SILVER SPRING, Md., Nov. 5 /PRNewswire-FirstCall/ -- Choice Hotels
International, Inc., (NYSE:CHH) today reported the following
highlights for third quarter 2009: -- Adjusted diluted earnings per
share ("EPS") for third quarter 2009 were $0.56, compared to $0.57
for the same period of the prior year. Diluted EPS were $0.55 for
third quarter 2009 compared to $0.57 for third quarter 2008.
Adjusted diluted EPS for third quarter 2009 exclude certain special
items, as described below, totaling $0.01. -- Excluding special
items, adjusted earnings before interest, taxes and depreciation
("EBITDA") were $51.7 million for the three months ended September
30, 2009, compared to $64.4 million for the same period of 2008.
Operating income for the three months ended September 30, 2009 was
$48.1 million compared to $61.9 million for the same period of
2008. -- Adjusted selling, general and administrative ("SG&A")
costs for the third quarter of 2009 totaled $23.0 million which
represented an 8% decline from the same period of the prior year.
Adjusted SG&A costs exclude special items totaling $1.5 million
and $0.5 million for the three months ended September 30, 2009 and
2008, respectively. -- Domestic unit and room growth increased 4.9
percent and 4.8 percent, respectively, from September 30, 2008. --
Domestic system-wide revenue per available room ("RevPAR") declined
15.9% for the third quarter of 2009 compared to the same period of
2008. -- The effective royalty rate increased 4 basis points to
4.23% for the three months ended September 30, 2009 compared to
4.19% for the same period of the prior year. -- Franchising
revenues declined 16% from $89.0 million for the three months ended
September 30, 2008 to $74.6 million for the same period of 2009.
Total revenues for the three months ended September 30, 2009
declined 13% compared to the same period of 2008. -- The company
executed 79 new domestic hotel franchise contracts for the three
months ended September 30, 2009, a decline of 51% compared to the
160 contracts executed in the same period of the prior year. -- The
number of domestic hotels under construction, awaiting conversion
or approved for development declined 22% from September 30, 2008 to
744 hotels representing 59,121 rooms; the worldwide pipeline
declined 20% from September 30, 2008 to 860 hotels representing
68,541 rooms. -- Interest and other investment income for the three
months ended September 30, 2009 improved by approximately $5.4
million from the same period of the prior year primarily due to the
appreciation in the fair value of investments held in the Company's
non-qualified employee benefit plans during the current period
compared to a decline in the fair value of these investments in the
prior year. "Our well-known diversified brands and our unrelenting
focus on our owners' property-level profitability and return on
investment has fueled our continued unit and room growth in the
face of a continued difficult economic and lodging industry
environment," said Stephen P. Joyce, president and chief executive
officer. "Recently, we announced that we reached the 6,000 property
milestone and we remain confident that the strength of brands will
allow us to continue to attract hotels into our global distribution
system." Special Items During the three and nine months ended
September 30, 2009, the company recorded employee termination
benefits of approximately $1.5 million and $2.3 million,
respectively. In addition, during the nine months ended September
30, 2009, the company recorded a $1.5 million charge related to the
sublease of a portion of its office space. These special items
represent diluted EPS of $0.01 and $0.03 for the three and nine
months ended September 30, 2009, respectively. During the three and
nine months ended September 30, 2008, the company recorded employee
termination benefits of approximately $0.5 million and $0.8
million, respectively. Furthermore, the company incurred $6.1
million of benefit costs during the nine months ended September 30,
2008 resulting from the acceleration of the company's management
succession plan. These special items represented diluted EPS of
$0.07 for the nine months ended September 30, 2008. Outlook for
2009 The uncertainty around the current economic environment and
credit market conditions and their impact on travel patterns and
hotel development activities makes it difficult to predict future
results, particularly as they relate to underlying assumptions for
RevPAR, new hotel franchise and relicensing sales and interest and
investment income and expense. The company's fourth quarter 2009
adjusted diluted EPS is expected to be $0.40. The company expects
full-year 2009 adjusted diluted EPS of $1.68. Adjusted EBITDA for
full-year 2009 are expected to be approximately $164.5 million.
These estimates include the following assumptions: -- The company
expects net domestic unit growth of approximately 4.0% in 2009; --
RevPAR is expected to decline approximately 12% for the fourth
quarter of 2009 and decline between 13% and 14% for full-year 2009;
-- The effective royalty rate is expected to increase 5 basis
points for full-year 2009; -- All figures assume the existing share
count and an effective tax rate of 36.3% and 36.0% for the fourth
quarter and full-year 2009, respectively; -- Adjusted diluted EPS
for fourth quarter 2009 exclude approximately $0.01 diluted EPS
related to employee termination benefits. -- Adjusted EBITDA and
adjusted diluted EPS for full year 2009 exclude $4.8 million ($3.0
million after tax and approximately $0.05 diluted EPS) of operating
expenses related to employee termination benefits and a loss on the
sublease of office space. 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 nine
months ended September 30, 2009 the company paid $33.3 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 three months ended September 30, 2009, the
company purchased approximately 0.7 million shares of its common
stock at an average price of $27.37 for a total cost of $20.5
million under the share repurchase program. During the nine months
ended September 30, 2009, the company purchased approximately 2.1
million shares of its common stock at an average price of $26.90
for a total cost of $55.3 million and has authorization to purchase
up to an additional 3.9 million shares under this program. 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 42.8 million shares of its
common stock for a total cost of $1 billion through September 30,
2009. Considering the effect of a two-for-one stock split in
October 2005, the company has repurchased 75.8 million shares under
the share repurchase program at an average price of $13.26 per
share. Our Board has authorized us to enter into programs which
permit us to offer financing, investment and guaranty support to
qualified franchisees to incent multi-unit franchise development in
top markets. We expect to opportunistically deploy this capital
over the next several years. Our annual investment in these
programs is dependent on market and other conditions.
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.
Impact of the Adoption of New Accounting Pronouncements on Earnings
Per Share In June 2008, the Financial Accounting Standards Board
("FASB") issued FASB Staff Position Emerging Issues Task Force No.
03-6-1, "Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities" ("FSP EITF
03-6-1"). FSP EITF 03-6-1 clarified that all share-based payment
awards that contain rights to non-forfeitable dividends participate
in undistributed earnings with common shareholders. Therefore,
awards of this nature are considered participating securities and
the two-class method of computing basic and diluted earnings per
share must be applied rather than the treasury stock method. FSP
EITF 03-6-1 is effective for fiscal years beginning after December
15, 2008. In addition, once effective, all prior period earnings
per share data presented must be adjusted retrospectively to
conform to the provisions of FSP EITF 03-6-1. The Company's
outstanding unvested restricted stock awards contain rights to
non-forfeitable dividends and as a result, the Company applied this
guidance in the first quarter of 2009. The two-class method of
calculating earnings per share is more dilutive to both basic and
diluted shares outstanding than the previously utilized treasury
stock method. In accordance with FSP EITF 03-6-1, the Company has
retrospectively adjusted its basic and diluted shares outstanding
for the three and nine months ended September 30, 2008 under the
two-class method which resulted in a reduction of the Company's
basic and diluted earnings per share for the nine months ended
September 30, 2008 from $1.31 to $1.30 and $1.30 to $1.29 per
share, respectively. In addition, basic earnings per share for the
three months ended September 30, 2008 has been revised from $0.58
to $0.57 per share. Conference Call Choice will conduct a
conference call on Friday, November 6, 2009 at 10:00 a.m. EST to
discuss the company's third quarter results. The dial-in number to
listen to the call is 1-800-510-0219, and the access code is
72342358. International callers should dial 1-617-614-3451 and
enter the access code 72342358. The conference call also will be
Webcast simultaneously via the company's Web site,
http://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. EST on November 6, 2009 through December 6,
2009 by calling 1-888-286-8010 and entering access code 56845732.
The international dial-in number for the replay is 617-801-6888,
access code 56845732. In addition, the call will be archived and
available on http://www.choicehotels.com/ via the Investor Info
link. About Choice Hotels Choice Hotels International, Inc.
franchises more than 6,000 hotels, representing more than 485,000
rooms, in the United States and more than 35 other countries and
territories. As of September 30, 2009, more than 700 hotels are
under construction, awaiting conversion or approved for development
in the United States, representing more than 59,000 rooms, and more
than 100 hotels, representing approximately 9,400 rooms, are under
construction, awaiting conversion or approved for development in
more than 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 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 http://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,
2008, filed with the Securities and Exchange Commission on March 2,
2009. 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 and a loss on the sublease of a portion of the Company's
office space for 2009 and the impact of the acceleration of the
Company's management succession plan and employee termination
benefits for the periods ended September 30, 2008. 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. 2009 Choice Hotels
International, Inc. All rights reserved. Choice Hotels
International, Inc. Exhibit 1 Consolidated Statements of Income
(Unaudited) Three Months Ended September 30,
-------------------------------- Variance 2009 2008 $ % ---- ----
--- --- (In thousands, except per share amounts) REVENUES: Royalty
fees $66,401 $76,595 $(10,194) (13%) Initial franchise and
relicensing fees 2,957 7,012 (4,055) (58%) Procurement services
3,922 3,836 86 2% Marketing and reservation 90,465 100,811 (10,346)
(10%) Hotel operations 934 1,353 (419) (31%) Other 1,297 1,604
(307) (19%) ----- ----- ---- --- Total revenues 165,976 191,211
(25,235) (13%) OPERATING EXPENSES: Selling, general and
administrative 24,517 25,579 (1,062) (4%) Depreciation and
amortization 2,105 2,038 67 3% Marketing and reservation 90,465
100,811 (10,346) (10%) Hotel operations 764 914 (150) (16%) --- ---
---- --- Total operating expenses 117,851 129,342 (11,491) (9%)
Operating income 48,125 61,869 (13,744) (22%) OTHER INCOME AND
EXPENSES: Interest expense 926 2,157 (1,231) (57%) Interest and
other investment (income) loss (2,961) 2,402 (5,363) (223%) Equity
in net income of affiliates (336) (436) 100 (23%) ---- ---- --- ---
Total other income and expenses, net (2,371) 4,123 (6,494) (158%)
------ ----- ------ ---- Income before income taxes 50,496 57,746
(7,250) (13%) Income taxes 17,688 21,831 (4,143) (19%) ------
------ ------ --- Net income $32,808 $35,915 $(3,107) (9%) =======
======= ======= == Weighted average shares outstanding-basic*
59,733 62,836 ====== ====== Weighted average shares outstanding-
diluted* 59,818 63,390 ====== ====== Basic earnings per share*
$0.55 $0.57 $(0.02) (4%) ===== ===== ====== == Diluted earnings per
share* $0.55 $0.57 $(0.02) (4%) ===== ===== ====== == Nine Months
Ended September 30, ------------------------------- Variance 2009
2008 $ % ---- ---- --- --- (In thousands, except per share amounts)
REVENUES: Royalty fees $164,771 $188,151 $(23,380) (12%) Initial
franchise and relicensing fees 9,599 21,202 (11,603) (55%)
Procurement services 14,084 13,650 434 3% Marketing and reservation
227,803 254,573 (26,770) (11%) Hotel operations 3,231 3,683 (452)
(12%) Other 3,989 5,927 (1,938) (33%) ----- ----- ------ --- Total
revenues 423,477 487,186 (63,709) (13%) OPERATING EXPENSES:
Selling, general and administrative 73,054 83,409 (10,355) (12%)
Depreciation and amortization 6,252 6,165 87 1% Marketing and
reservation 227,803 254,573 (26,770) (11%) Hotel operations 2,378
2,540 (162) (6%) ----- ----- ---- -- Total operating expenses
309,487 346,687 (37,200) (11%) Operating income 113,990 140,499
(26,509) (19%) OTHER INCOME AND EXPENSES: Interest expense 3,731
8,687 (4,956) (57%) Interest and other investment (income) loss
(5,302) 3,329 (8,631) (259%) Equity in net income of affiliates
(779) (938) 159 (17%) ---- ---- --- --- Total other income and
expenses, net (2,350) 11,078 (13,428) (121%) ------ ------ -------
---- Income before income taxes 116,340 129,421 (13,081) (10%)
Income taxes 41,721 47,921 (6,200) (13%) ------ ------ ------ ---
Net income $74,619 $81,500 $(6,881) (8%) ======= ======= ======= ==
Weighted average shares outstanding-basic* 60,241 62,606 ======
====== Weighted average shares outstanding-diluted* 60,412 63,253
====== ====== Basic earnings per share* $1.24 $1.30 $(0.06) (5%)
===== ===== ====== == Diluted earnings per share* $1.24 $1.29
$(0.05) (4%) ===== ===== ====== == * The Company's weighted average
shares outstanding for the three and nine months ended September
30, 2008 have been retrospectively adjusted due to the application
of EITF Issue 03-6-1 "Determining Whether Instruments Granted in
Share Based Payment Transactions are Participating Securities"
which became effective for the Company in 2009. The application of
this guidance has resulted in the revision of basic and diluted
earnings per share for the nine months ended September 30, 2008
from $1.31 to $1.30 and $1.30 to $1.29 per share, respectively. In
addition, basic earnings per share for the three months ended
September 30, 2008 has been revised from $0.58 to $0.57 per share.
Choice Hotels International, Inc. Exhibit 2 Consolidated Balance
Sheets (In thousands, except per share amounts) September 30,
December 31, 2009 2008 ---- ---- (Unaudited) ASSETS Cash and cash
equivalents $63,645 $52,680 Accounts receivable, net 51,396 43,141
Deferred income taxes 8,223 8,223 Other current assets 12,549
16,172 ------ ------ Total current assets 135,813 120,216 Fixed
assets and intangibles, net 134,293 138,867 Receivable -- marketing
and reservation fees 32,903 13,527 Investments, employee benefit
plans, at fair value 19,865 25,360 Other assets 30,154 30,249
------ ------ Total assets $353,028 $328,219 -------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT Accounts payable and accrued
expenses $72,675 $79,897 Deferred revenue 52,456 47,004 Deferred
compensation & retirement plan obligations 2,190 6,960 Other
current liabilities 21,910 1,206 ------ ----- Total current
liabilities 149,231 135,067 Long-term debt 292,300 284,400 Deferred
compensation & retirement plan obligations 35,654 33,462 Other
liabilities 8,753 12,960 ----- ------ Total liabilities 485,938
465,889 ------- ------- Common stock, $0.01 par value 595 607
Additional paid-in-capital 86,156 90,141 Accumulated other
comprehensive loss (1,318) (3,472) Treasury stock, at cost
(870,085) (835,186) Retained earnings 651,742 610,240 -------
------- Total shareholders' deficit (132,910) (137,670) --------
-------- Total liabilities and shareholders' deficit $353,028
$328,219 -------- -------- Choice Hotels International, Inc.
Exhibit 3 Consolidated Statements of Cash Flows (Unaudited) Nine
Months Ended (In thousands) September 30, ----------------- 2009
2008 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$74,619 $81,500 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
6,252 6,165 Provision for bad debts 1,643 870 Non-cash stock
compensation and other charges 8,796 9,989 Non-cash interest and
other (income) loss (4,953) 4,489 Dividends received from equity
method investments 819 673 Equity in net income of affiliates (779)
(938) Changes in assets and liabilities: Receivables (9,409)
(8,646) Receivable - marketing and reservation fees, net (13,742)
(3,803) Accounts payable (2,061) (16,061) Accrued expenses (5,754)
(5,416) Income taxes payable/receivable 22,314 16,750 Deferred
income taxes - 782 Deferred revenue 5,349 1,292 Other assets 2,087
2,465 Other liabilities (5,215) 2,280 ------ ----- NET CASH
PROVIDED BY OPERATING ACTIVITIES 79,966 92,391 ------ ------ CASH
FLOWS FROM INVESTING ACTIVITIES: Investment in property and
equipment (7,539) (7,873) Issuance of notes receivable (1,731)
(6,411) Collections of notes receivable 190 368 Purchases of
investments, employee benefit plans (3,239) (6,908) Proceeds from
sales of investments, employee benefit plans 13,839 6,857 Other
items, net (447) (965) ---- ---- NET CASH PROVIDED (USED) IN
INVESTING ACTIVITIES 1,073 (14,932) ----- ------- CASH FLOWS FROM
FINANCING ACTIVITIES: Principal payments of long-term debt -
(100,000) Net borrowings pursuant to revolving credit facility
7,900 62,000 Purchase of treasury stock (57,042) (1,568) Excess tax
benefits from stock-based compensation 4,374 4,653 Dividends paid
(33,335) (31,626) Proceeds from exercise of stock options 6,744
6,085 ----- ----- NET CASH USED IN FINANCING ACTIVITIES (71,359)
(60,456) ------- ------- Net change in cash and cash equivalents
9,680 17,003 Effect of foreign exchange rate changes on cash and
cash equivalents 1,285 (853) Cash and cash equivalents at beginning
of period 52,680 46,377 ------ ------ CASH AND CASH EQUIVALENTS AT
END OF PERIOD $63,645 $62,527 ======= ======= CHOICE HOTELS
INTERNATIONAL, INC. Exhibit 4 SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM (UNAUDITED) For the Nine Months Ended
September 30, 2009* ------------------------- Average Daily Rate
Occupancy RevPAR ---- --------- ------ Comfort Inn $77.48 54.7%
$42.36 Comfort Suites 85.72 54.2% 46.50 Sleep 70.16 52.5% 36.80
----- ---- ----- Midscale without Food & Beverage 78.41 54.2%
42.53 ----- ---- ----- Quality 68.73 46.9% 32.20 Clarion 77.95
43.0% 33.55 ----- ---- ----- Midscale with Food & Beverage
70.54 46.1% 32.48 ----- ---- ----- Econo Lodge 54.96 43.9% 24.15
Rodeway 53.24 43.9% 23.35 ----- ---- ----- Economy 54.46 43.9%
23.92 ----- ---- ----- MainStay 71.68 58.1% 41.65 Suburban 42.37
56.0% 23.72 ----- ---- ----- Extended Stay 50.76 56.6% 28.71 -----
---- ----- Total $71.59 50.1% $35.85 ====== ==== ====== For the
Nine Months Ended September 30, 2008* -------------------------
Average Daily Rate Occupancy RevPAR ---- --------- ------ Comfort
Inn $80.12 60.9% $48.82 Comfort Suites 89.95 62.5% 56.26 Sleep
72.05 59.7% 43.02 ----- ---- ----- Midscale without Food &
Beverage 81.18 61.1% 49.61 ----- ---- ----- Quality 72.08 53.0%
38.20 Clarion 85.04 51.0% 43.37 ----- ---- ----- Midscale with Food
& Beverage 74.87 52.6% 39.35 ----- ---- ----- Econo Lodge 55.65
47.3% 26.33 Rodeway 55.51 48.7% 27.04 ----- ---- ----- Economy
55.61 47.7% 26.51 ----- ---- ----- MainStay 73.38 65.2% 47.86
Suburban 42.57 64.3% 27.37 ----- ---- ----- Extended Stay 50.66
64.5% 32.70 ----- ---- ----- Total $74.47 56.2% $41.87 ====== ====
====== Change ------ Average Daily Rate Occupancy RevPAR ----
--------- ------ Comfort Inn (3.3%) (620) bps (13.2%) Comfort
Suites (4.7%) (830) bps (17.3%) Sleep (2.6%) (720) bps (14.5%) ----
---- --- ----- Midscale without Food & Beverage (3.4%) (690)
bps (14.3%) ---- ---- --- ----- Quality (4.6%) (610) bps (15.7%)
Clarion (8.3%) (800) bps (22.6%) ---- ---- --- ----- Midscale with
Food & Beverage (5.8%) (650) bps (17.5%) ---- ---- --- -----
Econo Lodge (1.2%) (340) bps (8.3%) Rodeway (4.1%) (480) bps
(13.6%) ---- ---- --- ----- Economy (2.1%) (380) bps (9.8%) ----
---- --- ---- MainStay (2.3%) (710) bps (13.0%) Suburban (0.5%)
(830) bps (13.3%) ---- ---- --- ----- Extended Stay 0.2% (790) bps
(12.2%) --- ---- --- ----- Total (3.9%) (610) bps (14.4%) ==== ====
=== ===== * Operating statistics represent hotel operations from
December through August For the Three Months Ended September 30,
2009* -------------------------- Average Daily Rate Occupancy
RevPAR ---- --------- ------ Comfort Inn $81.35 62.7% $51.04
Comfort Suites 86.67 60.0% 52.02 Sleep 72.14 57.9% 41.74 ----- ----
----- Midscale without Food & Beverage 81.32 61.4% 49.89 -----
---- ----- Quality 72.71 53.7% 39.02 Clarion 81.07 47.8% 38.75
----- ---- ----- Midscale with Food & Beverage 74.33 52.4%
38.97 ----- ---- ----- Econo Lodge 58.54 51.2% 29.94 Rodeway 57.37
51.1% 29.30 ----- ---- ----- Economy 58.19 51.1% 29.75 ----- ----
----- MainStay 73.01 63.6% 46.44 Suburban 41.68 60.1% 25.06 -----
---- ----- Extended Stay 50.88 61.1% 31.10 ----- ---- ----- Total
$74.77 56.9% $42.56 ====== ==== ====== For the Three Months Ended
September 30, 2008* -------------------------- Average Daily Rate
Occupancy RevPAR ---- --------- ------ Comfort Inn $85.58 69.9%
$59.79 Comfort Suites 92.58 68.7% 63.57 Sleep 74.93 66.2% 49.63
----- ---- ----- Midscale without Food & Beverage 85.65 69.1%
59.15 ----- ---- ----- Quality 77.04 61.2% 47.15 Clarion 89.85
59.1% 53.06 ----- ---- ----- Midscale with Food & Beverage
79.74 60.7% 48.43 ----- ---- ----- Econo Lodge 60.26 55.7% 33.59
Rodeway 61.31 56.0% 34.34 ----- ---- ----- Economy 60.54 55.8%
33.79 ----- ---- ----- MainStay 76.09 70.0% 53.28 Suburban 43.27
65.8% 28.45 ----- ---- ----- Extended Stay 52.27 66.9% 34.95 -----
---- ----- Total $78.96 64.1% $50.62 ====== ==== ====== Change
------ Average Daily Rate Occupancy RevPAR ---- --------- ------
Comfort Inn (4.9%) (720) bps (14.6%) Comfort Suites (6.4%) (870)
bps (18.2%) Sleep (3.7%) (830) bps (15.9%) ---- ---- --- -----
Midscale without Food & Beverage (5.1%) (770) bps (15.7%) ----
---- --- ----- Quality (5.6%) (750) bps (17.2%) Clarion (9.8%)
(1,130) bps (27.0%) ---- ------ --- ----- Midscale with Food &
Beverage (6.8%) (830) bps (19.5%) ---- ---- --- ----- Econo Lodge
(2.9%) (450) bps (10.9%) Rodeway (6.4%) (490) bps (14.7%) ---- ----
--- ----- Economy (3.9%) (470) bps (12.0%) ---- ---- --- -----
MainStay (4.0%) (640) bps (12.8%) Suburban (3.7%) (570) bps (11.9%)
---- ---- --- ----- Extended Stay (2.7%) (580) bps (11.0%) ----
---- --- ----- Total (5.3%) (720) bps (15.9%) ==== ==== === ===== *
Operating statistics represent hotel operations from June through
August For the Quarter Ended For the Nine Months Ended
--------------------- ------------------------- 9/30/2009 9/30/2008
9/30/2009 9/30/2008 System-wide effective royalty rate 4.23% 4.19%
4.25% 4.19% CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA (UNAUDITED) September 30,
September 30, 2009 2008 ------------- ------------------ Hotels
Rooms Hotels Rooms ------ ----- ------ ----- Comfort Inn 1,457
114,377 1,455 113,782 Comfort Suites 601 46,853 526 40,890 Sleep
389 28,459 359 26,478 --- ------ --- ------ Midscale without Food
& Beverage 2,447 189,689 2,340 181,150 ----- ------- -----
------- Quality 963 88,129 888 83,648 Clarion 167 24,063 173 23,031
--- ------ --- ------ Midscale with Food & Beverage 1,130
112,192 1,061 106,679 ----- ------- ----- ------- Econo Lodge 795
49,504 824 51,490 Rodeway 374 21,834 336 19,904 --- ------ ---
------ Economy 1,169 71,338 1,160 71,394 ----- ------ ----- ------
MainStay 37 2,866 34 2,605 Suburban 63 7,531 58 7,054 -- ----- --
----- Extended Stay 100 10,397 92 9,659 --- ------ -- ----- Ascend
Collection 26 1,941 - - Cambria Suites 18 2,073 8 857 -- ----- --
--- Domestic Franchises 4,890 387,630 4,661 369,739 International
Franchises 1,116 99,582 1,110 98,628 ----- ------ ----- ------
Total Franchises 6,006 487,212 5,771 468,367 ===== ======= =====
======= Variance -------- Hotels Rooms % % ------ ----- --- ---
Comfort Inn 2 595 0.1% 0.5% Comfort Suites 75 5,963 14.3% 14.6%
Sleep 30 1,981 8.4% 7.5% -- ----- --- --- Midscale without Food
& Beverage 107 8,539 4.6% 4.7% --- ----- --- --- Quality 75
4,481 8.4% 5.4% Clarion (6) 1,032 (3.5%) 4.5% -- ----- ---- ---
Midscale with Food & Beverage 69 5,513 6.5% 5.2% -- ----- ---
--- Econo Lodge (29) (1,986) (3.5%) (3.9%) Rodeway 38 1,930 11.3%
9.7% -- ----- ---- --- Economy 9 (56) 0.8% (0.1%) -- --- --- ----
MainStay 3 261 8.8% 10.0% Suburban 5 477 8.6% 6.8% -- --- --- ---
Extended Stay 8 738 8.7% 7.6% -- --- --- --- Ascend Collection 26
1,941 NM NM Cambria Suites 10 1,216 125.0% 141.9% -- ----- -----
----- Domestic Franchises 229 17,891 4.9% 4.8% International
Franchises 6 954 0.5% 1.0% -- --- --- --- Total Franchises 235
18,845 4.1% 4.0% === ====== === === Exhibit 6 CHOICE HOTELS
INTERNATIONAL, INC. SUPPLEMENTAL INFORMATION BY BRAND DEVELOPMENT
RESULTS -- DOMESTIC NEW HOTEL CONTRACTS (UNAUDITED) For the Nine
Months For the Nine Months Ended September 30, Ended September 30,
2009 2008 -------------------- -------------------- New New Const-
Const- ruction Conversion Total ruction Conversion Total -------
---------- ----- ------- ---------- ----- Comfort Inn 4 22 26 33 41
74 Comfort Suites 9 1 10 65 3 68 Sleep 11 2 13 47 3 50 -- -- -- --
-- -- Midscale without Food & Beverage 24 25 49 145 47 192 --
-- -- --- -- --- Quality 3 87 90 4 108 112 Clarion 1 23 24 6 28 34
-- -- -- -- -- -- Midscale with Food & Beverage 4 110 114 10
136 146 -- --- --- -- --- --- Econo Lodge - 45 45 3 55 58 Rodeway 1
36 37 2 65 67 -- -- -- -- -- -- Economy 1 81 82 5 120 125 -- -- --
-- --- --- MainStay 1 1 2 7 - 7 Suburban 2 - 2 8 - 8 -- -- -- -- --
-- Extended Stay 3 1 4 15 - 15 -- -- -- -- -- -- Ascend Collection
1 5 6 - 1 1 Cambria Suites 2 - 2 12 - 12 -- -- -- -- -- -- Total
Domestic System 35 222 257 187 304 491 == === === === === === %
Change -------- New Construction Conversion Total ------------
---------- ----- Comfort Inn (88%) (46%) (65%) Comfort Suites (86%)
(67%) (85%) Sleep (77%) (33%) (74%) --- --- --- Midscale without
Food & Beverage (83%) (47%) (74%) --- --- --- Quality (25%)
(19%) (20%) Clarion (83%) (18%) (29%) --- --- --- Midscale with
Food & Beverage (60%) (19%) (22%) --- --- --- Econo Lodge
(100%) (18%) (22%) Rodeway (50%) (45%) (45%) --- --- --- Economy
(80%) (33%) (34%) --- --- --- MainStay (86%) NM (71%) Suburban
(75%) NM (75%) --- -- --- Extended Stay (80%) NM (73%) --- -- ---
Ascend Collection NM 400% 500% Cambria Suites (83%) NM (83%) --- --
--- Total Domestic System (81%) (27%) (48%) === === === For the
Three Months For the Three Months Ended September 30, Ended
September 30, 2009 2008 -------------------- --------------------
New New Const- Const- ruction Conversion Total ruction Conversion
Total ------- ---------- ----- ------- ---------- ----- Comfort Inn
3 7 10 11 14 25 Comfort Suites 3 - 3 23 - 23 Sleep 4 - 4 15 1 16 --
-- -- -- -- -- Midscale without Food & Beverage 10 7 17 49 15
64 -- -- -- -- -- -- Quality 1 23 24 2 33 35 Clarion 1 9 10 1 7 8
-- -- -- -- -- -- Midscale with Food & Beverage 2 32 34 3 40 43
-- -- -- -- -- -- Econo Lodge - 16 16 2 16 18 Rodeway - 8 8 - 17 17
-- -- -- -- -- -- Economy - 24 24 2 33 35 -- -- -- -- -- --
MainStay - - - 6 - 6 Suburban - - - 4 - 4 -- -- -- -- -- --
Extended Stay - - - 10 - 10 -- -- -- -- -- -- Ascend Collection 1 3
4 - 1 1 Cambria Suites - - - 7 - 7 -- -- -- -- -- -- Total Domestic
System 13 66 79 71 89 160 == == == == == === % Change -------- New
Construction Conversion Total ------------ ---------- ----- Comfort
Inn (73%) (50%) (60%) Comfort Suites (87%) NM (87%) Sleep (73%)
(100%) (75%) --- ---- --- Midscale without Food & Beverage
(80%) (53%) (73%) --- --- --- Quality (50%) (30%) (31%) Clarion 0%
29% 25% - -- -- Midscale with Food & Beverage (33%) (20%) (21%)
--- --- --- Econo Lodge (100%) 0% (11%) Rodeway NM (53%) (53%) --
--- --- Economy (100%) (27%) (31%) ---- --- --- MainStay (100%) NM
(100%) Suburban (100%) NM (100%) ---- -- ---- Extended Stay (100%)
NM (100%) ---- -- ---- Ascend Collection NM 200% 300% Cambria
Suites (100%) NM (100%) ---- -- ---- Total Domestic System (82%)
(26%) (51%) === === === Exhibit 7 CHOICE HOTELS INTERNATIONAL, INC.
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. September 30, 2009 September 30, 2008
Units Units ----- ----- New New Const- Const- Conversion ruction
Total Conversion ruction Total ---------- ------- ----- ----------
------- ----- Comfort Inn 37 97 134 44 123 167 Comfort Suites - 194
194 2 281 283 Sleep Inn 1 129 130 1 148 149 -- --- --- -- --- ---
Midscale without Food & Beverage 38 420 458 47 552 599 -- ---
--- -- --- --- Quality 49 16 65 77 16 93 Clarion 23 6 29 30 10 40
-- -- -- -- -- -- Midscale with Food & Beverage 72 22 94 107 26
133 -- -- -- --- -- --- Econo Lodge 40 4 44 33 5 38 Rodeway 35 2 37
43 1 44 -- -- -- -- -- -- Economy 75 6 81 76 6 82 -- -- -- -- -- --
MainStay - 34 34 - 38 38 Suburban - 31 31 1 39 40 -- -- -- -- -- --
Extended Stay - 65 65 1 77 78 -- -- -- -- -- -- Ascend Collection 1
2 3 - - - Cambria Suites - 43 43 - 63 63 -- -- -- -- -- -- 186 558
744 231 724 955 === === === === === === Variance --------
Conversion New Construction Total ---------- ---------------- -----
Units % Units % Units % ----- --- ----- --- ----- --- Comfort Inn
(7) (16%) (26) (21%) (33) (20%) Comfort Suites (2) (100%) (87)
(31%) (89) (31%) Sleep Inn - 0% (19) (13%) (19) (13%) -- -- --- ---
--- --- Midscale without Food & Beverage (9) (19%) (132) (24%)
(141) (24%) -- --- ---- --- ---- --- Quality (28) (36%) - 0% (28)
(30%) Clarion (7) (23%) (4) (40%) (11) (28%) -- --- -- --- --- ---
Midscale with Food & Beverage (35) (33%) (4) (15%) (39) (29%)
--- --- -- --- --- --- Econo Lodge 7 21% (1) (20%) 6 16% Rodeway
(8) (19%) 1 100% (7) (16%) -- --- -- --- -- --- Economy (1) (1%) -
0% (1) (1%) -- -- -- -- -- -- MainStay - NM (4) (11%) (4) (11%)
Suburban (1) (100%) (8) (21%) (9) (23%) -- ---- -- --- -- ---
Extended Stay (1) (100%) (12) (16%) (13) (17%) -- ---- --- --- ---
--- Ascend Collection 1 NM 2 NM 3 NM Cambria Suites - NM (20) (32%)
(20) (32%) -- -- --- --- --- --- (45) (19%) (166) (23%) (211) (22%)
=== === ==== === ==== === CHOICE HOTELS INTERNATIONAL, INC. Exhibit
8 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING
MARGINS (dollar Three Months amounts in Ended September Nine Months
Ended thousands) 30, September 30, ----------------
----------------- 2009 2008 2009 2008 ---- ---- ---- ----
Franchising Revenues: Total Revenues $165,976 $191,211 $423,477
$487,186 Adjustments: Marketing and reservation revenues (90,465)
(100,811) (227,803) (254,573) Hotel operations (934) (1,353)
(3,231) (3,683) ---- ------ ------ ------ Franchising Revenues
$74,577 $89,047 $192,443 $228,930 ------- ------- -------- --------
Franchising Margins: Operating Margin: Total Revenues $165,976
$191,211 $423,477 $487,186 Operating Income $48,125 $61,869
$113,990 $140,499 ------- ------- -------- -------- Operating
Margin 29.0% 32.4% 26.9% 28.8% ---- ---- ---- ---- Adjusted
Franchising Margin: Franchising Revenues $74,577 $89,047 $192,443
$228,930 Operating Income $48,125 $61,869 $113,990 $140,499
Acceleration of management succession plan benefits - - - 6,069
Employee termination benefits 1,496 461 2,270 842 Loss on sublease
of office space - - 1,503 - Hotel operations (170) (439) (853)
(1,143) ---- ---- ---- ------ $49,451 $61,891 $116,910 $146,267
------- ------- -------- -------- ---- ---- ---- ---- Adjusted
Franchising Margins 66.3% 69.5% 60.8% 63.9% ---- ---- ---- ----
CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS
Three Months Nine Months (dollar amounts in Ended September Ended
September thousands) 30, 30, ---------------- ---------------- 2009
2008 2009 2008 ---- ---- ---- ---- Selling, general and
administrative costs $24,517 $25,579 $73,054 $83,409 Acceleration
of management succession plan benefits - - - (6,069) Employee
termination benefits (1,496) (461) (2,270) (842) Loss on sublease
of office space - - (1,503) - - - ------ - Adjusted Selling,
General and Administrative Costs $23,021 $25,118 $69,281 $76,498
======= ======= ======= ======= CALCULATION OF ADJUSTED NET INCOME
AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) Three Months Nine
Months (In thousands, except per Ended Ended share amounts)
September 30, September 30, --------------- --------------- 2009
2008 2009 2008 ---- ---- ---- ---- Net Income $32,808 $35,915
$74,619 $81,500 Adjustments: Acceleration of management succession
plan benefits - - - 3,799 Employee termination benefits 936 289
1,421 527 Loss on sublease of office space - - 941 - - - --- -
Adjusted Net Income $33,744 $36,204 $76,981 $85,826 ------- -------
------- ------- Weighted average shares outstanding-diluted 59,818
63,390 60,412 63,253 Diluted Earnings Per Share $0.55 $0.57 $1.24
$1.29 Adjustments: Acceleration of management succession plan - - -
0.06 Employee termination benefits 0.01 - 0.02 0.01 Loss on
sublease of office space - - 0.01 - -- -- ---- -- Adjusted Diluted
Earnings Per Share (EPS) $0.56 $0.57 $1.27 $1.36 ----- ----- -----
----- Adjusted EBITDA Reconciliation (in millions) Nine Nine Months
Months Ended Ended Full- Q3 Q3 Sept. 30, Sept. 30, Year 2009 2008
2009 2008 2009 Actuals Actuals Actuals Actuals Outlook -------
------- ---------- ---------- ------- Operating Income (per GAAP)
$48.1 $61.9 $114.0 $140.5 $151.4 Acceleration of management
succession plan - - - 6.1 - Employee termination benefits 1.5 0.5
2.3 0.8 3.3 Loss on sublease of office space - - 1.5 - 1.5
Depreciation and amortization 2.1 2.0 6.3 6.2 8.3 --- --- --- ---
--- Adjusted Earnings before interest, taxes, depreciation &
amortization (non- GAAP) $51.7 $64.4 $124.1 $153.6 $164.5 =====
===== ====== ====== ====== DATASOURCE: 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 Web Site:
http://www.choicehotels.com/
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