| SILVER SPRING, Md., April 25, 2001 - Choice Hotels
International, Inc. (NYSE: CHH) today reported first quarter 2001 recurring
net income of $8.7 million, or $0.19 recurring diluted earnings per share
(EPS), compared to the $9.9 million in recurring net income and $0.18 recurring
diluted EPS reported for first quarter 2000.
�We are pleased that our first quarter results
exceeded analysts� expectations,� said Charles A. Ledsinger, Jr., president
and chief executive officer. �Strong royalty fee performance was driven
by gains of 4.9% in revenue per available room (RevPAR), domestic unit
growth of 2.2% and solid improvement in the effective royalty rate of four
basis points. Our technology investments are beginning to pay off handsomely.
Profit Manager, our proprietary property and yield management system, is
now installed in more than 2,400 hotels. The yield management component
of this system is operational in more than 1,600 of our properties, generating
premiums of greater than 3% over the Smith Travel market set on average
for each hotel.�
He continued, �On the development side, we continue
to sell hotel contracts with an emphasis on converting existing hotels
to our system. As hotel capital becomes tighter and economic times more
uncertain, we see greater opportunities for conversions in our Clarion,
Quality, Econo Lodge and Rodeway brands as independent and existing hotels
look to improve their performance in a slower economy.�
Overall, Choice signed 57 hotel franchise contracts
in first quarter 2001, roughly equivalent to the 59 contracts signed in
the same period a year ago. The company signed 38 contracts to convert
existing hotels to a Choice brand, up from 29 conversions from the same
period a year ago.
The decline the company reported in initial franchisee
fees and relicensing fees is due to a drop in overall relicensing fees,
which are generated by Choice when there is a change in control over one
of the company�s franchised hotels. Overall, the number of relicensing
transactions dropped to 34 in first quarter 2001 from 60 a year ago.
The company reported royalty revenues of $27.0
million for first quarter 2001, compared to $24.9 million for first quarter
2000, an increase of 8.3%. The system-wide domestic effective royalty rate
increased from 3.84% in first quarter 2000 to 3.88% for the first quarter
of 2001. Domestic RevPAR increased 4.9% from $26.94 in first quarter 2000
to $28.25 in the quarter just ended.
During the three months ended March 31, 2001,
the company recorded an equity loss of $2.2 million related to changes
in its equity investment in Friendly Hotels plc. The equity loss is excluded
from the company�s recurring net income and recurring diluted EPS. In the
event that Friendly has future liquidity issues, the company does not intend
to fund future losses.
2001 Outlook
The company announced that 2001 recurring EBITDA
should approximate $117 million to $119 million, with 2001 diluted EPS,
excluding potential equity or impairment losses on its investment in Friendly
Hotels plc, reaching $1.23 to $1.25, given the current number of shares
outstanding, which would meet or exceed current estimates.
In discussing the outlook, Ledsinger noted, �Our
franchising business model enjoys a level of predictability not common
in many of today�s industries. We believe that our emphasis on brand re-imaging
and quality improvements, coupled with our ongoing focus on efficiency
and cost controls, should translate to continued improvements in overall
operating performance.�
Internet Growth
Choice continues to emphasize cost-effective electronic
distribution channels for its reservations activity. Total net revenue
sold over the Internet was $49.3 million for first quarter 2001, an increase
of 85.3% over the $26.6 million sold in first quarter 2000. Choice Hotels�
proprietary web site, http://www.choicehotels.com, generated more than
55% of the total Internet volume for the quarter. Internet reservations
represented 7.6% of total system sales for first quarter 2001, up from
4.4% for the same period a year ago.
The average room rate booked through the company�s
Internet site was up 4.3% for first quarter 2001 to $75.03 from $71.91
for the same period a year ago. This result compares to system-average
daily rates of $58.67 for 2001 and $56.65 for 2000. In addition, the Internet
is a less expensive channel for booking reservations.
System Growth
As of March 31, 2001, the total number of Choice
hotels worldwide on-line grew 3.2% to 4,390 from 4,253 as of the same date
a year ago. As of the same date, the total number of rooms worldwide increased
3.0% to 349,994 from 339,744 as of the same date a year ago.
The company had 684 franchised hotels with 59,230
rooms either in design or under construction in its worldwide hotel system
as of March 31, 2001.
Notable Events
Among the notable company events occurring since
the previous earnings report:
-
The company has remaining authority to acquire up
to 4.5 million shares. Since Choice announced its stock repurchase program
on June 25, 1998, the company has purchased 16.9 million shares of common
stock at a total cost of $240.3 million, as of April 18, 2001. Total
shares outstanding as of April 24, 2001 are 44.8 million.
-
Guest Privileges, the company�s program for frequent
travelers, has surpassed the one million member mark.
Choice
Hotels International
Supplemental Operating Information
By Brand
Domestic Hotel System
(Unaudited)
Three Months Ended
March 31,
2001
2000
COMFORT INN
Hotels
1,276
1,253
Rooms
99,879
98,256
Avg. Daily Rate (ADR)
$59.35
$56.77
Occupancy %
50.0%
50.1%
RevPAR
$29.67
$28.43
COMFORT SUITES
Hotels
278
238
Rooms
21,840
19,065
Avg. Daily Rate (ADR)
$71.06
$68.68
Occupancy %
55.6%
55.3%
RevPAR
$39.54
$37.99
QUALITY
Hotels
425
430
Rooms
47,804
49,085
Avg. Daily Rate (ADR)
$61.01
$58.08
Occupancy %
46.8%
45.5%
RevPAR
$28.58
$26.42
CLARION
Hotels
106
112
Rooms
16,915
18,965
Avg. Daily Rate (ADR)
$75.50
$77.73
Occupancy %
46.6%
48.7%
RevPAR
$35.16
$37.83
SLEEP
Hotels
262
236
Rooms
20,237
18,050
Avg. Daily Rate (ADR)
$53.34
$51.68
Occupancy %
48.1%
47.3%
RevPAR
$25.67
$24.42
MAINSTAY
Hotels
37
31
Rooms
3,320
2,885
Avg. Daily Rate (ADR)
$63.35
$58.39
Occupancy %
58.5%
60.0%
RevPAR
$37.06
$35.01
ECONO LODGE
Hotels
677
682
Rooms
42,227
42,977
Avg. Daily Rate (ADR)
$42.83
$41.68
Occupancy %
42.3%
41.0%
RevPAR
$18.13
$17.10
RODEWAY
Hotels
152
161
Rooms
10,042
10,548
Avg. Daily Rate (ADR)
$43.12
$42.48
Occupancy %
40.1%
40.1%
RevPAR
$17.27
$17.02
TOTAL CHOICE - DOMESTIC
Hotels
3,213
3,143
Rooms
262,264
259,831
Avg. Daily Rate (ADR)
$58.67
$56.65
Occupancy %
48.1%
47.6%
RevPAR
$28.25
$26.94
Effective Royalty Rate
3.88%
3.84%
|
Choice Hotels International,
Inc.
Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2001
2000
(Unaudited)
ASSETS
Cash and cash
equivalents
$7,080 $19,701
Other current
assets
30,539
32,385
Total current assets
37,619
52,086
Fixed assets
and intangibles, net
175,198 174,772
Investment in
Friendly Hotels
32,622
34,616
Note receivable from Sunburst
Hospitality
35,962 137,492
Other assets
84,867
85,154
Total assets
366,268 484,120
LIABILITIES AND (DEFICIT) EQUITY
Current portion
of long-term debt
53,246
50,046
Other current
liabilities
43,127
43,782
Total current liabilities
96,373
93,828
Long-term debt
224,658 247,179
Deferred income
taxes and other
52,637
53,020
Total liabilities
373,668 394,027
Total shareholders� (deficit)
equity
(7,400) 90,093
Total liabilities and
shareholders� (deficit)
equity
$366,268 $484,120
Choice Hotels International,
Inc.
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended
March 31, March 31,
Revenues
2001
2000
Royalty fees
$26,956
$24,885
Initial franchise fees and
relicensing
fees
2,318
3,348
Partner service
revenue
1,936
2,298
Hotel Operations
784
--
Other
1,356
1,114
Total revenues
33,350
31,645
Operating expenses
Selling, general
and administrative
12,489
12,228
Hotel Operations
520
--
Depreciation
and amortization
2,890
2,502
Total operating expenses
15,899
14,730
Operating income
17,451
16,915
Other
Interest and
dividend income
(1,150)
(3,865)
Interest expense
4,312
4,616
Equity loss-Friendly
Hotels
2,158
1,725
Total other
5,320
2,476
Income before
income taxes
12,131
14,439
Income taxes
4,731
5,631
Net income
$7,400
$8,808
Recurring net
income (a)
$8,747
$9,885
Weighted average
shares outstanding
45,798
53,390
Diluted shares
outstanding
46,282
54,262
Diluted earnings
per share
$0.16
$0.16
Diluted recurring
earnings per share (a)
$0.19
$0.18
(a) Recurring net income and diluted
recurring earnings per share exclude the impact of the equity loss-Friendly
Hotels after the effect of income taxes. |
Choice Hotels International is the second-largest
hotel franchisor in the world with 4,390 hotels open, representing 349,994
rooms, and another 684 hotels under development, representing 59,230 rooms,
in 43 countries, as of March 31, 2001. Its Comfort, Quality, Clarion, Sleep
Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide.
Certain matters discussed in this press release
may constitute forward- looking statements within the meaning of the federal
securities law.
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