Choice Hotels International Reports Record Revenues, Operating Income And Net Income

Domestic Pipeline of Hotels Awaiting Conversion or Approved for Development Increased 19%

Feb 18, 2016, 09:00 ET from Choice Hotels International, Inc.

ROCKVILLE, Md., Feb. 18, 2016 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH) today reported the following highlights for the fourth quarter and full-year 2015:

Fourth Quarter Highlights

  • Diluted earnings per share ("EPS") from continuing operations for the three months ended December 31, 2015 totaled $0.51, an increase of 19 percent from the same period of 2014.
  • Revenues for the three months ended December 31, 2015 totaled $211.0 million, an increase of 14 percent from the same period of 2014.
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") from franchising activities for the three months ended December 31, 2015 totaled $55.7 million, an increase of 6 percent from the same period of 2014.
  • Franchising margins for the three months ended December 31, 2015 were 62.3 percent, an increase of 20 basis points from the same period of 2014.
  • Domestic royalty fees for the three months ended December 31, 2015 totaled $63.1 million, an increase of 6.7 percent from the same period of 2014.
  • Domestic system-wide revenue per available room ("RevPAR") increased 4.3 percent in the fourth quarter of 2015, as occupancy and average daily rates increased 60 basis points and 3.2 percent, respectively from the same period of 2014.
  • Domestic units as of December 31, 2015 increased 1.1 percent from December 31, 2014.
  • Effective royalty rate for the three months ended December 31, 2015 was 4.37 percent, an increase of 9 basis points from the same period of 2014.
  • Domestic relicensing and contract renewal transactions totaled 104 for the three months ended December 31, 2015, an increase of 12 percent from the same period of 2014.
  • The company's domestic pipeline of hotels awaiting conversion, under construction or approved for development as of December 31, 2015 increased 19 percent from December 31, 2014.

"We are pleased to report another record year of revenue, operating income and net income performance," said Stephen P. Joyce, president and chief executive officer, Choice Hotels. "Our performance was driven by continued improvement in our domestic royalty revenues resulting from growth all in 3 critical levers – RevPAR, system-size and effective royalty rate, as well as our franchise development results. Our effective royalty rates for the domestic system increased 9 basis points during the quarter and, excluding the impact of our Comfort rejuvenation strategy, our domestic units under franchise grew 4% from the prior year. As domestic franchise contracts for both new construction and conversion sales continue to strengthen, we are expecting an acceleration of the growth rates for our domestic system size in 2016.  We are optimistic that developers will continue to respond to our strong family of brands and are optimistic that RevPAR performance and growth of our effective royalty rates will continue to be strong in 2016."

Full-Year Highlights

  • EBITDA from franchising activities in 2015 totaled $255.8 million, an increase of $15.8 million or 7 percent from 2014.
  • Revenues for 2015 totaled $859.9 million, an increase of 13 percent from 2014.
  • Franchising revenues for 2015 totaled $366.7 million, an increase of $21.9 million or 6 percent from 2014.
  • Franchising selling, general and administration ("SG&A") expenses in 2015 totaled $110.9 million, an increase of 5.8 percent from 2014.
  • Franchising margins for 2015 were 67.3 percent, an increase of 10 basis points from 2014.
  • Diluted EPS from continuing operations in 2015 totaled $2.22, an increase of 7 percent from 2014.
  • Domestic royalty fees in 2015 totaled $281.3 million, an increase of 7 percent from 2014.
  • Domestic system-wide RevPAR increased 6.5 percent in 2015 as occupancy and average daily rates increased 160 basis points and 3.7 percent, respectively, from 2014.
  • The effective royalty rate in 2015 was 4.30 percent, a 2 basis point increase from 2014.
  • Initial and relicensing fees for 2015 totaled $24.7 million, an increase of 27 percent from 2014.
  • New franchise contracts executed in 2015 for domestic hotels, totaled 630, an 11 percent increase from 2014.
  • Domestic relicensing and contract renewal transactions in 2015 totaled 408 contracts, an increase of 21 percent from 2014.
  • During 2015, non-franchising activities, which primarily relate to SkyTouch, and an acquired vacation rental technology business drove $4 million of revenues and a net $19 million operating expense.

Use of Cash Flows

Dividends

During the fourth quarter of 2015, the company's board of directors announced a 5% increase in the current quarterly dividend rate per common share to $0.205 per share.  During the year ended December 31, 2015, the company paid cash dividends totaling approximately $45 million.

Share Repurchases

The company repurchased 1.3 million shares of common stock under its share repurchase program during 2015, at a total cost of approximately $66 million. The company currently has authorization to purchase up to 1.7 million additional shares under this program. 

Hotel Development & Financing

Pursuant to its program to encourage acceleration of the growth of our upscale select-service Cambria hotel & suites brand, the company's net advances in support of the Cambria brand totaled $61 million during the year ended December 31, 2015.  These advances are primarily in the form of joint venture investments, forgivable key money loans, senior and mezzanine lending and site acquisitions.  At December 31, 2015, the Company had approximately $129 million outstanding pursuant to these financial support activities. With respect to lending and joint venture investments, the company generally expects to recycle these loans and investments within a five year period.

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 months and year ended December 31, 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 2016 outlook reflects the following assumptions:

Hotel Franchising

  • EBITDA from franchising activities for full-year 2016 are expected to range between $270 million and $275 million;
  • Net domestic unit growth for 2016 is expected to be between 2% and 3%;
  • RevPAR is expected to increase approximately 2% for first quarter and range between 3.75% and 4.75% for full-year 2016; and
  • The effective royalty rate is expected to increase between 6 and 8 basis points for full-year 2016 as compared to full-year 2015.

Non-Hotel Franchising Activities

  • Net reductions in EBITDA relating to our non-hotel franchising operations, which primarily relate to SkyTouch and vacation rental activities, for full-year 2016 are expected to range between approximately $16 million and $19 million.

Other Items

  • The effective tax rate for continuing operations is expected to be approximately 33.5% for the first quarter and full-year 2016; and
  • All figures assume no further repurchases of common stock under the company's share repurchase program.

Consolidated Outlook

The company's first quarter 2016 diluted EPS is expected to be at least $0.38. The company expects full-year 2016 diluted EPS to range between $2.30 and $2.36 and full year 2016 EBITDA to range between $252 million and $257 million. The EPS and consolidated EBITDA estimates assume that we incur net reductions in EBITDA related to non-hotel franchising activities at the midpoint of the range for these investments.

Conference Call

Choice will conduct a conference call on Thursday, February 18, 2016 at 10:00 a.m. EST to discuss the company's fourth quarter and full-year 2015 results. The dial-in number to listen to the call is 1-855-638-5678, and the access code is 32610371. International callers should dial 1-920-663-6286 and enter the access code 32610371.  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. EST on Thursday, February 18, 2016 through Thursday, February 25, 2016 by calling 1-855-859-2056 and entering access code 32610371. The international dial-in number for the replay is 1-404-537-3406 and the access code is 32610371. 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.® (NYSE: CHH) is one of the world's largest lodging companies. With more than 6,400 hotels franchised in more than 35 countries and territories, we represent more than 500,000 rooms around the globe. As of December 31, 2015, 720 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 25 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.

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, Franchising EBITDA, Franchising SG&A and Margins:  The company reports franchising revenues, EBITDA, SG&A and margins which exclude marketing and reservation revenues, the SkyTouch Technology division, recently acquired operations that provide SaaS technology solutions to vacation rental management companies 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 and our vacation rental technology solutions provider are excluded since they do not reflect the company's core franchising business but are adjacent, complimentary lines 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.

© 2016 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



2015


2014


$


%


2015


2014


$


%

(In thousands, except per share amounts)


































REVENUES:


































Royalty fees


$                 67,965


$              65,237


$     2,728


4%


$              301,508


$               287,538


$     13,970


5%

Initial franchise and relicensing fees


6,977


6,720


257


4%


24,680


19,481


5,199


27%

Procurement services


7,404


5,526


1,878


34%


27,071


23,819


3,252


14%

Marketing and reservation 


122,465


103,594


18,871


18%


488,763


412,619


76,144


18%

Other


6,140


4,325


1,815


42%


17,856


14,513


3,343


23%

      Total revenues


210,951


185,402


25,549


14%


859,878


757,970


101,908


13%


















OPERATING EXPENSES:


































Selling, general and administrative


38,542


33,089


5,453


16%


134,254


121,418


12,836


11%

Depreciation and amortization


2,749


2,462


287


12%


11,542


9,365


2,177


23%

Marketing and reservation


122,465


103,594


18,871


18%


488,763


412,619


76,144


18%

Total operating expenses


163,756


139,145


24,611


18%


634,559


543,402


91,157


17%


















Operating income


47,195


46,257


938


2%


225,319


214,568


10,751


5%


















OTHER INCOME AND EXPENSES, NET:

















Interest expense


10,776


10,110


666


7%


42,833


41,486


1,347


3%

Interest income


(598)


(556)


(42)


8%


(1,580)


(1,761)


181


(10%)

Other (gains) and losses


(581)


585


(1,166)


(199%)


(820)


427


(1,247)


(292%)

Equity in net (income) loss of affiliates


(206)


80


(286)


(358%)


901


658


243


37%

Total other income and expenses, net


9,391


10,219


(828)


(8%)


41,334


40,810


524


1%


















Income from continuing operations before income taxes


37,804


36,038


1,766


5%


183,985


173,758


10,227


6%

Income taxes


8,601


10,729


(2,128)


(20%)


55,956


52,285


3,671


7%

Income from continuing operations, net of income taxes


29,203


25,309


3,894


15%


128,029


121,473


6,556


5%

Income from discontinued operations, net of income taxes


-


(24)


24


(100%)


-


1,687


(1,687)


(100%)

Net income


$                 29,203


$              25,285


$     3,918


15%


$              128,029


$               123,160


$       4,869


4%



































Basic earnings per share

















Continuing operations


$                     0.52


$                  0.44


$      0.08


18%


$                   2.24


$                    2.08


$        0.16


8%

Discontinued operations


-


-


-


NM


-


0.03


(0.03)


(100%)



$                     0.52


$                  0.44


$      0.08


18%


$                   2.24


$                    2.11


$        0.13


6%



































Diluted earnings per share

















Continuing operations


$                     0.51


$                  0.43


$      0.08


19%


$                   2.22


$                    2.07


$        0.15


7%

Discontinued operations


-


-


-


NM


-


0.03


(0.03)


(100%)



$                     0.51


$                  0.43


$      0.08


19%


$                   2.22


$                    2.10


$        0.12


6%

 

 


Choice Hotels International, Inc.



Exhibit 2


Condensed Consolidated Balance Sheets























(In thousands, except per share amounts)

 December 31, 


 December 31, 







2015


2014(1)







(Unaudited)













ASSETS

















Cash and cash equivalents



$           193,441


$         214,879


Accounts receivable, net



89,352


91,681


Other current assets



28,160


18,869



Total current assets



310,953


325,429











Fixed assets and intangibles, net


179,433


152,034


Notes receivable, net of allowances


82,572


40,441


Investments, employee benefit plans, at fair value

17,674


17,539


Other assets




126,378


102,474













Total assets


$           717,010


$         637,917





























LIABILITIES AND SHAREHOLDERS' DEFICIT














Accounts payable 



$              64,431


$            57,124


Accrued expenses and other current liabilities

70,807


64,243


Deferred revenue



71,587


66,382


Current portion of long-term debt


1,191


12,349



Total current liabilities


208,016


200,098











Long-term debt



812,945


772,729


Deferred compensation & retirement plan obligations  

22,859


23,987


Other liabilities




69,089


69,904












Total liabilities



1,112,909


1,066,718












Total shareholders' deficit


(395,899)


(428,801)













Total liabilities and shareholders' deficit

$           717,010


$         637,917




















(1)

The consolidated balance sheet has been recast to reflect the Company's adoption of ASU 2015-03 "Simplifying the Presentation of Debt Issuance Costs" and ASU 2015-17 "Balance Sheet Classification of Deferred Taxes". As a result, debt issuance costs have been recast from other assets to long-term debt and current deferred taxes were recast as long-term assets

 

 

Choice Hotels International, Inc.



Exhibit 3

Consolidated Statements of Cash Flows




(Unaudited)














(In thousands)

Year Ended December 31,






2015


2014

CASH FLOWS FROM OPERATING ACTIVITIES:








Net income

$                  128,029


$            123,160





Adjustments to reconcile net income to net cash provided 




 by operating activities:




  Depreciation and amortization  

11,542


9,365

  Gain on sale of assets

(1,521)


(2,809)

  Provision for bad debts, net

1,704


2,775

  Non-cash stock compensation and other charges

11,805


9,706

  Non-cash interest and other (income) loss

3,229


3,174

  Deferred income taxes

615


(22,899)

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

3,279


2,200





Changes in assets and liabilities, net of acquisition:




  Receivables

401


(14,250)

  Advances to/from marketing and reservation activities, net

11,074


70,179

  Forgivable notes receivable, net

(23,066)


(12,914)

  Accounts payable

6,493


9,636

  Accrued expenses and other current liabilities

5,166


6,678

  Income taxes payable/receivable

(4,399)


(3,582)

  Deferred revenue

5,251


5,297

  Other assets

(5,792)


(1,250)

  Other liabilities

6,062


(575)





 NET CASH PROVIDED BY OPERATING ACTIVITIES 

159,872


183,891





CASH FLOWS FROM INVESTING ACTIVITIES:








Investment in property and equipment

(27,765)


(20,946)

Proceeds from sales of assets

6,347


15,612

Acquisition, net of cash acquired

(13,269)


-

Issuance of mezzanine and other notes receivable

(36,884)


(3,340)

Collections of mezzanine and other notes receivable

4,849


11,289

Contributions to equity method investments

(23,737)


(17,789)

Distributions from equity method investments

518


-

Purchases of investments, employee benefit plans

(3,220)


(2,794)

Proceeds from sales of investments, employee benefit plans

3,170


964

Other items, net

(9,819)


(642)





 NET CASH USED BY INVESTING ACTIVITIES 

(99,810)


(17,646)





CASH FLOWS FROM FINANCING ACTIVITIES:








Net borrowings pursuant to revolving credit facilities

158,867


-

Principal payments on long-term debt

(130,501)


(10,108)

Proceeds from the issuance of long-term debt

176


250

Debt issuance costs

(2,169)


-

Purchase of treasury stock

(72,873)


(77,972)

Dividends paid

(45,214)


(43,529)

Excess tax benefits from stock-based compensation

5,207


3,721

Proceeds from exercise of stock options

7,056


10,098





 NET CASH USED BY FINANCING ACTIVITIES

(79,451)


(117,540)





Net change in cash and cash equivalents

(19,389)


48,705

Effect of foreign exchange rate changes on cash and cash equivalents

(2,049)


(1,621)

Cash and cash equivalents at beginning of period

214,879


167,795





CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                  193,441


$            214,879

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 


DOMESTIC HOTEL SYSTEM


(UNAUDITED)




























































































For the Year Ended December 31, 2015


For the Year Ended December 31, 2014


Change



























Average Daily






Average Daily






Average Daily










Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR

























Comfort Inn


$             89.68


65.0%


$          58.25


$             86.08


63.3%


$         54.50


4.2%


170

bps


6.9%



Comfort Suites


93.89


68.3%


64.16


90.24


66.5%


60.01


4.0%


180

bps


6.9%



Sleep


80.41


63.9%


51.41


77.13


62.5%


48.24


4.3%


140

bps


6.6%



Quality


75.06


58.2%


43.69


71.98


56.1%


40.39


4.3%


210

bps


8.2%



Clarion


79.85


57.2%


45.63


77.65


54.5%


42.34


2.8%


270

bps


7.8%



Econo Lodge


59.61


53.5%


31.90


57.85


51.6%


29.86


3.0%


190

bps


6.8%



Rodeway


59.75


56.3%


33.64


56.68


55.1%


31.25


5.4%


120

bps


7.6%



MainStay


77.02


67.1%


51.71


74.82


71.4%


53.40


2.9%


(430)

bps


(3.2%)



Suburban


47.61


75.5%


35.95


45.25


71.8%


32.51


5.2%


370

bps


10.6%



Ascend Hotel Collection


127.27


58.5%


74.47


121.49


60.3%


73.20


4.8%


(180)

bps


1.7%

























Total 


$             79.86


61.1%


$          48.78


$             77.03


59.5%


$         45.80


3.7%


160

bps


6.5%





























































































For the Three Months Ended December 31, 2015


For the Three Months Ended December 31, 2014


Change



























Average Daily






Average Daily






Average Daily










Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR

























Comfort Inn


$             86.31


59.4%


$          51.25


$             83.22


58.4%


$         48.59


3.7%


100

bps


5.5%



Comfort Suites


90.85


63.7%


57.90


87.51


62.4%


54.65


3.8%


130

bps


5.9%



Sleep


77.35


58.7%


45.41


75.09


59.0%


44.30


3.0%


(30)

bps


2.5%



Quality


71.82


52.5%


37.68


68.96


51.3%


35.37


4.1%


120

bps


6.5%



Clarion


76.13


51.8%


39.43


76.21


50.3%


38.29


(0.1%)


150

bps


3.0%



Econo Lodge


56.79


48.8%


27.72


55.18


47.7%


26.33


2.9%


110

bps


5.3%



Rodeway


57.00


49.9%


28.47


54.01


50.9%


27.47


5.5%


(100)

bps


3.6%



MainStay


73.73


60.1%


44.30


72.56


67.0%


48.59


1.6%


(690)

bps


(8.8%)



Suburban


47.15


71.1%


33.51


45.11


67.5%


30.45


4.5%


360

bps


10.0%



Ascend Hotel Collection


126.92


54.4%


69.09


124.75


62.2%


77.56


1.7%


(780)

bps


(10.9%)

























Total 


$             76.81


55.7%


$          42.76


$             74.42


55.1%


$         41.00


3.2%


60

bps


4.3%









































































































































For the Three Months Ended




For the Year Ended














12/31/2015


12/31/2014




12/31/2015


12/31/2014


































System-wide effective royalty rate


4.37%


4.28%




4.30%


4.28%












 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA


(UNAUDITED)


























































December 31, 2015


December 31, 2014


Variance






















Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%




















Comfort Inn


1,156


89,545


1,240


95,862


(84)


(6,317)


(6.8%)


(6.6%)


Comfort Suites


569


43,949


577


44,632


(8)


(683)


(1.4%)


(1.5%)


Sleep


377


27,047


371


26,811


6


236


1.6%


0.9%


Quality


1,379


110,116


1,284


104,454


95


5,662


7.4%


5.4%


Clarion


175


24,449


178


25,049


(3)


(600)


(1.7%)


(2.4%)


Econo Lodge


856


52,978


856


52,878


-


100


0.0%


0.2%


Rodeway


513


28,880


474


26,172


39


2,708


8.2%


10.3%


MainStay


52


3,846


45


3,568


7


278


15.6%


7.8%


Suburban


62


6,994


65


7,198


(3)


(204)


(4.6%)


(2.8%)


Ascend Hotel Collection


112


9,455


109


9,395


3


60


2.8%


0.6%


Cambria hotel & suites


25


3,113


22


2,642


3


471


13.6%


17.8%




















Domestic Franchises


5,276


400,372


5,221


398,661


55


1,711


1.1%


0.4%




















International Franchises


1,147


107,111


1,158


106,617


(11)


494


(0.9%)


0.5%




















Total Franchises


6,423


507,483


6,379


505,278


44


2,205


0.7%


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, 2015


For the Year Ended December 31, 2014


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


37


39


76


31


24


55


19%


63%


38%


Comfort Suites


45


6


51


39


1


40


15%


500%


28%


Sleep


34


-


34


36


2


38


(6%)


(100%)


(11%)


Quality


3


193


196


3


166


169


0%


16%


16%


Clarion


-


12


12


1


28


29


(100%)


(57%)


(59%)


Econo Lodge


-


60


60


3


79


82


(100%)


(24%)


(27%)


Rodeway


-


104


104


3


76


79


(100%)


37%


32%


MainStay


27


-


27


20


3


23


35%


(100%)


17%


Suburban


1


6


7


4


5


9


(75%)


20%


(22%)


Ascend Hotel Collection


5


32


37


11


23


34


(55%)


39%


9%


Cambria hotel & suites


21


5


26


8


-


8


163%


NM


225%






















Total Domestic System


173


457


630


159


407


566


9%


12%


11%








































































































For the Three Months Ended December 31, 2015


For the Three Months Ended December 31, 2014


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


20


11


31


15


13


28


33%


(15%)


11%


Comfort Suites


27


3


30


28


1


29


(4%)


200%


3%


Sleep


15


-


15


15


1


16


0%


(100%)


(6%)


Quality


-


79


79


-


84


84


NM


(6%)


(6%)


Clarion


-


5


5


-


13


13


NM


(62%)


(62%)


Econo Lodge


-


21


21


2


33


35


(100%)


(36%)


(40%)


Rodeway


-


47


47


-


28


28


NM


68%


68%


MainStay


11


-


11


10


2


12


10%


(100%)


(8%)


Suburban


-


2


2


2


2


4


(100%)


0%


(50%)


Ascend Hotel Collection


2


10


12


5


12


17


(60%)


(17%)


(29%)


Cambria hotel & suites


7


3


10


3


-


3


133%


NM


233%






















Total Domestic System


82


181


263


80


189


269


3%


(4%)


(2%)


 

 























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



December 31, 2015

Units


December 31, 2014

Units

















Conversion


New Construction


Total



Conversion


New Construction


Total


Conversion


New Construction


Total


Units


%


Units


%


Units


%


























Comfort Inn


38


83


121


36


64


100


2


6%


19


30%


21


21%

Comfort Suites


3


95


98


-


75


75


3


NM


20


27%


23


31%

Sleep Inn


-


81


81


2


72


74


(2)


(100%)


9


13%


7


9%

Quality


53


5


58


52


5


57


1


2%


-


0%


1


2%

Clarion


7


2


9


12


2


14


(5)


(42%)


-


0%


(5)


(36%)

Econo Lodge


23


4


27


32


5


37


(9)


(28%)


(1)


(20%)


(10)


(27%)

Rodeway


47


2


49


31


4


35


16


52%


(2)


(50%)


14


40%

MainStay


-


60


60


1


46


47


(1)


(100%)


14


30%


13


28%

Suburban


5


8


13


4


12


16


1


25%


(4)


(33%)


(3)


(19%)

Ascend Hotel Collection


28


19


47


14


20


34


14


100%


(1)


(5%)


13


38%

Cambria hotel & suites


5


38


43


-


21


21


5


NM


17


81%


22


105%




























209


397


606


184


326


510


25


14%


71


22%


96


19%

 

 


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 December 31, 


Year Ended December 31, 


















2015


2014


2015


2014




Franchising Revenues:
























Total Revenues


$              210,951


$               185,402


$               859,878


$              757,970




Adjustments:












     Marketing and reservation revenues


(122,465)


(103,594)


(488,763)


(412,619)




     Non-franchising activities


(1,943)


(387)


(4,416)


(600)




Franchising Revenues


$                86,543


$                 81,421


$               366,699


$              344,751
















Franchising Margins:
























Operating Margin:
























Total Revenues


$              210,951


$               185,402


$               859,878


$              757,970




Operating Income


$                47,195


$                 46,257


$               225,319


$              214,568




     Operating Margin


22.4%


24.9%


26.2%


28.3%
















Franchising Margin:
























Franchising Revenues


$                86,543


$                 81,421


$               366,699


$              344,751
















Operating Income


$                47,195


$                 46,257


$               225,319


$              214,568




Non-franchising activities operating loss


6,722


4,271


21,529


17,065






$                53,917


$                 50,528


$               246,848


$              231,633
















     Franchising Margins


62.3%


62.1%


67.3%


67.2%







































CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES



















(dollar amounts in thousands)


Three Months Ended December 31, 


Year Ended December 31, 


















2015


2014


2015


2014
















Total Selling, General and Administrative Expenses


$                38,542


$                 33,089


$               134,254


$              121,418




Non-Franchising Activities


(7,746)


(4,336)


(23,376)


(16,658)




Franchising Selling, General and Administration Expenses


$                30,796


$                 28,753


$               110,878


$              104,760







































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













(dollar amounts in thousands)














Three Months Ended December 31, 


Year Ended December 31, 


















2015


2014


2015


2014















Income from continuing operations, net of income taxes


$                29,203


$                 25,309


$               128,029


$              121,473




Income taxes


8,601


10,729


55,956


52,285




Interest expense


10,776


10,110


42,833


41,486




Interest income


(598)


(556)


(1,580)


(1,761)




Other (gains) and losses


(581)


585


(820)


427




Equity in net (income) loss of affiliates


(206)


80


901


658




Depreciation and amortization


2,749


2,462


11,542


9,365



EBITDA


$                49,944


$                 48,719


$               236,861


$              223,933















Franchising 


$                55,747


$                 52,668


$               255,821


$              239,991



Non-Franchising activities


(5,803)


(3,949)


(18,960)


(16,058)






$                49,944


$                 48,719


$               236,861


$              223,933



 

 


CHOICE HOTELS INTERNATIONAL, INC.


Exhibit 9


DISCONTINUED OPERATIONS




(UNAUDITED)




































Three Months Ended December 31,


Year Ended December 31, 











(In thousands)


2015


2014


2015


2014











REVENUES:









Hotel operations


$                       -


$                          -


$                        -


$                  801

      Total revenues


-


-


-


801











OPERATING EXPENSES:









Hotel operations


-


43


-


927

Total operating expenses


-


43


-


927











Operating income (loss)


-


(43)


-


(126)











Gain (loss) on disposal of discontinued operations


-


4


-


2,807











Income (loss) from discontinued operations before income taxes


-


(39)


-


2,681

Income tax  (benefit)


-


(15)


-


994

Income (loss) from discontinued operations


$                       -


$                      (24)


$                        -


$               1,687

 

Logo - http://photos.prnewswire.com/prnh/20140807/134515

SOURCE Choice Hotels International, Inc.



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