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Choice Hotels International Reports a 9% Increase in Third Quarter Domestic RevPAR and Royalties

October 29, 2014 Financial No Comments Email Email

Choice Hotels International, Inc. today reported the following highlights for the third quarter of 20141:

  • Franchising revenues for the three months ended September 30, 2014 totaled $99.4 million, an increase of 8 percent from the same period of 2013.
  • Earnings before interest, taxes, depreciation and amortization (“EBITDA”) from franchising activities for the three months endedSeptember 30, 2014 totaled $74 million, an increase of 8 percent from the same period of 2013.
  • Franchising margins for the three months ended September 30, 2014 were 72.3 percent, an increase of 40 basis points from the same period of 2013.
  • Diluted earnings per share (“EPS”) from continuing operations for the three months ended September 30, 2014 totaled $0.67compared to $0.65 for the same period of 2013.
  • Domestic royalty fees for the three months ended September 30, 2014 totaled $79.5 million, an increase of 9 percent from the same period of 2013.
  • Domestic unit and room growth increased 1.6 percent and 0.9 percent from September 30, 2013, respectively.
  • Domestic system-wide revenue per available room (“RevPAR”) increased 8.8 percent in the third quarter of 2014 as occupancy and average daily rates increased 320 basis points and 3.4 percent, respectively from the same period of 2013.
  • New construction domestic hotel executed franchise agreements totaled 31 for the three months ended September 30, 2014, an increase of 55 percent from the same period of the prior year.
  • The company executed 85 relicensing and renewal hotel franchise agreements for the three months ended September 30, 2014, an increase of 18 percent compared to the same period of 2013.
  • The company’s domestic pipeline of hotels under construction, awaiting conversion or approved for development increased 14 percent from September 30, 2013.
  • The company purchased 0.4 million shares of common stock under its share repurchase program during the three months endedSeptember 30, 2014 at a total cost of approximately $18.4 million.

“Our efforts and initiatives to improve business delivery, hotel revenue yield and our innovative brand programs are leading to strong results for our franchisees, while simultaneously improving our value proposition which drives franchise development results,” saidStephen P. Joyce, president and chief executive officer. “Our strong brands and innovative marketing and reservation programs, supported by a favorable lodging environment, resulted in average daily rate and occupancy gains driving domestic RevPAR growth of approximately 9% over the same period of the prior year. We are optimistic that strong RevPAR performance should continue in the fourth quarter and into 2015, supporting future growth.”

Discontinued Operations

In the first quarter of 2014, the company entered into a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the disposal of these hotels met the definition of a discontinued operation since the operations and cash flows of these components will be eliminated from the on-going operations of the company and the company will not have significant continuing involvement in the operations of the hotels after the disposal transaction.

At September 30, 2014, the company had disposed of all three of the owned MainStay Suites hotels and the new owners of each of those hotels had executed new franchise agreements with the company.

The company’s consolidated statement of income for the three and nine months ended September 30, 2014 reflect these three company-owned hotels as discontinued operations. In addition, the company’s statement of income for the three and nine months ended September 30, 2013 has been recast to account for these operations as discontinued. Summarized financial information related to these discontinued operations is presented in Exhibit 9 of this press release.

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