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Choice Hotels Posts 4th Qtr 2011 Net Income of $24.8 million
Compared to $24.1 million Same Year Ago Period


Domestic RevPAR Increases 7.8%, Full Year Net Income was $110.4 million

Hotel Operating Statistics

SILVER SPRING, Md., Feb. 20, 2012--Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for fourth quarter and full year 2011:

Full Year Results

  • Adjusted diluted earnings per share ("EPS") for full year 2011 were $1.92 compared to $1.82 for full year 2010. Diluted EPS were $1.85 for 2011 compared to $1.80 for 2010. Adjusted diluted EPS for full year 2011 and 2010 exclude certain special items, as described below, totaling $0.07 and $0.02, respectively.
  • Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 8% to $184.3 million for the year ended December 31, 2011, compared to $170.8 million for the year ended December 31, 2010. Operating income increased 7% from $160.8 million for the year ended December 31, 2010 to $171.9 million for same period of 2011.
  • Franchising revenues increased 9% from $262.8 million for the year ended December 31, 2010 to $285.4 million for the same period of 2011. Total revenues increased 7% to $638.8 million for the year ended December 31, 2011 compared to the same period of 2010.
  • The effective income tax rate for the year ended December 31, 2011 was 30.1% compared to 32.1% for the same period of the prior year. Excluding discrete items, totaling $5.1 million and $3.2 million recorded during the years ended December 31, 2011 and 2010, the company's effective income tax rate was approximately 33.4% and 34.2%, respectively.
  • Worldwide unit growth increased 0.6 percent from December 31, 2010 comprised of domestic and international unit growth of 0.2 percent and 2.4 percent, respectively.
  • Domestic system-wide revenue per available room ("RevPAR") increased 6.2% for full year 2011 compared to the same period of 2010 as occupancy and average daily rates increased 220 basis points and 1.9 percent, respectively.
  • The effective royalty rate increased 3 basis points to 4.32% for the year ended December 31, 2011 compared to 4.29% for the same period of the prior year.
  • The company executed 332 new domestic hotel franchise contracts for the year ended December 31, 2011 compared to 357 new domestic hotel franchise contracts in the prior year.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development at December 31, 2011 was 490 hotels representing 39,675 rooms;
  • During the year ended December 31, 2011, the company purchased approximately 1.6 million shares of its common stock at an average price of $31.59 for a total cost of $51.0 million under the share repurchase program.

Fourth Quarter Results

  • Adjusted EPS for fourth quarter 2011 increased 10% to $0.46 compared to $0.42 for the same period of the prior year. Diluted EPS were $0.42 for the fourth quarter of 2011 compared to $0.40 for the same period of 2010. Adjusted diluted EPS for fourth quarter 2011 and 2010 exclude certain special items, as described below, totaling $0.04 and $0.02, respectively.
  • Excluding special items, adjusted EBITDA were $44.3 million for the three months ended December 31, 2011, compared to $41.5 million for the same period of 2010. Operating income for the three months ended December 31, 2011 and 2010 was $38.7 million and $38.4 million, respectively.
  • Franchising revenues increased 10% from $66.9 million for the three months ended December 31, 2010 to $73.9 million for the same period of 2011. Total revenues for the three months ended December 31, 2011 increased 7% compared to the same period of 2010.
  • Domestic system-wide RevPAR increased 7.8% for the fourth quarter of 2011 compared to the same period of 2010 as a result of occupancy rates increasing 260 basis points and a 2.7% increase in average daily rates.
  • The company executed 128 new domestic hotel franchise contracts for the three months ended December 31, 2011 compared to 161 contracts executed in the same period of the prior year.

"We are pleased with the continued strong gains we achieved in domestic RevPAR during the fourth quarter and the growth of our global franchise system," said Stephen P. Joyce, president and chief executive officer. "While the near term franchise sales environment remains challenging, we believe that our well-known diversified brands will continue to resonate with developers and hotel owners due to our focus on owners' property-level profitability and return on investment. We remain focused on prudently managing our brands, gaining operating efficiencies and returning value to our shareholders."

Special Items

During the three months and year ended December 31, 2011, the company recorded employee termination benefit charges included in selling, general and administration ("SG&A") expenses of approximately $3.6 million and $4.4 million, respectively. In addition, during the year ended December 31, 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 special items represent diluted EPS of $0.04 and $0.07 for the three months and year ended December 31, 2011, respectively.

During the three months and year ended December 31, 2010, the company recorded employee termination benefit charges in SG&A of approximately $1.2 million and $1.7 million, respectively. These special items represent diluted EPS of $0.02 for both the three months and year ended December 31, 2010.

Outlook for 2012

The company's first quarter 2012 diluted EPS is expected to be at least $0.30. The company expects full-year 2012 diluted EPS to range between $1.99 and $2.04. EBITDA for full-year 2012 are expected to range between $199 million and $203 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to be relatively flat in 2012;
  • RevPAR is expected to increase approximately 8% for first quarter of 2012 and increase between approximately 4% and 6% for full-year 2012;
  • The effective royalty rate is expected to increase 1 basis point for full-year 2012;
  • During the fourth quarter of 2011, the company implemented measures to increase its productivity and streamline services that are projected to result in future cost savings. As a result of these measures as well as expected reduction of certain variable incentive compensation and employee termination benefits, the company's 2012 SG&A is projected to decline approximately $15 million from the $106.4 million incurred during the year ended December 31, 2011.
  • All figures assume the existing share count and an effective tax rate of 34.5% for the first quarter and full-year 2012.

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 year ended December 31, 2011 the company paid $43.7 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 year ended December 31, 2011, the company purchased approximately 1.6 million shares of its common stock at an average price of $31.59 for a total cost of $51.0 million under the share repurchase program. Subsequent to December 31, 2011 and through February 20, 2012, the company repurchased an additional 0.2 million shares for a total cost of $5.9 million at an average price of $36.49 and has authorization to purchase up to an additional 1.8 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 44.8 million shares of its common stock for a total cost of $1.1 billion through December 31, 2011. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 77.8 million shares through December 31, 2011 under the share repurchase program at an average price of $13.73 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, February 21, 2012 at 9:30 a.m. EST to discuss the company's fourth quarter and full-year 2011 results. The dial-in number to listen to the call is 1-866-383-7989, and the access code is 60035894. International callers should dial 1-617-597-5328 and enter the access code 60035894. 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 11:30 a.m. EST on Tuesday, February 21, 2012 through Wednesday, March 28, 2012 by calling 1-888-286-8010 and entering access code 88211651. The international dial-in number for the replay is 617-801-6888, access code 88211651. 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 495,000 rooms, in the United States and more than 30 other countries and territories. As of December 31, 2011, more than 400 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 30,000 rooms, and approximately 80 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in 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 system 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 system 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 years ended December 31, 2011 and 2010 as well as a reduction in the carrying amount of land held for sale during the year ended December 31, 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 Collection are proprietary trademarks and service marks of Choice Hotels International.

2012 Choice Hotels International, Inc. All rights reserved.

Choice Hotels International, Inc.














Exhibit 1


Consolidated Statements of Income
















(Unaudited)


















































































Three Months Ended December 31,


Year Ended December 31,











Variance






Variance







2011


2010


$


%


2011


2010


$


%


(In thousands, except per share amounts)







































REVENUES:










































Royalty fees




$ 63,344


$ 59,067


$ 4,277


7%


$ 247,240


$ 230,096


$ 17,144


7%


Initial franchise and relicensing fees



4,889


2,758


2,131


77%


13,557


9,295


4,262


46%


Procurement services




3,913


3,595


318


9%


17,619


17,207


412


2%


Marketing and reservation



90,844


87,150


3,694


4%


349,036


329,246


19,790


6%


Hotel operations




1,183


987


196


20%


4,356


4,031


325


8%


Other





1,717


1,449


268


18%


6,985


6,201


784


13%


Total revenues




165,890


155,006


10,884


7%


638,793


596,076


42,717


7%























OPERATING EXPENSES:









































Selling, general and administrative



33,463


26,744


6,719


25%


106,404


94,540


11,864


13%


Depreciation and amortization



2,048


1,872


176


9%


8,024


8,342


(318)


(4%)


Marketing and reservation



90,844


87,150


3,694


4%


349,036


329,246


19,790


6%


Hotel operations




873


799


74


9%


3,466


3,186


280


9%


Total operating expenses



127,228


116,565


10,663


9%


466,930


435,314


31,616


7%























Operating income




38,662


38,441


221


1%


171,863


160,762


11,101


7%























OTHER INCOME AND EXPENSES:



















Interest expense




3,220


3,520


(300)


(9%)


12,939


6,680


6,259


94%


Interest income




(369)


(192)


(177)


92%


(1,306)


(548)


(758)


138%


Other (gains) and losses



(1,236)


(1,066)


(170)


16%


2,442


(2,355)


4,797


(204%)


Equity in net income of affiliates



(7)


(336)


329


(98%)


(269)


(1,226)


957


(78%)


Total other income and expenses, net


1,608


1,926


(318)


(17%)


13,806


2,551


11,255


441%























Income before income taxes



37,054


36,515


539


1%


158,057


158,211


(154)


(0%)


Income taxes




12,268


12,372


(104)


(1%)


47,661


50,770


(3,109)


(6%)


Net income




$ 24,786


$ 24,143


$ 643


3%


$ 110,396


$ 107,441


$ 2,955


3%












































Basic earnings per share



$ 0.42


$ 0.41


$ 0.01


2%


$ 1.86


$ 1.80


$ 0.06


3%























Diluted earnings per share



$ 0.42


$ 0.40


$ 0.02


5%


$ 1.85


$ 1.80


$ 0.05


3%
























Choice Hotels International, Inc.





Exhibit 2


Consolidated Balance Sheets

























(In thousands, except per share amounts)


December 31,


December 31,







2011


2010







(Unaudited)













ASSETS

















Cash and cash equivalents



$ 107,057


$ 91,259


Accounts receivable, net



53,012


47,638


Investments, employee benefit plans, at fair value


12,094


-


Deferred income taxes



-


429


Other current assets




22,633


24,256



Total current assets



194,796


163,582











Fixed assets and intangibles, net



135,252


142,528


Receivable -- marketing and reservation fees


54,014


42,507


Investments, employee benefit plans, at fair value


11,678


23,365


Other assets




51,949


39,740













Total assets



$ 447,689


$ 411,722





























LIABILITIES AND SHAREHOLDERS' DEFICIT















Accounts payable and accrued expenses


$ 92,240


$ 88,986


Deferred revenue




68,825


67,322


Revolving credit facility



-


200


Deferred compensation & retirement plan obligations


18,935


2,552


Current portion of long-term debt



673


420


Other current liabilities



3,892


5,778



Total current liabilities



184,565


165,258











Long-term debt




252,032


251,554


Deferred compensation & retirement plan obligations


20,593


35,707


Other liabilities




16,060


17,274












Total liabilities



473,250


469,793











Common stock, $0.01 par value



583


596


Additional paid-in-capital



102,665


92,774


Accumulated other comprehensive loss



(6,801)


(7,192)


Treasury stock, at cost



(916,955)


(872,306)


Retained earnings




794,947


728,057



Total shareholders' deficit



(25,561)


(58,071)













Total liabilities and shareholders' deficit

$ 447,689


$ 411,722












Choice Hotels International, Inc.



Exhibit 3


Consolidated Statements of Cash Flows





(Unaudited)


















(In thousands)

Year Ended December 31,








2011


2010


CASH FLOWS FROM OPERATING ACTIVITIES:










Net income

$ 110,396


$ 107,441







Adjustments to reconcile net income to net cash provided





by operating activities:





Depreciation and amortization

8,024


8,342


Provision for bad debts

2,160


3,547


Non-cash stock compensation and other charges

14,511


9,304


Non-cash interest and other (income) loss

2,208


(1,711)


Dividends received from equity method investments

1,139


1,155


Equity in net income of affiliates

(269)


(1,226)







Changes in assets and liabilities, net of acquisitions:





Receivables

(7,785)


(9,229)


Receivable - marketing and reservation fees, net

623


4,654


Accounts payable

(1,851)


5,744


Accrued expenses

6,346


10,630


Income taxes payable/receivable

(4,562)


(1,417)


Deferred income taxes

5,514


(2,381)


Deferred revenue

1,523


15,413


Other assets

(3,162)


(12,705)


Other liabilities

29


7,374







NET CASH PROVIDED BY OPERATING ACTIVITIES

134,844


144,935







CASH FLOWS FROM INVESTING ACTIVITIES:










Investment in property and equipment

(10,924)


(24,368)


Equity method investments

(5,000)


-


Issuance of notes receivable

(12,766)


(11,786)


Collections of notes receivable

4,754


5,083


Proceeds from sale of assets

1,654


-


Purchases of investments, employee benefit plans

(1,602)


(1,948)


Proceeds from sales of investments, employee benefit plans

644


1,649


Acquisitions, net of cash acquired

-


(466)


Other items, net

(564)


(319)







NET CASH USED IN INVESTING ACTIVITIES

(23,804)


(32,155)







CASH FLOWS FROM FINANCING ACTIVITIES:










Proceeds from the issuance of long-term debt

75


247,733


Net repayments pursuant to revolving credit facilities

(200)


(277,500)


Principal payments on long-term debt

(297)


(25)


Settlement of forward starting interest rate swap agreement

-


(8,663)


Debt issuance costs

(2,356)


(800)


Purchase of treasury stock

(53,617)


(11,212)


Excess tax benefits from stock-based compensation

1,227


625


Dividends paid

(43,747)


(43,808)


Proceeds from exercise of stock options

3,845


2,457







NET CASH USED IN FINANCING ACTIVITIES

(95,070)


(91,193)







Net change in cash and cash equivalents

15,970


21,587


Effect of foreign exchange rate changes on cash and cash equivalents

(172)


1,802


Cash and cash equivalents at beginning of period

91,259


67,870







CASH AND CASH EQUIVALENTS AT END OF PERIOD

$ 107,057


$ 91,259








CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4


SUPPLEMENTAL OPERATING INFORMATION



DOMESTIC HOTEL SYSTEM



(UNAUDITED)

































































































For the Year Ended December 31, 2011*


For the Year Ended December 31, 2010*


Change





























Average Daily






Average Daily






Average Daily











Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR



























Comfort Inn


$ 79.41


57.5%


$ 45.62


$ 77.21


55.6%


$ 42.93


2.8%


190

bps


6.3%




Comfort Suites


83.72


58.6%


49.09


82.48


55.2%


45.53


1.5%


340

bps


7.8%




Sleep


69.96


53.6%


37.49


68.82


51.6%


35.52


1.7%


200

bps


5.5%




Quality


67.75


50.0%


33.86


66.81


48.1%


32.11


1.4%


190

bps


5.5%




Clarion


73.89


46.9%


34.64


75.15


43.7%


32.86


(1.7%)


320

bps


5.4%




Econo Lodge


54.71


47.5%


25.96


54.10


45.8%


24.80


1.1%


170

bps


4.7%




Rodeway


51.87


48.7%


25.27


51.07


45.8%


23.38


1.6%


290

bps


8.1%




MainStay


66.16


67.7%


44.80


65.60


63.6%


41.71


0.9%


410

bps


7.4%




Suburban


40.26


67.5%


27.15


39.23


63.8%


25.03


2.6%


370

bps


8.5%




Ascend Collection


113.59


60.3%


68.44


112.50


57.6%


64.81


1.0%


270

bps


5.6%



























Total


$ 71.83


53.5%


$ 38.44


$ 70.50


51.3%


$ 36.18


1.9%


220

bps


6.2%



























* Operating statistics represent hotel operations from December through November




















































For the Three Months Ended December 31, 2011*


For the Three Months Ended December 31, 2010*


Change





























Average Daily






Average Daily






Average Daily











Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR



























Comfort Inn


$ 79.92


58.8%


$ 46.98


$ 77.36


56.3%


$ 43.54


3.3%


250

bps


7.9%




Comfort Suites


83.13


59.2%


49.23


81.17


55.4%


44.96


2.4%


380

bps


9.5%




Sleep


70.06


54.0%


37.80


68.47


51.2%


35.04


2.3%


280

bps


7.9%




Quality


67.17


50.2%


33.74


65.35


48.2%


31.52


2.8%


200

bps


7.0%




Clarion


74.27


47.6%


35.32


74.05


44.9%


33.23


0.3%


270

bps


6.3%




Econo Lodge


54.62


48.3%


26.37


53.59


46.2%


24.77


1.9%


210

bps


6.5%




Rodeway


51.12


49.1%


25.11


50.00


45.2%


22.60


2.2%


390

bps


11.1%




MainStay


66.12


69.7%


46.06


64.30


63.1%


40.56


2.8%


660

bps


13.6%




Suburban


40.31


66.6%


26.84


39.20


62.5%


24.50


2.8%


410

bps


9.6%




Ascend Collection


122.22


61.0%


74.56


127.73


60.4%


77.12


(4.3%)


60

bps


(3.3%)



























Total


$ 71.98


54.2%


$ 39.03


$ 70.09


51.6%


$ 36.19


2.7%


260

bps


7.8%


















































* Operating statistics represent hotel operations from September through November

























































































For the Quarter Ended




For the Year Ended





12/31/2011


12/31/2010




12/31/2011


12/31/2010
















System-wide effective royalty rate


4.31%


4.31%




4.32%


4.29%

















CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5


SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA



(UNAUDITED)






























































December 31, 2011


December 31, 2010


Variance
























Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%






















Comfort Inn


1,399


109,330


1,435


112,169


(36)


(2,839)


(2.5%)


(2.5%)



Comfort Suites


616


47,738


623


48,246


(7)


(508)


(1.1%)


(1.1%)



Sleep


394


28,568


398


28,957


(4)


(389)


(1.0%)


(1.3%)



Quality


1,047


91,502


1,012


89,185


35


2,317


3.5%


2.6%



Clarion


189


27,527


192


28,711


(3)


(1,184)


(1.6%)


(4.1%)



Econo Lodge


797


49,483


784


48,728


13


755


1.7%


1.5%



Rodeway


388


21,627


387


21,261


1


366


0.3%


1.7%



MainStay


40


3,093


37


2,868


3


225


8.1%


7.8%



Suburban


60


7,126


64


7,685


(4)


(559)


(6.3%)


(7.3%)



Ascend Collection


52


4,617


38


3,025


14


1,592


36.8%


52.6%



Cambria Suites


19


2,215


23


2,700


(4)


(485)


(17.4%)


(18.0%)






















Domestic Franchises


5,001


392,826


4,993


393,535


8


(709)


0.2%


(0.2%)






















International Franchises


1,177


104,379


1,149


101,610


28


2,769


2.4%


2.7%






















Total Franchises


6,178


497,205


6,142


495,145


36


2,060


0.6%


0.4%









































Exhibit 6


CHOICE HOTELS INTERNATIONAL, INC.


SUPPLEMENTAL INFORMATION BY BRAND


DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS


(UNAUDITED)




















































































For the Year Ended December 31, 2011


For the Year Ended December 31, 2010


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


12


46


58


7


32


39


71%


44%


49%


Comfort Suites


12


4


16


21


2


23


(43%)


100%


(30%)


Sleep


9


2


11


9


1


10


0%


100%


10%


Quality


-


80


80


1


104


105


(100%)


(23%)


(24%)


Clarion


-


19


19


-


37


37


NM


(49%)


(49%)


Econo Lodge


1


56


57


-


67


67


NM


(16%)


(15%)


Rodeway


-


49


49


1


39


40


(100%)


26%


23%


MainStay


6


3


9


8


2


10


(25%)


50%


(10%)


Suburban


5


4


9


5


1


6


0%


300%


50%


Ascend Collection


2


14


16


1


13


14


100%


8%


14%


Cambria Suites


8


-


8


6


-


6


33%


NM


33%






















Total Domestic System


55


277


332


59


298


357


(7%)


(7%)


(7%)








































































































For the Three Months Ended December 31, 2011


For the Three Months Ended December 31, 2010


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


6


18


24


3


10


13


100%


80%


85%


Comfort Suites


5


-


5


8


1


9


(38%)


(100%)


(44%)


Sleep


3


1


4


6


1


7


(50%)


0%


(43%)


Quality


-


31


31


-


50


50


NM


(38%)


(38%)


Clarion


-


7


7


-


20


20


NM


(65%)


(65%)


Econo Lodge


1


20


21


-


29


29


NM


(31%)


(28%)


Rodeway


-


17


17


-


13


13


NM


31%


31%


MainStay


5


-


5


4


2


6


25%


(100%)


(17%)


Suburban


3


2


5


4


1


5


(25%)


100%


0%


Ascend Collection


-


5


5


-


8


8


NM


(38%)


(38%)


Cambria Suites


4


-


4


1


-


1


300%


NM


300%






















Total Domestic System


27


101


128


26


135


161


4%


(25%)


(20%)

































































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




December 31, 2011


December 31, 2010
















Units


Units


Conversion


New Construction


Total




Conversion


New Construction


Total


Conversion


New Construction


Total


Units


%


Units


%


Units


%




























Comfort Inn


29


46


75


30


62


92


(1)


(3%)


(16)


(26%)


(17)


(18%)


Comfort Suites


1


90


91


1


122


123


-


0%


(32)


(26%)


(32)


(26%)


Sleep Inn


1


49


50


-


75


75


1


NM


(26)


(35%)


(25)


(33%)


Quality


29


5


34


33


8


41


(4)


(12%)


(3)


(38%)


(7)


(17%)


Clarion


14


1


15


18


2


20


(4)


(22%)


(1)


(50%)


(5)


(25%)


Econo Lodge


25


2


27


35


2


37


(10)


(29%)


-


0%


(10)


(27%)


Rodeway


22


1


23


12


2


14


10


83%


(1)


(50%)


9


64%


MainStay


2


28


30


1


42


43


1


100%


(14)


(33%)


(13)


(30%)


Suburban


2


20


22


-


27


27


2


NM


(7)


(26%)


(5)


(19%)


Ascend Collection


6


4


10


6


4


10


-


0%


-


0%


-


0%


Cambria Suites


-


31


31


-


34


34


-


NM


(3)


(9%)


(3)


(9%)




























Total Domestic Pipeline


131


277


408


136


380


516


(5)


(4%)


(103)


(27%)


(108)


(21%)






























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 December 31,


Year Ended December 31,




















2011


2010


2011


2010





Franchising Revenues:


























Total Revenues


$ 165,890


$ 155,006


$ 638,793


$ 596,076





Adjustments:













Marketing and reservation revenues


(90,844)


(87,150)


(349,036)


(329,246)





Hotel operations


(1,183)


(987)


(4,356)


(4,031)





Franchising Revenues


$ 73,863


$ 66,869


$ 285,401


$ 262,799


















Franchising Margins:


























Operating Margin:


























Total Revenues


$ 165,890


$ 155,006


$ 638,793


$ 596,076





Operating Income


$ 38,662


$ 38,441


$ 171,863


$ 160,762





Operating Margin


23.3%


24.8%


26.9%


27.0%


















Adjusted Franchising Margin:


























Franchising Revenues


$ 73,863


$ 66,869


$ 285,401


$ 262,799


















Operating Income


$ 38,662


$ 38,441


$ 171,863


$ 160,762





Employee termination benefits


3,619


1,233


4,444


1,730





Hotel operations


(310)


(188)


(890)


(845)







$ 41,971


$ 39,486


$ 175,417


$ 161,647


















Adjusted Franchising Margins


56.8%


59.0%


61.5%


61.5%











































CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS

















(dollar amounts in thousands)


Three Months Ended December 31,


Year Ended December 31,




















2011


2010


2011


2010


















Selling, general and administrative expense


$ 33,463


$ 26,744


$ 106,404


$ 94,540





Employee termination benefits


(3,619)


(1,233)


(4,444)


(1,730)





Adjusted Selling, General and Administrative Expense


$ 29,844


$ 25,511


$ 101,960


$ 92,810











































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

















(In thousands, except per share amounts)


Three Months Ended December 31,


Year Ended December 31,




















2011


2010


2011


2010