Choice Hotels International Reports A 7% Increase In Second Quarter Domestic RevPAR

New Executed Domestic Franchise Agreements Increase 11%

ROCKVILLE, Md. - July 29, 2015 // PRNewswire // - Choice Hotels International, Inc. (NYSE: CHH) today reported the following highlights for the second quarter 2015:

  • Revenues for the three months ended June 30, 2015 totaled $232.2 million, an increase of 17 percent from the same period of 2014.
  • Domestic hotel executed franchise agreements totaled 139 for the three months ended June 30, 2015, an increase of 11 percent from the same period of 2014.
  • New domestic hotel franchise agreements executed in the second quarter of 2015 for the Comfort family of brands increased 67 percent over the same period of the prior year with nearly 60 percent of agreements representing new construction hotels.
  • Executed 5 new domestic franchise agreements during the three months ended June 30, 2015 for the Cambria hotels & suites brand expanding to new markets including Philadelphia, PA and Memphis, TN.
  • Domestic relicensing and contract renewal transactions totaled 85 for the three months ended June 30, 2015, an increase of 13 percent from the same period of 2014.
  • The company's new construction domestic pipeline of hotels under construction or approved for development increased 30 percent from June 30, 2014, and the total pipeline increased 22 percent. The increase in the new construction hotel pipeline was led by the company's Comfort family of brands which increased 44 percent over the same period of the prior year.
  • Franchising revenues for the three months ended June 30, 2015, totaled $98.6 million, an increase of 5 percent from the same period of 2014.
  • Domestic royalty fees for the three months ended June 30, 2015, totaled $75.8 million, an increase of 6 percent from the same period of 2014.
  • Domestic system-wide revenue per available room ("RevPAR") increased 6.7 percent in the second quarter of 2015, as occupancy and average daily rates increased 170 basis points and 3.8 percent, respectively from the same period of 2014.
  • Domestic units increased 0.3 percent from June 30, 2014.
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") from franchising activities for the three months ended June 30, 2015, totaled $69.8 million, an increase of 5 percent from the same period of 2014.
  • Diluted earnings per share ("EPS") from continuing operations for the three months ended June 30, 2015, totaled $0.62, an increase of 3 percent from the same period of 2014.
  • On July 21, 2015, the company completed the refinancing of its existing $350 senior secured credit facility with a new five year, $450 million senior unsecured revolving credit facility.

"We are pleased with our second quarter operating results that were highlighted by strong domestic RevPAR performance and franchise sales results," said Stephen P. Joyce, president and chief executive officer, Choice Hotels. "Once again our RevPAR performance continued to outpace the gains reported by Smith Travel Research in the chain scale segments in which we compete and as reflected in our franchise sales results our programs to accelerate the growth of the Cambria hotels and suites and Comfort brands have been well received by developers and franchisees. We continue to be optimistic that these programs will drive the continued improvement and expansion of these brands."

Discontinued Operations

During 2014, the company entered into and completed a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the sale of these hotels met the definition of a discontinued operation since the operations and cash flows of these components have been eliminated from the on-going operations of the company and the company does not have significant continuing involvement in the operations of the hotels after the transaction. As a result, the company's consolidated statement of income for the three and six months ended June 30, 2014, reflects these three company-owned hotels as discontinued operations.

Summarized financial information related to these discontinued operations is presented in Exhibit 9 of this press release.

Outlook

The company's consolidated 2015 outlook reflects the following assumptions:

  • All figures assume no repurchases of common stock under the company's share repurchase program; and
  • The effective tax rate for continuing operations is expected to be approximately 32% for both the third quarter and full-year 2015, respectively.

Franchising

  • EBITDA from franchising activities for full-year 2015 are expected to range between $254 million and $257 million;
  • Net domestic unit growth for 2015 is expected to be approximately 1%;
  • RevPAR is expected to increase approximately 6.5% for the third quarter and range between 6.5% and 7.5% for full-year 2015; and
  • The effective royalty rate is expected to increase 2 basis points for full-year 2015 as compared to full-year 2014.

SkyTouch

  • Net reductions in EBITDA relating to our investment in the SkyTouch division for full-year 2015 are expected to range between $15 million and $20 million.

Consolidated Outlook

  • The company's third quarter 2015 diluted EPS is expected to be $0.72. The company expects full-year 2015 diluted EPS to range between $2.18 and $2.22 and full year 2015 EBITDA to range between $237 million and $241 million.

Conference Call

Choice will conduct a conference call on Wednesday, July 29, 2015 at 9:00 a.m. EDT to discuss the company's second quarter 2015 results. The dial-in number to listen to the call is 1-855-638-5678, and the access code is 72461415. International callers should dial 1-920-663-6286 and enter the access code 72461415. The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com. Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link. The Investor 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 Wednesday, July 29, 2015 through Wednesday, August 5, 2015 by calling 1-855-859-2056 and entering access code 72461415. The international dial-in number for the replay is 1-404-537-3406 and the access code is 72461415. In addition, the call will be archived for approximately one-year and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc.® (NYSE: CHH) is one of the world's largest lodging companies. With more than 6,300 hotels franchised in more than 35 countries and territories, we represent more than 500,000 rooms around the globe. As of June 30, 2015, 613 hotels were in our development pipeline. Our company's Ascend Hotel Collection®, Cambria® hotels & suites, Comfort Inn®, Comfort Suites®, Sleep Inn®, Quality®, Clarion®, MainStay Suites®, Suburban Extended Stay Hotel®, Econo Lodge® and Rodeway Inn® brands provide a spectrum of lodging choices to meet guests' needs. With more than 23 million members and counting, check out our Choice Privileges® rewards program to see how you can reap the benefits of being a member of the Choice Hotels® family. Visit us at www.choicehotels.com for more information.

SkyTouch Technology® is a business division of Choice Hotels that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company.

Additional corporate information can 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 Private Securities Litigation Reform Act of 1995. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "should," "will," "forecast," "plan," "project," "assume" or similar words of futurity identify such forward-looking statements. These forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, ability to repay outstanding indebtedness, payment of dividends, repurchases of common stock 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; foreign currency fluctuations; 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 marketing and reservations systems and other operating systems; or ability to grow our franchise system; exposure to risks related to development activities; fluctuations in the supply and demand for hotels rooms; our ability to realize anticipated benefits from acquired businesses; the level of acceptance of alternative growth strategies we may implement; operating risks associated with our international operations; the outcome of litigation; and our ability to manage our indebtedness. These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission including our annual reports on Form 10-K and our quarterly reports filed on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements Presented in this Press Release

EBITDA, franchising revenues, franchising SG&A, EBITDA from franchising activities and franchising margins are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in the United States ("GAAP"), such as 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 EBITDA, franchising revenues, franchising SG&A and franchising margins to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects income from continuing operations excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income of unconsolidated affiliates. We consider EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Franchising Revenues, Operating Income, EBITDA, SG&A and Margins: The company reports franchising revenues, operating income, EBITDA, SG&A and margins which exclude marketing and reservation revenues, the SkyTouch Technology operations and revenue generated from the ownership of an office building that is leased to a third-party. Marketing and reservation activities are excluded since the company is required by its franchise agreements to use the fees collected for marketing and reservation activities; as such, no income or loss to the company is generated. Cumulative marketing and reservation system fees not expended are recorded as a liability in the company's financial statements and are carried over to the next 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 deferred and recorded as an asset in the company's financial statements and recovered in future periods. SkyTouch Technology is a division of the company that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company. The operations for SkyTouch Technology are excluded since they do not reflect the company's core franchising business but are an adjacent, complimentary line of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

© 2015 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

   

2015

   

2014

   

$

 

%

   

2015

   

2014

   

$

 

%

(In thousands, except per share amounts)

                               
                                 

REVENUES:

                               
                                 

Royalty fees

 

$     81,183

 

$     77,670

 

$ 3,513

 

5%

 

$ 143,614

 

$ 136,210

 

$  7,404

 

5%

Initial franchise and relicensing fees

 

5,816

 

4,722

 

1,094

 

23%

 

11,533

 

8,462

 

3,071

 

36%

Procurement services

 

8,589

 

8,020

 

569

 

7%

 

13,396

 

12,798

 

598

 

5%

Marketing and reservation 

 

133,122

 

103,766

 

29,356

 

28%

 

231,835

 

193,372

 

38,463

 

20%

Other

 

3,446

 

3,486

 

(40)

 

(1%)

 

7,023

 

6,558

 

465

 

7%

      Total revenues

 

232,156

 

197,664

 

34,492

 

17%

 

407,401

 

357,400

 

50,001

 

14%

                                 

OPERATING EXPENSES:

                               
                                 

Selling, general and administrative

 

33,122

 

31,413

 

1,709

 

5%

 

65,560

 

58,093

 

7,467

 

13%

Depreciation and amortization

 

2,995

 

2,332

 

663

 

28%

 

5,685

 

4,610

 

1,075

 

23%

Marketing and reservation

 

133,122

 

103,766

 

29,356

 

28%

 

231,835

 

193,372

 

38,463

 

20%

Total operating expenses

 

169,239

 

137,511

 

31,728

 

23%

 

303,080

 

256,075

 

47,005

 

18%

                                 

Operating income

 

62,917

 

60,153

 

2,764

 

5%

 

104,321

 

101,325

 

2,996

 

3%

                                 

OTHER INCOME AND EXPENSES, NET:

                               

Interest expense

 

11,057

 

10,710

 

347

 

3%

 

21,236

 

20,881

 

355

 

2%

Interest income

 

(277)

 

(347)

 

70

 

(20%)

 

(623)

 

(850)

 

227

 

(27%)

Other (gains) and losses

 

(1,173)

 

(474)

 

(699)

 

147%

 

(1,641)

 

(533)

 

(1,108)

 

208%

Equity in net loss of affiliates

 

431

 

30

 

401

 

1337%

 

1,436

 

65

 

1,371

 

2109%

Total other income and expenses, net

 

10,038

 

9,919

 

119

 

1%

 

20,408

 

19,563

 

845

 

4%

                                 

Income from continuing operations before income taxes

 

52,879

 

50,234

 

2,645

 

5%

 

83,913

 

81,762

 

2,151

 

3%

Income taxes

 

17,066

 

14,955

 

2,111

 

14%

 

26,506

 

25,014

 

1,492

 

6%

Income from continuing operations, net of income taxes

 

35,813

 

35,279

 

534

 

2%

 

57,407

 

56,748

 

659

 

1%

Income from discontinued operations, net of income taxes

 

-

 

121

 

(121)

 

(100%)

 

-

 

1,762

 

(1,762)

 

(100%)

Net income

 

$     35,813

 

$     35,400

 

$    413

 

1%

 

$   57,407

 

$   58,510

 

$ (1,103)

 

(2%)

                                 
                                 

Basic earnings per share

                               

Continuing operations

 

$         0.62

 

$         0.61

 

$   0.01

 

2%

 

$       1.00

 

$       0.97

 

$    0.03

 

3%

Discontinued operations

 

-

 

-

 

-

 

NM

 

-

 

0.03

 

(0.03)

 

(100%)

   

$         0.62

 

$         0.61

 

$   0.01

 

2%

 

$       1.00

 

$       1.00

 

$    0.00

 

0%

                                 
                                 

Diluted earnings per share

                               

Continuing operations

 

$         0.62

 

$         0.60

 

$   0.02

 

3%

 

$       0.99

 

$       0.96

 

$    0.03

 

3%

Discontinued operations

 

-

 

-

 

-

 

NM

 

-

 

0.03

 

(0.03)

 

(100%)

   

$         0.62

 

$         0.60

 

$   0.02

 

3%

 

$       0.99

 

$       0.99

 

$    0.00

 

0%

 

Choice Hotels International, Inc.

   

Exhibit 2

Consolidated Balance Sheets

     
               
               

(In thousands, except per share amounts)

 June 30, 

 

 December 31, 

         

2015

   

2014

         

(Unaudited)

   
               

ASSETS

     
               

Cash and cash equivalents

$    230,650

 

$         214,879

Accounts receivable, net

118,989

 

91,681

Other current assets

47,938

 

44,854

 

Total current assets

397,577

 

351,414

               

Fixed assets and intangibles, net

155,456

 

152,034

Notes receivable, net of allowances

51,228

 

40,441

Investments, employee benefit plans, at fair value

18,274

 

17,539

Other assets

     

80,058

 

85,842

               
   

Total assets

$    702,593

 

$         647,270

               
               
               

LIABILITIES AND SHAREHOLDERS' DEFICIT

     
               

Accounts payable and accrued expenses

$    128,744

 

$         120,654

Deferred revenue

70,402

 

66,382

Current portion of long-term debt

1,124

 

12,349

Other current liabilities

1,416

 

713

 

Total current liabilities

201,686

 

200,098

               

Long-term debt

800,035

 

782,082

Deferred compensation & retirement plan obligations  

24,237

 

23,987

Other liabilities

62,102

 

69,904

               
 

Total liabilities

1,088,060

 

1,076,071

               

Common stock, $0.01 par value

576

 

573

Additional paid-in-capital

134,144

 

127,661

Accumulated other comprehensive loss

(7,812)

 

(6,971)

Treasury stock, at cost

(979,211)

 

(982,463)

Retained earnings

466,836

 

432,399

 

Total shareholders' deficit

(385,467)

 

(428,801)

               
   

Total liabilities and shareholders' deficit

$    702,593

 

$         647,270

 

Choice Hotels International, Inc.

 

Exhibit 3

Consolidated Statements of Cash Flows

   

(Unaudited)

   
       
       
   

(In thousands)

Six Months Ended June 30,

       
 

2015

   

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

     
       

Net income

$  57,407

 

$  58,510

       

Adjustments to reconcile net income to net cash provided 

     

 by operating activities:

     

  Depreciation and amortization  

5,685

 

4,610

  Gain on sale of assets

(1,595)

 

(2,849)

  Provision for bad debts, net

1,197

 

1,383

  Non-cash stock compensation and other charges

5,399

 

4,711

  Non-cash interest and other (income) loss

1,340

 

719

  Deferred income taxes

(2,095)

 

(9,273)

  Equity (earnings) losses from unconsolidated joint ventures, net of distributions received

2,781

 

611

       

Changes in assets and liabilities:

     

  Receivables

(28,856)

 

(39,518)

  Advances to/from marketing and reservation activities, net

3,724

 

31,522

  Forgivable notes receivable, net

(19,186)

 

(6,692)

  Accounts payable

16,990

 

8,316

  Accrued expenses

(6,969)

 

(5,247)

  Income taxes payable/receivable

2,450

 

15,198

  Deferred revenue

4,041

 

6,231

  Other assets

(5,152)

 

(1,102)

  Other liabilities

769

 

(1,298)

       

 NET CASH PROVIDED BY OPERATING ACTIVITIES 

37,930

 

65,832

       

CASH FLOWS FROM INVESTING ACTIVITIES:

     
       

Investment in property and equipment

(14,554)

 

(7,314)

Proceeds from sales of assets

6,283

 

12,216

Contributions to equity method investments

(2,446)

 

(6,946)

Distributions from equity method investments

270

 

-

Purchases of investments, employee benefit plans

(1,736)

 

(1,220)

Proceeds from sales of investments, employee benefit plans

1,087

 

641

Issuance of mezzanine and other notes receivable

(1,500)

 

(2,223)

Collections of mezzanine and other notes receivable

3,567

 

9,743

Other items, net

(261)

 

(296)

       

 NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 

(9,290)

 

4,601

       

CASH FLOWS FROM FINANCING ACTIVITIES:

     
       

Net borrowings pursuant to revolving credit facility

13,000

 

-

Principal payments on long-term debt

(6,169)

 

(4,112)

Proceeds from the issuance of long-term debt

-

 

26

Purchase of treasury stock

(6,244)

 

(4,544)

Dividends paid

(22,940)

 

(21,957)

Excess tax benefits from stock-based compensation

4,613

 

1,319

Proceeds from exercise of stock options

5,696

 

1,547

       

 NET CASH USED BY FINANCING ACTIVITIES

(12,044)

 

(27,721)

       

Net change in cash and cash equivalents

16,596

 

42,712

Effect of foreign exchange rate changes on cash and cash equivalents

(825)

 

1,035

Cash and cash equivalents at beginning of period

214,879

 

167,795

       

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$230,650

 

$211,542

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 

 

DOMESTIC HOTEL SYSTEM

 

(UNAUDITED)

 
                                           
                                           
                                           
                                           
   

For the Six Months Ended June 30, 2015

 

For the Six Months Ended June 30, 2014

 

Change

   
                                           
   

Average Daily

         

Average Daily

         

Average Daily

             
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

   
                                           

Comfort Inn

 

$            87.35

 

63.5%

 

$  55.48

 

$           83.68

 

61.3%

 

$  51.31

 

4.4%

 

220

bps

 

8.1%

   

Comfort Suites

 

93.06

 

68.2%

 

63.43

 

89.35

 

65.7%

 

58.68

 

4.2%

 

250

bps

 

8.1%

   

Sleep

 

79.60

 

64.0%

 

50.93

 

75.94

 

61.3%

 

46.57

 

4.8%

 

270

bps

 

9.4%

   

Quality

 

73.16

 

57.5%

 

42.05

 

70.37

 

54.8%

 

38.57

 

4.0%

 

270

bps

 

9.0%

   

Clarion

 

78.25

 

56.3%

 

44.07

 

75.01

 

53.0%

 

39.75

 

4.3%

 

330

bps

 

10.9%

   

Econo Lodge

 

57.47

 

52.4%

 

30.13

 

55.75

 

49.7%

 

27.72

 

3.1%

 

270

bps

 

8.7%

   

Rodeway

 

57.22

 

55.8%

 

31.90

 

54.19

 

53.2%

 

28.85

 

5.6%

 

260

bps

 

10.6%

   

MainStay

 

76.24

 

68.5%

 

52.23

 

73.80

 

70.6%

 

52.11

 

3.3%

 

(210)

bps

 

0.2%

   

Suburban

 

47.25

 

76.5%

 

36.15

 

44.53

 

72.6%

 

32.34

 

6.1%

 

390

bps

 

11.8%

   

Ascend Hotel Collection

 

122.78

 

59.8%

 

73.45

 

117.13

 

59.2%

 

69.30

 

4.8%

 

60

bps

 

6.0%

   
                                           

Total 

 

$            78.08

 

60.4%

 

$  47.15

 

$           75.26

 

58.0%

 

$  43.63

 

3.7%

 

240

bps

 

8.1%

   
                                           
                                           
                                           
                                           
   

For the Three Months Ended June 30, 2015

 

For the Three Months Ended June 30, 2014

 

Change

   
                                           
   

Average Daily

         

Average Daily

         

Average Daily

             
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

   
                                           

Comfort Inn

 

$            90.92

 

69.5%

 

$  63.16

 

$           87.16

 

67.6%

 

$  58.94

 

4.3%

 

190

bps

 

7.2%

   

Comfort Suites

 

95.59

 

71.8%

 

68.64

 

91.46

 

70.4%

 

64.36

 

4.5%

 

140

bps

 

6.7%

   

Sleep

 

82.23

 

68.3%

 

56.11

 

78.40

 

66.9%

 

52.42

 

4.9%

 

140

bps

 

7.0%

   

Quality

 

75.52

 

62.0%

 

46.83

 

72.61

 

59.8%

 

43.38

 

4.0%

 

220

bps

 

8.0%

   

Clarion

 

80.54

 

60.8%

 

48.95

 

78.36

 

57.0%

 

44.68

 

2.8%

 

380

bps

 

9.6%

   

Econo Lodge

 

59.86

 

56.6%

 

33.87

 

58.12

 

54.9%

 

31.90

 

3.0%

 

170

bps

 

6.2%

   

Rodeway

 

59.92

 

58.4%

 

35.01

 

56.56

 

56.7%

 

32.05

 

5.9%

 

170

bps

 

9.2%

   

MainStay

 

78.53

 

70.4%

 

55.32

 

76.33

 

76.3%

 

58.25

 

2.9%

 

(590)

bps

 

(5.0%)

   

Suburban

 

47.96

 

78.9%

 

37.86

 

45.72

 

75.0%

 

34.27

 

4.9%

 

390

bps

 

10.5%

   

Ascend Hotel Collection

 

129.04

 

59.2%

 

76.41

 

122.07

 

60.1%

 

73.32

 

5.7%

 

(90)

bps

 

4.2%

   
                                           

Total 

 

$            80.89

 

64.7%

 

$  52.36

 

$           77.92

 

63.0%

 

$  49.08

 

3.8%

 

170

bps

 

6.7%

   
                                           
                                           
                                           
                                           
                                           
                                           
   

For the Quarter Ended

     

For the Six Months Ended

                     
   

6/30/2015

 

6/30/2014

     

6/30/2015

 

6/30/2014

                     
                                           

System-wide effective royalty rate

 

4.28%

 

4.28%

     

4.29%

 

4.30%

                     

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

 

(UNAUDITED)

 
                                   
                                   
                                   
   

June 30, 2015

 

June 30, 2014

 

Variance

 
                                   
   

Hotels

 

Rooms

 

Hotels

 

Rooms

 

Hotels

 

Rooms

 

%

 

%

 
                                   

Comfort Inn

 

1,215

 

93,904

 

1,281

 

99,679

 

(66)

 

(5,775)

 

(5.2%)

 

(5.8%)

 

Comfort Suites

 

575

 

44,447

 

590

 

45,664

 

(15)

 

(1,217)

 

(2.5%)

 

(2.7%)

 

Sleep

 

377

 

27,207

 

375

 

27,159

 

2

 

48

 

0.5%

 

0.2%

 

Quality

 

1,311

 

105,761

 

1,251

 

102,859

 

60

 

2,902

 

4.8%

 

2.8%

 

Clarion

 

175

 

24,587

 

185

 

26,501

 

(10)

 

(1,914)

 

(5.4%)

 

(7.2%)

 

Econo Lodge

 

853

 

52,835

 

840

 

51,678

 

13

 

1,157

 

1.5%

 

2.2%

 

Rodeway

 

481

 

26,544

 

460

 

25,366

 

21

 

1,178

 

4.6%

 

4.6%

 

MainStay

 

47

 

3,629

 

42

 

3,304

 

5

 

325

 

11.9%

 

9.8%

 

Suburban

 

62

 

6,959

 

64

 

7,164

 

(2)

 

(205)

 

(3.1%)

 

(2.9%)

 

Ascend Hotel Collection

 

110

 

9,408

 

104

 

9,076

 

6

 

332

 

5.8%

 

3.7%

 

Cambria hotel & suites

 

24

 

2,917

 

20

 

2,404

 

4

 

513

 

20.0%

 

21.3%

 
                                   

Domestic Franchises

 

5,230

 

398,198

 

5,212

 

400,854

 

18

 

(2,656)

 

0.3%

 

(0.7%)

 
                                   

International Franchises

 

1,146

 

106,763

 

1,160

 

105,669

 

(14)

 

1,094

 

(1.2%)

 

1.0%

 
                                   

Total Franchises

 

6,376

 

504,961

 

6,372

 

506,523

 

4

 

(1,562)

 

0.1%

 

(0.3%)

 

 

                                 

 

Exhibit 6

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)

                                       
                                       
                                       
                                       
   

For the Six Months Ended June 30, 2015

 

For the Six Months Ended June 30, 2014

 

% Change

 
                                       
   

New

         

New

         

New

         
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 
                                       

Comfort Inn

 

13

 

20

 

33

 

10

 

8

 

18

 

30%

 

150%

 

83%

 

Comfort Suites

 

13

 

2

 

15

 

7

 

-

 

7

 

86%

 

NM

 

114%

 

Sleep

 

9

 

-

 

9

 

14

 

1

 

15

 

(36%)

 

(100%)

 

(40%)

 

Quality

 

3

 

75

 

78

 

3

 

48

 

51

 

0%

 

56%

 

53%

 

Clarion

 

-

 

6

 

6

 

-

 

11

 

11

 

NM

 

(45%)

 

(45%)

 

Econo Lodge

 

-

 

28

 

28

 

-

 

27

 

27

 

NM

 

4%

 

4%

 

Rodeway

 

-

 

35

 

35

 

1

 

31

 

32

 

(100%)

 

13%

 

9%

 

MainStay

 

6

 

-

 

6

 

5

 

1

 

6

 

20%

 

(100%)

 

0%

 

Suburban

 

1

 

3

 

4

 

1

 

3

 

4

 

0%

 

0%

 

0%

 

Ascend Hotel Collection

 

1

 

16

 

17

 

6

 

6

 

12

 

(83%)

 

167%

 

42%

 

Cambria hotel & suites

 

7

 

-

 

7

 

1

 

-

 

1

 

600%

 

NM

 

600%

 
                                       

Total Domestic System

 

53

 

185

 

238

 

48

 

136

 

184

 

10%

 

36%

 

29%

 
                                       
                                       
                                       
                                       
                                       
   

For the Three Months Ended June 30, 2015

 

For the Three Months Ended June 30, 2014

 

% Change

 
                                       
   

New

         

New

         

New

         
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 
                                       

Comfort Inn

 

9

 

13

 

22

 

7

 

5

 

12

 

29%

 

160%

 

83%

 

Comfort Suites

 

8

 

-

 

8

 

6

 

-

 

6

 

33%

 

NM

 

33%

 

Sleep

 

4

 

-

 

4

 

10

 

1

 

11

 

(60%)

 

(100%)

 

(64%)

 

Quality

 

1

 

46

 

47

 

2

 

38

 

40

 

(50%)

 

21%

 

18%

 

Clarion

 

-

 

3

 

3

 

-

 

9

 

9

 

NM

 

(67%)

 

(67%)

 

Econo Lodge

 

-

 

19

 

19

 

-

 

21

 

21

 

NM

 

(10%)

 

(10%)

 

Rodeway

 

-

 

21

 

21

 

-

 

16

 

16

 

NM

 

31%

 

31%

 

MainStay

 

2

 

-

 

2

 

1

 

1

 

2

 

100%

 

(100%)

 

0%

 

Suburban

 

1

 

1

 

2

 

-

 

2

 

2

 

NM

 

(50%)

 

0%

 

Ascend Hotel Collection

 

-

 

6

 

6

 

3

 

3

 

6

 

(100%)

 

100%

 

0%

 

Cambria hotel & suites

 

5

 

-

 

5

 

-

 

-

 

-

 

NM

 

NM

 

NM

 
                                       

Total Domestic System

 

30

 

109

 

139

 

29

 

96

 

125

 

3%

 

14%

 

11%

 

 

                                           

Exhibit 7

CHOICE HOTELS INTERNATIONAL, INC.

DOMESTIC 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, 2015

 

June 30, 2014

                       
   

Units

 

Units

 

Conversion

 

New Construction

 

Total

   

Conversion

 

New Construction

 

Total

 

Conversion

 

New Construction

 

Total

 

Units

 

%

 

Units

 

%

 

Units

 

%

                                                 

Comfort Inn

 

38

 

64

 

102

 

38

 

50

 

88

 

-

 

0%

 

14

 

28%

 

14

 

16%

Comfort Suites

 

3

 

76

 

79

 

1

 

47

 

48

 

2

 

200%

 

29

 

62%

 

31

 

65%

Sleep Inn

 

1

 

65

 

66

 

2

 

56

 

58

 

(1)

 

(50%)

 

9

 

16%

 

8

 

14%

Quality

 

54

 

5

 

59

 

41

 

6

 

47

 

13

 

32%

 

(1)

 

(17%)

 

12

 

26%

Clarion

 

11

 

2

 

13

 

12

 

2

 

14

 

(1)

 

(8%)

 

-

 

0%

 

(1)

 

(7%)

Econo Lodge

 

24

 

4

 

28

 

33

 

2

 

35

 

(9)

 

(27%)

 

2

 

100%

 

(7)

 

(20%)

Rodeway

 

34

 

3

 

37

 

31

 

2

 

33

 

3

 

10%

 

1

 

50%

 

4

 

12%

MainStay

 

1

 

47

 

48

 

2

 

35

 

37

 

(1)

 

(50%)

 

12

 

34%

 

11

 

30%

Suburban

 

6

 

12

 

18

 

7

 

14

 

21

 

(1)

 

(14%)

 

(2)

 

(14%)

 

(3)

 

(14%)

Ascend Hotel Collection

 

25

 

18

 

43

 

9

 

15

 

24

 

16

 

178%

 

3

 

20%

 

19

 

79%

Cambria hotel & suites

 

-

 

25

 

25

 

-

 

18

 

18

 

-

 

NM

 

7

 

39%

 

7

 

39%

                                                 
   

197

 

321

 

518

 

176

 

247

 

423

 

21

 

12%

 

74

 

30%

 

95

 

22%

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 8

 

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

 
 

(UNAUDITED)

 
                     

CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

     
                     

(dollar amounts in thousands)

 

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 
                     
     

2015

   

2014

   

2015

   

2014

 
 

Franchising Revenues:

                 
                     
 

Total Revenues

 

$  232,156

 

$  197,664

 

$  407,401

 

$  357,400

 
 

Adjustments:

                 
 

     Marketing and reservation revenues

 

(133,122)

 

(103,766)

 

(231,835)

 

(193,372)

 
 

     SkyTouch & Other

 

(411)

 

(68)

 

(1,014)

 

(121)

 
 

Franchising Revenues

 

$    98,623

 

$    93,830

 

$  174,552

 

$  163,907

 
                     
 

Franchising Margins:

                 
                     
 

Operating Margin:

                 
                     
 

Total Revenues

 

$  232,156

 

$  197,664

 

$  407,401

 

$  357,400

 
 

Operating Income

 

$    62,917

 

$    60,153

 

$  104,321

 

$  101,325

 
 

     Operating Margin

 

27.1%

 

30.4%

 

25.6%

 

28.4%

 
                     
 

Franchising Margin:

                 
                     
 

Franchising Revenues

 

$    98,623

 

$    93,830

 

$  174,552

 

$  163,907

 
                     
 

Operating Income

 

$    62,917

 

$    60,153

 

$  104,321

 

$  101,325

 
 

Non-franchising activities operating loss

 

4,375

 

4,360

 

9,576

 

7,866

 
     

$    67,292

 

$    64,513

 

$  113,897

 

$  109,191

 
                     
 

     Franchising Margins

 

68.2%

 

68.8%

 

65.3%

 

66.6%

 
                     
                     
                     

CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES

     
                     

(dollar amounts in thousands)

 

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 
                     
     

2015

 

2014

 

2015

 

2014

 
                     
 

Total Selling, General and Administrative Expenses

 

$    33,122

 

$    31,413

 

$    65,560

 

$    58,093

 
 

SkyTouch & other

 

(4,314)

 

(4,200)

 

(9,709)

 

(7,536)

 
 

Franchising Selling, General and Administration Expenses

 

$    28,808

 

$    27,213

 

$    55,851

 

$    50,557

 
                     
                     
                     

CALCULATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")

 
                     

(dollar amounts in thousands)

                 
     

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 
                     
     

2015

 

2014

 

2015

 

2014

 
                     

Income from continuing operations, net of income taxes

 

$    35,813

 

$    35,279

 

$    57,407

 

$    56,748

 
 

Income taxes

 

17,066

 

14,955

 

26,506

 

25,014

 
 

Interest expense

 

11,057

 

10,710

 

21,236

 

20,881

 
 

Interest income

 

(277)

 

(347)

 

(623)

 

(850)

 
 

Other (gains) and losses

 

(1,173)

 

(474)

 

(1,641)

 

(533)

 
 

Equity in net loss of affiliates

 

431

 

30

 

1,436

 

65

 
 

Depreciation and amortization

 

2,995

 

2,332

 

5,685

 

4,610

 

EBITDA

 

$    65,912

 

$    62,485

 

$  110,006

 

$  105,935

 
                     

Franchising 

 

$    69,815

 

$    66,617

 

$  118,701

 

$  113,350

 

SkyTouch & other

 

(3,903)

 

(4,132)

 

(8,695)

 

(7,415)

 
     

$    65,912

 

$    62,485

 

$  110,006

 

$  105,935

 

 

 

CHOICE HOTELS INTERNATIONAL, INC.

 

Exhibit 9

 

DISCONTINUED OPERATIONS

   

 

(UNAUDITED)

   
                   
                   
                   
     

Three Months Ended June 30,

 

Six Months Ended June 30, 

                   

(In thousands)

 

2015

 

2014

 

2015

 

2014

                   

REVENUES:

               

Hotel operations

 

$    -

 

$  111

 

$    -

 

$          801

      Total revenues

 

-

 

111

 

-

 

801

                   

OPERATING EXPENSES:

               

Hotel operations

 

-

 

170

 

-

 

832

Total operating expenses

 

-

 

170

 

-

 

832

                   

Operating income (loss)

 

-

 

(59)

 

-

 

(31)

                   

Gain on disposal of discontinued operations

 

-

 

252

 

-

 

2,833

                   

Income from discontinued operations before income taxes

 

-

 

193

 

-

 

2,802

Income tax 

 

-

 

72

 

-

 

1,040

Income from discontinued operations

 

$    -

 

$  121

 

$    -

 

$       1,762

                   

SOURCE Choice Hotels International, Inc.

Contacts:

David White
Senior Vice President
Chief Financial Officer & Treasurer
(301) 592-5117

Scott Carman
Director
Public Relations
(301) 592-6361

 

###

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