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   Choice Hotels Posts 1st Qtr 2010
 Profit of $15.8 million

RevPAR Falls 10.3% with New Unit Growth Up 2.9%

 
 


SILVER SPRING, Md.
, April 26, 2010 - Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for first quarter 2010:

  • Adjusted diluted earnings per share ("EPS") for first quarter 2010 were $0.27 compared to $0.27 for the same period of the prior year.  Diluted EPS were $0.26 for first quarter 2010 compared to $0.27 for first quarter 2009.  Adjusted diluted EPS for first quarter 2010 exclude certain special items, as described below, totaling $0.01.
  • Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") were $26.4 million for the three months ended March 31, 2010, compared to $30.3 million for the same period of 2009. Operating income for the three months ended March 31, 2010 and 2009 were $23.8 million and $27.8 million, respectively.
  • Franchising revenues declined 6% from $51.0 million for the three months ended March 31, 2009 to $47.7 million for the same period of 2010.  Total revenues for the three months ended March 31, 2010 declined 6% compared to the same period of 2009.
  • Interest and other investment income for the three months ended March 31, 2010 improved by approximately $1.9 millionfrom 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 same period of the prior year.
  • Domestic unit and room growth increased 2.9 percent and 2.4 percent, respectively, from March 31, 2009.  
  • Domestic system-wide revenue per available room ("RevPAR") declined 10.3% for the first quarter of 2010 compared to the same period of 2009.    
  • The effective royalty rate increased 8 basis points to 4.34% for the three months ended March 31, 2010 compared to 4.26% for the same period of the prior year.
  • The company executed 55 new domestic hotel franchise contracts for the three months ended March 31, 2010, a decline of 8% compared to the 60 contracts executed in the same period of the prior year.
  • The number of domestic hotels under construction, awaiting conversion or approved for development declined 27% fromMarch 31, 2009 to 657 hotels representing 52,483 rooms; the worldwide pipeline declined 25% from March 31, 2009 to 759 hotels representing 60,704 rooms.

"While the domestic RevPAR and franchise sales environment remained challenging during the first quarter, the company's overall franchise sales results and recent RevPAR trends indicate some stabilization in this environment," said Stephen P. Joyce, president and chief executive officer.  "As the domestic RevPAR and hotel transaction environment improves, we believe that Choice will remain a top choice for hotel developers, on account of our well-known family of brands, our ability to deliver guests to our franchisees' hotels and our range of centralized support services designed to enhance our franchisees' profitability."

Special Items

During the three months ended March 31, 2010, the company recorded employee termination benefits of approximately $0.4 million representing adjusted diluted EPS of $0.01 for the three months ended March 31, 2010.

During the three months ended March 31, 2009, the company recorded employee termination benefits of approximately $0.4 million representing adjusted diluted EPS of $0.00 for the three months ended March 31, 2009.

Outlook for 2010

The company's second quarter 2010 diluted EPS is expected to be at least $0.42. The company expects full-year 2010 diluted EPS to be between $1.68 and $1.72.  Adjusted EBITDA for full-year 2010 are expected to be between $166 million and $170 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth of approximately 2% in 2010;
  • RevPAR is expected to decline approximately 2% for second quarter of 2010 and decline between 1% and 3% for full-year 2010;
  • The effective royalty rate is expected to increase 6 basis points for full-year 2010;
  • All figures assume the existing share count and an effective tax rate of 35.8% for the second quarter and full-year 2010;
  • Projections assume that the company's existing credit facility remains in place for full-year 2010.

Use of Free Cash Flow

The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.

For the three months ended March 31, 2010 the company paid $10.9 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

During the three months ended March 31, 2010, the company purchased approximately 0.2 million shares of its common stock at an average price of $31.75 for a total cost of $6.9 million under the share repurchase program and has authorization to purchase up to an additional 3.6 million shares under this program.  We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 43.1 million shares of its common stock for a total cost of $1 billion through March 31, 2010. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.1 million shares through March 31, 2010under the share repurchase program at an average price of $13.33 per share.

Our Board has authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets.  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.

Conference Call

Choice will conduct a conference call on Tuesday, April 27, 2010 at 10:00 a.m. EDST to discuss the company's first quarter 2010 results. The dial-in number to listen to the call is 1-800-299-7098, and the access code is 88998398. International callers should dial 1-617-801-9715 and enter the access code 88998398.  The conference call also will be Webcast simultaneously via the company's Web site, www.choicehotels.com.  Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link.  The Investor Information page will feature a conference call microphone icon to access the call.

The call will be recorded and available for replay beginning at 1:00 p.m. EDST on April 27, 2010 through May 27, 2010 by calling 1-888-286-8010 and entering access code 18022472. The international dial-in number for the replay is 617-801-6888, access code 18022472. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc. franchises more than 6,000 hotels, representing more than 485,000 rooms, in the United States and more than 35 other countries and territories.  As of March 31, 2010, more than 600 hotels are under construction, awaiting conversion or approved for development in the United States, representing more than 52,000 rooms, and more than 100 hotels, representing approximately 8,200 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, Canada and theCaribbean 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 atwww.choicehotels.com.

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law.  Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Such forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management.  Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters.   We caution you not to place undue reliance on any such forward-looking statements.  Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.

Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements.  Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions;  operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness.  These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 1, 2010.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements

Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements.  This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States (GAAP), such as diluted earnings per share, operating income, total revenues and operating margins.  The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited.  The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.

Franchising Revenues and Margins:  The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations.  Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the company's financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities.  Hotel operations are excluded since they do not reflect the most accurate measure of the company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the three months ended March 31, 2010 and 2009.   The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.

Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.

Exhibit 1


Choice Hotels International, Inc. 

Consolidated Statements of Income

(Unaudited)
































Three Months Ended March 31,








Variance




2010


2009


$


%


(In thousands, except per share amounts)




















REVENUES:




















Royalty fees


$ 41,021


$ 43,441


$ (2,420)


(6%)


Initial franchise and relicensing fees


1,912


2,649


(737)


(28%)


Procurement services


3,245


3,390


(145)


(4%)


Marketing and reservation


58,840


62,042


(3,202)


(5%)


Hotel operations


867


1,118


(251)


(22%)


Other


1,536


1,518


18


1%


     Total revenues


107,421


114,158


(6,737)


(6%)












OPERATING EXPENSES:




















Selling, general and administrative


21,816


21,461


355


2%


Depreciation and amortization


2,172


2,115


57


3%


Marketing and reservation


58,840


62,042


(3,202)


(5%)


Hotel operations


756


785


(29)


(4%)


Total operating expenses


83,584


86,403


(2,819)


(3%)












Operating income


23,837


27,755


(3,918)


(14%)












OTHER INCOME AND EXPENSES:










Interest expense


621


1,540


(919)


(60%)


Interest and other investment (income) loss


(1,077)


832


(1,909)


(229%)


Equity in net income of affiliates


(353)


(218)


(135)


62%


Total other income and expenses, net


(809)


2,154


(2,963)


(138%)












Income before income taxes


24,646


25,601


(955)


(4%)


Income taxes


8,853


9,293


(440)


(5%)


Net income


$ 15,793


$ 16,308


$    (515)


(3%)






















Weighted average shares outstanding-basic


59,514


60,532
















Weighted average shares outstanding-diluted


59,600


60,851
















Basic earnings per share


$     0.27


$     0.27


$        -


0%












Diluted earnings per share


$     0.26


$     0.27


$   (0.01)


(4%)













Exhibit 2

Choice Hotels International, Inc.

Consolidated Balance Sheets
















(In thousands, except per share amounts)

March 31,


December 31,





2010


2009





(Unaudited)











ASSETS













Cash and cash equivalents

$      65,593


$          67,870


Accounts receivable, net

41,642


41,898


Deferred income taxes

7,980


7,980


Other current assets

17,081


10,114



Total current assets

132,296


127,862









Fixed assets and intangibles, net

134,954


133,999


Receivable -- marketing and reservation fees

47,484


33,872


Investments, employee benefit plans, at fair value

22,319


20,931


Other assets

23,587


23,373











Total assets

$    360,640


$        340,037






























LIABILITIES AND SHAREHOLDERS' DEFICIT












Accounts payable and accrued expenses

$      63,793


$          70,933


Deferred revenue

60,934


51,765


Deferred compensation & retirement plan obligations

3,086


2,798


Other current liabilities

10,821


6,310



Total current liabilities

138,634


131,806









Long-term debt

293,900


277,700


Deferred compensation & retirement plan obligations  

33,865


34,956


Other liabilities

9,195


9,787










Total liabilities

475,594


454,249









Common stock, $0.01 par value

596


595


Additional paid-in-capital

87,005


90,731


Accumulated other comprehensive loss

339


333


Treasury stock, at cost

(872,147)


(870,302)


Retained earnings

669,253


664,431










Total shareholders' deficit

(114,954)


(114,212)











Total liabilities and shareholders' deficit

$    360,640


$        340,037










Exhibit 3

Choice Hotels International, Inc.

Consolidated Statements of Cash Flows

(Unaudited)















(In thousands)

Three Months Ended March 31,








2010


2009


CASH FLOWS FROM OPERATING ACTIVITIES:










Net income

$ 15,793


$ 16,308







Adjustments to reconcile net income to net cash provided





by operating activities:





 Depreciation and amortization  

2,172


2,115


 Provision for bad debts

856


350


 Non-cash stock compensation and other charges

2,670


2,406


 Non-cash interest and other (income) loss

(987)


949


 Dividends received from equity method investments

-


166


 Equity in net income of affiliates

(353)


(218)







Changes in assets and liabilities, net of acquisitions:





 Receivables

(435)


4,455


 Receivable - marketing and reservation fees, net

(10,909)


(10,370)


 Accounts payable

3,294


(9,095)


 Accrued expenses

(10,611)


(8,708)


 Income taxes payable/receivable

4,667


8,321


 Deferred income taxes

(65)


-


 Deferred revenue

9,138


8,964


 Other assets

(6,898)


456


 Other liabilities

(1,352)


(5,643)







NET CASH PROVIDED BY OPERATING ACTIVITIES

6,980


10,456







CASH FLOWS FROM INVESTING ACTIVITIES:










Investment in property and equipment

(4,558)


(2,068)


Acquisitions, net of cash acquired

(466)


-


Purchases of investments, employee benefit plans

(1,104)


(2,003)


Proceeds from sales of investments, employee benefit plans

522


1,149


Issuance of notes receivable

(534)


(948)


Collections of notes receivable

10


2


Other items, net

(124)


(74)







NET CASH USED IN INVESTING ACTIVITIES

(6,254)


(3,942)







CASH FLOWS FROM FINANCING ACTIVITIES:










Net borrowings pursuant to revolving credit facility

16,200


25,400


Excess tax benefits from stock-based compensation

49


694


Purchase of treasury stock

(8,936)


(19,308)


Dividends paid

(10,945)


(11,157)


Proceeds from exercise of stock options

648


2,711







NET CASH USED IN FINANCING ACTIVITIES

(2,984)


(1,660)







Net change in cash and cash equivalents

(2,258)


4,854


Effect of foreign exchange rate changes on cash and cash equivalents

(19)


(139)


Cash and cash equivalents at beginning of period

67,870


52,680







CASH AND CASH EQUIVALENTS AT END OF PERIOD

$ 65,593


$ 57,395








Exhibit 4


CHOICE HOTELS INTERNATIONAL, INC. 

SUPPLEMENTAL OPERATING INFORMATION

DOMESTIC HOTEL SYSTEM

(UNAUDITED)
























































































For the Three Months Ended March 31, 2010*


For the Three Months Ended March 31, 2009*


Change

























Average Daily






Average Daily






Average Daily









Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR























Comfort Inn


$            71.02


42.8%


$ 30.36


$          73.96


45.9%


$ 33.96


(4.0%)


(310)

bps


(10.6%)


Comfort Suites


79.21


43.7%


34.64


84.48


47.1%


39.77


(6.2%)


(340)

bps


(12.9%)


Sleep


64.76


41.2%


26.67


67.49


44.9%


30.32


(4.0%)


(370)

bps


(12.0%)


 Midscale without Food & Beverage


72.24


42.8%


30.89


75.56


46.0%


34.79


(4.4%)


(320)

bps


(11.2%)























Quality


61.59


37.0%


22.77


64.73


39.1%


25.29


(4.9%)


(210)

bps


(10.0%)


Clarion


69.45


33.6%


23.32


74.03


37.0%


27.35


(6.2%)


(340)

bps


(14.7%)


 Midscale with Food & Beverage


63.19


36.2%


22.89


66.57


38.6%


25.72


(5.1%)


(240)

bps


(11.0%)























Econo Lodge


49.58


35.6%


17.65


51.65


37.1%


19.14


(4.0%)


(150)

bps


(7.8%)


Rodeway


45.44


36.3%


16.51


49.60


37.0%


18.34


(8.4%)


(70)

bps


(10.0%)


 Economy


48.31


35.8%


17.31


51.07


37.0%


18.92


(5.4%)


(120)

bps


(8.5%)























MainStay


63.11


52.1%


32.86


71.08


50.5%


35.90


(11.2%)


160

bps


(8.5%)


Suburban


37.22


58.8%


21.89


42.60


52.0%


22.15


(12.6%)


680

bps


(1.2%)


 Extended Stay


44.02


56.9%


25.03


50.25


51.6%


25.92


(12.4%)


530

bps


(3.4%)























Total


$            65.01


40.1%


$ 26.03


$          68.39


42.4%


$ 29.02


(4.9%)


(230)

bps


(10.3%)
































































































For the Quarter Ended*





3/31/2010


3/31/2009










System-wide effective royalty rate


4.34%


4.26%































* Operating statistics represent hotel operations from December through February










Exhibit 5


CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

(UNAUDITED)


























































March 31, 2010


March 31, 2009


Variance






















Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%




















Comfort Inn


1,445


113,266


1,452


114,008


(7)


(742)


(0.5%)


(0.7%)


Comfort Suites


620


48,180


560


43,694


60


4,486


10.7%


10.3%


Sleep


389


28,377


366


26,956


23


1,421


6.3%


5.3%


 Midscale without Food & Beverage


2,454


189,823


2,378


184,658


76


5,165


3.2%


2.8%




















Quality


976


88,394


926


85,943


50


2,451


5.4%


2.9%


Clarion


168


24,336


155


22,562


13


1,774


8.4%


7.9%


 Midscale with Food & Beverage


1,144


112,730


1,081


108,505


63


4,225


5.8%


3.9%




















Econo Lodge


786


48,519


821


51,288


(35)


(2,769)


(4.3%)


(5.4%)


Rodeway


373


21,118


352


20,442


21


676


6.0%


3.3%


 Economy


1,159


69,637


1,173


71,730


(14)


(2,093)


(1.2%)


(2.9%)




















MainStay


36


2,797


37


2,867


(1)


(70)


(2.7%)


(2.4%)


Suburban


62


7,474


64


7,675


(2)


(201)


(3.1%)


(2.6%)


 Extended Stay


98


10,271


101


10,542


(3)


(271)


(3.0%)


(2.6%)




















Ascend Collection


30


2,459


21


1,363


9


1,096


42.9%


80.4%


Cambria Suites


20


2,326


13


1,448


7


878


53.8%


60.6%




















Domestic Franchises


4,905


387,246


4,767


378,246


138


9,000


2.9%


2.4%




















International Franchises


1,127


100,018


1,099


97,989


28


2,029


2.5%


2.1%




















Total Franchises


6,032


487,264


5,866


476,235


166


11,029


2.8%


2.3%





















Exhibit 6


CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)




















































































For the Three Months Ended March 31, 2010


For the Three Months Ended March 31, 2009


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


1


8


9


-


7


7


NM


14%


29%


Comfort Suites


2


-


2


1


1


2


100%


(100%)


0%


Sleep


2


-


2


2


-


2


0%


NM


0%


 Midscale without Food & Beverage


5


8


13


3


8


11


67%


0%


18%






















Quality


1


11


12


1


23


24


0%


(52%)


(50%)


Clarion


-


3


3


-


6


6


NM


(50%)


(50%)


 Midscale with Food & Beverage


1


14


15


1


29


30


0%


(52%)


(50%)






















Econo Lodge


-


10


10


-


9


9


NM


11%


11%


Rodeway


1


11


12


1


7


8


0%


57%


50%


 Economy


1


21


22


1


16


17


0%


31%


29%






















MainStay


2


-


2


-


1


1


NM


(100%)


100%


Suburban


1


-


1


-


-


-


NM


NM


NM


 Extended Stay


3


-


3


-


1


1


NM


(100%)


200%






















Ascend Collection


-


2


2


-


-


-


NM


NM


NM


Cambria Suites


-


-


-


1


-


1


(100%)


NM


(100%)






















Total Domestic System


10


45


55


6


54


60


67%


(17%)


(8%)























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.





Variance




March 31, 2010


March 31, 2009
















Units


Units


Conversion


New Construction


Total




Conversion


New Construction


Total


Conversion


New Construction


Total


Units


%


Units


%


Units


%




























Comfort Inn


43


81


124


48


118


166


(5)


(10%)


(37)


(31%)


(42)


(25%)


Comfort Suites


-


154


154


2


253


255


(2)


(100%)


(99)


(39%)


(101)


(40%)


Sleep Inn


1


115


116


1


151


152


-


0%


(36)


(24%)


(36)


(24%)


  Midscale without Food & Beverage


44


350


394


51


522


573


(7)


(14%)


(172)


(33%)


(179)


(31%)




























Quality


39


13


52


64


13


77


(25)


(39%)


-


0%


(25)


(32%)


Clarion


16


6


22


27


7


34


(11)


(41%)


(1)


(14%)


(12)


(35%)


    Midscale with Food & Beverage


55


19


74


91


20


111


(36)


(40%)


(1)


(5%)


(37)


(33%)




























Econo Lodge


39


4


43


35


4


39


4


11%


-


0%


4


10%


Rodeway


33


3


36


48


3


51


(15)


(31%)


-


0%


(15)


(29%)


    Economy


72


7


79


83


7


90


(11)


(13%)


-


0%


(11)


(12%)




























MainStay


-


39


39


-


36


36


-


NM


3


8%


3


8%


Suburban


-


26


26


-


30


30


-


NM


(4)


(13%)


(4)


(13%)


    Extended Stay


-


65


65


-


66


66


-


NM


(1)


(2%)


(1)


(2%)




























Ascend Collection


4


4


8


-


1


1


4


NM


3


300%


7


700%


Cambria Suites


-


37


37


-


55


55


-


NM


(18)


(33%)


(18)


(33%)






























175


482


657


225


671


896


(50)


(22%)


(189)


(28%)


(239)


(27%)





























<

Exhibit 8 


CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)









CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS









(dollar amounts in thousands)


Three Months Ended March 31,












2010


2009



Franchising Revenues:














Total Revenues


$            107,421


$            114,158



Adjustments:







    Marketing and reservation revenues


(58,840)


(62,042)



    Hotel operations


(867)


(1,118)



Franchising Revenues


$              47,714


$              50,998










Franchising Margins:














Operating Margin:














Total Revenues


$            107,421


$            114,158



Operating Income


$              23,837


$              27,755



    Operating Margin


22.2%


24.3%










Adjusted Franchising Margin:














Franchising Revenues


$              47,714


$              50,998










Operating Income


$              23,837


$              27,755



Employee termination benefits


352


374



Hotel operations


(111)


(333)





$              24,078


$              27,796










    Adjusted Franchising Margins


50.5%


54.5%