Choice Hotels Reports A 20% Increase In Second Quarter 2012 Diluted EPS And Domestic RevPAR Growth Of 7.7% New Domestic Hotel Franchise Contracts Rise 54%

SILVER SPRING, Md., July 26, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the second quarter of 2012:

  • Diluted earnings per share ("EPS") for the second quarter of 2012 of $0.55 compared to diluted EPS of $0.46 for the second quarter of 2011, a 20% increase. 
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 14% to $53.6 million for the three months ended June 30, 2012, compared to $47.0 million for the three months ended June 30, 2011. Operating income increased 14% from $45.1 million for the three months ended June 30, 2011 to $51.6 million for the same period of 2012.
  • Franchising revenues increased 6% to $77.8 million for the three months ended June 30, 2012 from $73.4 million for the same period of 2011.  Total revenues increased 5% to $173.6 million for the three months ended June 30, 2012 compared to the same period of 2011.
  • Domestic royalty fees for the three months ended June 30, 2012 increased $4.4 million to $59.8 million from $55.4 million in the three months ended June 30, 2011, an increase of 8%.
  • Franchising margins increased from 61.2% for the three months ended June 30, 2011 to 65.9% for the same period of the current year.
  • Worldwide unit growth increased 1.3 percent from June 30, 2011 comprised of domestic and international unit growth of 1.3 percent and 1.6 percent, respectively. 
  • Domestic system-wide revenue per available room ("RevPAR") increased 7.7% for the three months ended June 30, 2012 compared to the same period of 2011 as occupancy and average daily rates increased 250 basis points and 2.8 percent, respectively.  
  • The company executed 106 new domestic hotel franchise contracts for the three months ended June 30, 2012 compared to 69 new domestic hotel franchise contracts in the same period of the prior year, a 54% increase.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development as of June 30, 2012 was 453 hotels representing 37,380 rooms.

"We are very pleased with our results for the quarter. People are traveling, we are driving record traffic to our hotels and the development environment is improving. Our second quarter results, in fact, were highlighted by the 106 new domestic franchise agreements we executed in the second quarter of 2012, a 54% increase over the prior year," said Stephen P. Joyce, president and chief executive officer. "These results demonstrate our ability to attract owners to our family of eleven brands due to our size, scale and distribution which allow us to deliver guests and create opportunities for our franchisees to achieve exceptional returns on investment. We are also excited about our recent announcement of the declaration of a $600 million special cash dividend to shareholders which further illustrates our commitment and adds to our already strong history of returning value to our shareholders over time."

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 six months ended June 30, 2012, the company paid $21.4 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

On July 26, 2012, the company announced that its board of directors declared a special cash dividend in the amount of $10.41 per share or approximately $600 million in the aggregate.  The record date for the special cash dividend is August 20, 2012 and the special cash dividend will be paid on August 23, 2012.  The company has been informed by the New York Stock Exchange that, in accordance with its rules, the ex-dividend date is expected to be August 24, 2012. Accordingly, stockholders who sell their shares on or before the payment date will not be entitled to receive the special cash dividend.

The special cash dividend is being paid with the proceeds from the company's recent offering of $400 million, 5.75% unsecured senior notes and its new senior secured credit facility.  On June 27, 2012, the company issued unsecured senior notes in an aggregate principal amount of $400 million, in an underwritten, registered public offering. The 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 cost 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 expects to utilize the proceeds from the term loan as well as approximately $50 million under the revolving credit tranche for payment of the special dividend. As a result of entering into the senior secured credit facility, the company's existing $300 million senior unsecured revolving credit facility was terminated.

The senior secured credit facility is secured by a first priority pledge of equity by certain wholly-owned subsidiaries and contains customary financial covenants, including with respect to restrictions on liens, incurring indebtedness, making investments, restricted payments and effecting mergers and/or asset sales. In addition, the senior secured credit facility imposes certain financial maintenance covenants. 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.  

Share Repurchases

During the three months ended June 30, 2012, the company purchased approximately 0.2 million shares of its common stock at an average price of $37.39 for a total cost of $7.0 million under the share repurchase program. During the six months ended June 30, 2012, the company repurchased 0.5 million shares for a total cost of $19.9 million at an average price of $37.02 and has authorization to purchase up to an additional 1.4 million shares under this program.  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 June 30, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.3 million shares through June 30, 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.  Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands.  The amount and timing of the investment in these programs will be dependent on market and other conditions.  Notwithstanding these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.

Outlook for 2012
The company's third quarter 2012 diluted EPS is expected to be $0.61. The company expects full-year 2012 diluted EPS to range between $1.91 and $1.94.  EBITDA for full-year 2012 are expected to range between $201.0 million and $203.5 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to range between flat and a 1% increase in 2012;
  • RevPAR is expected to increase approximately 5% for third quarter of 2012 and increase between 6% and 7% for full-year 2012;
  • The effective royalty rate is expected to remain flat for full-year 2012;
  • All figures assume the existing share count and an effective tax rate of 34.0% for the third quarter and 33.8% for full-year 2012.
  • Diluted EPS guidance for full-year 2012 reflects the impact of increased borrowing costs to be incurred as the result of the declaration of a $600 million special cash dividend to be paid in the third quarter of 2012 which is expected to total approximately $14 million or $0.16 per share. 

Conference Call
Choice will conduct a conference call on Friday, July 27, 2012 at 9:30 a.m. EST to discuss the company's second quarter 2012 results. The dial-in number to listen to the call is 1-866-730-5767, and the access code is 51535988. International callers should dial 1-857-350-1591 and enter the access code 51535988.  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 12:00 p.m. EST on Friday, July 27, 2012 through Monday, August 27, 2012 by calling 1-888-286-8010 and entering access code 76425859. The international dial-in number for the replay is 1-617-801-6888, access code 76425859. 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 495,000 rooms, in the United States and more than 30 other countries and territories.  As of June 30, 2012, more than 375 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 30,000 rooms, and 75 hotels, representing approximately 6,700 rooms, were under construction, awaiting conversion or approved for development in 15 other countries and territories.  The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide.  In addition, via its Ascend Collection membership program, travelers have upscale lodging options at historic, boutique and unique hotels.

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

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

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

Franchising Revenues and Margins:  The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations.  Marketing and reservation activities are excluded from revenues and operating margins since the company is 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: The company's management uses adjusted diluted EPS, which excludes a reduction in the carrying amount of land held for sale resulting in a loss of $1.8 million included in other gains and losses during the six months ended June 30, 2011.   This amount represented net income of $1.1 million and diluted EPS of $0.02 for the six months ended June 30, 2011. The company utilizes this non-GAAP measure to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.

Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.

© 2012 Choice Hotels International, Inc.  All rights reserved.

Choice Hotels International, Inc.






Exhibit 1

Consolidated Statements of Income









(Unaudited)
























































Three Months Ended June 30,


Six Months Ended June 30,






Variance






Variance


2012


2011


$


%


2012


2011


$


%

(In thousands, except per share amounts)
































REVENUES:
































Royalty fees

$   66,064


$  61,620


$4,444


7%


$113,917


$105,414


$8,503


8%

Initial franchise and relicensing fees

3,178


2,779


399


14%


5,706


5,500


206


4%

Procurement services

6,836


6,673


163


2%


10,151


9,934


217


2%

Marketing and reservation 

94,633


90,832


3,801


4%


165,562


153,799


11,763


8%

Hotel operations

1,224


1,073


151


14%


2,202


1,937


265


14%

Other

1,686


2,324


(638)


(27%)


5,252


3,998


1,254


31%

      Total revenues

173,621


165,301


8,320


5%


302,790


280,582


22,208


8%

















OPERATING EXPENSES:
































Selling, general and administrative

24,554


26,539


(1,985)


(7%)


48,903


50,386


(1,483)


(3%)

Depreciation and amortization

1,977


1,948


29


1%


3,994


3,903


91


2%

Marketing and reservation

94,633


90,832


3,801


4%


165,562


153,799


11,763


8%

Hotel operations

867


860


7


1%


1,676


1,693


(17)


(1%)

Total operating expenses

122,031


120,179


1,852


2%


220,135


209,781


10,354


5%

















Operating income

51,590


45,122


6,468


14%


82,655


70,801


11,854


17%

















OTHER INCOME AND EXPENSES, NET:
















Interest expense

3,540


3,267


273


8%


6,657


6,491


166


3%

Interest income

(394)


(221)


(173)


78%


(731)


(431)


(300)


70%

Other (gains) and losses

377


(38)


415


(1092%)


(1,626)


1,005


(2,631)


(262%)

Equity in net (income) loss of affiliates

128


-


128


NM


183


(301)


484


(161%)

Total other income and expenses, net

3,651


3,008


643


21%


4,483


6,764


(2,281)


(34%)

















Income before income taxes

47,939


42,114


5,825


14%


78,172


64,037


14,135


22%

Income taxes

16,077


14,536


1,541


11%


26,313


20,729


5,584


27%

Net income

$   31,862


$  27,578


$4,284


16%


$  51,859


$  43,308


$8,551


20%

































Basic earnings per share

$       0.55


$      0.46


$ 0.09


20%


$      0.89


$      0.72


$ 0.17


24%

















Diluted earnings per share

$       0.55


$      0.46


$ 0.09


20%


$      0.89


$      0.72


$ 0.17


24%

















Choice Hotels International, Inc.



Exhibit 2

Consolidated Balance Sheets
















(In thousands, except per share amounts)

 June 30, 


 December 31, 




2012


2011




(Unaudited)









ASSETS











Cash and cash equivalents

$           485,390


$         107,057

Accounts receivable, net

62,643


53,012

Investments, employee benefit plans, at fair value

5,184


12,094

Other current assets

30,656


22,633


Total current assets

583,873


194,796







Fixed assets and intangibles, net

131,992


135,252

Receivable -- marketing and reservation fees

64,838


54,014

Investments, employee benefit plans, at fair value

12,221


11,678

Other assets


64,814


51,949









Total assets

$           857,738


$         447,689



















LIABILITIES AND SHAREHOLDERS' DEFICIT










Accounts payable and accrued expenses

$              81,685


$            92,240

Deferred revenue

64,422


68,825

Deferred compensation & retirement plan obligations

19,276


18,935

Current portion of long-term debt

683


673

Other current liabilities

15,674


3,892


Total current liabilities

181,740


184,565







Long-term debt

651,717


252,032

Deferred compensation & retirement plan obligations  

19,482


20,593

Other liabilities


16,042


16,060








Total liabilities

868,981


473,250







Common stock, $0.01 par value

580


583

Additional paid-in-capital

101,719


102,665

Accumulated other comprehensive loss

(6,350)


(6,801)

Treasury stock, at cost

(932,663)


(916,955)

Retained earnings

825,471


794,947








Total shareholders' deficit

(11,243)


(25,561)









Total liabilities and shareholders' deficit

$           857,738


$         447,689







 

Choice Hotels International, Inc.



Exhibit 3

Consolidated Statements of Cash Flows




(Unaudited)














(In thousands)

Six Months Ended June 30,






2012


2011

CASH FLOWS FROM OPERATING ACTIVITIES:








Net income

$               51,859


$         43,308





Adjustments to reconcile net income to net cash provided 




 by operating activities:




  Depreciation and amortization  

3,994


3,903

  Provision for bad debts

1,236


1,340

  Non-cash stock compensation and other charges

4,868


7,436

  Non-cash interest and other (income) loss

(820)


22

  Dividends received from equity method investments

399


159

  Equity in net (income) loss of affiliates

183


(301)





Changes in assets and liabilities:




  Receivables

(12,258)


(11,058)

  Receivable - marketing and reservation fees, net

(2,389)


(11,387)

  Accounts payable

6,330


6,026

  Accrued expenses

(17,659)


(11,004)

  Income taxes payable/receivable

11,808


11,404

  Deferred income taxes

(194)


40

  Deferred revenue

(4,404)


(6,463)

  Other assets

(4,331)


(750)

  Other liabilities

(820)


(624)





 NET CASH PROVIDED BY OPERATING ACTIVITIES

37,802


32,051





CASH FLOWS FROM INVESTING ACTIVITIES:








Investment in property and equipment

(6,236)


(5,110)

Equity method investments

(6,315)


(1,600)

Purchases of investments, employee benefit plans

(969)


(1,139)

Proceeds from sales of investments, employee benefit plans

8,969


347

Issuance of notes receivable

(5,820)


(2,651)

Collections of notes receivable

210


13

Other items, net

(226)


(192)





 NET CASH USED IN INVESTING ACTIVITIES

(10,387)


(10,332)





CASH FLOWS FROM FINANCING ACTIVITIES:








Net repayments pursuant to revolving credit facilities

-


(200)

Repayments of long-term debt

(333)


(13)

Proceeds from the issuance of long-term debt

393,444


75

Purchase of treasury stock

(22,173)


(2,527)

Dividends paid

(21,396)


(21,922)

Excess tax benefits from stock-based compensation

641


1,061

Debt issuance costs

(153)


(2,356)

Proceeds from exercise of stock options

445


3,132





 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

350,475


(22,750)





Net change in cash and cash equivalents

377,890


(1,031)

Effect of foreign exchange rate changes on cash and cash equivalents

443


733

Cash and cash equivalents at beginning of period

107,057


91,259





CASH AND CASH EQUIVALENTS AT END OF PERIOD

$             485,390


$         90,961





 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 



DOMESTIC HOTEL SYSTEM



(UNAUDITED)

























































































For the Six Months Ended June 30, 2012*


For the Six Months Ended June 30, 2011*


Change

























Average Daily






Average Daily






Average Daily









Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR























Comfort Inn


$  77.48


53.6%


$41.52


$  75.27


51.1%


$38.47


2.9%


250

bps


7.9%


Comfort Suites


83.15


57.6%


47.92


81.82


53.7%


43.96


1.6%


390

bps


9.0%


Sleep


69.90


52.0%


36.32


67.81


48.7%


33.03


3.1%


330

bps


10.0%


Quality


66.29


46.8%


31.03


64.47


44.7%


28.81


2.8%


210

bps


7.7%


Clarion


71.85


44.6%


32.07


70.89


42.4%


30.07


1.4%


220

bps


6.7%


Econo Lodge


52.48


44.0%


23.09


51.60


42.4%


21.89


1.7%


160

bps


5.5%


Rodeway


49.36


46.2%


22.81


47.78


43.2%


20.66


3.3%


300

bps


10.4%


MainStay


67.02


67.4%


45.16


64.06


61.8%


39.57


4.6%


560

bps


14.1%


Suburban


40.48


67.3%


27.24


39.82


65.3%


25.99


1.7%


200

bps


4.8%


Ascend Collection


109.96


59.4%


65.28


106.96


55.3%


59.19


2.8%


410

bps


10.3%























Total 


$  70.38


50.7%


$35.66


$  68.57


48.2%


$33.02


2.6%


250

bps


8.0%























* Operating statistics represent hotel operations from December through May






















































For the Three Months Ended June 30, 2012*


For the Three Months Ended June 30, 2011*


Change

























Average Daily






Average Daily






Average Daily









Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR























Comfort Inn


$ 79.87


60.2%


$48.05


$  77.54


57.7%


$44.73


3.0%


250

bps


7.4%


Comfort Suites


85.71


64.2%


55.01


83.89


60.3%


50.55


2.2%


390

bps


8.8%


Sleep


72.52


58.7%


42.56


69.95


55.0%


38.45


3.7%


370

bps


10.7%


Quality


68.43


52.5%


35.95


66.58


50.4%


33.58


2.8%


210

bps


7.1%


Clarion


74.71


50.2%


37.53


73.14


47.9%


35.01


2.1%


230

bps


7.2%


Econo Lodge


54.14


49.2%


26.62


53.10


47.4%


25.14


2.0%


180

bps


5.9%


Rodeway


51.10


50.4%


25.76


49.34


47.7%


23.55


3.6%


270

bps


9.4%


MainStay


69.06


72.9%


50.32


66.31


69.2%


45.87


4.1%


370

bps


9.7%


Suburban


41.58


71.9%


29.89


41.13


69.7%


28.68


1.1%


220

bps


4.2%


Ascend Collection


114.40


66.4%


75.94


113.44


60.4%


68.50


0.8%


600

bps


10.9%























Total 


$ 72.69


56.6%


$41.16


$  70.72


54.1%


$38.22


2.8%


250

bps


7.7%












































* Operating statistics represent hotel operations from March through May












































































For the Quarter Ended




For the Six Months Ended













6/30/2012


6/30/2011




6/30/2012


6/30/2011
































System-wide effective royalty rate


4.32%


4.33%




4.33%


4.34%











 


















CHOICE HOTELS INTERNATIONAL, INC. 

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA



(UNAUDITED)
























































June 30, 2012


June 30, 2011


Variance




















Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%


















Comfort Inn


1,379


107,895


1,416


110,736


(37)


(2,841)


(2.6%)


(2.6%)

Comfort Suites


608


46,903


613


47,441


(5)


(538)


(0.8%)


(1.1%)

Sleep


391


28,327


394


28,625


(3)


(298)


(0.8%)


(1.0%)

Quality


1,082


93,655


1,027


89,571


55


4,084


5.4%


4.6%

Clarion


189


27,534


193


28,335


(4)


(801)


(2.1%)


(2.8%)

Econo Lodge


801


49,114


778


48,197


23


917


3.0%


1.9%

Rodeway


401


22,671


377


20,506


24


2,165


6.4%


10.6%

MainStay


40


3,083


39


3,007


1


76


2.6%


2.5%

Suburban


62


7,260


61


7,255


1


5


1.6%


0.1%

Ascend Collection


52


4,652


44


3,392


8


1,260


18.2%


37.1%

Cambria Suites


19


2,221


19


2,215


-


6


0.0%


0.3%


















Domestic Franchises


5,024


393,315


4,961


389,280


63


4,035


1.3%


1.0%


















International Franchises


1,175


104,522


1,156


102,086


19


2,436


1.6%


2.4%


















Total Franchises


6,199


497,837


6,117


491,366


82


6,471


1.3%


1.3%


















 


















Exhibit 6

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)















































































For the Six Months Ended June 30, 2012


For the Six Months Ended June 30, 2011


% Change






















New






New






New







Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total




















Comfort Inn

6


12


18


5


18


23


20%


(33%)


(22%)

Comfort Suites

7


4


11


1


4


5


600%


0%


120%

Sleep

11


1


12


3


1


4


267%


0%


200%

Quality

-


63


63


-


35


35


NM


80%


80%

Clarion

-


7


7


-


8


8


NM


(13%)


(13%)

Econo Lodge

-


18


18


-


18


18


NM


0%


0%

Rodeway

-


31


31


-


18


18


NM


72%


72%

MainStay

1


1


2


1


3


4


0%


(67%)


(50%)

Suburban

-


1


1


2


1


3


(100%)


0%


(67%)

Ascend Collection

1


4


5


-


5


5


NM


(20%)


0%

Cambria Suites

2


-


2


2


-


2


0%


NM


0%



















Total Domestic System

28


142


170


14


111


125


100%


28%


36%




























































































For the Three Months Ended June 30, 2012


For the Three Months Ended June 30, 2011


% Change




















New






New






New






Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total



















Comfort Inn

5


4


9


3


11


14


67%


(64%)


(36%)

Comfort Suites

6


2


8


1


2


3


500%


0%


167%

Sleep

8


1


9


1


1


2


700%


0%


350%

Quality

-


36


36


-


11


11


NM


227%


227%

Clarion

-


5


5


-


3


3


NM


67%


67%

Econo Lodge

-


14


14


-


12


12


NM


17%


17%

Rodeway

-


19


19


-


13


13


NM


46%


46%

MainStay

1


1


2


-


3


3


NM


(67%)


(33%)

Suburban

-


1


1


2


1


3


(100%)


0%


(67%)

Ascend Collection

-


2


2


-


4


4


NM


(50%)


(50%)

Cambria Suites

1


-


1


1


-


1


0%


NM


0%



















Total Domestic System

21


85


106


8


61


69


163%


39%


54%



















 























Exhibit 7

CHOICE HOTELS INTERNATIONAL, INC.

DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT

(UNAUDITED)


























A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors.




































































Variance



June 30, 2012


June 30, 2011















Units


Units


Conversion


New Construction


Total



Conversion


New Construction


Total


Conversion


New Construction


Total


Units


%


Units


%


Units


%


























Comfort Inn

25


40


65


27


50


77


(2)


(7%)


(10)


(20%)


(12)


(16%)

Comfort Suites

2


82


84


3


108


111


(1)


(33%)


(26)


(24%)


(27)


(24%)

Sleep Inn

1


40


41


-


62


62


1


NM


(22)


(35%)


(21)


(34%)

Quality

39


3


42


25


5


30


14


56%


(2)


(40%)


12


40%

Clarion

14


1


15


16


2


18


(2)


(13%)


(1)


(50%)


(3)


(17%)

Econo Lodge

20


1


21


34


1


35


(14)


(41%)


-


0%


(14)


(40%)

Rodeway

31


1


32


15


1


16


16


107%


-


0%


16


100%

MainStay

1


22


23


4


37


41


(3)


(75%)


(15)


(41%)


(18)


(44%)

Suburban

2


14


16


-


22


22


2


NM


(8)


(36%)


(6)


(27%)

Ascend Collection

8


5


13


5


3


8


3


60%


2


67%


5


63%

Cambria Suites

-


26


26


-


31


31


-


NM


(5)


(16%)


(5)


(16%)


























143


235


378


129


322


451


14


11%


(87)


(27%)


(73)


(16%)

























 


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, 














2012


2011


2012


2011



Franchising Revenues:




















Total Revenues

$173,621


$165,301


$302,790


$  280,582



Adjustments:










     Marketing and reservation revenues

(94,633)


(90,832)


(165,562)


(153,799)



     Hotel operations

(1,224)


(1,073)


(2,202)


(1,937)



Franchising Revenues

$  77,764


$  73,396


$135,026


$  124,846













Franchising Margins:




















Operating Margin:




















Total Revenues

$173,621


$165,301


$302,790


$  280,582



Operating Income

$   51,590


$  45,122


$  82,655


$    70,801



     Operating Margin

29.7%


27.3%


27.3%


25.2%













 Franchising Margin:




















Franchising Revenues

$  77,764


$  73,396


$135,026


$  124,846













Operating Income

$  51,590


$  45,122


$  82,655


$    70,801



Hotel operations

(357)


(213)


(526)


(244)




$  51,233


$  44,909


$  82,129


$    70,557













     Franchising Margins

65.9%


61.2%


60.8%


56.5%











































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