Domestic RevPAR accelerated in fourth quarter to 20.4% versus 2019; full-year net income and adjusted EBITDA surpassed 2019 levels by 49% and 28%, respectively
ROCKVILLE, Md., Feb. 15, 2023 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest lodging franchisors, today reported its fourth quarter and full-year 2022 results.
"2022 was a landmark year for Choice Hotels, in which we drove step function growth with adjusted EBITDA surpassing 2019 levels by 28%. We generated significant organic growth over 2021 and acquired the Radisson Hotels Americas brands in August, which has accelerated our long-term growth potential," said Patrick Pacious, president and chief executive officer. "Our distinct strategy of growing our brand portfolio with hotels that generate higher royalties per unit is driving impressive results. The new capabilities we have built to improve the profitability of each franchisee have resulted in three straight years of RevPAR growth that exceeded the industry, strengthening our competitive position and creating additional runway for growth in 2023 and beyond."
Highlights of fourth quarter and full-year 2022 results include:1,2
RevPAR Performance Trends
Financial Performance
Development
Shareholder Returns
During full-year 2022, the company paid cash dividends totaling approximately $53 million, compared to total dividends of $25 million paid in 2021.
During full-year 2022, the company repurchased $434.7 million of common stock, including $188.2 million during the fourth quarter, under its stock repurchase program as well as through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company's equity incentive plans. As of December 31, 2022, the company had 4.7 million shares of common stock remaining under the current share repurchase authorization.
Outlook
The outlook information provided below is inclusive of the Radisson Americas acquisition unless otherwise noted and includes forward-looking non-GAAP financial measures, which management uses in measuring performance. The adjusted numbers in the company's outlook below exclude the net surplus or deficit generated from reimbursable revenue from franchised and managed properties, gain (loss) on sales of assets, due diligence and transition costs and other items:
Full-Year 2023
First Quarter 2023
Conference Call
Choice Hotels International will conduct a conference call on February 15, 2023, at 10:00 a.m. Eastern Time to discuss the company's fourth quarter and full-year 2022 earnings results. The dial-in number to listen to the call domestically is (888) 886-7786 and the number for international participants is (416) 764-8658 and use conference ID 21655006. A live webcast and accompanying materials will also be available on the company's investor relations website, http://investor.choicehotels.com/ and can be accessed via the Events and Presentations tab.
About Choice Hotels®
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world. With nearly 7,500 hotels, representing nearly 630,000 rooms, in 47 countries and territories as of December 31, 2022, the Choice® family of hotel brands provides business and leisure travelers with a range of high-quality lodging options from limited service to full-service hotels in the upper upscale, upper midscale, extended-stay and economy segments. The award-winning Choice Privileges® loyalty program offers members a faster way to rewards, with personalized benefits starting on day one. For more information, visit www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "expect," "estimate," "believe," "anticipate," "should," "will," "forecast," "plan," "project," "assume," or similar words of futurity. All statements other than historical facts are forward-looking statements. These 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, expenses, adjusted EBITDA, earnings, debt levels, ability to repay outstanding indebtedness, payment of dividends, repurchases of common stock and other financial and operational measures, including occupancy and open hotels, RevPAR, the company's ability to benefit from any rebound in travel demand, the company's liquidity, the impact of COVID-19 and economic conditions on our 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, including access to liquidity and capital; the company's ability to successfully integrate Radisson Hotels Americas' employees and operations; the ability to realize the anticipated benefits and synergies of the acquisition of Radisson Hotels Americas as rapidly or to the extent anticipated; the continuation or resurgence of the COVID-19 pandemic, including with respect to new strains or variants; changes in consumer demand and confidence, including the potential for long-term adverse changes in consumer sentiment with respect to travel as a result of the pandemic; the timing and amount of future dividends and share repurchases; future domestic or global outbreaks of epidemics, pandemics or contagious diseases, or fear of such outbreaks; changes in law and regulation applicable to the travel, lodging or franchising industries, including with respect to the status of the relationship with employees of our franchisees; foreign currency fluctuations; impairments or declines in the value of the company's assets; operating risks common in the travel, lodging or 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 and our relationships with our franchisees; our ability to keep pace with improvements in technology utilized for marketing and reservations systems and other operating systems; the commercial acceptance of our Software-as-a-Service ("SaaS") technology solutions division's products and services; our ability to grow our franchise system; exposure to risks related to our hotel development, financing and ownership activities; exposures to risks associated with our investments in new businesses; fluctuations in the supply and demand for hotel rooms; our ability to realize anticipated benefits from acquired businesses; impairments or losses relating to acquired businesses; the level of acceptance of alternative growth strategies we may implement; the impact of inflation; cyber security and data breach risks; climate change and sustainability related concerns; ownership and financing activities; hotel closures or financial difficulties of our franchisees; operating risks associated with our international operations, especially in areas currently most affected by COVID-19; labor shortages; the outcome of litigation; and our ability to effectively manage our indebtedness, and secure our indebtedness, including additional indebtedness incurred as a result of the acquisition of Radisson Hotels Americas. These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and, where applicable, our Quarter Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measurements and Other Definitions
The company evaluates its operations utilizing the performance metrics of adjusted EBITDA, adjusted EBITDA margins, adjusted selling, general and administrative (SG&A) expenses, revenues excluding reimbursable revenue from franchised and managed properties and extraordinary termination fees from franchisee, adjusted net income and adjusted EPS, which are all non-GAAP financial measurements. These measures, which are reconciled to the comparable GAAP measures in Exhibit 7, should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by GAAP, such as net income, SG&A, EPS and total revenues. The company's calculation of these measurements may be different from the calculations used by other companies and comparability may therefore be limited. We discuss management's reasons for reporting these non-GAAP measures and how each non-GAAP measure is calculated below.
In addition to the specific adjustments noted below with respect to each measure, the non-GAAP measures presented herein also exclude restructuring of the company's operations including employee severance benefit, income taxes and legal costs, exceptional allowances recorded as a result of COVID-19's impact on the collectability of receivables, expenses associated with legal claims, acquisition related due diligence, transition and transaction costs, one-time franchise agreement termination fees received related to the purchase and rebranding of a 110 hotel portfolio of WoodSpring Suites hotels, and gains/losses on sale/disposal and impairment of assets primarily related to hotel ownership and development activities to allow for period-over-period comparison of ongoing core operations before the impact of these discrete and infrequent charges.
Adjusted SG&A, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization and Margin: Adjusted SG&A, Adjusted EBITDA and Adjusted EBITDA Margin reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, franchise-agreement acquisition cost amortization, other (gains) and losses, equity in net income (loss) of unconsolidated affiliates, mark-to-market adjustments on non-qualified retirement plan investments, share based compensation expense (benefit) and surplus or deficits generated by reimbursable revenue from franchised and managed properties. We consider adjusted EBITDA and adjusted EBITDA margins to be an indicator of operating performance because it measures our ability to service debt, fund capital expenditures and expand our business. We also use these measures, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings, and share based compensation expense (benefit) is dependent on the design of compensation plans in place and the usage of them. Accordingly, the impact of interest expense and share based compensation expense (benefit) on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. These measures also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets or amortizing franchise-agreement acquisition costs. These differences can result in considerable variability in the relative asset costs and estimated lives and, therefore, the depreciation and amortization expense among companies. Mark-to-market adjustments on non-qualified retirement-plan investments recorded in SG&A are excluded from EBITDA, as the company accounts for these investments in accordance with accounting for deferred-compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have a material impact on the company's net income. Surpluses and deficits generated from reimbursable revenues from franchised and managed properties are excluded, as the company's franchise and management agreements require these revenues to be used exclusively for expenses associated with providing franchise and management services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchised and managed property owners are required to reimburse the company for any deficits generated from these activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.
Adjusted Net Income and Adjusted Earnings Per Share: Adjusted net income and EPS exclude the impact of surpluses or deficits generated from reimbursable revenue from franchised and managed properties. Surpluses and deficits generated from reimbursable revenue from franchised and managed properties are excluded, as the company's franchise agreements require these revenues to be used exclusively for expenses associated with providing franchised and managed services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchised and managed property owners are required to reimburse the company for any deficits generated from activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance. We consider adjusted net income and adjusted EPS to be indicators of operating performance because excluding these items allow for period-over-period comparisons of our ongoing operations.
Revenues, Excluding Reimbursable Revenue from Franchised and Managed Properties and Extraordinary Termination Fees from Franchisee: The company reports revenues, excluding reimbursable revenue from franchised and managed properties and extraordinary termination fees from franchisee. These non-GAAP measures we present are commonly used measures of performance in our industry and facilitate comparisons between the company and its competitors. Reimbursable revenues from franchised and managed properties are excluded, as the company's franchise and management agreements require revenues to be used exclusively for expenses associated with providing franchise and management services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance. During the third quarter of 2022, the company earned one-time franchise agreement termination fees related to the purchase by a third-party from an existing franchisee and the subsequent rebranding of a 110 hotel portfolio of WoodSpring Suites hotels. These termination fees received are considered infrequent in nature and not representative of on-going operations and therefore have been excluded from the measurements utilized to assess the company's operating performance.
Occupancy
Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel for a given period. Occupancy measures the utilization of the hotels' available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. The company calculates occupancy based on information as reported by its franchisees. To accurately reflect occupancy, the company may revise its prior years' operating statistics for the most current information provided.
Average Daily Rate (ADR)
ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures the average room price attained by a hotel, and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and management uses ADR to assess pricing levels that the company is able to generate. The company calculates ADR based on information as reported by its franchisees. To accurately reflect ADR, the company may revise its prior years' operating statistics for the most current information provided.
RevPAR
RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. Management considers RevPAR to be a meaningful indicator of hotel performance and therefore company royalty and system revenues as it provides a metric correlated to the two key drivers of operations at a hotel: occupancy and ADR. The company calculates RevPAR based on information as reported by its franchisees. To accurately reflect RevPAR, the company may revise its prior years' operating statistics for the most current information provided. RevPAR is also a useful indicator in measuring performance over comparable periods.
Pipeline
Pipeline is defined as hotels awaiting conversion, under construction or approved for development and master development agreements committing owners to future franchise development.
© 2023 Choice Hotels International, Inc. All rights reserved.
1 2019 RevPAR comparison data is shown for comparable prior year periods for context throughout this press release in light of the pandemic's impact on industry performance in 2021. |
2 For comparative purposes, RevPAR and effective royalty rate exclude the impact of the Radisson Hotels Americas acquisition, while financial results, unit growth, pipeline and franchise agreements include the impact of the Radisson Hotels Americas acquisition unless otherwise noted. All outlook figures are inclusive of the Radisson Americas acquisition. |
3 The percentage of shares repurchased is calculated based on 54.6 million weighted average number of shares outstanding year-to-date through December 31, 2022. |
4 The pipeline number also includes 45 Radisson Hotels Americas units representing over 5,100 rooms. |
5 RevPAR results for January 2023 are inclusive of the Radisson Americas acquisition. |
6 For comparative purposes, excludes the impact of long-term strategic decisions, including the sale of three owned Cambria assets, the one-time exit of the 110 WoodSpring Suites hotels and other one-time 2022 non-recurring items. |
7 For comparative purposes, domestic effective royalty rate baseline for full-year 2022 is inclusive of the Radisson Hotels Americas acquisition. |
Choice Hotels International, Inc. and Subsidiaries | Exhibit 1 | |||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
Variance | Variance | |||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | |||||||||
REVENUES | ||||||||||||||||
Royalty, licensing and management fees | $ 115,551 | $ 97,612 | $ 17,939 | 18 % | $ 471,759 | $ 397,218 | $ 74,541 | 19 % | ||||||||
Initial franchise fees | 6,439 | 7,438 | (999) | (13) % | 28,074 | 26,342 | 1,732 | 7 % | ||||||||
Procurement services | 15,913 | 14,100 | 1,813 | 13 % | 63,800 | 50,393 | 13,407 | 27 % | ||||||||
Other revenues from franchised and | 189,321 | 144,463 | 44,858 | 31 % | 702,750 | 528,843 | 173,907 | 33 % | ||||||||
Owned hotels | 21,606 | 13,109 | 8,497 | 65 % | 70,826 | 37,833 | 32,993 | 87 % | ||||||||
Other | 13,152 | 7,916 | 5,236 | 66 % | 64,740 | 28,669 | 36,071 | 126 % | ||||||||
Total revenues | 361,982 | 284,638 | 77,344 | 27 % | 1,401,949 | 1,069,298 | 332,651 | 31 % | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Selling, general and administrative | 62,861 | 45,776 | 17,085 | 37 % | 207,275 | 145,623 | 61,652 | 42 % | ||||||||
Depreciation and amortization | 9,989 | 6,296 | 3,693 | 59 % | 30,425 | 24,773 | 5,652 | 23 % | ||||||||
Other expenses from franchised and | 195,023 | 117,272 | 77,751 | 66 % | 653,060 | 444,946 | 208,114 | 47 % | ||||||||
Owned hotels | 16,833 | 8,220 | 8,613 | 105 % | 48,837 | 24,754 | 24,083 | 97 % | ||||||||
Total operating expenses | 284,706 | 177,564 | 107,142 | 60 % | 939,597 | 640,096 | 299,501 | 47 % | ||||||||
Gain (loss) on sale of business & assets, | (439) | (269) | (170) | 63 % | 16,249 | (269) | 16,518 | (6146) % | ||||||||
Operating income | 76,837 | 106,805 | (29,968) | (28) % | 478,601 | 428,933 | 49,668 | 12 % | ||||||||
OTHER INCOME AND EXPENSES, NET | ||||||||||||||||
Interest expense | 11,713 | 11,574 | 139 | 1 % | 43,797 | 46,680 | (2,883) | (6) % | ||||||||
Interest income | (2,032) | (1,264) | (768) | 61 % | (7,288) | (4,981) | (2,307) | 46 % | ||||||||
Other (gain) loss | (2,560) | (2,228) | (332) | 15 % | 7,018 | (5,134) | 12,152 | (237) % | ||||||||
Equity in net (gain) loss of affiliates | (453) | 14,384 | (14,837) | (103) % | (1,732) | 15,876 | (17,608) | (111) % | ||||||||
Total other income and expenses, net | 6,668 | 22,466 | (15,798) | (70) % | 41,795 | 52,441 | (10,646) | (20) % | ||||||||
Income before income taxes | 70,169 | 84,339 | (14,170) | (17) % | 436,806 | 376,492 | 60,314 | 16 % | ||||||||
Income tax expense | 14,656 | 20,256 | (5,600) | (28) % | 104,654 | 87,535 | 17,119 | 20 % | ||||||||
Net income | $ 55,513 | $ 64,083 | $ (8,570) | (13) % | $ 332,152 | $ 288,957 | $ 43,195 | 15 % | ||||||||
Basic earnings per share | $ 1.05 | $ 1.15 | $ (0.10) | (9) % | $ 6.05 | $ 5.20 | $ 0.85 | 16 % | ||||||||
Diluted earnings per share | $ 1.04 | $ 1.14 | $ (0.10) | (9) % | $ 5.99 | $ 5.15 | $ 0.84 | 16 % | ||||||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 2 | ||||||
Condensed Consolidated Balance Sheets | |||||||
(Unaudited) | |||||||
(In thousands) | December 31, | December 31, | |||||
2022 | 2021 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ 41,566 | $ 511,605 | |||||
Accounts receivable, net | 216,614 | 153,147 | |||||
Other current assets | 89,742 | 96,909 | |||||
Total current assets | 347,922 | 761,661 | |||||
Property and equipment, net | 427,306 | 377,367 | |||||
Intangible assets, net | 742,190 | 312,389 | |||||
Goodwill | 218,653 | 159,196 | |||||
Notes receivable, net of allowances | 55,577 | 66,451 | |||||
Investments in affiliates | 30,647 | 27,967 | |||||
Operating lease right-of-use assets | 68,985 | 34,183 | |||||
Investments, employee benefit plans, at fair value | 31,645 | 33,946 | |||||
Other assets | 179,250 | 158,664 | |||||
Total assets | $ 2,102,175 | $ 1,931,824 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Accounts payable | $ 118,863 | $ 81,169 | |||||
Accrued expenses and other current liabilities | 131,410 | 104,472 | |||||
Deferred revenue | 92,695 | 81,538 | |||||
Liability for guest loyalty program | 89,954 | 86,765 | |||||
Current portion of long-term debt | 2,976 | 216,351 | |||||
Total current liabilities | 435,898 | 570,295 | |||||
Long-term debt | 1,200,547 | 844,123 | |||||
Deferred revenue | 134,149 | 105,785 | |||||
Liability for guest loyalty program | 47,381 | 41,785 | |||||
Operating lease liabilities | 70,994 | 35,492 | |||||
Deferred compensation & retirement plan obligations | 36,673 | 38,690 | |||||
Other liabilities | 21,873 | 29,772 | |||||
Total liabilities | 1,947,515 | 1,665,942 | |||||
Total shareholders' equity | 154,660 | 265,882 | |||||
Total liabilities and shareholders' equity | $ 2,102,175 | $ 1,931,824 | |||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 3 | ||
Condensed Consolidated Statements of Cash Flows | |||
(Unaudited) | |||
(In thousands) | Year Ended December 31, | ||
2022 | 2021 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 332,152 | $ 288,957 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 30,425 | 24,773 | |
Depreciation and amortization - marketing and reservation system | 33,488 | 25,721 | |
Franchise agreement acquisition cost amortization | 15,666 | 13,222 | |
Impairment of long-lived assets | — | 282 | |
(Gain) loss on sale and disposal of assets, net | (16,251) | 530 | |
Non-cash stock compensation and other charges | 42,974 | 35,731 | |
Non-cash interest, investment, and affiliate (income) loss, net | 7,365 | (13,509) | |
Deferred income taxes | (19,642) | (1,006) | |
Equity in net loss of affiliates, less distributions received | 489 | 23,985 | |
Franchise agreement acquisition costs, net of reimbursements | (54,527) | (38,230) | |
Change in working capital and other, net of acquisition | (5,078) | 23,240 | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 367,061 | 383,696 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Investment in property and equipment | (89,954) | (74,294) | |
Investment in intangible assets | (3,631) | (3,573) | |
Proceeds from sales of assets | 166,568 | 6,119 | |
Asset acquisitions, net of cash acquired | (856) | — | |
Business acquisition, net of cash acquired | (550,431) | — | |
Proceeds from termination of intangibles | 44,711 | — | |
Contributions to investments in affiliates | (3,148) | (2,778) | |
Distributions and sales proceeds from investments in affiliates | — | 15,554 | |
Purchases of investments, employee benefit plans | (4,185) | (1,705) | |
Proceeds from sales of investments, employee benefit plans | 1,908 | 2,609 | |
Issuance of notes receivable | (5,647) | (20,133) | |
Collections of notes receivable | 975 | 213 | |
Other items, net | 1,260 | (938) | |
NET CASH USED IN INVESTING ACTIVITIES | (442,430) | (78,926) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net borrowings pursuant to revolving credit facilities | 360,000 | — | |
Principal payments on long-term debt | (216,571) | — | |
Payments to extinguish acquired debt | (55,975) | — | |
Proceeds from acquired derivative | 1,943 | — | |
Debt issuance costs | (44) | (365) | |
Purchases of treasury stock | (434,767) | (13,365) | |
Dividends paid | (52,545) | (25,044) | |
Proceeds from exercise of stock options | 3,809 | 11,054 | |
NET CASH USED IN FINANCING ACTIVITIES | (394,150) | (27,720) | |
Net change in cash and cash equivalents | (469,519) | 277,050 | |
Effect of foreign exchange rate changes on cash and cash equivalents | (520) | (224) | |
Cash and cash equivalents at beginning of period | 511,605 | 234,779 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 41,566 | $ 511,605 | |
Exhibit 4 | ||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | ||||||||||||||||||
DOMESTIC HOTEL SYSTEM | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
For the Year Ended December 31, 2022 | For the Year Ended December 31, 2021 | Change | ||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||
Comfort(1) | $ 108.31 | 61.8 % | $ 66.88 | $ 98.22 | 60.1 % | $ 59.05 | 10.3 % | 170 | bps | 13.3 % | ||||||||
Sleep | 95.29 | 59.5 % | 56.72 | 86.55 | 58.7 % | 50.85 | 10.1 % | 80 | bps | 11.5 % | ||||||||
Quality | 90.64 | 53.5 % | 48.53 | 83.88 | 53.5 % | 44.84 | 8.1 % | — | bps | 8.2 % | ||||||||
Clarion(2) | 94.83 | 45.5 % | 43.13 | 88.09 | 43.1 % | 37.99 | 7.7 % | 240 | bps | 13.5 % | ||||||||
Econo Lodge | 72.04 | 49.6 % | 35.72 | 68.08 | 50.1 % | 34.08 | 5.8 % | (50) | bps | 4.8 % | ||||||||
Rodeway | 72.55 | 50.9 % | 36.96 | 68.01 | 50.9 % | 34.64 | 6.7 % | — | bps | 6.7 % | ||||||||
WoodSpring Suites | 58.02 | 79.2 % | 45.94 | 51.66 | 79.6 % | 41.10 | 12.3 % | (40) | bps | 11.8 % | ||||||||
MainStay | 87.07 | 62.3 % | 54.24 | 80.25 | 62.1 % | 49.79 | 8.5 % | 20 | bps | 8.9 % | ||||||||
Suburban | 59.94 | 67.5 % | 40.46 | 55.36 | 70.0 % | 38.77 | 8.3 % | (250) | bps | 4.4 % | ||||||||
Cambria Hotels | 159.18 | 64.2 % | 102.13 | 132.48 | 56.2 % | 74.47 | 20.2 % | 800 | bps | 37.1 % | ||||||||
Ascend Hotel Collection | 154.32 | 56.3 % | 86.83 | 138.01 | 53.7 % | 74.11 | 11.8 % | 260 | bps | 17.2 % | ||||||||
Total | $ 93.17 | 58.0 % | $ 54.06 | $ 84.06 | 57.2 % | $ 48.10 | 10.8 % | 80 | bps | 12.4 % | ||||||||
For comparability purposes, the above operating statistics include only the Choice legacy brands. Additionally, the operating statistics exclude Choice's Everhome brand since the operating | ||||||||||||||||||
For the Three Months December 31, 2022 | For the Three Months December 31, 2021 | Change | ||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||
Comfort(1) | $ 104.54 | 58.2 % | $ 60.84 | $ 99.68 | 58.2 % | $ 58.02 | 4.9 % | — | bps | 4.9 % | ||||||||
Sleep | 92.67 | 55.4 % | 51.34 | 87.05 | 56.4 % | 49.06 | 6.5 % | (100) | bps | 4.6 % | ||||||||
Quality | 87.19 | 49.4 % | 43.03 | 83.70 | 50.2 % | 42.04 | 4.2 % | (80) | bps | 2.4 % | ||||||||
Clarion(2) | 91.99 | 43.1 % | 39.62 | 88.67 | 41.1 % | 36.40 | 3.7 % | 200 | bps | 8.8 % | ||||||||
Econo Lodge | 70.06 | 46.6 % | 32.67 | 67.18 | 46.8 % | 31.44 | 4.3 % | (20) | bps | 3.9 % | ||||||||
Rodeway | 70.42 | 47.8 % | 33.67 | 67.45 | 47.5 % | 32.07 | 4.4 % | 30 | bps | 5.0 % | ||||||||
WoodSpring Suites | 57.85 | 75.6 % | 43.75 | 54.09 | 75.8 % | 40.00 | 7.0 % | (20) | bps | 9.4 % | ||||||||
MainStay | 84.25 | 59.4 % | 50.01 | 81.48 | 59.9 % | 48.78 | 3.4 % | (50) | bps | 2.5 % | ||||||||
Suburban | 58.69 | 62.9 % | 36.91 | 58.40 | 65.8 % | 38.42 | 0.5 % | (290) | bps | (3.9) % | ||||||||
Cambria Hotels | 157.78 | 62.8 % | 99.06 | 140.35 | 59.5 % | 83.48 | 12.4 % | 330 | bps | 18.7 % | ||||||||
Ascend Hotel Collection | 149.13 | 51.8 % | 77.18 | 137.09 | 51.6 % | 70.73 | 8.8 % | 20 | bps | 9.1 % | ||||||||
Total | $ 91.30 | 54.1 % | $ 49.40 | $ 85.13 | 54.7 % | $ 46.54 | 7.2 % | (60) | bps | 6.1 % | ||||||||
For comparability purposes, the above operating statistics include only the Choice legacy brands. Additionally, the operating statistics exclude Choice's Everhome brand since the operating | ||||||||||||||||||
Effective Royalty Rate | ||||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||||
12/31/2022 | 12/31/2021 | 12/31/2022 | 12/31/2021 | |||||||||||||||
System-wide | 5.06 % | 5.04 % | 5.05 % | 5.01 % | ||||||||||||||
(1) Includes Comfort family of brand extensions including Comfort and Comfort Suites | ||||||||||||||||||
(2) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | ||||||||||||||||||
Exhibit 5 | ||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | ||||||||||||||||||
DOMESTIC HOTEL SYSTEM | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
For the Year Ended December 31, 2022 | For the Year Ended December 31, 2019 | Change | ||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||
Comfort(1) | $ 108.31 | 61.8 % | $ 66.88 | $ 95.84 | 62.2 % | $ 59.65 | 13.0 % | (40) | bps | 12.1 % | ||||||||
Sleep | 95.29 | 59.5 % | 56.72 | 85.28 | 61.1 % | 52.09 | 11.7 % | (160) | bps | 8.9 % | ||||||||
Quality | 90.64 | 53.5 % | 48.53 | 80.11 | 54.1 % | 43.34 | 13.1 % | (60) | bps | 12.0 % | ||||||||
Clarion(2) | 94.83 | 45.5 % | 43.13 | 84.73 | 49.3 % | 41.81 | 11.9 % | (380) | bps | 3.2 % | ||||||||
Econo Lodge | 72.04 | 49.6 % | 35.72 | 63.75 | 47.7 % | 30.43 | 13.0 % | 190 | bps | 17.4 % | ||||||||
Rodeway | 72.55 | 50.9 % | 36.96 | 64.25 | 49.0 % | 31.48 | 12.9 % | 190 | bps | 17.4 % | ||||||||
WoodSpring Suites | 58.02 | 79.2 % | 45.94 | 47.10 | 75.3 % | 35.44 | 23.2 % | 390 | bps | 29.6 % | ||||||||
MainStay | 87.07 | 62.3 % | 54.24 | 85.28 | 63.9 % | 54.49 | 2.1 % | (160) | bps | (0.5) % | ||||||||
Suburban | 59.94 | 67.5 % | 40.46 | 57.46 | 66.0 % | 37.91 | 4.3 % | 150 | bps | 6.7 % | ||||||||
Cambria Hotels | 159.18 | 64.2 % | 102.13 | 145.45 | 67.5 % | 98.12 | 9.4 % | (330) | bps | 4.1 % | ||||||||
Ascend Hotel Collection | 154.32 | 56.3 % | 86.83 | 125.16 | 61.2 % | 76.57 | 23.3 % | (490) | bps | 13.4 % | ||||||||
Total | $ 93.17 | 58.0 % | $ 54.06 | $ 81.86 | 57.6 % | $ 47.18 | 13.8 % | 40 | bps | 14.6 % | ||||||||
For comparability purposes, the above operating statistics include only the Choice legacy brands. Additionally, the operating statistics exclude Choice's Everhome brand since the operating | ||||||||||||||||||
For the Three Months December 31, 2022 | For the Three Months December 31, 2019 | Change | ||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||
Comfort(1) | $ 104.54 | 58.2 % | $ 60.84 | $ 90.72 | 57.3 % | $ 51.96 | 15.2 % | 90 | bps | 17.1 % | ||||||||
Sleep | 92.67 | 55.4 % | 51.34 | 81.19 | 55.5 % | 45.06 | 14.1 % | (10) | bps | 13.9 % | ||||||||
Quality | 87.19 | 49.4 % | 43.03 | 75.35 | 48.8 % | 36.78 | 15.7 % | 60 | bps | 17.0 % | ||||||||
Clarion(2) | 91.99 | 43.1 % | 39.62 | 79.29 | 43.8 % | 34.71 | 16.0 % | (70) | bps | 14.1 % | ||||||||
Econo Lodge | 70.06 | 46.6 % | 32.67 | 60.30 | 43.7 % | 26.32 | 16.2 % | 290 | bps | 24.1 % | ||||||||
Rodeway | 70.42 | 47.8 % | 33.67 | 60.73 | 44.9 % | 27.25 | 16.0 % | 290 | bps | 23.6 % | ||||||||
WoodSpring Suites | 57.85 | 75.6 % | 43.75 | 46.35 | 70.7 % | 32.79 | 24.8 % | 490 | bps | 33.4 % | ||||||||
MainStay | 84.25 | 59.4 % | 50.01 | 81.33 | 58.3 % | 47.45 | 3.6 % | 110 | bps | 5.4 % | ||||||||
Suburban | 58.69 | 62.9 % | 36.91 | 53.75 | 60.9 % | 32.73 | 9.2 % | 200 | bps | 12.8 % | ||||||||
Cambria Hotels | 157.78 | 62.8 % | 99.06 | 146.52 | 62.1 % | 91.05 | 7.7 % | 70 | bps | 8.8 % | ||||||||
Ascend Hotel Collection | 149.13 | 51.8 % | 77.18 | 120.31 | 56.7 % | 68.25 | 24.0 % | (490) | bps | 13.1 % | ||||||||
Total | $ 91.30 | 54.1 % | $ 49.40 | $ 77.77 | 52.8 % | $ 41.04 | 17.4 % | 130 | bps | 20.4 % | ||||||||
For comparability purposes, the above operating statistics include only the Choice legacy brands. Additionally, the operating statistics exclude Choice's Everhome brand since the operating | ||||||||||||||||||
Effective Royalty Rate | ||||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||||
12/31/2022 | 12/31/2019 | 12/31/2022 | 12/31/2019 | |||||||||||||||
System-wide | 5.06 % | 4.91 % | 5.05 % | 4.86 % | ||||||||||||||
(1) Includes Comfort family of brand extensions including Comfort and Comfort Suites | ||||||||||||||||||
(2) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | ||||||||||||||||||
Exhibit 6 | ||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
December 31, 2022 | December 31, 2021 | Variance | ||||||||||||||
Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||
Comfort(1) | 1,685 | 132,523 | 1,665 | 130,963 | 20 | 1,560 | 1.2 % | 1.2 % | ||||||||
Sleep | 423 | 29,775 | 414 | 29,194 | 9 | 581 | 2.2 % | 2.0 % | ||||||||
Quality | 1,633 | 121,275 | 1,652 | 123,549 | (19) | (2,274) | (1.2) % | (1.8) % | ||||||||
Clarion(2) | 178 | 19,630 | 189 | 21,837 | (11) | (2,207) | (5.8) % | (10.1) % | ||||||||
Econo Lodge | 702 | 42,112 | 734 | 44,107 | (32) | (1,995) | (4.4) % | (4.5) % | ||||||||
Rodeway | 503 | 28,364 | 528 | 30,275 | (25) | (1,911) | (4.7) % | (6.3) % | ||||||||
WoodSpring Suites | 212 | 25,592 | 302 | 36,374 | (90) | (10,782) | (29.8) % | (29.6) % | ||||||||
Everhome | 1 | 99 | — | — | 1 | 99 | NM | NM | ||||||||
MainStay | 115 | 7,891 | 101 | 6,994 | 14 | 897 | 13.9 % | 12.8 % | ||||||||
Suburban | 75 | 6,719 | 71 | 6,395 | 4 | 324 | 5.6 % | 5.1 % | ||||||||
Cambria Hotels | 65 | 8,865 | 57 | 7,869 | 8 | 996 | 14.0 % | 12.7 % | ||||||||
Ascend Hotel Collection | 196 | 20,091 | 200 | 20,473 | (4) | (382) | (2.0) % | (1.9) % | ||||||||
Radisson(3) | 508 | 51,473 | — | — | 508 | 51,473 | NM | NM | ||||||||
Domestic Franchises(4) | 6,296 | 494,409 | 5,913 | 458,030 | 383 | 36,379 | 6.5 % | 7.9 % | ||||||||
International Choice | 1,101 | 120,468 | 1,117 | 121,716 | (16) | (1,248) | (1.4) % | (1.0) % | ||||||||
International Radisson(3) | 90 | 12,927 | — | — | 90 | 12,927 | NM | NM | ||||||||
International Franchises(4) | 1,191 | 133,395 | 1,117 | 121,716 | 74 | 11,679 | 6.6 % | 9.6 % | ||||||||
Total Franchises | 7,487 | 627,804 | 7,030 | 579,746 | 457 | 48,058 | 6.5 % | 8.3 % | ||||||||
(1) Includes Comfort family of brand extensions including Comfort and Comfort Suites | ||||||||||||||||
(2) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | ||||||||||||||||
(3) Radisson Hotels Americas brands are referred to as Radisson within this table | ||||||||||||||||
(4) In 2022, the Company reclassified seven properties located in the Caribbean from Domestic Franchises to International Franchises. Prior year hotel and room | ||||||||||||||||
Exhibit 7 | |||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION | |||||||||
(UNAUDITED) | |||||||||
REVENUES EXCLUDING REIMBURSABLE REVENUE FROM FRANCHISED AND MANAGED PROPERTIES AND EXTRAORDINARY TERMINATION FEES | |||||||||
(dollar amounts in thousands) | Three Months Ended December 31, | Year Ended December 31, | |||||||
2022 | 2021 | 2022 | 2021 | ||||||
Total Revenues | $ 361,982 | $ 284,638 | $ 1,401,949 | $ 1,069,298 | |||||
Adjustments: | |||||||||
Reimbursable revenue from franchised and managed properties | (175,967) | (144,463) | (682,612) | (528,843) | |||||
Extraordinary termination fees from franchisee | — | — | (22,647) | — | |||||
Revenues, excluding reimbursable revenue from franchised and managed | $ 186,015 | $ 140,175 | $ 696,690 | $ 540,455 | |||||
ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |||||||||
(dollar amounts in thousands) | Three Months Ended December 31, | Year Ended December 31, | |||||||
2022 | 2021 | 2022 | 2021 | ||||||
Total Selling, General and Administrative Expenses | $ 62,861 | $ 45,776 | $ 207,275 | $ 145,623 | |||||
Mark to market adjustments on non-qualified retirement plan investments | (2,050) | (2,153) | 5,929 | (5,555) | |||||
Operational restructuring charges | (1,298) | (89) | (6,714) | (813) | |||||
Share-based compensation | (6,268) | (3,028) | (19,137) | (11,427) | |||||
Due diligence and transition costs | (9,306) | — | (32,863) | — | |||||
Exceptional allowances attributable to COVID-19 | 1,241 | (2,080) | 1,241 | (5,167) | |||||
Expenses associated with legal claims | — | — | — | (3,000) | |||||
Adjusted Selling, General and Administrative Expenses | $ 45,180 | $ 38,426 | $ 155,731 | $ 119,661 | |||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") AND ADJUSTED EBITDA MARGINS | |||||||||
(dollar amounts in thousands) | |||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||
2022 | 2021 | 2022 | 2021 | ||||||
Net income | $ 55,513 | $ 64,083 | $ 332,152 | $ 288,957 | |||||
Income tax expense | 14,656 | 20,256 | 104,654 | 87,535 | |||||
Interest expense | 11,713 | 11,574 | 43,797 | 46,680 | |||||
Interest income | (2,032) | (1,264) | (7,288) | (4,981) | |||||
Other (gain) loss | (2,560) | (2,228) | 7,018 | (5,134) | |||||
Equity in operating net (gain) loss of affiliates, net of impairments | (637) | (140) | (1,916) | 3,408 | |||||
Loss (gain) on sale of affiliates, business & assets, and impairments, net | 623 | 14,793 | (16,065) | 12,737 | |||||
Depreciation and amortization | 9,989 | 6,296 | 30,425 | 24,773 | |||||
Mark to market adjustments on non-qualified retirement plan investments | 2,050 | 2,153 | (5,929) | 5,555 | |||||
Operational restructuring charges | 1,298 | 89 | 6,714 | 813 | |||||
Share-based compensation | 6,268 | 3,028 | 19,137 | 11,427 | |||||
Due diligence and transition costs | 9,306 | — | 32,863 | — | |||||
Exceptional allowances attributable to COVID-19 | (1,241) | 2,080 | (1,241) | 5,167 | |||||
Expenses associated with legal claims | — | — | — | 3,000 | |||||
Extraordinary termination fees from franchisee | — | — | (22,647) | — | |||||
Net reimbursable deficit (surplus) from franchised and managed properties | 5,181 | (27,191) | (52,102) | (83,897) | |||||
Franchise agreement acquisition costs amortization | 2,375 | 1,983 | 8,995 | 7,517 | |||||
Adjusted EBITDA | $ 112,502 | $ 95,512 | $ 478,567 | $ 403,557 | |||||
Revenues, excluding reimbursable revenue from franchised and managed | $ 186,015 | $ 140,175 | $ 696,690 | $ 540,455 | |||||
Adjusted EBITDA margins | 60.5 % | 68.1 % | 68.7 % | 74.7 % | |||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) | |||||||||
(dollar amounts in thousands, except per share amounts) | Three Months Ended December 31, | Year Ended December 31, | |||||||
2022 | 2021 | 2022 | 2021 | ||||||
Net income | $ 55,513 | $ 64,083 | $ 332,152 | $ 288,957 | |||||
Adjustments: | |||||||||
Loss (gain) on sale of affiliates, business & assets, and impairments, net | 474 | 11,065 | (12,208) | 9,642 | |||||
Operational restructuring charges | 986 | 65 | 5,103 | 582 | |||||
Due diligence and transition costs | 7,073 | — | 24,976 | — | |||||
Exceptional allowances attributable to COVID-19 | (943) | 1,556 | (943) | 3,911 | |||||
Expenses associated with legal claims | — | — | — | 2,271 | |||||
Extraordinary termination fees from franchisee | — | — | (17,212) | — | |||||
Net reimbursable deficit (surplus) from franchised and managed properties | 4,088 | (20,602) | (39,233) | (64,337) | |||||
Adjusted Net Income | $ 67,191 | $ 56,167 | $ 292,635 | $ 241,026 | |||||
Diluted Earnings Per Share | $ 1.04 | $ 1.14 | $ 5.99 | $ 5.15 | |||||
Adjustments: | |||||||||
Loss (gain) on sale of affiliates, business & assets, and impairments, net | 0.01 | 0.19 | (0.22) | 0.17 | |||||
Operational restructuring charges | 0.02 | — | 0.09 | 0.01 | |||||
Due diligence and transition costs | 0.13 | — | 0.45 | — | |||||
Exceptional allowances attributable to COVID-19 | (0.02) | 0.03 | (0.02) | 0.07 | |||||
Expenses associated with legal claims | — | — | — | 0.04 | |||||
Extraordinary termination fees from franchisee | — | — | (0.31) | — | |||||
Net reimbursable deficit (surplus) from franchised and managed properties | 0.08 | (0.37) | (0.71) | (1.15) | |||||
Adjusted Diluted Earnings Per Share (EPS) | $ 1.26 | $ 0.99 | $ 5.27 | $ 4.29 | |||||
Exhibit 8 | |||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||
SUPPLEMENTAL INFORMATION - 2023 OUTLOOK | |||
(UNAUDITED) | |||
Guidance represents the midpoint of the company's range of estimated outcomes for the year ended December 31, 2023 | |||
ADJUSTED EBITDA FIRST QUARTER FORECAST | |||
(dollar amounts in thousands) | Midpoint | ||
2023 Guidance | |||
Net income | $ 29,500 | ||
Income tax expense | 8,400 | ||
Interest expense | 14,800 | ||
Interest income | (1,400) | ||
Other gains and losses, net | 600 | ||
Depreciation and amortization | 12,800 | ||
Operational restructuring charges | 13,100 | ||
Share-based compensation | 4,800 | ||
Franchise agreement acquisition costs amortization | 2,700 | ||
Net reimbursable deficit from franchised and managed properties | 17,200 | ||
Adjusted EBITDA | $ 102,500 | ||
ADJUSTED EBITDA FULL YEAR FORECAST | |||
(dollar amounts in thousands) | Midpoint | ||
2023 Guidance | |||
Net income | $ 255,700 | ||
Income tax expense | 80,800 | ||
Interest expense | 66,500 | ||
Interest income | (5,000) | ||
Other gains and losses, net | (500) | ||
Depreciation and amortization | 51,200 | ||
Operational restructuring charges | 36,700 | ||
Share-based compensation | 18,000 | ||
Franchise agreement acquisition costs amortization | 10,700 | ||
Net reimbursable deficit from franchised and managed properties | 15,900 | ||
Adjusted EBITDA | $ 530,000 | ||
SOURCE Choice Hotels International, Inc.
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