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Choice Hotels Posts 2nd Qtr 2011 Net Income of $27.6 million

Domestic RevPAR Increases 6.6% and Worldwide Unit Growth of .7%

SILVER SPRING, Md., Aug. 1, 2011 /

Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for second quarter 2011:

  • Diluted earnings per share ("EPS") for second quarter 2011 were $0.46 compared to $0.45 for the same period of the prior year.
  • Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") were $47.3 million for the three months ended June 30, 2011, compared to $45.7 million for the same period of 2010. Operating income increased 3% from $43.6 million for the three months ended June 30, 2010 to $45.1 million for the same period of the current year.
  • Franchising revenues increased 7% from $68.4 million for the three months ended June 30, 2010 to $73.4 million for the same period of 2011. Total revenues for the three months ended June 30, 2011 increased 10% to $165.3 million compared to the same period of 2010.
  • Worldwide unit growth increased 0.7 percent from June 30, 2010 comprised of domestic and international unit growth of 0.5 percent and 1.6 percent, respectively.
  • Domestic system-wide revenue per available room ("RevPAR") increased 6.6% for the second quarter of 2011 compared to the same period of 2010.
  • The effective royalty rate increased 4 basis points to 4.33% for the three months ended June 30, 2011 compared to 4.29% for the same period of the prior year.
  • The company executed 69 new domestic hotel franchise contracts for the three months ended June 30, 2011, an increase of 11% compared to the 62 contracts executed in the same period of the prior year.
  • The number of domestic hotels under construction, awaiting conversion or approved for development declined 23% from June 30, 2010 to 451 hotels representing 37,892 rooms; the worldwide pipeline declined 19% from June 30, 2010 to 554 hotels representing 46,612 rooms.

"During the second quarter, we continued to see strong gains in RevPAR domestically across every brand in the Choice family thanks to a combination of increases in both occupancy and rate," said Stephen P. Joyce, president and chief executive officer. "We were also pleased to see a robust increase in domestic franchise development agreements for our conversion brands. In particular, the development community continues to warmly receive our Ascend Collection membership program, with units online increasing more than 35% over the past year. We are also excited with the recent addition of the Collection's largest property, the 431-room Xona Resorts Suites hotel in Scottsdale, Arizona which will further strengthen the portfolio."

Special Items

During the three and six months ended June 30, 2011, the company recorded employee termination benefits charges of approximately $0.3 million and $0.4 million, respectively. In addition, during the six months ended June 30, 2011, the company reduced the carrying amount of a parcel of land held for sale resulting in a loss of $1.8 million included in other gains and losses. These amounts represented diluted EPS of $0.03 for the six months ended June 30, 2011 but did not have an effect on the reported diluted EPS for the three months ended June 30, 2011.

During the three and six months ended June 30, 2010, the company recorded employee termination benefits charges (reversals) of approximately ($0.1) million and $0.2 million, respectively. These amounts did not have an effect on the reported diluted EPS for the periods reported.

Outlook for 2011

The company's third quarter 2011 diluted EPS is expected to be $0.59. The company expects full-year 2011 adjusted diluted EPS to be between $1.75 and $1.77. Adjusted EBITDA for full-year 2011 are expected to be between $178 million and $180 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to be relatively flat in 2011;
  • RevPAR is expected to increase approximately 5% for the third quarter of 2011 and increase approximately 5% for full-year 2011;
  • The effective royalty rate is expected to increase 1 basis points for full-year 2011;
  • The growth rate for selling, general and administrative expenses for the second half of 2011 is expected to moderate, from the growth rate in the first half of 2011, to a mid-single digit percentage increase compared to the second half of 2010;
  • All figures assume the existing share count and an effective tax rate of 34.5% and 33.5% for the third quarter and full-year 2011, respectively;
  • Adjusted EBITDA for the full year 2011 excludes $0.4 million of operating expenses related to employee termination benefits. Adjusted diluted EPS excludes the aforementioned employee termination benefits as well as a $1.8 million loss on land held for sale which together represent approximately $0.03 diluted EPS for full year 2011.

Use of Free Cash Flow

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

For the six months ended June 30, 2011 the company paid $21.9 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

During the six months ended June 30, 2011, the company did not purchase shares of its common stock under the share repurchase program but still 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 43.2 million shares of its common stock for a total cost of $1 billion through June 30, 2011. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.2 million shares through June 30, 2011 under the share repurchase program at an average price of $13.35 per share.

Our board of directors previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. The amount and timing of the investment in these programs will be dependent on market and other conditions. 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, August 2, 2011 at 10:00 a.m. EDT to discuss the company's second quarter 2011 results. The dial-in number to listen to the call is 1-800-599-9816, and the access code is 24713398. International callers should dial 1-617-847-8705 and enter the access code 24713398. The conference call also will be Webcast simultaneously via the company's Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.

The call will be recorded and available for replay beginning at 1:00 p.m. EDT on Tuesday, August 2, 2011 through Friday, September 2, 2011 by calling 1-888-286-8010 and entering access code 84948188. The international dial-in number for the replay is 1-617-801-6888, access code 84948188. 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 6,100 hotels, representing more than 490,000 rooms, in the United States and more than 30 other countries and territories. As of June 30, 2011, more than 450 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 37,000 rooms, and approximately 100 hotels, representing approximately 8,700 rooms, were 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 the Caribbean have upscale lodging options at historic, boutique and unique hotels.

Additional corporate information may be found on the Choice Hotels International, Inc. Web site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements

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

Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on March 1, 2011. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements

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

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

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

Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the three and six months ended June 30, 2011 and 2010 as well as a reduction in the carrying amount of land held for sale during the six months ended June 30, 2011. 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 Collectionare proprietary trademarks and service marks of Choice Hotels International.

© 2011 Choice Hotels International, Inc. All rights reserved.

Choice Hotels International, Inc.

















Exhibit 1


Consolidated Statements of Income


















(Unaudited)






















































































Three Months Ended June 30,


Six Months Ended June 30,











Variance






Variance







2011


2010


$


%


2011


2010


$


%


(In thousands, except per share amounts)







































REVENUES:










































Royalty fees




$ 62,301


$ 57,443


$ 4,858


8%


$ 106,541


$ 98,464


$ 8,077


8%


Initial franchise and relicensing fees



2,585


2,655


(70)


(3%)


5,199


4,567


632


14%


Procurement services




6,557


6,611


(54)


(1%)


9,722


9,856


(134)


(1%)


Marketing and reservation



90,832


80,389


10,443


13%


153,799


139,229


14,570


10%


Hotel operations




1,073


1,109


(36)


(3%)


1,937


1,976


(39)


(2%)


Other





1,953


1,641


312


19%


3,384


3,177


207


7%


Total revenues




165,301


149,848


15,453


10%


280,582


257,269


23,313


9%























OPERATING EXPENSES:









































Selling, general and administrative



26,539


22,824


3,715


16%


50,386


44,640


5,746


13%


Depreciation and amortization



1,948


2,220


(272)


(12%)


3,903


4,392


(489)


(11%)


Marketing and reservation



90,832


80,389


10,443


13%


153,799


139,229


14,570


10%


Hotel operations




860


808


52


6%


1,693


1,564


129


8%


Total operating expenses



120,179


106,241


13,938


13%


209,781


189,825


19,956


11%























Operating income




45,122


43,607


1,515


3%


70,801


67,444


3,357


5%























OTHER INCOME AND EXPENSES, NET:


















Interest expense




3,267


675


2,592


384%


6,491


1,296


5,195


401%


Interest income




(221)


(135)


(86)


64%


(431)


(195)


(236)


121%


Other (gains) and losses



(38)


1,238


(1,276)


(103%)


1,005


221


784


355%


Equity in net income of affiliates



-


(195)


195


(100%)


(301)


(548)


247


(45%)


Total other income and expenses, net


3,008


1,583


1,425


90%


6,764


774


5,990


774%























Income before income taxes



42,114


42,024


90


0%


64,037


66,670


(2,633)


(4%)


Income taxes




14,536


15,013


(477)


(3%)


20,729


23,866


(3,137)


(13%)


Net income




$ 27,578


$ 27,011


$ 567


2%


$ 43,308


$ 42,804


$ 504


1%












































Basic earnings per share



$ 0.46


$ 0.45


$ 0.01


2%


$ 0.72


$ 0.72


$ -


0%























Diluted earnings per share



$ 0.46


$ 0.45


$ 0.01


2%


$ 0.72


$ 0.72


$ -


0%






















Choice Hotels International, Inc.





Exhibit 2


Consolidated Balance Sheets

























(In thousands, except per share amounts)


June 30,


December 31,







2011


2010







(Unaudited)













ASSETS

















Cash and cash equivalents



$ 90,961


$ 91,259


Accounts receivable, net



58,044


47,638


Deferred income taxes



429


429


Other current assets




22,030


24,256



Total current assets



171,464


163,582











Fixed assets and intangibles, net



139,066


142,528


Receivable -- marketing and reservation fees


60,475


42,507


Investments, employee benefit plans, at fair value


24,972


23,365


Other assets




45,328


39,740













Total assets



$ 441,305


$ 411,722





























LIABILITIES AND SHAREHOLDERS' DEFICIT















Accounts payable and accrued expenses


$ 83,752


$ 88,986


Deferred revenue




60,898


67,322


Deferred compensation & retirement plan obligations


2,693


2,552


Current portion of long-term debt



516


420


Revolving credit facility



-


200


Income taxes payable




17,142


5,778



Total current liabilities



165,001


165,258











Long-term debt




251,981


251,554


Deferred compensation & retirement plan obligations


34,969


35,707


Other liabilities




17,296


17,274












Total liabilities



469,247


469,793











Common stock, $0.01 par value



598


596


Additional paid-in-capital



95,083


92,774


Accumulated other comprehensive loss



(5,768)


(7,192)


Treasury stock, at cost



(867,249)


(872,306)


Retained earnings




749,394


728,057












Total shareholders' deficit



(27,942)


(58,071)













Total liabilities and shareholders' deficit

$ 441,305


$ 411,722










Choice Hotels International, Inc.



Exhibit 3


Consolidated Statements of Cash Flows





(Unaudited)


















(In thousands)

Six Months Ended June 30,








2011


2010


CASH FLOWS FROM OPERATING ACTIVITIES:










Net income

$ 43,308


$ 42,804







Adjustments to reconcile net income to net cash provided





by operating activities:





Depreciation and amortization

3,903


4,392


Provision for bad debts

1,340


1,637


Non-cash stock compensation and other charges

7,436


5,297


Non-cash interest and other loss

22


307


Dividends received from equity method investments

159


148


Equity in net income of affiliates

(301)


(548)







Changes in assets and liabilities, net of acquisitions:





Receivables

(11,058)


(10,061)


Receivable - marketing and reservation fees, net

(11,387)


(17,996)


Accounts payable

6,026


9,043


Accrued expenses

(11,004)


(6,601)


Income taxes payable/receivable

11,404


11,492


Deferred income taxes

40


(55)


Deferred revenue

(6,463)


5,475


Other assets

(750)


(4,307)


Other liabilities

(624)


577







NET CASH PROVIDED BY OPERATING ACTIVITIES

32,051


41,604







CASH FLOWS FROM INVESTING ACTIVITIES:










Investment in property and equipment

(5,110)


(12,249)


Equity method investments

(1,600)


-


Acquisitions, net of cash acquired

-


(466)


Purchases of investments, employee benefit plans

(1,139)


(1,204)


Proceeds from sales of investments, employee benefit plans

347


836


Issuance of notes receivable

(2,651)


(8,008)


Collections of notes receivable

13


37


Other items, net

(192)


(361)







NET CASH USED IN INVESTING ACTIVITIES

(10,332)


(21,415)







CASH FLOWS FROM FINANCING ACTIVITIES:










Net borrowings (repayments) pursuant to revolving credit facilities

(200)


13,400


Repayments of long-term debt

(13)


-


Proceeds from the issuance of long-term debt

75


-


Purchase of treasury stock

(2,527)


(9,242)


Dividends paid

(21,922)


(21,924)


Excess tax benefits from stock-based compensation

1,061


12


Debt issuance costs

(2,356)


-


Proceeds from exercise of stock options

3,132


1,315







NET CASH USED IN FINANCING ACTIVITIES

(22,750)


(16,439)







Net change in cash and cash equivalents

(1,031)


3,750


Effect of foreign exchange rate changes on cash and cash equivalents

733


(694)


Cash and cash equivalents at beginning of period

91,259


67,870







CASH AND CASH EQUIVALENTS AT END OF PERIOD

$ 90,961


$ 70,926






CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4


SUPPLEMENTAL OPERATING INFORMATION



DOMESTIC HOTEL SYSTEM



(UNAUDITED)

















For the Six Months Ended June 30, 2011*


For the Six Months Ended June 30, 2010*


Change





























Average Daily






Average Daily






Average Daily











Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR



























Comfort Inn


$ 75.27


51.1%


$ 38.47


$ 73.44


49.5%


$ 36.33


2.5%


160

bps


5.9%




Comfort Suites


81.82


53.7%


43.96


81.05


50.5%


40.92


1.0%


320

bps


7.4%




Sleep


67.81


48.7%


33.03


66.93


47.3%


31.68


1.3%


140

bps


4.3%




Quality


64.47


44.7%


28.81


64.10


42.6%


27.31


0.6%


210

bps


5.5%




Clarion


70.89


42.4%


30.07


72.34


39.1%


28.27


(2.0%)


330

bps


6.4%




Econo Lodge


51.60


42.4%


21.89


51.21


40.7%


20.87


0.8%


170

bps


4.9%




Rodeway


47.78


43.2%


20.66


47.06


40.7%


19.14


1.5%


250

bps


7.9%




MainStay


64.06


61.8%


39.57


64.20


59.3%


38.06


(0.2%)


250

bps


4.0%




Suburban


39.82


65.3%


25.99


38.47


62.4%


24.01


3.5%


290

bps


8.2%




Ascend Collection


106.96


55.3%


59.19


103.97


50.1%


52.09


2.9%


520

bps


13.6%



























Total


$ 68.57


48.2%


$ 33.02


$ 67.57


46.1%


$ 31.12


1.5%


210

bps


6.1%



























* Operating statistics represent hotel operations from December through May



























For the Three Months Ended June 30, 2011*


For the Three Months Ended June 30, 2010*


Change





























Average Daily






Average Daily






Average Daily











Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR



























Comfort Inn


$ 77.54


57.7%


$ 44.73


$ 75.22


55.9%


$ 42.04


3.1%


180

bps


6.4%




Comfort Suites


83.89


60.3%


50.55


82.40


56.9%


46.88


1.8%


340

bps


7.8%




Sleep


69.95


55.0%


38.45


68.54


53.3%


36.51


2.1%


170

bps


5.3%




Quality


66.58


50.4%


33.58


65.93


48.0%


31.62


1.0%


240

bps


6.2%




Clarion


73.14


47.9%


35.01


74.37


44.2%


32.85


(1.7%)


370

bps


6.6%




Econo Lodge


53.10


47.4%


25.14


52.44


45.7%


23.95


1.3%


170

bps


5.0%




Rodeway


49.34


47.7%


23.55


48.32


44.8%


21.63


2.1%


290

bps


8.9%




MainStay


66.31


69.2%


45.87


65.04


66.3%


43.09


2.0%


290

bps


6.5%




Suburban


41.13


69.7%


28.68


39.51


65.8%


25.98


4.1%


390

bps


10.4%




Ascend Collection


113.44


60.4%


68.50


108.34


57.0%


61.70


4.7%


340

bps


11.0%



























Total


$ 70.72


54.1%


$ 38.22


$ 69.31


51.8%


$ 35.86


2.0%


230

bps


6.6%


















































* Operating statistics represent hotel operations from March through May



























For the Quarter Ended




For the Six Months Ended




6/30/2011


6/30/2010




6/30/2011


6/30/2010














System-wide effective royalty rate


4.33%


4.29%




4.34%


4.30%













CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5


SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA



(UNAUDITED)






























































June 30, 2011


June 30, 2010


Variance
























Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%






















Comfort Inn


1,416


110,736


1,446


113,677


(30)


(2,941)


(2.1%)


(2.6%)



Comfort Suites


613


47,441


621


48,200


(8)


(759)


(1.3%)


(1.6%)



Sleep


394


28,625


392


28,586


2


39


0.5%


0.1%



Quality


1,027


89,571


984


88,453


43


1,118


4.4%


1.3%



Clarion


193


28,335


175


25,188


18


3,147


10.3%


12.5%



Econo Lodge


778


48,197


785


48,543


(7)


(346)


(0.9%)


(0.7%)



Rodeway


377


20,506


381


21,473


(4)


(967)


(1.0%)


(4.5%)



MainStay


39


3,007


36


2,798


3


209


8.3%


7.5%



Suburban


61


7,255


63


7,608


(2)


(353)


(3.2%)


(4.6%)



Ascend Collection


44


3,392


32


2,646


12


746


37.5%


28.2%



Cambria Suites


19


2,215


21


2,453


(2)


(238)


(9.5%)


(9.7%)






















Domestic Franchises


4,961


389,280


4,936


389,625


25


(345)


0.5%


(0.1%)






















International Franchises


1,156


102,086


1,138


100,858


18


1,228


1.6%


1.2%






















Total Franchises


6,117


491,366


6,074


490,483


43


883


0.7%


0.2%






















Exhibit 6


CHOICE HOTELS INTERNATIONAL, INC.


SUPPLEMENTAL INFORMATION BY BRAND


DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS


(UNAUDITED)




















































































For the Six Months Ended June 30, 2011


For the Six Months Ended June 30, 2010


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


5


18


23


3


13


16


67%


38%


44%


Comfort Suites


1


4


5


8


1


9


(88%)


300%


(44%)


Sleep


3


1


4


2


-


2


50%


NM


100%


Quality


-


35


35


1


31


32


(100%)


13%


9%


Clarion


-


8


8


-


6


6


NM


33%


33%


Econo Lodge


-


18


18


-


22


22


NM


(18%)


(18%)


Rodeway


-


18


18


1


19


20


(100%)


(5%)


(10%)


MainStay


1


3


4


3


-


3


(67%)


NM


33%


Suburban


2


1


3


1


-


1


100%


NM


200%


Ascend Collection


-


5


5


-


3


3


NM


67%


67%


Cambria Suites


2


-


2


3


-


3


(33%)


NM


(33%)






















Total Domestic System


14


111


125


22


95


117


(36%)


17%


7%








































































































For the Three Months Ended June 30, 2011


For the Three Months Ended June 30, 2010


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


3


11


14


2


5


7


50%


120%


100%


Comfort Suites


1


2


3


6


1


7


(83%)


100%


(57%)


Sleep


1


1


2


-


-


-


NM


NM


NM


Quality


-


11


11


-


20


20


NM


(45%)


(45%)


Clarion


-


3


3


-


3


3


NM


0%


0%


Econo Lodge


-


12


12


-


12


12


NM


0%


0%


Rodeway


-


13


13


-


8


8


NM


63%


63%


MainStay


-


3


3


1


-


1


(100%)


NM


200%


Suburban


2


1


3


-


-


-


NM


NM


NM


Ascend Collection


-


4


4


-


1


1


NM


300%


300%


Cambria Suites


1


-


1


3


-


3


(67%)


NM


(67%)






















Total Domestic System


8


61


69


12


50


62


(33%)


22%


11%










































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




June 30, 2011


June 30, 2010
















Units


Units


Conversion


New Construction


Total




Conversion


New Construction


Total


Conversion


New Construction


Total


Units


%


Units


%


Units


%




























Comfort Inn


27


50


77


33


69


102


(6)


(18%)


(19)


(28%)


(25)


(25%)


Comfort Suites


3


108


111


1


136


137


2


200%


(28)


(21%)


(26)


(19%)


Sleep Inn


-


62


62


1


101


102


(1)


(100%)


(39)


(39%)


(40)


(39%)


Quality


25


5


30


41


11


52


(16)


(39%)


(6)


(55%)


(22)


(42%)


Clarion


16


2


18


15


5


20


1


7%


(3)


(60%)


(2)


(10%)


Econo Lodge


34


1


35


35


2


37


(1)


(3%)


(1)


(50%)


(2)


(5%)


Rodeway


15


1


16


26


3


29


(11)


(42%)


(2)


(67%)


(13)


(45%)


MainStay


4


37


41


-


39


39


4


NM


(2)


(5%)


2


5%


Suburban


-


22


22


-


26


26


-


NM


(4)


(15%)


(4)


(15%)


Ascend Collection


5


3


8


3


4


7


2


67%


(1)


(25%)


1


14%


Cambria Suites


-


31


31


-


35


35


-


NM


(4)


(11%)


(4)


(11%)






























129


322


451


155


431


586


(26)


(17%)


(109)


(25%)


(135)


(23%)




























CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 8



SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION




(UNAUDITED)






CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS














(dollar amounts in thousands)


Three Months Ended June 30,


Six Months Ended June 30,


















2011


2010


2011


2010




Franchising Revenues:
























Total Revenues


$ 165,301


$ 149,848


$ 280,582


$ 257,269




Adjustments:












Marketing and reservation revenues


(90,832)


(80,389)


(153,799)


(139,229)




Hotel operations


(1,073)


(1,109)


(1,937)


(1,976)




Franchising Revenues


$ 73,396


$ 68,350


$ 124,846


$ 116,064
















Franchising Margins:
























Operating Margin:
























Total Revenues


$ 165,301


$ 149,848


$ 280,582


$ 257,269




Operating Income


$ 45,122


$ 43,607


$ 70,801


$ 67,444




Operating Margin


27.3%


29.1%


25.2%


26.2%
















Adjusted Franchising Margin:
























Franchising Revenues


$ 73,396


$ 68,350


$ 124,846


$ 116,064
















Operating Income


$ 45,122


$ 43,607


$ 70,801


$ 67,444




Employee termination benefits


347


(119)


417


233




Hotel operations


(213)


(301)


(244)


(412)






$ 45,256


$ 43,187


$ 70,974


$ 67,265
















Adjusted Franchising Margins


61.7%


63.2%


56.8%


58.0%







































CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS





















(dollar amounts in thousands)


Three Months Ended June 30,


Six Months Ended June 30,


















2011


2010


2011


2010
















Selling, general and administrative costs


$ 26,539


$ 22,824


$ 50,386


$ 44,640




Employee termination benefits


(347)


119


(417)


(233)




Adjusted Selling, General and Administrative Costs


$ 26,192


$ 22,943


$ 49,969


$ 44,407







































CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)





















(In thousands, except per share amounts)


Three Months Ended June 30,


Six Months Ended June 30,


















2011


2010


2011


2010















Net Income


$ 27,578


$ 27,011


$ 43,308


$ 42,804



Adjustments:












Employee termination benefits


218


(74)


262


146




Loss on land held for sale


-


-


1,111


-



Adjusted Net Income


$ 27,796


$ 26,937


$ 44,681


$ 42,950















Weighted average shares outstanding-diluted


59,918


59,676


59,854


59,639















Diluted Earnings Per Share


$ 0.46


$ 0.45


$ 0.72


$ 0.72



Adjustments:












Employee termination benefits


-


-


0.01


-




Loss on land held for sale


-


-


0.02


-



Adjusted Diluted Earnings Per Share (EPS)


$ 0.46


$ 0.45


$ 0.75


$ 0.72














Adjusted EBITDA Reconciliation

























(in millions)















Q2 2011 Actuals


Q2 2010 Actuals


Six Months Ended

June 30, 2011

Actuals


Six Months Ended

June 30, 2010

Actuals


Full-Year

2011 Outlook
















Operating Income (per GAAP)


$ 45.1


$ 43.6


$ 70.8


$ 67.4


$169.1-$171.1



Employee termination benefits


0.3


(0.1)


0.4


0.2


0.4



Depreciation and amortization


1.9


2.2


3.9


4.4


8.5



Adjusted Earnings before interest, taxes, depreciation &

amortization (non-GAAP)


$ 47.3


$ 45.7


$ 75.1


$ 72.0


$178-$180
















 
.
Contact: 
 
 Choice Hotels International, Inc.
David White, Senior Vice President, Chief Financial Officer & Treasurer, +1-301-592-5117; or David Peikin, Senior Director, Corporate Communications, +1-301-592-6361
.
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Also See: Choice Hotels Posts 1st Qtr 2011 Net Income of $15.7 million; RevPAR Increases 5.5% with Domestic Unit Growth of 1.3% / April 2011

Choice Hotels Posts 1st Qtr 2010 Profit of $15.8 million; RevPAR Falls 10.3% with New Unit Growth Up 2.9% / April 2010

Choice Hotels Posts 4th Qtr Net Income of $23.6 million Compared to $18.7 million a Year Earlier; RevPAR Falls 14%, For the full year, Net Income was $98.25 million / February 2010
.

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