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Third quarter domestic RevPAR exceeded 2019 levels by 15.2%; new domestic franchise agreements awarded in the quarter increased 38% versus the same period of 2021
ROCKVILLE, Md., Nov. 7, 2022 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest lodging franchisors, reported its results today for the three months ended September 30, 2022.
"Our third quarter results and the acquisition of the Radisson Hotels Americas business are a significant leap forward in the evolution of both Choice Hotels' competitive position and future growth potential. For 11 consecutive quarters, our RevPAR growth has outperformed the hotel industry, confirming that our strategy of focusing our investments and growth on RevPAR accretive hotel segments and locations is working. Our future growth is now enhanced by the addition of the Radisson Hotels Americas' brands to our best-in-class business delivery engine. Radisson Hotels Americas is expected to provide the company with significant incremental recurring adjusted EBITDA upon its full integration in early 2024," said Patrick Pacious, president and chief executive officer, Choice Hotels. "We exceeded our 2019 earnings last year, have built on that strength through the third quarter this year and are confident that the changes we are observing in leisure and business travel behavior that favor our brands will enable us to maximize growth opportunities well into the future."
Highlights of third quarter 2022 results include:1,2
RevPAR Performance Trends
Financial Performance
Development
Shareholder Returns
During the nine months ended September 30, 2022, the company paid cash dividends totaling approximately $40 million. Based on the current quarterly dividend rate of $0.2375 per common shares outstanding, the company expects to pay dividends of $53 million during 2022, compared to total dividends of $25 million paid in 2021.
During the nine months ended September 30, 2022, the company repurchased approximately 2 million shares of common stock for $247 million under its stock repurchase program as well as through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company's equity incentive plans. As of September 30, 2022, the company had 6.3 million shares of common stock remaining under the current share repurchase authorization.
Outlook
The outlook information provided below includes forward-looking non-GAAP financial measures, which management uses in measuring performance. The company is not able to reconcile full-year 2022 projected adjusted EBITDA and full-year 2024 projected adjusted EBITDA contribution from the Radisson Hotels Americas business unit, in each case without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the final valuation and related allocation of the purchase price and other potential adjustments. The unavailable information could have a significant impact on the company's full-year 2022 and full-year 2024 reported financial results. The adjusted numbers in the company's outlook below exclude the net surplus or deficit generated from reimbursable revenue from franchised and managed properties, the gain (loss) on sales of assets, extraordinary one-time franchisee termination fees, due diligence and transition costs and other items:
Conference Call
Choice Hotels International will conduct a conference call on, November 7, 2022, at 8:30 a.m. Eastern Time to discuss the company's third quarter 2022 earnings results. The dial-in number to listen to the call domestically is (888) 349-0087 and the number for international participants is (412) 317-5259. A live webcast and accompanying materials will also be available on the company's investor relations website, http://investor.choicehotels.com/ and can be accessed via the Financial Performance and Presentations tab.
About Choice Hotels®
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world. With nearly 7,500 hotels, representing nearly 630,000 rooms, in 46 countries and territories as of September 30, 2022, the Choice® family of hotel brands provides business and leisure travelers with a range of high-quality lodging options from limited service to full-service hotels in the upscale, midscale, extended-stay and economy segments. The award-winning Choice Privileges® loyalty program offers members benefits ranging from everyday rewards to exceptional experiences. For more information, visit 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. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "expect," "estimate," "believe," "anticipate," "should," "will," "forecast," "plan," "project," "assume," or similar words of futurity. All statements other than historical facts are 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, expenses, adjusted EBITDA, earnings, debt levels, ability to repay outstanding indebtedness, payment of dividends, repurchases of common stock and other financial and operational measures, including occupancy and open hotels, RevPAR, the company's ability to benefit from any rebound in travel demand, the company's liquidity, the impact of COVID-19 and economic conditions on our 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, the consummation of the acquisition of Radisson Hotels Americas, including the related incurrence of additional indebtedness; the company's ability to successfully integrate Radisson Hotels Americas' employees and operations; the ability to realize the anticipated benefits and synergies of the acquisition of Radisson Hotels Americas as rapidly or to the extent anticipated; the continuation or resurgence of the COVID-19 pandemic, including with respect to new strains or variants; the rate, pace and effectiveness of vaccination in the broader population; changes in consumer demand and confidence, including the impact of the COVID-19 pandemic on unemployment rates, consumer discretionary spending and the demand for travel, transient and group business; the impact of COVID-19 on the global hospitality industry, particularly but not exclusively in the U.S. travel market; the timing and amount of future dividends and share repurchases; changes to general, domestic and foreign economic conditions, including access to liquidity and capital; future domestic or global outbreaks of epidemics, pandemics or contagious diseases, or fear of such outbreaks; changes in law and regulation applicable to the travel, lodging or franchising industries; including with respect to the status of the relationship with employees of our franchisees; foreign currency fluctuations; impairments or declines in the value of the company's assets; operating risks common in the travel, lodging or 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 and our relationships with our franchisees; our ability to keep pace with improvements in technology utilized for marketing and reservations systems and other operating systems; the commercial acceptance of our Software-as-a-Service ("SaaS") technology solutions division's products and services; our ability to grow our franchise system; exposure to risks related to our hotel development, financing and ownership activities; exposures to risks associated with our investments in new businesses; fluctuations in the supply and demand for hotel rooms; our ability to realize anticipated benefits from acquired businesses; impairments or losses relating to acquired businesses; the level of acceptance of alternative growth strategies we may implement; cyber security and data breach risks; ownership and financing activities; hotel closures or financial difficulties of our franchisees; operating risks associated with our international operations, especially in areas currently most affected by COVID-19; the outcome of litigation; and our ability to effectively manage our indebtedness, and secure our indebtedness, including additional indebtedness incurred as a result of the acquisition of Radisson Hotels Americas. These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and, where applicable, our Quarter Reports 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, except as required by law.
Non-GAAP Financial Measurements
The company evaluates its operations utilizing the performance metrics of adjusted EBITDA, adjusted EBITDA margins, adjusted selling, general and administrative (SG&A) expenses, revenues excluding reimbursable revenue from franchised and managed properties and extraordinary termination fees from franchisee, adjusted net income and adjusted EPS, which are all non-GAAP financial measurements. These measures, which are reconciled to the comparable GAAP measures in Exhibit 7, should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by GAAP, such as net income, SG&A, EPS and total revenues. The company's calculation of these measurements may be different from the calculations used by other companies and comparability may therefore be limited. We discuss management's reasons for reporting these non-GAAP measures and how each non-GAAP measure is calculated below.
In addition to the specific adjustments noted below with respect to each measure, the non-GAAP measures presented herein also exclude restructuring of the company's operations including employee severance benefit, income taxes and legal costs, exceptional allowances recorded as a result of COVID-19's impact on the collectability of receivables, expenses associated with legal claims, acquisition related due diligence, transition and transaction costs, one-time franchise agreement termination fees received related to the purchase and rebranding of a 110 hotel portfolio of WoodSpring Suites hotels, and gains/losses on sale/disposal and impairment of assets primarily related to hotel ownership and development activities to allow for period-over-period comparison of ongoing core operations before the impact of these discrete and infrequent charges.
Adjusted SG&A, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization and Margin: Adjusted SG&A, Adjusted EBITDA and Adjusted EBITDA Margin reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, franchise-agreement acquisition cost amortization, other (gains) and losses, equity in net income (loss) of unconsolidated affiliates, mark-to-market adjustments on non-qualified retirement plan investments, share based compensation expense (benefit) and surplus or deficits generated by reimbursable revenue from franchised and managed properties. We consider adjusted EBITDA and adjusted EBITDA margins to be an indicator of operating performance because it measures our ability to service debt, fund capital expenditures and expand our business. We also use these measures, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across 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, and share based compensation expense (benefit) is dependent on the design of compensation plans in place and the usage of them. Accordingly, the impact of interest expense and share based compensation expense (benefit) 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. These measures also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets or amortizing franchise-agreement acquisition costs. These differences can result in considerable variability in the relative asset costs and estimated lives and, therefore, the depreciation and amortization expense among companies. Mark-to-market adjustments on non-qualified retirement-plan investments recorded in SG&A are excluded from EBITDA, as the company accounts for these investments in accordance with accounting for deferred-compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have a material impact on the company's net income. Surpluses and deficits generated from reimbursable revenues from franchised and managed properties are excluded, as the company's franchise and management agreements require these revenues to be used exclusively for expenses associated with providing franchise and management services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchised and managed property owners are required to reimburse the company for any deficits generated from these activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.
Adjusted Net Income and Adjusted Earnings Per Share: Adjusted net income and EPS exclude the impact of surpluses or deficits generated from reimbursable revenue from franchised and managed properties. Surpluses and deficits generated from reimbursable revenue from franchised and managed properties are excluded, as the company's franchise agreements require these revenues to be used exclusively for expenses associated with providing franchised and managed services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchised and managed property owners are required to reimburse the company for any deficits generated from activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance. We consider adjusted net income and adjusted EPS to be indicators of operating performance because excluding these items allow for period-over-period comparisons of our ongoing operations.
Revenues, Excluding Reimbursable Revenue from Franchised and Managed Properties and Extraordinary Termination Fees from Franchisee: The company reports revenues, excluding reimbursable revenue from franchised and managed properties and extraordinary termination fees from franchisee. These non-GAAP measures we present are commonly used measures of performance in our industry and facilitate comparisons between the company and its competitors. Reimbursable revenues from franchised and managed properties are excluded, as the company's franchise and management agreements require revenues to be used exclusively for expenses associated with providing franchise and management services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance. During the third quarter of 2022, the company earned one-time franchise agreement termination fees related to the purchase by a third-party from an existing franchisee and the subsequent rebranding of a 110 hotel portfolio of WoodSpring Suites hotels. These termination fees received are considered infrequent in nature and not representative of on-going operations and therefore have been excluded from the measurements utilized to assess the company's operating performance.
© 2022 Choice Hotels International, Inc. All rights reserved.
1 2019 RevPAR comparison data is shown for comparable prior year periods for context throughout this press release in light of the pandemic's impact on industry performance in 2021. |
2 For comparative purposes, RevPAR, effective royalty rate and executed contracts exclude the impact of the Radisson Hotels Americas acquisition, while financial data, pipeline and unit growth include the impact of the Radisson Hotels Americas acquisition unless otherwise noted. |
3 The percentage of shares repurchased is calculated based on 54 million shares outstanding as of September 30, 2022. |
4 Pipeline is defined as hotels awaiting conversion, under construction or approved for development and master development agreements committing owners to future franchise development. The pipeline number also includes 48 Radisson Hotels Americas units representing over 5,700 rooms. |
5 Subsequent to quarter-end, the company sold the Cambria Hotel New Haven, Connecticut, in October 2022 for $30 million and secured a 30-year franchise agreement with the buyer to continue operating the hotel as a Cambria Hotel. |
6 Including both the Radisson Hotels Americas incremental units and the impact of the previously announced one-time exits. |
Choice Hotels International, Inc. and Subsidiaries | Exhibit 1 | |||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
Variance | Variance | |||||||||||||||
2022 | 2021 | $ | % | 2022 | 2021 | $ | % | |||||||||
REVENUES | ||||||||||||||||
Royalty, licensing and management fees | $ 144,020 | $ 127,317 | $ 16,703 | 13 % | $ 356,208 | $ 299,606 | $ 56,602 | 19 % | ||||||||
Initial franchise fees | 7,011 | 6,149 | 862 | 14 % | 21,635 | 18,904 | 2,731 | 14 % | ||||||||
Procurement services | 14,401 | 13,010 | 1,391 | 11 % | 47,887 | 36,293 | 11,594 | 32 % | ||||||||
Owned hotels | 19,992 | 11,377 | 8,615 | 76 % | 49,220 | 24,724 | 24,496 | 99 % | ||||||||
Other | 31,432 | 8,645 | 22,787 | 264 % | 51,588 | 20,753 | 30,835 | 149 % | ||||||||
Other revenues from franchised and managed properties | 197,410 | 156,871 | 40,539 | 26 % | 513,429 | 384,380 | 129,049 | 34 % | ||||||||
Total revenues | 414,266 | 323,369 | 90,897 | 28 % | 1,039,967 | 784,660 | 255,307 | 33 % | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Selling, general and administrative | 70,202 | 35,110 | 35,092 | 100 % | 144,414 | 99,847 | 44,567 | 45 % | ||||||||
Depreciation and amortization | 8,726 | 5,883 | 2,843 | 48 % | 20,436 | 18,477 | 1,959 | 11 % | ||||||||
Owned hotels | 13,158 | 7,054 | 6,104 | 87 % | 32,004 | 16,534 | 15,470 | 94 % | ||||||||
Other expenses from franchised and managed properties | 190,541 | 116,216 | 74,325 | 64 % | 458,037 | 327,674 | 130,363 | 40 % | ||||||||
Total operating expenses | 282,627 | 164,263 | 118,364 | 72 % | 654,891 | 462,532 | 192,359 | 42 % | ||||||||
Gain on sale of business and assets, net | 13,379 | — | 13,379 | NM | 16,688 | — | 16,688 | NM | ||||||||
Operating income | 145,018 | 159,106 | (14,088) | (9) % | 401,764 | 322,128 | 79,636 | 25 % | ||||||||
OTHER INCOME AND EXPENSES, NET | ||||||||||||||||
Interest expense | 9,362 | 11,638 | (2,276) | (20) % | 32,084 | 35,106 | (3,022) | (9) % | ||||||||
Interest income | (2,348) | (1,202) | (1,146) | 95 % | (5,256) | (3,717) | (1,539) | 41 % | ||||||||
Other loss (gain) | 2,303 | 407 | 1,896 | 466 % | 9,578 | (2,906) | 12,484 | (430) % | ||||||||
Equity in net loss (gain) of affiliates | (1,075) | (3,326) | 2,251 | (68) % | (1,279) | 1,492 | (2,771) | (186) % | ||||||||
Total other income and expenses, net | 8,242 | 7,517 | 725 | 10 % | 35,127 | 29,975 | 5,152 | 17 % | ||||||||
Income before income taxes | 136,776 | 151,589 | (14,813) | (10) % | 366,637 | 292,153 | 74,484 | 25 % | ||||||||
Income tax expense | 33,696 | 34,934 | (1,238) | (4) % | 89,998 | 67,279 | 22,719 | 34 % | ||||||||
Net income | $ 103,080 | $ 116,655 | $ (13,575) | (12) % | $ 276,639 | $ 224,874 | $ 51,765 | 23 % | ||||||||
Basic earnings per share | $ 1.87 | $ 2.10 | $ (0.23) | (11) % | $ 4.98 | $ 4.05 | $ 0.93 | 23 % | ||||||||
Diluted earnings per share | $ 1.85 | $ 2.08 | $ (0.23) | (11) % | $ 4.93 | $ 4.01 | $ 0.92 | 23 % |
Choice Hotels International, Inc. and Subsidiaries | Exhibit 2 | |||||
Condensed Consolidated Balance Sheets | ||||||
(Unaudited) | ||||||
(In thousands, except per share amounts) | September 30, | December 31, | ||||
2022 | 2021 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ 52,541 | $ 511,605 | ||||
Accounts receivable, net | 297,628 | 153,147 | ||||
Other current assets | 108,980 | 96,909 | ||||
Total current assets | 459,149 | 761,661 | ||||
Property and equipment, net | 417,431 | 377,367 | ||||
Intangible assets, net | 723,617 | 312,389 | ||||
Goodwill | 227,703 | 159,196 | ||||
Notes receivable, net of allowances | 54,492 | 66,451 | ||||
Investments in affiliates | 29,694 | 27,967 | ||||
Operating lease right-of-use assets | 70,533 | 34,183 | ||||
Investments, employee benefit plans, at fair value | 29,010 | 33,946 | ||||
Other assets | 177,354 | 158,664 | ||||
Total assets | $ 2,188,983 | $ 1,931,824 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Accounts payable | $ 129,856 | $ 81,169 | ||||
Accrued expenses and other current liabilities | 125,227 | 104,472 | ||||
Deferred revenue | 85,863 | 81,538 | ||||
Current portion of long-term debt | 2,976 | 216,351 | ||||
Liability for guest loyalty program | 82,461 | 86,765 | ||||
Total current liabilities | 426,383 | 570,295 | ||||
Long-term debt | 1,155,142 | 844,123 | ||||
Deferred revenue | 134,171 | 105,785 | ||||
Liability for guest loyalty program | 49,113 | 41,785 | ||||
Operating lease liabilities | 70,564 | 35,492 | ||||
Deferred compensation & retirement plan obligations | 43,053 | 38,690 | ||||
Other liabilities | 26,046 | 29,772 | ||||
Total liabilities | 1,904,472 | 1,665,942 | ||||
Total shareholders' equity | 284,511 | 265,882 | ||||
Total liabilities and shareholders' equity | $ 2,188,983 | $ 1,931,824 | ||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 3 | ||
Condensed Consolidated Statements of Cash Flows | |||
(Unaudited) | |||
(In thousands) | Nine Months Ended September 30, | ||
2022 | 2021 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 276,639 | $ 224,874 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 20,436 | 18,477 | |
Depreciation and amortization – marketing, reservation, and system | 23,237 | 18,364 | |
Gain on sale and disposal of business and assets, net | (16,688) | — | |
Amortization - franchise agreement acquisition cost | 11,558 | 9,734 | |
Stock compensation and other charges | 28,621 | 24,277 | |
Interest and investment loss (income) | 9,135 | (11,039) | |
Deferred income taxes | (22,402) | (34,285) | |
Equity in net loss of affiliates, less distributions received | 2,451 | 8,421 | |
Franchise agreement acquisition costs, net of reimbursements | (32,947) | (28,466) | |
Change in working capital and other | (34,838) | 14,887 | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 265,202 | 245,244 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Investment in property and equipment | (66,084) | (46,098) | |
Investment in intangible assets | (3,247) | (3,113) | |
Asset acquisitions, net of cash paid | (856) | — | |
Proceeds from termination of intangibles | 5,698 | — | |
Contributions to investments in affiliates | (4,264) | (2,150) | |
Proceeds from sale of equity method investments | — | 15,554 | |
Purchases of investments, employee benefit plans | (3,719) | (1,279) | |
Proceeds from sales of investments, employee benefit plans | 1,896 | 2,487 | |
Issuance of notes receivable | (5,617) | (17,918) | |
Collections of notes receivable | 701 | 63 | |
Proceeds from sale of business and assets | 140,554 | — | |
Business acquisition, net of cash acquired | (550,431) | — | |
Other items, net | 1,708 | (115) | |
NET CASH USED IN INVESTING ACTIVITIES | (483,661) | (52,569) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net borrowings pursuant to revolving credit facilities | 315,000 | — | |
Payments to extinguish acquired debt | (55,975) | — | |
Proceeds from acquired derivative | 1,943 | — | |
Principal payments on 2012 senior notes | (216,571) | — | |
Purchases of treasury stock | (246,530) | (10,039) | |
Dividends paid | (39,697) | (12,528) | |
Debt issuance costs | (24) | (365) | |
Proceeds from exercise of stock options | 2,361 | 10,817 | |
NET CASH USED IN FINANCING ACTIVITIES | (239,493) | (12,115) | |
Net change in cash and cash equivalents | (457,952) | 180,560 | |
Effect of foreign exchange rate changes on cash and cash equivalents | (1,112) | (223) | |
Cash and cash equivalents at beginning of period | 511,605 | 234,779 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 52,541 | $ 415,116 |
Exhibit 4 | |||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | |||||||||||||||||||
DOMESTIC HOTEL SYSTEM | |||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||
For the Nine Months Ended September 30, 2022 | For the Nine Months Ended September 30, 2021 | Change | |||||||||||||||||
Average Daily | Average Daily | Average Daily | |||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | |||||||||||
Comfort(1) | $ 109.50 | 63.0 % | $ 68.99 | $ 97.74 | 60.8 % | $ 59.40 | 12.0 % | 220 | bps | 16.1 % | |||||||||
Sleep | 96.10 | 60.9 % | 58.56 | 86.39 | 59.6 % | 51.45 | 11.2 % | 130 | bps | 13.8 % | |||||||||
Quality | 91.68 | 54.9 % | 50.36 | 83.94 | 54.5 % | 45.77 | 9.2 % | 40 | bps | 10.0 % | |||||||||
Clarion(2) | 95.66 | 46.3 % | 44.28 | 87.91 | 43.8 % | 38.52 | 8.8 % | 250 | bps | 15.0 % | |||||||||
Econo Lodge | 72.63 | 50.5 % | 36.70 | 68.35 | 51.1 % | 34.94 | 6.3 % | (60) | bps | 5.0 % | |||||||||
Rodeway | 73.20 | 52.0 % | 38.03 | 68.20 | 52.0 % | 35.48 | 7.3 % | — | bps | 7.2 % | |||||||||
WoodSpring Suites | 57.98 | 79.9 % | 46.30 | 50.83 | 81.9 % | 41.63 | 14.1 % | (200) | bps | 11.2 % | |||||||||
MainStay | 88.01 | 63.3 % | 55.75 | 79.84 | 62.8 % | 50.15 | 10.2 % | 50 | bps | 11.2 % | |||||||||
Suburban | 62.14 | 69.2 % | 43.02 | 54.49 | 71.5 % | 38.95 | 14.0 % | (230) | bps | 10.4 % | |||||||||
Cambria Hotels | 159.68 | 64.7 % | 103.24 | 129.62 | 55.1 % | 71.44 | 23.2 % | 960 | bps | 44.5 % | |||||||||
Ascend Hotel Collection | 155.81 | 57.7 % | 89.93 | 138.31 | 54.4 % | 75.28 | 12.7 % | 330 | bps | 19.5 % | |||||||||
Total* | $ 93.81 | 59.3 % | $ 55.65 | $ 83.70 | 58.2 % | $ 48.71 | 12.1 % | 110 | bps | 14.2 % | |||||||||
*The operating statistics presented exclude the legacy Radisson brands acquired. Additionally, the operating statistics exclude Choice's Everhome brand since the operating statistics are not | |||||||||||||||||||
For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2021 | Change | |||||||||||||||||
Average Daily | Average Daily | Average Daily | |||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | |||||||||||
Comfort(1) | $ 115.72 | 67.6 % | $ 78.26 | $ 110.72 | 67.8 % | $ 75.03 | 4.5 % | (20) | bps | 4.3 % | |||||||||
Sleep | 100.82 | 63.9 % | 64.47 | 95.70 | 66.4 % | 63.55 | 5.4 % | (250) | bps | 1.4 % | |||||||||
Quality | 97.66 | 59.6 % | 58.24 | 94.48 | 62.2 % | 58.76 | 3.4 % | (260) | bps | (0.9) % | |||||||||
Clarion(2) | 101.35 | 51.8 % | 52.52 | 101.17 | 51.9 % | 52.47 | 0.2 % | (10) | bps | 0.1 % | |||||||||
Econo Lodge | 78.12 | 54.1 % | 42.26 | 76.51 | 57.1 % | 43.66 | 2.1 % | (300) | bps | (3.2) % | |||||||||
Rodeway | 77.99 | 55.5 % | 43.32 | 76.21 | 56.9 % | 43.37 | 2.3 % | (140) | bps | (0.1) % | |||||||||
WoodSpring Suites | 59.26 | 81.1 % | 48.04 | 54.11 | 85.5 % | 46.26 | 9.5 % | (440) | bps | 3.8 % | |||||||||
MainStay | 92.26 | 67.2 % | 61.99 | 87.15 | 69.1 % | 60.18 | 5.9 % | (190) | bps | 3.0 % | |||||||||
Suburban | 61.61 | 68.4 % | 42.12 | 59.26 | 73.5 % | 43.54 | 4.0 % | (510) | bps | (3.3) % | |||||||||
Cambria Hotels | 164.66 | 70.1 % | 115.42 | 148.85 | 62.2 % | 94.15 | 10.6 % | 790 | bps | 22.6 % | |||||||||
Ascend Hotel Collection | 174.63 | 64.5 % | 112.56 | 158.37 | 63.3 % | 98.50 | 10.3 % | 120 | bps | 14.3 % | |||||||||
Total* | $ 100.07 | 63.4 % | $ 63.45 | $ 94.59 | 64.9 % | $ 61.37 | 5.8 % | (150) | bps | 3.4 % | |||||||||
*The operating statistics presented exclude the legacy Radisson brands acquired. Additionally, the operating statistics exclude Choice's Everhome brand since the operating statistics are not | |||||||||||||||||||
Effective Royalty Rate | |||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | ||||||||||||||||
System-wide | 5.04 % | 4.99 % | 5.05 % | 5.00 % | |||||||||||||||
(1) Includes Comfort family of brand extensions including Comfort and Comfort Suites | |||||||||||||||||||
(2) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | |||||||||||||||||||
Exhibit 5 | |||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | |||||||||||||||||||
DOMESTIC HOTEL SYSTEM | |||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||
For the Nine Months Ended September 30, 2022 | For the Nine Months Ended September 30, 2019 | Change | |||||||||||||||||
Average Daily | Average Daily | Average Daily | |||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | |||||||||||
Comfort(1) | $ 109.50 | 63.0 % | $ 68.99 | $ 97.39 | 63.9 % | $ 62.25 | 12.4 % | (90) | bps | 10.8 % | |||||||||
Sleep | 96.10 | 60.9 % | 58.56 | 86.50 | 63.0 % | 54.48 | 11.1 % | (210) | bps | 7.5 % | |||||||||
Quality | 91.68 | 54.9 % | 50.36 | 81.51 | 55.9 % | 45.55 | 12.5 % | (100) | bps | 10.6 % | |||||||||
Clarion(2) | 95.66 | 46.3 % | 44.28 | 86.31 | 51.3 % | 44.32 | 10.8 % | (500) | bps | (0.1) % | |||||||||
Econo Lodge | 72.63 | 50.5 % | 36.70 | 64.75 | 49.1 % | 31.77 | 12.2 % | 140 | bps | 15.5 % | |||||||||
Rodeway | 73.20 | 52.0 % | 38.03 | 65.29 | 50.4 % | 32.89 | 12.1 % | 160 | bps | 15.6 % | |||||||||
WoodSpring Suites | 57.98 | 79.9 % | 46.30 | 47.34 | 76.9 % | 36.40 | 22.5 % | 300 | bps | 27.2 % | |||||||||
MainStay | 88.01 | 63.3 % | 55.75 | 86.38 | 65.8 % | 56.86 | 1.9 % | (250) | bps | (2.0) % | |||||||||
Suburban | 62.14 | 69.2 % | 43.02 | 58.36 | 68.9 % | 40.18 | 6.5 % | 30 | bps | 7.1 % | |||||||||
Cambria Hotels | 159.68 | 64.7 % | 103.24 | 145.08 | 69.5 % | 100.88 | 10.1 % | (480) | bps | 2.3 % | |||||||||
Ascend Hotel Collection | 155.81 | 57.7 % | 89.93 | 126.66 | 62.7 % | 79.41 | 23.0 % | (500) | bps | 13.2 % | |||||||||
Total* | $ 93.81 | 59.3 % | $ 55.65 | $ 83.07 | 59.3 % | $ 49.26 | 12.9 % | — | bps | 13.0 % | |||||||||
*The operating statistics presented exclude the legacy Radisson brands acquired. Additionally, the operating statistics exclude Choice's Everhome brand since the operating statistics are not | |||||||||||||||||||
For the Three Months Ended September 30, 2022 | For the Three Months Ended September 30, 2019 | Change | |||||||||||||||||
Average Daily | Average Daily | Average Daily | |||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | |||||||||||
Comfort(1) | $ 115.72 | 67.6 % | $ 78.26 | $ 101.48 | 68.4 % | $ 69.38 | 14.0 % | (80) | bps | 12.8 % | |||||||||
Sleep | 100.82 | 63.9 % | 64.47 | 88.32 | 66.4 % | 58.62 | 14.2 % | (250) | bps | 10.0 % | |||||||||
Quality | 97.66 | 59.6 % | 58.24 | 85.60 | 60.6 % | 51.87 | 14.1 % | (100) | bps | 12.3 % | |||||||||
Clarion(2) | 101.35 | 51.8 % | 52.52 | 91.80 | 55.7 % | 51.16 | 10.4 % | (390) | bps | 2.7 % | |||||||||
Econo Lodge | 78.12 | 54.1 % | 42.26 | 68.67 | 53.3 % | 36.60 | 13.8 % | 80 | bps | 15.5 % | |||||||||
Rodeway | 77.99 | 55.5 % | 43.32 | 68.98 | 54.3 % | 37.45 | 13.1 % | 120 | bps | 15.7 % | |||||||||
WoodSpring Suites | 59.26 | 81.1 % | 48.04 | 48.69 | 77.4 % | 37.67 | 21.7 % | 370 | bps | 27.5 % | |||||||||
MainStay | 92.26 | 67.2 % | 61.99 | 88.05 | 70.5 % | 62.07 | 4.8 % | (330) | bps | (0.1) % | |||||||||
Suburban | 61.61 | 68.4 % | 42.12 | 57.55 | 67.9 % | 39.11 | 7.1 % | 50 | bps | 7.7 % | |||||||||
Cambria Hotels | 164.66 | 70.1 % | 115.42 | 145.78 | 72.0 % | 104.95 | 13.0 % | (190) | bps | 10.0 % | |||||||||
Ascend Hotel Collection | 174.63 | 64.5 % | 112.56 | 135.09 | 67.6 % | 91.29 | 29.3 % | (310) | bps | 23.3 % | |||||||||
Total* | $ 100.07 | 63.4 % | $ 63.45 | $ 86.95 | 63.4 % | $ 55.10 | 15.1 % | — | bps | 15.2 % | |||||||||
*The operating statistics presented exclude the legacy Radisson brands acquired. Additionally, the operating statistics exclude Choice's Everhome brand since the operating statistics are not | |||||||||||||||||||
Effective Royalty Rate | |||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||
September 30, 2022 | September 30, 2019 | September 30, 2022 | September 30, 2019 | ||||||||||||||||
System-wide | 5.04 % | 4.84 % | 5.05 % | 4.84 % | |||||||||||||||
(1) Includes Comfort family of brand extensions including Comfort and Comfort Suites | |||||||||||||||||||
(2) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | |||||||||||||||||||
Exhibit 6 | ||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
September 30, 2022 | September 30, 2021 | Variance | ||||||||||||||
Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||
Comfort(1) | 1,668 | 131,140 | 1,665 | 131,066 | 3 | 74 | 0.2 % | 0.1 % | ||||||||
Sleep | 423 | 29,770 | 414 | 29,167 | 9 | 603 | 2.2 % | 2.1 % | ||||||||
Quality | 1,625 | 120,708 | 1,666 | 125,061 | (41) | (4,353) | (2.5) % | (3.5) % | ||||||||
Clarion(2) | 185 | 20,642 | 183 | 21,917 | 2 | (1,275) | 1.1 % | (5.8) % | ||||||||
Econo Lodge | 704 | 42,323 | 734 | 44,112 | (30) | (1,789) | (4.1) % | (4.1) % | ||||||||
Rodeway | 491 | 27,569 | 531 | 30,657 | (40) | (3,088) | (7.5) % | (10.1) % | ||||||||
WoodSpring Suites | 206 | 24,890 | 300 | 36,112 | (94) | (11,222) | (31.3) % | (31.1) % | ||||||||
Everhome | 1 | 99 | — | — | 1 | 99 | NM | NM | ||||||||
MainStay | 113 | 7,843 | 97 | 6,780 | 16 | 1,063 | 16.5 % | 15.7 % | ||||||||
Suburban | 73 | 6,565 | 70 | 6,366 | 3 | 199 | 4.3 % | 3.1 % | ||||||||
Cambria Hotels | 61 | 8,433 | 58 | 8,060 | 3 | 373 | 5.2 % | 4.6 % | ||||||||
Ascend Hotel Collection | 192 | 20,069 | 224 | 28,175 | (32) | (8,106) | (14.3) % | (28.8) % | ||||||||
Radisson* | 520 | 53,185 | — | — | 520 | 53,185 | NM | NM | ||||||||
Domestic Franchises(3) | 6,262 | 493,236 | 5,942 | 467,473 | 320 | 25,763 | 5.4 % | 5.5 % | ||||||||
International Choice | 1,107 | 121,164 | 1,160 | 134,303 | (53) | (13,139) | (4.6) % | (9.8) % | ||||||||
International Radisson* | 89 | 12,783 | — | — | 89 | 12,783 | NM | NM | ||||||||
International Franchises(3) | 1,196 | 133,947 | 1,160 | 134,303 | 36 | (356) | 3.1 % | (0.3) % | ||||||||
Total Franchises | 7,458 | 627,183 | 7,102 | 601,776 | 356 | 25,407 | 5.0 % | 4.2 % | ||||||||
(1) Includes Comfort family of brand extensions including Comfort and Comfort Suites | ||||||||||||||||
(2) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | ||||||||||||||||
(3) Prior to 2022, seven properties located in Caribbean territories were classified as domestic. In 2022, the seven properties were reclassified to international. | ||||||||||||||||
*Radisson Hotels Americas brands are referred to as Radisson within this table. |
Exhibit 7 | |||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
REVENUES EXCLUDING REIMBURSABLE REVENUE FROM FRANCHISED AND MANAGED PROPERTIES AND | |||||||||||
(dollar amounts in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Total Revenues | $ 414,266 | $ 323,369 | $ 1,039,967 | $ 784,660 | |||||||
Adjustments: | |||||||||||
Reimbursable revenue from franchised and managed properties | (190,627) | (156,871) | (506,646) | (384,380) | |||||||
Extraordinary termination fees from franchisee | (22,647) | — | (22,647) | — | |||||||
Revenues excluding reimbursable revenue from franchised and | $ 200,992 | $ 166,498 | $ 510,674 | $ 400,280 | |||||||
ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |||||||||||
(dollar amounts in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Total Selling, General and Administrative Expenses | $ 70,202 | $ 35,110 | $ 144,414 | 99,847 | |||||||
Mark to market adjustments on non-qualified retirement plan investments | 1,419 | 61 | 7,979 | (3,402) | |||||||
Operational restructuring charges | (5,416) | — | (5,416) | (724) | |||||||
Share-based compensation | (4,662) | (3,016) | (12,869) | (8,399) | |||||||
Due diligence and transition costs | (19,496) | — | (23,557) | — | |||||||
Exceptional allowances attributable to COVID-19 | — | (989) | — | (3,087) | |||||||
Expense associated with legal claims | — | (3,000) | — | (3,000) | |||||||
Adjusted Selling, General and Administrative Expenses | $ 42,047 | $ 28,166 | $ 110,551 | $ 81,235 | |||||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") AND ADJUSTED EBITDA MARGINS | |||||||||||
(dollar amounts in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Net income | $ 103,080 | $ 116,655 | $ 276,639 | $ 224,874 | |||||||
Income tax expense | 33,696 | 34,934 | 89,998 | 67,279 | |||||||
Interest expense | 9,362 | 11,638 | 32,084 | 35,106 | |||||||
Interest income | (2,348) | (1,202) | (5,256) | (3,717) | |||||||
Other loss (gain) | 2,303 | 407 | 9,578 | (2,906) | |||||||
Equity in operating net loss (gain) of affiliates, net of impairments | (1,075) | 957 | (1,279) | 3,547 | |||||||
Loss on impairment of affiliate | — | — | — | 4,805 | |||||||
Gain on sale of affiliate | — | (4,283) | — | (6,860) | |||||||
Gain on sale of assets | (13,379) | — | (16,688) | — | |||||||
Depreciation and amortization | 9,668 | 5,883 | 21,378 | 18,477 | |||||||
Mark to market adjustments on non-qualified retirement plan investments | (1,419) | (61) | (7,979) | 3,402 | |||||||
Operational restructuring charges | 5,416 | — | 5,416 | 724 | |||||||
Share-based compensation | 4,662 | 3,016 | 12,869 | 8,399 | |||||||
Due diligence and transition costs | 19,496 | — | 23,557 | — | |||||||
Extraordinary termination fees from franchisee | (22,647) | — | (22,647) | — | |||||||
Expenses associated with legal claims | — | 3,000 | — | 3,000 | |||||||
Net reimbursable revenues from franchised and managed properties | (9,702) | (40,655) | (58,225) | (56,706) | |||||||
Exceptional allowances attributable to COVID-19 | — | 989 | — | 3,087 | |||||||
Franchise agreement acquisition costs amortization | 2,262 | 1,961 | 6,620 | 5,534 | |||||||
Adjusted EBITDA | $ 139,375 | $ 133,239 | $ 366,065 | $ 308,045 | |||||||
Revenues excluding reimbursable revenue from franchised and | $ 200,992 | $ 166,498 | $ 510,674 | $ 400,280 | |||||||
Adjusted EBITDA margins | 69.3 % | 80.0 % | 71.7 % | 77.0 % | |||||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) | |||||||||||
(dollar amounts in thousands, except per share amounts) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Net income | $ 103,080 | $ 116,655 | $ 276,639 | $ 224,874 | |||||||
Adjustments: | |||||||||||
Loss on impairment of affiliates | — | — | — | 3,647 | |||||||
Gain on sale of assets | (10,087) | — | (12,583) | — | |||||||
Gain on sale of affiliate | — | (3,276) | — | (5,207) | |||||||
Operational restructuring charges | 4,084 | — | 4,084 | 550 | |||||||
Due diligence & transition costs | 14,700 | — | 17,762 | — | |||||||
Extraordinary termination fees from franchisee | (17,076) | — | (17,076) | — | |||||||
Exceptional allowances attributable to COVID-19 | — | 757 | — | 2,343 | |||||||
Expenses associated with legal claims | — | 2,295 | — | 2,277 | |||||||
Net reimbursable revenues from franchise and managed properties | (7,238) | (31,286) | (43,436) | (43,635) | |||||||
Adjusted Net Income | $ 87,463 | $ 85,145 | $ 225,390 | $ 184,849 | |||||||
Diluted Earnings Per Share | $ 1.85 | $ 2.08 | $ 4.93 | $ 4.01 | |||||||
Adjustments: | |||||||||||
Loss on impairment of affiliates | — | — | — | 0.07 | |||||||
Gain on the sale of assets | (0.18) | — | (0.22) | — | |||||||
Gain on sale of affiliate | — | (0.06) | — | (0.09) | |||||||
Operational restructuring charges | 0.07 | — | 0.07 | 0.01 | |||||||
Due diligence & transition costs | 0.26 | — | 0.32 | — | |||||||
Extraordinary termination fees from franchisee | (0.31) | — | (0.30) | — | |||||||
Exceptional allowances attributable to COVID-19 | — | 0.01 | — | 0.04 | |||||||
Expenses associated with legal claims | — | 0.04 | — | 0.04 | |||||||
Net reimbursable revenues from franchise and managed properties | (0.13) | (0.56) | (0.78) | (0.78) | |||||||
Adjusted Diluted Earnings Per Share (EPS) | $ 1.56 | $ 1.51 | $ 4.02 | $ 3.30 |
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SOURCE Choice Hotels International, Inc.