Choice Hotels Reports 15.2 Percent Drop in Income for 2009

Choice Hotels International, Inc. reported operating income for the year ended Dec. 31, 2009, was $148.1 million compared to $174.6 million for the same period of 2008, a decline of 15.2 percent. Total revenues declined $77.5 million, or 12 percent, to $564.2 million for 2009, compared to 2008.
Adjusted diluted earnings per share for 2009 were $1.71 compared to $1.77 for 2008. Diluted EPS were $1.63 for 2009 compared to $1.59 for 2008. Adjusted diluted EPS for full year 2009 and 2008 exclude special items, as described below, totaling $0.08 and $0.18, respectively.
Excluding special items, adjusted earnings before interest, taxes and depreciation (EBITDA) were $163.7 million for the year ended Dec. 31, 2009, compared to $200.5 million for full year 2008.
Franchising revenues for 2009 declined $45.6 million, or 15 percent, from $300.3 million for the year ended Dec. 31, 2008, to $254.7 million. Adjusted selling, general and administrative (SG&A) costs for the full year 2009 totaled $91.9 million, which represented a 9 percent decline from the same period of the prior year.
Adjusted SG&A costs exclude special items totaling $7.3 million and $17.7 million for the year ended Dec. 31, 2009 and 2008, respectively. Interest and other investment income for the year ended Dec. 31, 2009, improved by approximately $13.6 million from the same period of the prior year primarily due to the appreciation in the fair value of investments held in the company’s non-qualified employee benefit plans during the current period compared to a decline in the fair value of these investments in the prior year.
Domestic unit and room growth increased 4 percent and 3.9 percent, respectively, from Dec. 31, 2008. Domestic system-wide revenue per available room (RevPAR) declined 14.4 percent for 2009 compared to 2008. The effective royalty rate increased 6 basis points to 4.26 percent for the year ended Dec. 31, 2009, compared to 4.20 percent for the same period of the prior year.
The company executed 369 new domestic hotel franchise contracts for the year ended Dec. 31, 2009, a decline of 47 percent compared to the 698 contracts executed in the same period of the prior year. The number of domestic hotels under construction, awaiting conversion or approved for development declined 26 percent from Dec. 31, 2008, to 727 hotels representing 57,140 rooms; the worldwide pipeline declined 24 percent from Dec. 31, 2008, to 843 hotels representing 66,585 rooms.