Choice Hotels International Reports Full Year 2012 Adjusted Diluted EPS of $2.11 Per Share

Full Year New Domestic Hotel Franchise Contracts Rise 42%

11 Feb, 2013, 17:22 ET from Choice Hotels International, Inc.

SILVER SPRING, Md., Feb. 11, 2013 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the fourth quarter and full year 2012:

"2012 was a record breaking year for the company in terms of operating performance. We established new company records for the size of the domestic franchise system, total franchising revenues, franchising margins, operating cash flows, operating income and earnings per share," said Stephen P. Joyce, president and chief executive officer. "We are very pleased with our development results which increased 42 percent over the prior year, highlighted by the conversion of 46 properties, formerly operated as Jameson Inns, to our system and the execution of several Cambria Suites agreements in key markets important for Cambria's long-term success. We remain optimistic that the development and RevPAR environments will continue to improve and result in further growth of our business in 2013." 

Full Year Highlights

  • Adjusted diluted earnings per share ("EPS") for full year 2012 were $2.11 compared to $1.92 for full year 2011, a 10% increase.  Adjusted diluted EPS for full year 2012 and 2011 exclude certain special items, as described below, totaling $0.04 and $0.07, respectively.
  • Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 10% to $203.7 million for the year ended December 31, 2012, compared to the prior year. Operating income increased 12% from $171.9 million for the year ended December 31, 2011 to $193.1 million for full year 2012.
  • Franchising revenues increased 6% to $302.2 million for the year ended December 31, 2012 from $285.4 million for the same period of 2011.  Total revenues increased 8% to $691.5 million for the year ended December 31, 2012 compared to the same period of 2011.
  • Adjusted franchising margins increased 280 basis points from 61.5% for the year ended December 31, 2011 to 64.3% for the same period of the current year.
  • Domestic royalty fees for the year ended December 31, 2012 increased $15.4 million to $235.7 million from $220.3 million for the year ended December 31, 2011, an increase of 7%.
  • Domestic unit and room growth increased 1.6 percent and 0.8 percent from December 31, 2011, respectively. 
  • Domestic system-wide revenue per available room ("RevPAR") increased 6.2% for the year ended December 31, 2012 compared to the year ended December 31, 2011 as occupancy and average daily rates increased 200 basis points and 2.5 percent, respectively.   
  • The effective royalty rate increased 1 basis point to 4.33% for the year ended December 31, 2012 compared to 4.32% for the same period of the prior year.
  • The company executed 473 new domestic hotel franchise contracts for the year ended December 31, 2012 compared to 332 new domestic hotel franchise contracts in the same period of the prior year, a 42% increase.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development as of December 31, 2012 was 482 hotels representing 38,969 rooms.
  • The effective income tax rate for the year ended December 31, 2012 was 28.7% compared to 30.1% for the same period of 2011.
  • During the year ended December 31, 2012, the company paid cash dividends totaling approximately $654.1 million, including a special cash dividend of $10.41 per share or approximately $600.7 million and purchased approximately 0.5 million shares of its common stock for a total cost of $19.9 million under the share repurchase program.

Fourth Quarter Highlights

  • Adjusted diluted EPS for fourth quarter 2012 were $0.45 compared to $0.46 for the same period of the prior year. Diluted EPS were $0.42 for the fourth quarter of 2012 compared to $0.42 for the same period of 2011. Adjusted diluted EPS for fourth quarter 2012 and 2011 exclude certain special items, as described below, totaling $0.03 and $0.04, respectively.
  • Excluding special items, adjusted EBITDA increased 11% to $49.3 million for the three months ended December 31, 2012 compared to the same period of the prior year.  Operating income for the three months ended December 31, 2012 increased 17% from the same period of the prior year to $45.2 million.
  • Franchising revenues increased 4% from $73.9 million for the three months ended December 31, 2011 to $77.0 million for the same period of 2012.  Total revenues for the three months ended December 31, 2012 increased 7% compared to the same period of the prior year.
  • Domestic system-wide revenue per available room ("RevPAR") increased 4.2% for the three months ended December 31, 2012 compared to the same period of 2011 as occupancy and average daily rates increased 120 basis points and 2.0 percent, respectively.   
  • The effective royalty rate increased 5 basis points to 4.36% for the three months ended December 31, 2012 compared to 4.31% for the same period of the prior year.
  • The company executed 214 new domestic hotel franchise contracts for the three months ended December 31, 2012 compared to 128 new domestic hotel franchise contracts in the same period of the prior year, a 67% increase.
  • Reached an agreement with affiliates of Colony Capital, LLC, including Colony Financial, Inc., and hospitality management company Aimbridge Hospitality, to convert 46 properties, formerly operated as Jameson Inns, to the company's Quality Inn, Comfort Inn and Econo Lodge brands, representing the company's largest single conversion transaction, excluding brand acquisitions.
  • Expanded Cambria Suites into additional major markets with new franchise agreements executed for hotels in New York City, Phoenix, Arizona and Plano, Texas.
  • Interest expense for the three months ended December 31, 2012 increased $7.1 million over the same period of the prior reflecting the financing transactions entered into during the second and third quarter of 2012 in conjunction with the payment of the $600 million special cash dividend paid on August 23, 2012.

Special Items

On December 27, 2012, the company settled its supplemental executive retirement plan and paid the actuarial equivalent of the lump sum value of the full accrued benefit to each participant. As a result of the settlement, the company recognized a settlement loss in SG&A expense totaling $1.8 million for the three months and year ended December 31, 2012. In addition, during the year ended December 31, 2012, the company recorded employee termination benefits charges in SG&A of approximately $0.5 million and recognized a loss on the extinguishment of debt totaling $0.5 million. These special items represent diluted EPS of $0.03 and $0.04 for the three months and year ended December 31, 2012, respectively.

During the three months and year ended December 31, 2011, the company recorded employee termination benefit charges included in 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.

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.

Dividends

For the year ended December 31, 2012, the company paid $654.1 million of cash dividends to shareholders which included a special cash dividend in the amount of $10.41 per share or approximately $600.7 million paid on August 23, 2012. The company's current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

Share Repurchases

During the year ended December 31, 2012, the company repurchased 0.5 million shares for a total cost of $19.9 million and has authorization to purchase up to an additional 1.4 million shares under this program.  The company did not repurchase any shares of common stock under the share repurchase program during the three months ended December 31, 2012. We expect to continue making repurchases under our share repurchase program 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 45.3 million shares of its common stock for a total cost of $1.1 billion through December 31, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.3 million shares through December 31, 2012 under the share repurchase program at an average price of $13.89 per share.

Other

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 strategic markets.  During the year ended December 31, 2012, the company advanced, net of repayments, approximately $41 million related to mezzanine financing and sliver equity investments to construct Cambria Suites in such markets as New York City and White Plains, New York, Phoenix, Arizona and Plano, Texas. At December 31, 2012 the company had approximately $68 million outstanding related to this program. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands.  We expect these advances to range between $20 million and $40 million per year, however, 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.

Balance Sheet

At December 31, 2012, the company had gross debt of $855.3 million and cash and cash equivalents totaling $134.2 million resulting in net debt of $721.1 million.  At December 31, 2011, the company had gross debt of $252.7 million and cash equivalents totaling $107.1 million resulting in net debt of $145.6 million.

On June 27, 2012, the company issued unsecured senior notes in an aggregate principal amount of $400 million, in an underwritten, registered public offering. These notes will mature in July 2022 and bear a coupon rate of interest of 5.75%. Considering bond issuance costs, the company's effective interest costs related to these senior notes is approximately 5.94%.

On July 25, 2012, the company entered into a senior secured credit facility consisting of a $200 million revolving credit tranche and a $150 million term loan tranche, with a four year term. The company may elect to have borrowings under the senior secured credit facility bear interest at (i) a base rate plus a margin ranging from 100 to 325 basis points based on the company's total leverage ratio or (ii) LIBOR plus a margin ranging from 200 to 425 basis points based on the company's total leverage ratio.  As a result of entering into the senior secured credit facility, the company's existing $300 million senior unsecured revolving credit facility was terminated. Under the $300 million senior unsecured revolving credit facility the company could elect to have borrowings bear interest at (i) a base rate plus a margin ranging from 5 to 80 basis points based on the company's credit rating or (ii) LIBOR plus a margin ranging from 105 to 180 basis points based on the company's credit rating.

The proceeds from the issuance of the $400 million senior notes and the company's new senior secured credit facility were utilized to pay the special cash dividend paid on August 23, 2012.

At December 31, 2012 and 2011, the company had outstanding mezzanine financing, real estate investments and sliver equity investments totaling $68 million and $27 million, respectively pursuant to its program to offer financing and investment support to incent franchise development for the Cambria Suites brand in strategic markets.  These investments are reported in other current assets and other assets on the company's consolidated balance sheet.

Outlook

The company's first quarter 2013 diluted EPS is expected to be $0.26. The company expects full-year 2013 diluted EPS to range between $1.96 and $1.98.  EBITDA for full-year 2013 are expected to range between $215 million and $217 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to increase by approximately 1.5% in 2013;
  • RevPAR is expected to increase approximately 5% for first quarter of 2013 and increase between 4.5% and 5.5% for full-year 2013;
  • The effective royalty rate is expected to increase 3 basis points for full-year 2013;
  • All figures assume the existing share count;
  • An effective tax rate of 28.5% and 30.6% for the first quarter and full-year 2013, respectively.

Conference Call

Choice will conduct a conference call on Tuesday, February 12, 2013 at 9:00 a.m. EST to discuss the company's fourth quarter 2012 results. The dial-in number to listen to the call is 1-800-591-6930, and the access code is 96459022. International callers should dial 1-617-614-4908 and enter the access code 96459022.  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 11:00 a.m. EST on Tuesday, February 12, 2013 through Tuesday, February 19, 2013 by calling 1-888-286-8010 and entering access code 56450518. The international dial-in number for the replay is 1-617-801-6888, access code 56450518. 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 approximately 6,200 hotels, representing more than 499,000 rooms, in the United States and more than 30 other countries and territories.  As of December 31, 2012, 394 hotels, representing more than 31,000 rooms, were under construction, awaiting conversion or approved for development in the United States.  Additionally, 88 hotels, representing approximately 7,800 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, as well as its Ascend Hotel Collection membership program, serve guests worldwide.

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 Private Securities Litigation Reform Act of 1995.  Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "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, 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, 2011, filed with the Securities and Exchange Commission on February 29, 2012 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 Exhibit 8

Adjusted diluted EPS, adjusted EBITDA, franchising revenues, adjusted franchising margins and adjusted SG&A expenses 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 EPS, 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 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 liability 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 the loss on settlement of a pension plan, employee termination benefits, a loss on extinguishment of debt as well as a reduction in the carrying amount of land held for sale.  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.

© 2013 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

2012

2011

$

%

2012

2011

$

%

(In thousands, except per share amounts)

REVENUES:

Royalty fees

$              66,020

$              62,922

$     3,098

5%

$            260,782

$            245,426

$     15,356

6%

Initial franchise and relicensing fees

5,250

4,969

281

6%

14,203

14,052

151

1%

Procurement services

3,972

4,074

(102)

(3%)

17,962

18,111

(149)

(1%)

Marketing and reservation 

100,160

90,844

9,316

10%

384,784

349,036

35,748

10%

Hotel operations

1,133

1,183

(50)

(4%)

4,573

4,356

217

5%

Other

1,771

1,898

(127)

(7%)

9,205

7,812

1,393

18%

      Total revenues

178,306

165,890

12,416

7%

691,509

638,793

52,716

8%

OPERATING EXPENSES:

Selling, general and administrative

29,779

33,463

(3,684)

(11%)

101,852

106,404

(4,552)

(4%)

Depreciation and amortization

2,237

2,048

189

9%

8,226

8,024

202

3%

Marketing and reservation

100,160

90,844

9,316

10%

384,784

349,036

35,748

10%

Hotel operations

896

873

23

3%

3,505

3,466

39

1%

Total operating expenses

133,072

127,228

5,844

5%

498,367

466,930

31,437

7%

Operating income

45,234

38,662

6,572

17%

193,142

171,863

21,279

12%

OTHER INCOME AND EXPENSES, NET:

Interest expense

10,366

3,220

7,146

222%

27,189

12,939

14,250

110%

Interest income

(384)

(369)

(15)

4%

(1,540)

(1,306)

(234)

18%

Loss on extinguishment of debt

-

-

-

NM

526

-

526

NM

Other (gains) and losses

148

(1,236)

1,384

(112%)

(1,989)

2,442

(4,431)

(181%)

Equity in net income of affiliates

(224)

(7)

(217)

3100%

(212)

(269)

57

(21%)

Total other income and expenses, net

9,906

1,608

8,298

516%

23,974

13,806

10,168

74%

Income before income taxes

35,328

37,054

(1,726)

(5%)

169,168

158,057

11,111

7%

Income taxes

10,877

12,268

(1,391)

(11%)

48,481

47,661

820

2%

Net income

$              24,451

$              24,786

$      (335)

(1%)

$            120,687

$            110,396

$     10,291

9%

Basic earnings per share

$                  0.42

$                  0.42

$          -

0%

$                  2.08

$                  1.86

$        0.22

12%

Diluted earnings per share

$                  0.42

$                  0.42

$          -

0%

$                  2.07

$                  1.85

$        0.22

12%

Choice Hotels International, Inc.

Exhibit 2

Consolidated Balance Sheets

(In thousands, except per share amounts)

 December 31, 

 December 31, 

2012

2011

(Unaudited)

ASSETS

Cash and cash equivalents

$           134,177

$         107,057

Accounts receivable, net

52,270

53,012

Investments, employee benefit plans, at fair value

3,486

12,094

Other current assets

43,537

22,633

Total current assets

233,470

194,796

Fixed assets and intangibles, net

130,937

135,252

Receivable -- marketing and reservation fees

42,179

54,014

Investments, employee benefit plans, at fair value

12,755

11,678

Other assets

91,431

51,949

Total assets

$           510,772

$         447,689

LIABILITIES AND SHAREHOLDERS' DEFICIT

Accounts payable and accrued expenses

$              94,266

$            92,240

Deferred revenue

71,154

68,825

Deferred compensation & retirement plan obligations

2,522

18,935

Current portion of long-term debt

8,195

673

Other current liabilities

-

3,892

Total current liabilities

176,137

184,565

Long-term debt

847,150

252,032

Deferred compensation & retirement plan obligations  

20,399

20,593

Other liabilities

15,990

16,060

Total liabilities

1,059,676

473,250

Common stock, $0.01 par value

582

583

Additional paid-in-capital

110,246

102,665

Accumulated other comprehensive loss

(4,216)

(6,801)

Treasury stock, at cost

(927,776)

(916,955)

Retained earnings

272,260

794,947

Total shareholders' deficit

(548,904)

(25,561)

Total liabilities and shareholders' deficit

$           510,772

$         447,689

 

Choice Hotels International, Inc.

Exhibit 3

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Year Ended December 31,

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$                  120,687

$            110,396

Adjustments to reconcile net income to net cash provided 

 by operating activities:

  Depreciation and amortization  

8,226

8,024

  Provision for bad debts, net

2,896

2,160

  Non-cash stock compensation and other charges

12,375

14,511

  Non-cash interest and other loss

292

2,208

  Loss on extinguishment of debt

526

-

  Dividends received from equity method investments

1,310

1,139

  Equity in net income of affiliates

(212)

(269)

Changes in assets and liabilities:

  Receivables

(5,239)

(7,785)

  Receivable - marketing and reservation fees, net

30,313

623

  Accounts payable

11

(1,851)

  Accrued expenses

12,376

6,346

  Income taxes payable/receivable

(3,193)

(4,562)

  Deferred income taxes

(540)

5,514

  Deferred revenue

2,188

1,523

  Other assets

(3,476)

(3,162)

  Other liabilities

(17,520)

29

 NET CASH PROVIDED BY OPERATING ACTIVITIES

161,020

134,844

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in property and equipment

(15,443)

(10,924)

Equity method investments

(20,285)

(5,000)

Issuance of notes receivable

(34,925)

(12,766)

Collections of notes receivable

3,561

4,754

Purchases of investments, employee benefit plans

(1,697)

(1,602)

Proceeds from sales of investments, employee benefit plans

11,223

644

Proceeds from sale of assets

-

1,654

Other items, net

(433)

(564)

 NET CASH USED IN INVESTING ACTIVITIES

(57,999)

(23,804)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the issuance of long-term debt

543,500

75

Net borrowings (repayments) pursuant to revolving credit facilities

57,000

(200)

Principal payments on long-term debt

(4,422)

(297)

Debt issuance costs

(4,759)

(2,356)

Dividends paid

(654,092)

(43,747)

Purchase of treasury stock

(22,586)

(53,617)

Excess tax benefits from stock-based compensation

1,559

1,227

Proceeds from exercise of stock options

7,090

3,845

 NET CASH USED IN FINANCING ACTIVITIES

(76,710)

(95,070)

Net change in cash and cash equivalents

26,311

15,970

Effect of foreign exchange rate changes on cash and cash equivalents

809

(172)

Cash and cash equivalents at beginning of period

107,057

91,259

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                  134,177

$            107,057

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 

DOMESTIC HOTEL SYSTEM

(UNAUDITED)

For the Year Ended December 31, 2012*

For the Year Ended December 31, 2011*

Change

Average Daily

Average Daily

Average Daily

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Comfort Inn

$             81.55

59.4%

$          48.42

$             79.41

57.5%

$           45.62

2.7%

190

bps

6.1%

Comfort Suites

85.47

61.7%

52.74

83.72

58.6%

49.09

2.1%

310

bps

7.4%

Sleep

72.40

56.3%

40.77

69.96

53.6%

37.49

3.5%

270

bps

8.7%

Quality

69.46

51.6%

35.85

67.75

50.0%

33.86

2.5%

160

bps

5.9%

Clarion

74.94

49.4%

37.03

73.89

46.9%

34.64

1.4%

250

bps

6.9%

Econo Lodge

55.78

48.5%

27.05

54.71

47.5%

25.96

2.0%

100

bps

4.2%

Rodeway

53.36

50.8%

27.13

51.87

48.7%

25.27

2.9%

210

bps

7.4%

MainStay

69.34

70.4%

48.81

66.16

67.7%

44.80

4.8%

270

bps

9.0%

Suburban

41.61

69.7%

29.01

40.26

67.5%

27.15

3.4%

220

bps

6.9%

Ascend Collection

113.33

64.4%

72.94

113.59

60.3%

68.44

(0.2%)

410

bps

6.6%

Total 

$             73.60

55.5%

$          40.84

$             71.83

53.5%

$           38.44

2.5%

200

bps

6.2%

* Operating statistics represent hotel operations from December through November

For the Three Months Ended December 31, 2012*

For the Three Months Ended December 31, 2011*

Change

Average Daily

Average Daily

Average Daily

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Comfort Inn

$             81.67

60.0%

$          48.98

$             79.92

58.8%

$           46.98

2.2%

120

bps

4.3%

Comfort Suites

85.01

61.4%

52.21

83.13

59.2%

49.23

2.3%

220

bps

6.1%

Sleep

72.70

56.5%

41.05

70.06

54.0%

37.80

3.8%

250

bps

8.6%

Quality

68.34

51.2%

35.02

67.17

50.2%

33.74

1.7%

100

bps

3.8%

Clarion

74.81

49.6%

37.12

74.27

47.6%

35.32

0.7%

200

bps

5.1%

Econo Lodge

55.84

48.0%

26.80

54.62

48.3%

26.37

2.2%

(30)

bps

1.6%

Rodeway

52.64

49.5%

26.07

51.12

49.1%

25.11

3.0%

40

bps

3.8%

MainStay

69.54

70.3%

48.85

66.12

69.7%

46.06

5.2%

60

bps

6.1%

Suburban

42.78

69.2%

29.61

40.31

66.6%

26.84

6.1%

260

bps

10.3%

Ascend Collection

116.26

67.0%

77.86

122.22

61.0%

74.56

(4.9%)

600

bps

4.4%

Total 

$             73.44

55.4%

$          40.68

$             71.98

54.2%

$           39.03

2.0%

120

bps

4.2%

* Operating statistics represent hotel operations from September through November

For the Quarter Ended

For the Year Ended

12/31/2012

12/31/2011

12/31/2012

12/31/2011

System-wide effective royalty rate

4.36%

4.31%

4.33%

4.32%

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

(UNAUDITED)

December 31, 2012

December 31, 2011

Variance

Hotels

Rooms

Hotels

Rooms

Hotels

Rooms

%

%

Comfort Inn

1,349

105,471

1,399

109,330

(50)

(3,859)

(3.6%)

(3.5%)

Comfort Suites

597

46,045

616

47,738

(19)

(1,693)

(3.1%)

(3.5%)

Sleep

387

28,087

394

28,568

(7)

(481)

(1.8%)

(1.7%)

Quality

1,152

98,078

1,047

91,502

105

6,576

10.0%

7.2%

Clarion

191

27,441

189

27,527

2

(86)

1.1%

(0.3%)

Econo Lodge

817

49,951

797

49,483

20

468

2.5%

0.9%

Rodeway

410

23,370

388

21,627

22

1,743

5.7%

8.1%

MainStay

41

3,165

40

3,093

1

72

2.5%

2.3%

Suburban

63

7,291

60

7,126

3

165

5.0%

2.3%

Ascend Collection

57

4,982

52

4,617

5

365

9.6%

7.9%

Cambria Suites

19

2,221

19

2,215

-

6

0.0%

0.3%

Domestic Franchises

5,083

396,102

5,001

392,826

82

3,276

1.6%

0.8%

International Franchises

1,160

103,151

1,177

104,379

(17)

(1,228)

(1.4%)

(1.2%)

Total Franchises

6,243

499,253

6,178

497,205

65

2,048

1.1%

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, 2012

For the Year Ended December 31, 2011

% Change

New

New

New

Construction

Conversion

Total

Construction

Conversion

Total

Construction

Conversion

Total

Comfort Inn

23

36

59

12

46

58

92%

(22%)

2%

Comfort Suites

12

5

17

12

4

16

0%

25%

6%

Sleep

25

2

27

9

2

11

178%

0%

145%

Quality

-

170

170

-

80

80

NM

113%

113%

Clarion

-

22

22

-

19

19

NM

16%

16%

Econo Lodge

-

59

59

1

56

57

(100%)

5%

4%

Rodeway

-

71

71

-

49

49

NM

45%

45%

MainStay

12

1

13

6

3

9

100%

(67%)

44%

Suburban

3

4

7

5

4

9

(40%)

0%

(22%)

Ascend Collection

4

17

21

2

14

16

100%

21%

31%

Cambria Suites

7

-

7

8

-

8

(13%)

NM

(13%)

Total Domestic System

86

387

473

55

277

332

56%

40%

42%

For the Three Months Ended December 31, 2012

For the Three Months Ended December 31, 2011

% Change

New

New

New

Construction

Conversion

Total

Construction

Conversion

Total

Construction

Conversion

Total

Comfort Inn

13

19

32

6

18

24

117%

6%

33%

Comfort Suites

1

1

2

5

-

5

(80%)

NM

(60%)

Sleep

8

1

9

3

1

4

167%

0%

125%

Quality

-

82

82

-

31

31

NM

165%

165%

Clarion

-

8

8

-

7

7

NM

14%

14%

Econo Lodge

-

26

26

1

20

21

(100%)

30%

24%

Rodeway

-

25

25

-

17

17

NM

47%

47%

MainStay

10

-

10

5

-

5

100%

NM

100%

Suburban

2

3

5

3

2

5

(33%)

50%

0%

Ascend Collection

3

9

12

-

5

5

NM

80%

140%

Cambria Suites

3

-

3

4

-

4

(25%)

NM

(25%)

Total Domestic System

40

174

214

27

101

128

48%

72%

67%

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.