
He continued, "On the development side, we continue to sell hotel contracts with an emphasis on converting existing hotels to our system. As hotel capital becomes tighter and economic times more uncertain, we see greater opportunities for conversions in our Clarion, Quality, Econo Lodge and Rodeway brands as independent and existing hotels look to improve their performance in a slower economy."
Overall, Choice signed 57 hotel franchise contracts in first quarter 2001, roughly equivalent to the 59 contracts signed in the same period a year ago. The company signed 38 contracts to convert existing hotels to a Choice brand, up from 29 conversions from the same period a year ago.
The decline the company reported in initial franchisee fees and relicensing fees is due to a drop in overall relicensing fees, which are generated by Choice when there is a change in control over one of the company's franchised hotels. Overall, the number of relicensing transactions dropped to 34 in first quarter 2001 from 60 a year ago.
The company reported royalty revenues of $27.0 million for first quarter 2001, compared to $24.9 million for first quarter 2000, an increase of 8.3%. The system-wide domestic effective royalty rate increased from 3.84% in first quarter 2000 to 3.88% for the first quarter of 2001. Domestic RevPAR increased 4.9% from $26.94 in first quarter 2000 to $28.25 in the quarter just ended.
During the three months ended March 31, 2001, the company recorded an equity loss of $2.2 million related to changes in its equity investment in Friendly Hotels plc. The equity loss is excluded from the company's recurring net income and recurring diluted EPS. In the event that Friendly has future liquidity issues, the company does not intend to fund future losses.
2001 Outlook
The company announced that 2001 recurring EBITDA should approximate $117 million to $119 million, with 2001 diluted EPS, excluding potential equity or impairment losses on its investment in Friendly Hotels plc, reaching $1.23 to $1.25, given the current number of shares outstanding, which would meet or exceed current estimates.
In discussing the outlook, Ledsinger noted, "Our franchising business model enjoys a level of predictability not common in many of today's industries. We believe that our emphasis on brand re-imaging and quality improvements, coupled with our ongoing focus on efficiency and cost controls, should translate to continued improvements in overall operating performance."
Internet Growth
Choice continues to emphasize cost-effective electronic distribution channels for its reservations activity. Total net revenue sold over the Internet was $49.3 million for first quarter 2001, an increase of 85.3% over the $26.6 million sold in first quarter 2000. Choice Hotels' proprietary web site, http://www.choicehotels.com/, generated more than 55% of the total Internet volume for the quarter. Internet reservations represented 7.6% of total system sales for first quarter 2001, up from 4.4% for the same period a year ago.
The average room rate booked through the company's Internet site was up 4.3% for first quarter 2001 to $75.03 from $71.91 for the same period a year ago. This result compares to system-average daily rates of $58.67 for 2001 and $56.65 for 2000. In addition, the Internet is a less expensive channel for booking reservations.
System Growth
As of March 31, 2001, the total number of Choice hotels worldwide on-line grew 3.2% to 4,390 from 4,253 as of the same date a year ago. As of the same date, the total number of rooms worldwide increased 3.0% to 349,994 from 339,744 as of the same date a year ago.
The company had 684 franchised hotels with 59,230 rooms either in design or under construction in its worldwide hotel system as of March 31, 2001.
Notable Events
Among the notable company events occurring since the previous earnings report:
* The company has remaining authority to acquire up to 4.5 million
shares. Since Choice announced its stock repurchase program on June
25, 1998, the company has purchased 16.9 million shares of common
stock at a total cost of $240.3 million, as of April 18, 2001. Total
shares outstanding as of April 24, 2001 are 44.8 million.
* Guest Privileges, the company's program for frequent travelers, has
surpassed the one million member mark.
Choice Hotels International is the second-largest hotel franchisor in the world with 4,390 hotels open, representing 349,994 rooms, and another 684 hotels under development, representing 59,230 rooms, in 43 countries, as of March 31, 2001. Its Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide.
Certain matters discussed in this press release may constitute forward- looking statements within the meaning of the federal securities law. Such statements are based on management's beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice's ability to predict or control. For further information on factors that could impact Choice and the statements contained therein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its registration statement on Form S-4 and report on Form 10-Q for the period ended June 30, 1999.
Additional corporate information may be found on the Choice Hotels' internet site, which may be accessed at http://www.choicehotels.com/ .
Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Guest Privileges and ChoiceBuys.com are registered trademarks, service marks and trade names of Choice Hotels International, Inc. Choice Hotels also owns and uses common law marks, including Profit Manager.
Choice Hotels International, Inc.
Consolidated Balance Sheets
(In thousands) March 31, December 31,
2001 2000
(Unaudited)
ASSETS
Cash and cash equivalents $7,080 $19,701
Other current assets 30,539 32,385
Total current assets 37,619 52,086
Fixed assets and intangibles, net 175,198 174,772
Investment in Friendly Hotels 32,622 34,616
Note receivable from Sunburst
Hospitality 35,962 137,492
Other assets 84,867 85,154
Total assets 366,268 484,120
LIABILITIES AND (DEFICIT) EQUITY
Current portion of long-term debt 53,246 50,046
Other current liabilities 43,127 43,782
Total current liabilities 96,373 93,828
Long-term debt 224,658 247,179
Deferred income taxes and other 52,637 53,020
Total liabilities 373,668 394,027
Total shareholders' (deficit)
equity (7,400) 90,093
Total liabilities and
shareholders' (deficit)
equity $366,268 $484,120
Choice Hotels International, Inc.
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share
amounts) Three Months Ended
March 31, March 31,
Revenues 2001 2000
Royalty fees $26,956 $24,885
Initial franchise fees and
relicensing fees 2,318 3,348
Partner service revenue 1,936 2,298
Hotel Operations 784 --
Other 1,356 1,114
Total revenues 33,350 31,645
Operating expenses
Selling, general and administrative 12,489 12,228
Hotel Operations 520 --
Depreciation and amortization 2,890 2,502
Total operating expenses 15,899 14,730
Operating income 17,451 16,915
Other
Interest and dividend income (1,150) (3,865)
Interest expense 4,312 4,616
Equity loss-Friendly Hotels 2,158 1,725
Total other 5,320 2,476
Income before income taxes 12,131 14,439
Income taxes 4,731 5,631
Net income $7,400 $8,808
Recurring net income (a) $8,747 $9,885
Weighted average shares outstanding 45,798 53,390
Diluted shares outstanding 46,282 54,262
Diluted earnings per share $0.16 $0.16
Diluted recurring earnings per share (a) $0.19 $0.18
(a) Recurring net income and diluted recurring earnings per share exclude
the impact of the equity loss-Friendly Hotels after the effect of
income taxes.
Choice Hotels International
Supplemental Operating Information By Brand
Domestic Hotel System
(Unaudited)
Three Months Ended
March 31,
2001 2000
COMFORT INN
Hotels 1,276 1,253
Rooms 99,879 98,256
Avg. Daily Rate (ADR) $59.35 $56.77
Occupancy % 50.0% 50.1%
RevPAR $29.67 $28.43
COMFORT SUITES
Hotels 278 238
Rooms 21,840 19,065
Avg. Daily Rate (ADR) $71.06 $68.68
Occupancy % 55.6% 55.3%
RevPAR $39.54 $37.99
QUALITY
Hotels 425 430
Rooms 47,804 49,085
Avg. Daily Rate (ADR) $61.01 $58.08
Occupancy % 46.8% 45.5%
RevPAR $28.58 $26.42
CLARION
Hotels 106 112
Rooms 16,915 18,965
Avg. Daily Rate (ADR) $75.50 $77.73
Occupancy % 46.6% 48.7%
RevPAR $35.16 $37.83
SLEEP
Hotels 262 236
Rooms 20,237 18,050
Avg. Daily Rate (ADR) $53.34 $51.68
Occupancy % 48.1% 47.3%
RevPAR $25.67 $24.42
MAINSTAY
Hotels 37 31
Rooms 3,320 2,885
Avg. Daily Rate (ADR) $63.35 $58.39
Occupancy % 58.5% 60.0%
RevPAR $37.06 $35.01
ECONO LODGE
Hotels 677 682
Rooms 42,227 42,977
Avg. Daily Rate (ADR) $42.83 $41.68
Occupancy % 42.3% 41.0%
RevPAR $18.13 $17.10
RODEWAY
Hotels 152 161
Rooms 10,042 10,548
Avg. Daily Rate (ADR) $43.12 $42.48
Occupancy % 40.1% 40.1%
RevPAR $17.27 $17.02
TOTAL CHOICE - DOMESTIC
Hotels 3,213 3,143
Rooms 262,264 259,831
Avg. Daily Rate (ADR) $58.67 $56.65
Occupancy % 48.1% 47.6%
RevPAR $28.25 $26.94
Effective Royalty Rate 3.88% 3.84%
MAKE YOUR OPINION COUNT - Click Here
http://tbutton.prnewswire.com/prn/11690X20850385
SOURCE: Choice Hotels International
Contact: John Hawkins, Corporate Communications, 301-592-5075, or Fax:
301-592-6177, or
Officer, 301-592-5006, both of Choice Hotels International, Inc.
Website: http://www.choicehotels.com/
We redesigned the new CH.com with the latest technology. This makes it way faster and easier for you to use.
Sadly, the browser you are currently using does not support our new technology. Please download one of the awesome browsers below and you'll be on your way.