Search

NYSECHH
Subscribe
* Required Fields

Press Releases

Choice Hotels International Reports 2020 Fourth Quarter And Full Year Results
Fourth quarter year-over-year change in domestic RevPAR performance exceeded the overall industry by nearly 26 percentage points; awarded 195 new domestic franchise agreements in fourth quarter

ROCKVILLE, Md., Feb. 17, 2021 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest lodging franchisors, today reported its results for the three months and year ended December 31, 2020.

"Despite a year of unprecedented challenges brought upon us by the pandemic, Choice Hotels drove results that significantly outperformed the industry, achieved a number of major milestones in the execution of our long-term strategy and positioned the company to continue to grow our share of travel demand in the years to come," said Patrick Pacious, president and chief executive officer, Choice Hotels. "These results are a testament to the success of our winning strategy to grow our limited-service brands in more revenue-intense segments and the right locations. We believe that our long-term view, compelling franchisee value proposition, well-segmented brand portfolio and strong balance sheet will help us further capitalize on growth opportunities in 2021 and beyond."

Throughout 2020, Choice Hotels provided a broad range of support to its franchisees, guests and communities while improving its overall financial and liquidity position. Highlights of fourth quarter and full year 2020 results include:

  • Domestic systemwide revenue per available room (RevPAR) change outperformed the total industry by nearly 26 percentage points, declining 25.1% for fourth quarter 2020, compared to the same period of the prior year, and improved by 370 basis points from third quarter 2020. Full year and fourth quarter 2020 RevPAR performance also exceeded the chain scale segments in which the company competes, as reported by STR.
  • Fourth quarter 2020 domestic RevPAR change outperformed the industry by an average of 26 percentage points per week, an approximately 600 basis points expansion since third quarter 2020 (see Exhibit 7 for weekly RevPAR trends).
  • The company achieved a number of major milestones in the execution of its long-term strategy to grow its presence in more revenue-intense segments and locations, including a return to unit growth for the Comfort brand family following the successful completion of its transformation, significant expansion of its extended stay portfolio and the continued growth of Cambria Hotels.
  • The company awarded 427 domestic franchise agreements in 2020, a 38% decrease compared to the prior year. Over 70% of the agreements awarded in 2020 were for conversion hotels and 28% were executed in the month of December.
  • Net income was $7.9 million for fourth quarter and $75.4 million for full year 2020, representing diluted earnings per share (EPS) of $0.14 and $1.35, respectively.
  • Full year adjusted net income, excluding certain items described in Exhibit 6, decreased 49% over the prior full year period to $123.9 million.
  • Full year adjusted diluted EPS were $2.22, a decrease of 49% over the prior full year period, while fourth quarter 2020 adjusted diluted EPS were $0.51, a 45% decrease from fourth quarter 2019.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for full year 2020 were $241.1 million, a 35% decrease from the same period of 2019. Adjusted EBITDA for fourth quarter 2020 were $54.7 million, a 35% decrease from fourth quarter 2019.
  • The company reported cash flow from operations of over $115 million for full year 2020.

Performance Trends

  • Domestic systemwide RevPAR decreased 25.1% for fourth quarter 2020 compared to the same period of the prior year, exceeding the total industry by nearly 26 percentage points and outperforming the respective chain scales in which the company competes by more than 760 basis points. Full year 2020 domestic systemwide RevPAR declined 30.7%, surpassing the overall industry performance by nearly 17 percentage points.
  • The company's extended-stay portfolio continued to outperform the industry in 2020, with an average domestic systemwide occupancy rate of 69%. The portfolio achieved average weekly occupancy rates of over 70% since the onset of the pandemic in mid-March through December 31, 2020 — exceeding the industry weekly average by 30 percentage points. Specifically, the WoodSpring Suites brand achieved occupancy levels of over 70% in fourth quarter 2020, outperforming the industry by 28 percentage points, and grew RevPAR by 2% in the month of December, year-over-year. MainStay Suites gained nearly 22 percentage points on the local competition in RevPAR share in the fourth quarter, year-over-year. In addition, the Suburban brand's occupancy rates increased by 210 basis points in fourth quarter 2020 compared to the same period of 2019.
  • The company's upscale portfolio continued to achieve domestic systemwide RevPAR share gains versus its local competitors for fourth quarter 2020, compared to the same period of the prior year, with the Cambria Hotels brand achieving gains of nearly 22 percentage points year-over-year. In addition, the Ascend Hotel Collection's domestic systemwide year-over-year RevPAR change surpassed the upscale segment by over 20 percentage points in the fourth quarter.
  • All select-service midscale brands achieved domestic systemwide RevPAR share gains versus their local competitors for fourth quarter 2020 and full year, compared to the same periods of the prior year. The Comfort brand family's domestic systemwide year-over-year RevPAR change outperformed the upper-midscale chain scale by over 10 percentage points in fourth quarter 2020.
  • In fourth quarter and full year 2020, the company continued to outperform the industry on year-over-year domestic RevPAR change and achieved RevPAR share gains versus its local competitors across all location types, as reported by STR.

Additional details for the company's fourth quarter 2020 and full year results are as follows:

Revenues 

  • Total revenues decreased 31% to $774.1 million for full year 2020, compared to the same period of 2019, and decreased by 28% from the fourth quarter of the prior year to $193.4 million.
  • Total revenues excluding marketing and reservation system fees for full year 2020 decreased 31% over the prior year to $371.5 million, and decreased 32% to $88.0 million for fourth quarter compared to the same period of 2019.
  • Full year domestic royalties totaled $251.2 million, a 31% decrease from the same period of 2019, and reached $60.1 million for fourth quarter 2020, a 27% decrease compared to the same period of 2019.
  • The company's domestic effective royalty rate for full year 2020 increased 8 basis points over the prior year to 4.94% and grew 7 basis points for fourth quarter 2020 compared to the same period of 2019.

Development

  • The company awarded 195 domestic franchise agreements in fourth quarter 2020, a 36% decrease compared to the same period of the prior year. Of the total domestic franchise agreements awarded in the fourth quarter, over 70% were for conversion hotels.
  • The company continued its leadership in the midscale segment by increasing the number of domestic hotels by 1.3% from December 31, 2019. Specifically, the Comfort brand family grew both its number of domestic hotels and rooms by 2% since December 31, 2019, and reached over 260 hotels in its domestic pipeline, including 65 hotels awaiting conversion, which will drive the brand's growth in the near term.
  • The company's extended-stay portfolio continued its rapid expansion, reaching 447 domestic hotels as of December 31, 2020, an 11% increase since December 31, 2019, with the domestic extended-stay pipeline expanding to over 315 hotels awaiting conversion, under construction or approved for development. Since December 31, 2019, the MainStay Suites brand grew its number of open domestic hotels by 23% and experienced the highest number of hotel openings in a year in the brand's history. The Suburban brand's domestic franchise agreements awarded for full year 2020 increased by over 40% over the prior year.
  • The Cambria Hotels brand increased its number of domestic hotels and rooms by 8% and 6%, respectively, from December 31, 2019. The Cambria Hotels brand's pipeline has grown to nearly 80 domestic hotels with 19 under active construction as of December 31, 2020.
  • The number of domestic hotels and rooms, as of December 31, 2020, increased 0.2% and 0.4%, respectively, from December 31, 2019. The company's domestic upscale, midscale, and extended stay segments reported a 1.8% and 1.6% aggregate increase in units and rooms, respectively, since December 31, 2019.
  • The company's total domestic pipeline of hotels awaiting conversion, under construction or approved for development, as of December 31, 2020, reached 966 hotels that represent approximately 80,000 rooms.

Balance Sheet and Liquidity

The company ended full year 2020 with a strong balance sheet and continues to benefit from its primarily franchise-only business model, which has historically provided a relatively stable earnings stream, low capital expenditure requirements and significant free cash flow. In July 2020, the company refinanced a portion of debt to extend its debt maturity profile and capitalized on favorable credit markets to significantly reduce the company's effective cost of borrowings.

During fourth quarter 2020, the company's net debt decreased by approximately $50 million to a total net debt of $836 million as of December 31, 2020, compared to $886 million as of September 30, 2020. The company reported cash flow from operations of over $115 million for the year ended December 31, 2020, of which over $45 million was generated in the fourth quarter alone despite entering the historically lower seasonal demand environment. As of December 31, 2020, the company's total available liquidity consisting of cash and available borrowing capacity through the revolving credit facility was approximately $835 million.

Shareholder Returns

During full year 2020, the company repurchased approximately 0.7 million shares of common stock for approximately $55.5 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 December 31, 2020, the company had 3.4 million shares remaining under the current share repurchase authorization. The company has temporarily suspended share repurchases under the stock repurchase program as previously disclosed on April 8, 2020, but may continue to repurchase stock from employees in conjunction with tax withholding and option exercises under the company's equity incentive plans.

As previously disclosed, the company has temporarily suspended the payout of future dividends while the COVID-19 pandemic is significantly impacting travel. As a result, total dividends paid during 2020 were approximately $25 million.

Outlook

The ultimate and precise impact of COVID-19 on full year 2021 is still unknown at this time and will depend on numerous factors, including future levels of resurgence in COVID-19 cases, the pace of vaccination rollout and vaccines' effectiveness, the duration and scope of mandated travel and other restrictions, the confidence level of consumers to travel and the pace and level of the broader macroeconomic recovery. As a result, the company is not providing formal guidance for first quarter or full year 2021 at this time.

The company currently expects to see a sequential quarter-over-quarter improvement in RevPAR change for the quarter ending March 31, 2021 versus the same periods of 2020 and 2019. Through mid-February, the company's year-to-date 2021 RevPAR has declined by approximately 18% from the same period of 2020.

The company will continue to evaluate the impact of COVID-19 across its business and will provide further updates in the next earnings report based on the best information then available.

Conference Call

Choice Hotels International will conduct a conference call on Wednesday, February 17, 2021, at 11:30 a.m. Eastern Time to discuss the company's fourth quarter and full year 2020 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 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 more than 7,100 hotels, representing nearly 600,000 rooms, in over 40 countries and territories as of December 31, 2020, the Choice® family of hotel brands provide 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 presentation 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, expenses, 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, the company's ability to benefit from any rebound in travel demand, the company's liquidity, the company's ability to assist franchisees through relief or other financial measures, the company's ability to minimize or manage disruptions posed by COVID-19, the company's ability to achieve cost savings and reduce discretionary spending and investments and 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, continuation, resurgence or worsening of the COVID-19 pandemic, including quarantines, "shelter-in-place" orders or other travel restrictions; new information which may emerge concerning the severity or impact of the COVID-19 pandemic, including potential mutations of COVID-19; the pace of vaccination rollout and vaccines' effectiveness; 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; volatility or increases in oil and gas prices that may deter consumers from using their vehicles and impact the demand for leisure travel; the impact of COVID-19 on the global hospitality industry, particularly but not exclusively in the U.S. travel market; the success of our mitigation efforts in response to the COVID-19 pandemic; the performance of our brands and categories in any recovery from the COVID-19 pandemic disruption; the timing and amount of future dividends and share repurchases; changes to general, domestic and foreign economic conditions, including access to liquidity and capital as a result of COVID-19; future domestic or global outbreaks of COVID-19 or other epidemics, pandemics or contagious diseases, or fear of such outbreaks; changes in law and regulation applicable to the travel, lodging or franchising industries; 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 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; our ability to effectively manage our indebtedness and secure our indebtedness; and any current and future resurgence of COVID-19. 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 our Quarterly 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, revenues excluding marketing and reservation system activities, 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 6, 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, 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, debt-restructuring costs, tax credits related to the rehabilitation and re-use of historic buildings, exceptional allowances recorded as a result of COVID-19's impact on the collectability of receivables, expenses associated with legal claims and gains and losses on sale/disposal and impairment of assets primarily related to the company's operations that provide Software as a Service ("SaaS") technology solutions to vacation-rental management companies, hotel ownership and development activities; and an office building leased to a third-party to allow for period-over-period comparison of ongoing core operations before the impact of these discrete and infrequent charges.

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization: Adjusted EBITDA 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 marketing and reservation-system activities. We consider adjusted EBITDA 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 adjusted EBITDA, 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. Adjusted 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 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 marketing and reservation activities are excluded, as the company's franchise agreements require the marketing and reservation-system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system 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 marketing and reservation-system activities. Surpluses and deficits generated from marketing and reservation activities are excluded, as the company's franchise agreements require the marketing and reservation system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system 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 Marketing and Reservation System Activities: The company reports revenues, excluding marketing and reservation-system activities. These non-GAAP measures we present are commonly used measures of performance in our industry and facilitate comparisons between the company and its competitors. Marketing and reservation-system activities are excluded, as the company's franchise agreements require the marketing and reservation-system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system 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.

Net Debt: The company's net debt is calculated as total long-term debt (including current portion) excluding unamortized financing costs and discounts minus cash and cash equivalents. Net Debt is a non-GAAP financial measure.

© 2021 Choice Hotels International, Inc. All rights reserved.

Choice Hotels International, Inc. and Subsidiaries

Exhibit 1

Condensed Consolidated Statements of Income


(Unaudited)








Three Months Ended December 31,


Year Ended December 31,








Variance






Variance




2020


2019


$


%


2020


2019


$


%


(In thousands, except per share amounts)




































REVENUES




































Royalty fees


$               63,151


$               87,683


$              (24,532)


(28) %


$             263,308


$             388,151


$            (124,843)


(32) %


Initial franchise and relicensing fees


5,875


7,266


(1,391)


(19) %


25,906


27,489


(1,583)


(6) %


Procurement services


10,633


13,839


(3,206)


(23) %


45,242


61,429


(16,187)


(26) %


Marketing and reservation system


105,365


137,873


(32,508)


(24) %


402,568


577,426


(174,858)


(30) %


Owned hotels


4,437


11,572


(7,135)


(62) %


20,168


20,282


(114)


(1) %


Other


3,932


9,851


(5,919)


(60) %


16,880


40,043


(23,163)


(58) %


Total revenues


193,393


268,084


(74,691)


(28) %


774,072


1,114,820


(340,748)


(31) %




















OPERATING EXPENSES




































Selling, general and administrative


44,312


44,031


281


1 %


148,524


168,833


(20,309)


(12) %


Depreciation and amortization


6,522


6,239


283


5 %


25,831


18,828


7,003


37 %


Marketing and reservation system


113,283


140,749


(27,466)


(20) %


446,847


579,139


(132,292)


(23) %


Owned hotels


3,244


8,434


(5,190)


(62) %


16,066


14,448


1,618


11 %


Total operating expenses


167,361


199,453


(32,092)


(16) %


637,268


781,248


(143,980)


(18)%




















Gain (loss) on sale, disposition and impairment of assets, net


(9,235)


4


(9,239)


(234,183) %


(14,751)


(14,930)


179


(1)%




















Operating income


16,797


68,635


(51,838)


(76) %


122,053


318,642


(196,589)


(62)%




















OTHER INCOME AND EXPENSES, NET


















Interest expense


11,875


12,072


(197)


(2) %


49,028


46,807


2,221


5 %


Interest income


(1,411)


(2,379)


968


(41) %


(7,688)


(9,996)


2,308


(23) %


Loss on extinguishment of debt


-


7,188


(7,188)


(100) %


16,565


7,188


9,377


130 %


Other gains


(3,175)


(1,643)


(1,532)


93 %


(4,147)


(4,862)


715


(15) %


Equity in net loss of affiliates


8,117


25


8,092


32,368 %


15,289


9,576


5,713


60 %


Total other income and expenses, net


15,406


15,263


143


1 %


69,047


48,713


20,334


42 %




















Income before income taxes


1,391


53,372


(51,981)


(97) %


53,006


269,929


(216,923)


(80) %


Income tax (benefit) expense


(6,474)


11,203


(17,677)


(158) %


(22,381)


47,051


(69,432)


(148) %


Net income


$                 7,865


$               42,169


$              (34,304)


(81) %


$               75,387


$             222,878


$            (147,491)


(66) %






































Basic earnings per share


$                    0.14


$                    0.76


$                 (0.62)


(82) %


$                    1.36


$                    4.00


$                 (2.64)


(66) %






































Diluted earnings per share


$                    0.14


$                    0.75


$                 (0.61)


(81) %


$                    1.35


$                    3.98


$                 (2.63)


(66) %


 

 

Choice Hotels International, Inc. and Subsidiaries

Exhibit 2

Condensed Consolidated Balance Sheets


(Unaudited)




(In thousands, except per share amounts)


December 31,


December 31,




2020


2019












ASSETS












Cash and cash equivalents


$                    234,779


$                      33,766


Accounts receivable, net


149,921


141,566


Other current assets


48,214


61,257


Total current assets


432,914


236,589








Property and equipment, net


334,901


351,502


Intangible assets, net


303,725


290,421


Goodwill


159,196


159,196


Notes receivable, net of allowances


95,785


103,054


Investments in unconsolidated entities


57,879


78,655


Operating lease right-of-use assets


17,688


24,088


Investments, employee benefit plans, at fair value


29,104


24,978


Other assets


156,141


118,189








Total assets


$                 1,587,333


$                 1,386,672




















LIABILITIES AND SHAREHOLDERS' DEFICIT












Accounts payable


$                      83,329


$                      73,449


Accrued expenses and other current liabilities


78,920


90,364


Deferred revenue


50,290


71,594


Liability for guest loyalty program


43,308


82,970


Current portion of long-term debt


-


7,511


Total current liabilities


255,847


325,888








Long-term debt


1,058,738


844,102


Deferred revenue


122,406


112,662


Liability for guest loyalty program


77,071


46,698


Operating lease liabilities


12,739


21,270


Deferred compensation & retirement plan obligations


33,756


29,949


Other liabilities


32,528


29,614








Total liabilities


1,593,085


1,410,183








Total shareholders' deficit


(5,752)


(23,511)








Total liabilities and shareholders' deficit


$                 1,587,333


$                 1,386,672


 

 

Choice Hotels International, Inc. and Subsidiaries

Exhibit 3

Condensed Consolidated Statements of Cash Flows


(Unaudited)








(In thousands)

Year Ended December 31,








2020


2019


CASH FLOWS FROM OPERATING ACTIVITIES:










Net income

$                            75,387


$                          222,878







Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization

25,831


18,828


Depreciation and amortization - marketing and reservation system

22,625


17,294


Franchise agreement acquisition cost amortization

11,310


7,992


Impairment of goodwill and long-lived assets

14,751


10,356


Loss on sale of business

-


4,674


Gain on disposal of assets, net

-


(2,103)


Loss on debt extinguishment

16,565


7,188


Non-cash stock compensation and other charges

9,690


17,615


Non-cash interest and other (income) loss

(6,723)


(4,010)


Deferred income taxes

(44,826)


9,810


Equity in net losses from unconsolidated joint ventures, less distributions received

15,439


12,562


Franchise agreement acquisition costs, net of reimbursements

(36,479)


(38,944)


Change in working capital and other, net of acquisition

11,481


(13,584)







 NET CASH PROVIDED BY OPERATING ACTIVITIES

115,051


270,556







CASH FLOWS FROM INVESTING ACTIVITIES:










Investment in property and equipment

(38,593)


(57,342)


Investment in intangible assets

(1,359)


(6,699)


Asset acquisitions, net of cash acquired

-


(168,954)


Proceeds from sales of assets

-


10,585


Proceeds from sale of unconsolidated joint venture

7,435


8,937


Proceeds from sale of tax credits for rehabilitation of historic building

9,197


-


Payment on business disposition, net

-


(10,783)


Contributions to equity method investments

(5,454)


(27,828)


Distributions from equity method investments

3,363


10,241


Purchases of investments, employee benefit plans

(2,562)


(3,175)


Proceeds from sales of investments, employee benefit plans

2,478


2,217


Issuance of notes receivable

(9,845)


(20,722)


Collections of notes receivable

6,494


14,231


Other items, net

(623)


(1,875)







 NET CASH USED IN INVESTING ACTIVITIES

(29,469)


(251,167)







CASH FLOWS FROM FINANCING ACTIVITIES:










Net borrowings pursuant to revolving credit facilities

(18,480)


(72,400)


Proceeds from issuance of Term Loan

249,500


-


Proceeds from issuance of 2020 Senior Notes

447,723


-


Proceeds from issuance of long term debt

-


422,376


Principal payments on long-term debt, including premium on extinguishment

(473,857)


(250,497)


Payments to extinguish long-term debt

(14,347)


(6,312)


Debt issuance costs

(4,620)


(3,936)


Purchases of treasury stock

(55,450)


(50,638)


Dividends paid

(25,274)


(48,089)


Payments on transfer of interest in notes receivable

-


(24,409)


Proceeds from exercise of stock options

10,203


21,410







 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

115,398


(12,495)







Net change in cash and cash equivalents

200,980


6,894


Effect of foreign exchange rate changes on cash and cash equivalents

33


230


Cash and cash equivalents at beginning of period

33,766


26,642







CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                          234,779


$                            33,766


 

 

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION


DOMESTIC HOTEL SYSTEM(1)


(UNAUDITED)
























































































For the Year Ended December 31, 2020


For the Year Ended December 31, 2019


Change

























Average Daily






Average Daily






Average Daily









Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR























Comfort(2)


$83.72


46.1 %


$38.58


$95.84


62.2 %


$59.66


(12.6)%


(1,610)

bps


(35.3)%


Sleep


$75.92


46.2 %


$35.08


$85.28


61.1 %


$52.09


(11.0)%


(1,490)

bps


(32.7)%


Quality


$72.13


41.8 %


$30.16


$80.11


54.1 %


$43.33


(10.0)%


(1,230)

bps


(30.4)%


Clarion(3)


$73.37


32.9 %


$24.15


$84.73


49.5 %


$41.90


(13.4)%


(1,660)

bps


(42.4)%


Econo Lodge


$59.12


40.9 %


$24.16


$63.75


47.7 %


$30.44


(7.3)%


(680)

bps


(20.6)%


Rodeway


$59.48


43.6 %


$25.94


$64.25


49.0 %


$31.48


(7.4)%


(540)

bps


(17.6)%


WoodSpring Suites


$46.16


71.5 %


$33.02


$47.10


75.3 %


$35.46


(2.0)%


(380)

bps


(6.9)%


MainStay


$77.14


55.6 %


$42.86


$84.85


64.0 %


$54.32


(9.1)%


(840)

bps


(21.1)%


Suburban


$51.44


63.6 %


$32.73


$57.25


66.9 %


$38.30


(10.1)%


(330)

bps


(14.5)%


Cambria Hotels


$112.30


38.2 %


$42.87


$145.45


67.5 %


$98.12


(22.8)%


(2,930)

bps


(56.3)%


Ascend Hotel Collection


$116.52


43.4 %


$50.59


$125.16


61.2 %


$76.57


(6.9)%


(1,780)

bps


(33.9)%























Total


$71.63


45.6 %


$32.70


$81.83


57.7 %


$47.18


(12.5)%


(1,210)

bps


(30.7)%
























































































For the Three Months December 31, 2020


For the Three Months December 31, 2019


Change












Average Daily






Average Daily






Average Daily









Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR






















Comfort(2)


$79.26


45.6 %


$36.18


$90.72


57.3 %


$51.96


(12.6)%


(1,170)

bps


(30.4)%


Sleep


$71.55


45.3 %


$32.42


$81.19


55.5 %


$45.06


(11.9)%


(1,020)

bps


(28.1)%


Quality


$68.77


41.1 %


$28.25


$75.35


48.8 %


$36.78


(8.7)%


(770)

bps


(23.2)%


Clarion(3)


$68.86


31.5 %


$21.72


$79.29


43.9 %


$34.80


(13.2)%


(1,240)

bps


(37.6)%


Econo Lodge


$57.45


40.0 %


$22.97


$60.30


43.7 %


$26.32


(4.7)%


(370)

bps


(12.7)%


Rodeway


$57.34


42.5 %


$24.38


$60.73


44.9 %


$27.25


(5.6)%


(240)

bps


(10.5)%


WoodSpring Suites


$46.20


70.1 %


$32.38


$46.34


70.7 %


$32.78


(0.3)%


(60)

bps


(1.2)%


MainStay


$76.44


57.0 %


$43.58


$80.08


59.0 %


$47.21


(4.5)%


(200)

bps


(7.7)%


Suburban


$49.39


63.4 %


$31.32


$53.70


61.3 %


$32.93


(8.0)%


210

bps


(4.9)%


Cambria Hotels


$99.50


37.7 %


$37.50


$146.52


62.1 %


$91.05


(32.1)%


(2,440)

bps


(58.8)%


Ascend Hotel Collection


$105.72


42.2 %


$44.60


$120.31


56.7 %


$68.25


(12.1)%


(1,450)

bps


(34.7)%























Total


$68.37


44.9 %


$30.72


$77.73


52.8 %


$41.04


(12.0)%


(790)

bps


(25.1)%

































































Effective Royalty Rate












































For the Quarter Ended


For the Year Ended















12/31/2020


12/31/2019


12/31/2020


12/31/2019






























System-wide(4)


4.98%


4.91%


4.94%


4.86%


































(1)  In response to partial hotel closures resulting from the COVID-19 pandemic, the Company revised its calculation of Occupancy to be reflective of full room availability.

      Additionally, the Company also made minor revisions to its ADR calculations, with respect to complimentary rooms.  The revised ADR, Occupancy and RevPAR are reflected in the tables

      above for all periods noted.

(2) Includes Comfort family of brand extensions including Comfort and Comfort Suites

(3) Includes Clarion family of brand extensions including Clarion and Clarion Pointe

(4) Includes United States and Caribbean countries and territories

 

 

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA


(UNAUDITED)


























































December 31, 2020


December 31, 2019


Variance






















Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%




















Comfort(1)


1,648


129,711


1,616


127,000


32


2,711


2.0 %


2.1 %


Sleep


408


28,790


402


28,361


6


429


1.5 %


1.5 %


Quality


1,697


128,807


1,688


129,232


9


(425)


0.5 %


(0.3)%


Clarion(2)


183


22,072


178


22,498


5


(426)


2.8 %


(1.9)%


Econo Lodge


777


47,023


807


48,538


(30)


(1,515)


(3.7)%


(3.1)%


Rodeway


559


31,828


600


34,727


(41)


(2,899)


(6.8)%


(8.3)%


WoodSpring Suites


291


35,020


270


32,479


21


2,541


7.8 %


7.8 %


MainStay


90


6,374


73


4,636


17


1,738


23.3 %


37.5 %


Suburban


66


6,470


60


6,082


6


388


10.0 %


6.4 %


Cambria Hotels


54


7,697


50


7,277


4


420


8.0 %


5.8 %


Ascend Hotel Collection


194


20,890


211


22,143


(17)


(1,253)


(8.1)%


(5.7)%




















Domestic Franchises(3)


5,967


464,682


5,955


462,973


12


1,709


0.2 %


0.4 %




















International Franchises


1,180


133,295


1,198


127,924


(18)


5,371


(1.5)%


4.2 %




















Total Franchises


7,147


597,977


7,153


590,897


(6)


7,080


(0.1)%


1.2 %










































































(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) Includes United States and Caribbean countries and territories

 

 

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

Exhibit 6

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION


(UNAUDITED)















REVENUES AND ADJUSTED OPERATING MARGINS, EXCLUDING MARKETING AND RESERVATION ACTIVITIES

















(dollar amounts in thousands)


Three Months Ended December 31,


Year Ended December 31,
















2020


2019


2020


2019



Revenues, Excluding Marketing and Reservation Activities






















Total Revenues


$                  193,393


$                   268,084


$                  774,072


$                 1,114,820



Adjustments:











     Marketing and reservation system revenues


(105,365)


(137,873)


(402,568)


(577,426)



Revenues, excluding marketing and reservation activities


$                    88,028


$                   130,211


$                  371,504


$                   537,394





ADJUSTED SELLING, GENERAL AND ADMINISTRATION EXPENSES


(dollar amounts in thousands)


Year Ended December 31,


Year Ended December 31,
















2020


2019


2020


2019














Total Selling, General and Administrative Expenses


$                    44,312


$                     44,031


$                  148,524


$                   168,833



Mark to market adjustments on non-qualified retirement plan investments


(3,157)


(1,646)


(4,085)


(4,798)



Operational restructuring charges


(918)


(1,466)


(9,564)


(1,466)



Share-based compensation


(2,186)


(2,547)


(3,810)


(8,759)



Exceptional allowances attributable to COVID-19


(3,333)


-


(7,296)


-



Expenses associated with legal claims


(3,000)


-


(3,000)


-



Adjusted Selling, General and Administrative Expenses


$                    31,718


$                     38,372


$                  120,769


$                   153,810





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












(dollar amounts in thousands)


Three Months Ended December 31,


Year Ended December 31,
















2020


2019


2020


2019













Net income


$                      7,865


$                     42,169


$                    75,387


$                   222,878



Income tax (benefit) expense


(6,474)


11,203


(22,381)


47,051



Interest expense


11,875


12,072


49,028


46,807



Interest income


(1,411)


(2,379)


(7,688)


(9,996)



Other gains


(3,175)


(1,643)


(4,147)


(4,862)



Loss on extinguishment of debt


-


7,188


16,565


7,188



Equity in operating net loss of affiliates, net of impairments


776


25


7,948


9,576



Loss (gain) on sale, dispositions and impairments, net


16,576


(4)


22,092


14,930



Depreciation and amortization


6,522


6,239


25,831


18,828



Mark to market adjustments on non-qualified retirement plan investments


3,157


1,646


4,085


4,798



Operational restructuring charges


918


1,466


9,564


1,466



Share-based compensation


2,186


2,547


3,810


8,759



Exceptional allowances attributable to COVID-19


3,333


-


7,296


-



Expenses associated with legal claims


3,000


-


3,000


-



Marketing and reservation system reimbursable deficit


7,918


2,876


44,279


1,713



Franchise agreement acquisition costs amortization


1,657


155


6,416


4,484


Adjusted EBITDA


$                    54,723


$                     83,560


$                  241,085


$                   373,620





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












(dollar amounts in thousands, except per share amounts)


Three Months Ended December 31,


Year Ended December 31,
















2020


2019


2020


2019













Net income


$                      7,865


$                     42,169


$                    75,387


$                   222,878


Adjustments:











Loss on the extinguishment of debt


-


5,541


12,457


5,541



Loss on sale, dispositions and impairments, net


12,451


555


16,613


17,071



Operational restructuring charges


689


1,130


7,190


1,130



Exceptional allowances attributable to COVID-19


2,506


-


5,487


-



Expenses associated with legal claims


2,256


-


2,256


-



Marketing and reservation system reimbursable deficit


6,554


2,308


35,167


1,376



Sale of tax credits on historical building


-


62


(1,857)


(5,973)



Foreign tax benefit on international restructuring


(3,395)


-


(28,848)


-


Adjusted Net Income


$                    28,926


$                     51,765


$                  123,852


$                   242,023
























Diluted Earnings Per Share


$                       0.14


$                         0.75


$                       1.35


$                         3.98


Adjustments:











Loss on extinguishment of debt


-


0.10


0.22


0.10



Loss on sale, dispositions and impairments, net


0.22


0.01


0.30


0.30



Operational restructuring costs


0.01


0.02


0.13


0.02



Exceptional allowances attributable to COVID-19


0.04


-


0.10


-



Expenses associated with legal claims


0.04


-


0.04


-



Marketing and reservation system reimbursable deficit


0.12


0.04


0.63


0.03



Sale of tax credits on historical building


-


-


(0.03)


(0.11)



Foreign tax benefit on international restructuring


(0.06)


-


(0.52)


-


Adjusted Diluted Earnings Per Share (EPS)


$                       0.51


$                         0.92


$                       2.22


$                         4.32


 

 

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

Exhibit 7

DOMESTIC SYSTEM-WIDE REVPAR YEAR OVER YEAR


FLUCTUATION VERSUS INDUSTRY(1)


(UNAUDITED)










Choice


Total


Week beginning


Hotels


Industry


3/8/2020


-22.4%


-32.4%


3/15/2020


-46.4%


-69.5%


3/22/2020


-60.9%


-80.6%


3/29/2020


-63.1%


-81.3%


4/5/2020


-65.7%


-83.0%


4/12/2020


-57.5%


-78.7%


4/19/2020


-60.4%


-78.2%


4/26/2020


-56.8%


-76.5%


5/3/2020


-53.5%


-74.1%


5/10/2020


-54.6%


-73.4%


5/17/2020


-50.8%


-69.6%


5/24/2020


-44.0%


-62.1%


5/31/2020


-44.0%


-64.8%


6/7/2020


-42.4%


-62.5%


6/14/2020


-42.2%


-60.0%


6/21/2020


-37.9%


-56.3%


6/28/2020


-27.9%


-44.5%


7/5/2020


-35.8%


-54.4%


7/12/2020


-38.3%


-55.9%


7/19/2020


-37.5%


-54.8%


7/26/2020


-33.1%


-51.1%


8/2/2020


-29.5%


-49.1%


8/9/2020


-26.6%


-45.9%


8/16/2020


-25.8%


-45.9%


8/23/2020


-25.6%


-44.3%


8/30/2020


-14.0%


-32.7%


9/6/2020


-26.2%


-48.1%


9/13/2020


-28.6%


-51.6%


9/20/2020


-28.3%


-51.7%


9/27/2020


-26.9%


-48.0%


10/4/2020


-27.0%


-47.5%


10/11/2020


-27.4%


-50.3%


10/18/2020


-26.7%


-51.8%


10/25/2020


-23.8%


-48.4%


11/1/2020


-28.2%


-57.2%


11/8/2020


-23.2%


-53.5%


11/15/2020


-22.9%


-52.2%


11/22/2020


-25.5%


-41.2%


11/29/2020


-26.5%


-58.4%


12/6/2020


-25.2%


-57.3%


12/13/2020


-15.9%


-42.5%


12/19/2020


-26.3%


-52.3%


12/26/2020


-11.0%


-35.1%














(1) Source: STR Weekly Hotel Review


 

SOURCE Choice Hotels International, Inc.

For further information: Scott Oaksmith, Senior Vice President, Real Estate and Finance; Allie Summers, Director, Executive Reporting and Investor Relations; IR@choicehotels.com