ull-year domestic RevPAR beat guidance and 2019 levels; new record for net income, adjusted EBITDA and margin; 24% year-over-year increase in full-year domestic franchise agreements

Choice Hotels;

Choice Hotels International, Inc. (NYSE: CHH) today reported its results for the three months and year ended December 31, 2021.

"The past year was truly remarkable for Choice Hotels, as we have positioned the company to benefit from the acceleration of consumer trends that favor leisure travel, limited-service hotels and longer stay occasions," said Patrick Pacious, president and chief executive officer, Choice Hotels. "The deliberate investments in our brands and our franchisee pricing optimization and merchandizing tools enabled us to capture more share of consumer demand and emerge as a stronger company than we were two years ago. We believe the foundation we have established for sustained growth, combined with our increased earnings power and strong financial health, will allow us to continue to capitalize on growth opportunities and drive our performance to new levels in the years to come."

Highlights of fourth quarter and full-year 2021 results include (note that RevPAR and financial metrics are compared to 2019):

  • Domestic systemwide revenue per available room (RevPAR) growth increased by 2.2% for full-year 2021, compared to the same period of 2019, exceeding full-year 2021 guidance by 120 basis points and outperforming the total industry by 19 percentage points.
  • Fourth quarter domestic systemwide RevPAR growth increased 13.9%, compared to the same period of 2019, driven by an increase in average daily rate (ADR) of 9.5% and a 210-basis-point increase in occupancy levels versus fourth quarter 2019. RevPAR growth surpassed 2019 levels for the last seven months of 2021, a trend that has continued in the first quarter of 2022.
  • The company's domestic effective royalty rate for full-year 2021 increased 7 basis points over the prior year to 5.01% and reached 5.04% during the fourth quarter of 2021.
  • The company continues to successfully execute its strategy of growing its more revenue intense brands with new units entering the Choice Hotels' system in 2021 driving, on average, twice the revenue as units exiting the system.
  • The company awarded 528 domestic franchise agreements in 2021, a 24% increase compared to the prior year. Of the total agreements awarded in 2021, 83% were for the company's upscale, midscale and extended-stay brands. For full-year 2021, the company's domestic franchise agreements for conversion and new construction hotels increased by 17% and by 39%, respectively, compared to the same period of 2020.
  • Net income was $64.1 million for fourth quarter and reached a company record of $289 million for full-year 2021, representing diluted earnings per share (EPS) of $1.14 and $5.15, respectively.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for full-year 2021 reached a company record of $403.6 million, an 8% increase from the same period of 2019, exceeding the top end of the company's full-year 2021 guidance by nearly $17 million. Adjusted EBITDA for the fourth quarter was $95.5 million, a 14% increase from the fourth quarter 2019.
  • Adjusted EBITDA margin for full-year 2021 reached a company record of 74.7%, a 520-basis-point increase from the same period of 2019.
  • Fourth quarter and full-year 2021 adjusted diluted EPS was $0.99 and $4.29, respectively.
  • During full-year 2021, the company returned $38.4 million to shareholders in the form of cash dividends and share repurchases and announced a 6% increase in its quarterly dividend rate beginning in January 2022.

RevPAR Performance Trends

  • Domestic systemwide RevPAR outperformed the respective chain scales in which the company competes by 680 basis points for full-year 2021, compared to the same period of 2019.
  • Choice Hotels' overall portfolio achieved RevPAR index gains versus local competitors of 450 basis points for full-year 2021, compared to the same period of 2019, driven by both ADR and occupancy index gains. All of the company's brands achieved RevPAR index share gains versus local competition for full-year 2021, compared to the same period of 2019.
  • The company's overall midscale portfolio has surpassed 2019 RevPAR levels since June 2021 and achieved domestic systemwide RevPAR growth of 12.3% in fourth quarter 2021 compared to the same period of 2019, driven primarily by a 10.1% increase in ADR. In fourth quarter 2021, the Comfort brand family's domestic systemwide RevPAR growth outperformed the upper-midscale chain scale by 870 basis points compared to the same period of 2019.
  • The company's extended-stay portfolio has consistently exceeded 2019 RevPAR levels since April 2021 and achieved domestic systemwide RevPAR growth of 24.7% in fourth quarter 2021, compared to the same period of 2019. The WoodSpring Suites brand achieved RevPAR growth of nearly 30% in fourth quarter 2021, compared to the same period of 2019, driven by occupancy levels of nearly 79% and a 16.6% increase in ADR.
  • The company's upscale portfolio continued to achieve domestic systemwide RevPAR share gains versus its competitors for full-year 2021, compared to the same period of 2019, with the Cambria Hotels brand achieving gains of over 12 percentage points for full-year 2021.

Additional details for the company's fourth quarter and full-year 2021 results are as follows:

Revenues 

  • Total revenues were $1.1 billion for full-year 2021, a 4% decrease compared to the same period of 2019, and $284.6 million in fourth quarter 2021, a 6% increase compared to the same period of 2019.
  • Total revenues excluding marketing and reservation system fees increased 1% to $540.5 million for full-year 2021 compared to full-year 2019, and increased 8% to $140.2 million for fourth quarter 2021, compared to the same period of 2019.
  • Full-year 2021 domestic royalties totaled $382.4 million, a 4% increase from the same period of 2019, and $93.6 million for fourth quarter 2021, a 14% increase compared to the same period of 2019.
  • Procurement services revenues increased 2% to $14.1 million for fourth quarter 2021, compared to the same period of 2019.

Development

  • The company awarded 239 domestic franchise agreements in fourth quarter 2021, a 23% increase compared to the same period of the prior year. The company's domestic franchise agreements for new construction hotels increased by 58% for fourth quarter 2021, compared to the same period of 2020.
  • The company's extended-stay portfolio continued its rapid expansion, reaching 474 domestic hotels as of December 31, 2021, a 6% increase since December 31, 2020, with the domestic pipeline reaching over 340 hotels awaiting conversion, under construction or approved for development. For full-year 2021, the company's extended stay domestic franchise agreements increased by 27%, compared to the same period in 2020.
  • The company continued to grow the number of domestic hotels within the Comfort brand family by 1.2% from December 31, 2020 and executed the highest number of conversion hotel openings since 2013. In the fourth quarter of 2021, the brand's domestic franchise agreements increased by 25% and doubled for new construction hotels, compared to the same period of 2020.
  • As of December 31, 2021, the number of domestic units in the company's upscale portfolio expanded by 13% since December 31, 2020, driven by an increase in unit count for both the Cambria Hotels brand and Ascend Hotel Collection. This unit growth excludes the impact from the termination of the company's relationship with AMResorts® following its acquisition and exit from the Ascend Hotel Collection's portfolio of 17 AMResorts®-branded properties in fourth quarter 2021. For fourth quarter 2021, the company's upscale domestic franchise agreements increased by 86%, compared to the prior year.
  • The number of domestic hotels and rooms, as of December 31, 2021, decreased 0.8% and 1.2%, respectively, from December 31, 2020. Excluding the impact of 17 AMResorts®-branded properties and the company exiting 41 underperforming assets from the portfolio in fourth quarter 2021, the company's domestic upscale, midscale and extended-stay segments reported a 1.6% increase in units since December 31, 2020.
  • The company's total domestic pipeline of hotels awaiting conversion, under construction or approved for development, as of December 31, 2021, increased 2% to nearly 880 hotels from third quarter 2021, representing over 75,000 rooms.

Balance Sheet and Liquidity

The company further strengthened its liquidity position at year-end 2021 and continues to benefit from its primarily franchise-only business model, which has historically provided a stable earnings stream, low capital expenditure requirements and significant free cash flow. As of December 31, 2021, the company's total available liquidity consisting of cash and available borrowing capacity through the revolving credit facility nearly doubled to $1.1 billion, compared to December 31, 2019. The company generated cash flow from operations of $383.7 million for full-year 2021 and $138.5 million for fourth quarter 2021, increasing 42% and 74%, respectively, from the same periods of 2019.

Shareholder Returns

During full-year 2021, the company paid cash dividends totaling $25 million. During the fourth quarter of 2021, the company's board of directors announced a 6% increase to the annual dividend rate to $0.2375 per common share outstanding effective with the dividend payable on January 18, 2022. The company expects to pay dividends totaling $53 million during 2022.

During full-year 2021, the company repurchased $13.4 million of common stock 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 January 31, 2022, the company had 3.3 million shares remaining under the current share repurchase authorization.

In January 2022, the company returned $17.6 million to shareholders in the form of cash dividends and share repurchases.

Outlook

While the company exceeded pre-COVID-19 levels for RevPAR and adjusted EBITDA for full-year 2021, the continued precise recovery trends for full-year 2022 are still somewhat uncertain.

For full-year 2022, the company expects to drive continued growth in RevPAR and adjusted EBITDA, compared to full-year 2021, including incremental investments that are expected to accelerate long-term growth in 2023 and beyond.

The company's domestic effective royalty rate is expected to increase in the mid-single digits for full-year 2022, as compared to full-year 2021.

The company's outlook reflects its estimates based on the best information available at this time.

About Choice Hotels

Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world with more than 7,000 hotels, representing nearly 600,000 rooms, in 35 countries and territories as of December 31, 2021.

Choice Hotels International, Inc. and Subsidiaries

Exhibit 1

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

Variance

Variance

2021

2020

$

%

2021

2020

$

%

REVENUES

Royalty fees

$      97,612

$      63,151

$      34,461

55 %

$    397,218

$    263,308

$    133,910

51 %

Initial franchise and relicensing fees

7,438

5,875

1,563

27 %

26,342

25,906

436

2  %

Procurement services

14,100

10,633

3,467

33 %

50,393

45,242

5,151

11 %

Marketing and reservation system

144,463

105,365

39,098

37 %

528,843

402,568

126,275

31 %

Owned hotels

13,109

4,437

8,672

195 %

37,833

20,168

17,665

88 %

Other

7,916

3,932

3,984

101 %

28,669

16,880

11,789

70 %

Total revenues

284,638

193,393

91,245

47 %

1,069,298

774,072

295,226

38 %

OPERATING EXPENSES

Selling, general and administrative

45,776

44,812

964

2 %

145,623

148,910

(3,287)

(2) %

Depreciation and amortization

6,296

6,522

(226)

(3) %

24,773

25,831

(1,058)

(4) %

Marketing and reservation system

117,272

113,283

3,989

4 %

444,946

446,847

(1,901)

0 %

Owned hotels

8,220

3,244

4,976

153 %

24,754

16,066

8,688

54 %

Total operating expenses

177,564

167,861

9,703

6 %

640,096

637,654

2,442

0 %

Loss on sale of business & assets, and

impairments, net

(269)

(9,235)

8,966

(97) %

(269)

(14,751)

14,482

(98) %

Operating income

106,805

16,297

90,508

555 %

428,933

121,667

307,266

253 %

OTHER INCOME AND EXPENSES, NET

Interest expense

11,574

11,875

(301)

(3) %

46,680

49,028

(2,348)

(5) %

Interest income

(1,264)

(1,411)

147

(10) %

(4,981)

(7,688)

2,707

(35) %

Loss on extinguishment of debt

—

—

—

NM

—

16,565

(16,565)

(100) %

Other gains

(2,228)

(3,675)

1,447

(39) %

(5,134)

(4,533)

(601)

13 %

Equity in net loss of affiliates

14,384

8,117

6,267

77 %

15,876

15,289

587

4 %

Total other income and expenses, net

22,466

14,906

7,560

51 %

52,441

68,661

(16,220)

(24) %

Income before income taxes

84,339

1,391

82,948

5963 %

376,492

53,006

323,486

610 %

Income tax expense (benefit)

20,256

(6,474)

26,730

(413) %

87,535

(22,381)

109,916

(491) %

Net income

$      64,083

$       7,865

$      56,218

715 %

$    288,957

$      75,387

$    213,570

283 %

Basic earnings per share

$          1.15

$         0.14

$          1.01

721 %

$          5.20

$          1.36

$          3.84

282 %

Diluted earnings per share

$          1.14

$         0.14

$          1.00

714 %

$          5.15

$          1.35

$          3.80

282 %

Choice Hotels International, Inc. and Subsidiaries

Exhibit 2

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

December 31,

December 31,

2021

2020

ASSETS

Cash and cash equivalents

$                        511,605

$                        234,779

Accounts receivable, net

153,147

149,921

Other current assets

96,909

48,214

Total current assets

761,661

432,914

Property and equipment, net

377,367

334,901

Intangible assets, net

312,389

303,725

Goodwill

159,196

159,196

Notes receivable, net of allowances

66,451

95,785

Investments in affiliates

27,967

57,879

Operating lease right-of-use assets

34,183

17,688

Investments, employee benefit plans, at fair value

33,946

29,104

Other assets

158,664

156,141

Total assets

$                     1,931,824

$                     1,587,333

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Accounts payable

$                          81,169

$                          83,329

Accrued expenses and other current liabilities

104,472

78,920

Deferred revenue

81,538

50,290

Liability for guest loyalty program

86,765

43,308

Current portion of long-term debt

216,351

—

Total current liabilities

570,295

255,847

Long-term debt

844,123

1,058,738

Deferred revenue

105,785

122,406

Liability for guest loyalty program

41,785

77,071

Operating lease liabilities

35,492

12,739

Deferred compensation & retirement plan obligations

38,690

33,756

Other liabilities

29,772

32,528

Total liabilities

1,665,942

1,593,085

Total shareholders' equity (deficit)

265,882

(5,752)

Total liabilities and shareholders' equity (deficit)

$                     1,931,824

$                     1,587,333

Choice Hotels International, Inc. and Subsidiaries

Exhibit 3

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Year Ended December 31,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$                              288,957

$                                75,387

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

Depreciation and amortization

24,773

25,831

Depreciation and amortization - marketing and reservation system

25,721

22,625

Franchise agreement acquisition cost amortization

13,222

11,310

Impairment of long-lived assets

282

14,751

Loss (gain) on sale and disposal of assets, net

530

—

Loss on debt extinguishment

—

16,565

Non-cash stock compensation and other charges

35,731

9,690

Non-cash interest, investment, and affiliate income

(13,509)

(6,723)

Deferred income taxes

(1,006)

(44,826)

Equity in net losses from affiliates, less distributions received

23,985

15,439

Franchise agreement acquisition costs, net of reimbursements

(38,230)

(36,479)

Change in working capital and other, net of acquisition

23,240

6,491

 NET CASH PROVIDED BY OPERATING ACTIVITIES

383,696

110,061

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in property and equipment

(74,294)

(33,603)

Investment in intangible assets

(3,573)

(1,359)

Proceeds from sales of assets

6,119

—

Proceeds from sale of tax credits for rehabilitation of historic building

—

9,197

Contributions to investments in affiliates

(2,778)

(5,454)

Distributions and sales proceeds from investments in affiliates

15,554

10,798

Purchases of investments, employee benefit plans

(1,705)

(2,562)

Proceeds from sales of investments, employee benefit plans

2,609

2,478

Issuance of notes receivable

(20,133)

(9,845)

Collections of notes receivable

213

6,494

Other items, net

(938)

(623)

 NET CASH USED IN INVESTING ACTIVITIES

(78,926)

(24,479)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net (repayments) borrowings pursuant to revolving credit facilities

—

(18,480)

Proceeds from issuance of Term Loan

—

249,500

Proceeds from issuance of 2020 Senior Notes

—

447,723

Principal payments on long-term debt

—

(473,857)

Payments to extinguish long-term debt

—

(14,347)

Debt issuance costs

(365)

(4,620)

Purchases of treasury stock

(13,365)

(55,450)

Dividends paid

(25,044)

(25,274)

Proceeds from exercise of stock options

11,054

10,203

 NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

(27,720)

115,398

Net change in cash and cash equivalents

277,050

200,980

Effect of foreign exchange rate changes on cash and cash equivalents

(224)

33

Cash and cash equivalents at beginning of period

234,779

33,766

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                              511,605

$                              234,779

Exhibit 4

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

SUPPLEMENTAL OPERATING INFORMATION

DOMESTIC HOTEL SYSTEM

(UNAUDITED)

For the Year Ended December 31, 2021

For the Year Ended December 31, 2020

Change

Average Daily

Average Daily

Average Daily

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Comfort(1)

$            98.22

60.1 %

$       59.05

$            83.72

46.1 %

$      38.58

17.3 %

1,400

bps

53.1 %

Sleep

86.55

58.7 %

50.85

75.92

46.2 %

35.08

14.0 %

1,250

bps

45.0 %

Quality

83.88

53.5 %

44.84

72.13

41.8 %

30.16

16.3 %

1,170

bps

48.7 %

Clarion(2)

88.09

43.1 %

38.00

73.37

32.9 %

24.12

20.1 %

1,020

bps

57.5 %

Econo Lodge

68.08

50.1 %

34.09

59.12

40.9 %

24.16

15.2 %

920

bps

41.1 %

Rodeway

68.04

50.9 %

34.64

59.48

43.6 %

25.94

14.4 %

730

bps

33.5 %

WoodSpring Suites

51.61

81.1 %

41.85

46.16

71.5 %

33.01

11.8 %

960

bps

26.8 %

MainStay

80.25

62.1 %

49.80

77.10

55.4 %

42.69

4.1 %

670

bps

16.7 %

Suburban

55.41

70.0 %

38.81

51.44

63.6 %

32.72

7.7 %

640

bps

18.6 %

Cambria Hotels

132.48

56.2 %

74.47

112.30

38.2 %

42.87

18.0 %

1,800

bps

73.7 %

Ascend Hotel Collection

138.02

53.7 %

74.14

116.51

43.4 %

50.59

18.5 %

1,030

bps

46.6 %

Total

$            84.04

57.4 %

$       48.21

$            71.63

45.6 %

$      32.69

17.3 %

1,180

bps

47.5 %

For the Three Months December 31, 2021

For the Three Months December 31, 2020

Change

Average Daily

Average Daily

Average Daily

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Comfort(1)

$            99.68

58.2 %

$       58.02

$            79.26

45.6 %

$      36.18

25.8 %

1,260

bps

60.4 %

Sleep

87.05

56.4 %

49.06

71.55

45.3 %

32.42

21.7 %

1,110

bps

51.3 %

Quality

83.70

50.2 %

42.05

68.77

41.1 %

28.24

21.7 %

910

bps

48.9 %

Clarion(2)

88.66

41.1 %

36.44

68.86

31.5 %

21.71

28.8 %

960

bps

67.8 %

Econo Lodge

67.19

46.8 %

31.46

57.44

40.0 %

22.95

17.0 %

680

bps

37.1 %

Rodeway

67.49

47.5 %

32.09

57.34

42.5 %

24.38

17.7 %

500

bps

31.6 %

WoodSpring Suites

54.01

78.7 %

42.50

46.20

70.1 %

32.37

16.9 %

860

bps

31.3 %

MainStay

81.48

59.9 %

48.78

76.30

56.3 %

42.94

6.8 %

360

bps

13.6 %

Suburban

58.40

65.8 %

38.42

49.37

63.4 %

31.28

18.3 %

240

bps

22.8 %

Cambria Hotels

140.35

59.5 %

83.48

99.50

37.7 %

37.50

41.1 %

2,180

bps

122.6 %

Ascend Hotel Collection

137.14

51.7 %

70.85

105.69

42.2 %

44.60

29.8 %

950

bps

58.9 %

Total

$            85.11

54.9 %

$       46.73

$            68.37

44.9 %

$      30.71

24.5 %

1,000

bps

52.2 %

Effective Royalty Rate

For the Quarter Ended

For the Year Ended

12/31/2021

12/31/2020

12/31/2021

12/31/2020

System-wide(3)

5.04 %

4.98 %

5.01 %

4.94 %

(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

Exhibit 5

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

SUPPLEMENTAL OPERATING INFORMATION

DOMESTIC HOTEL SYSTEM(1)

(UNAUDITED)

For the Year Ended December 31, 2021

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)

$            98.22

60.1 %

$       59.05

$            95.84

62.2 %

$       59.65

2.5 %

(210)

bps

(1.0) %

Sleep

86.55

58.7 %

50.85

85.28

61.1 %

52.09

1.5 %

(240)

bps

(2.4) %

Quality

83.88

53.5 %

44.84

80.11

54.1 %

43.33

4.7 %

(60)

bps

3.5 %

Clarion(3)

88.09

43.1 %

38.00

84.73

49.5 %

41.90

4.0 %

(640)

bps

(9.3) %

Econo Lodge

68.08

50.1 %

34.09

63.75

47.7 %

30.43

6.8 %

240

bps

12.0 %

Rodeway

68.04

50.9 %

34.64

64.25

49.0 %

31.48

5.9 %

190

bps

10.0 %

WoodSpring Suites

51.61

81.1 %

41.85

47.10

75.3 %

35.46

9.6 %

580

bps

18.0 %

MainStay

80.25

62.1 %

49.80

84.85

64.0 %

54.32

(5.4) %

(190)

bps

(8.3) %

Suburban

55.41

70.0 %

38.81

57.25

66.9 %

38.30

(3.2) %

310

bps

1.3 %

Cambria Hotels

132.48

56.2 %

74.47

145.45

67.5 %

98.12

(8.9) %

(1,130)

bps

(24.1) %

Ascend Hotel Collection

138.02

53.7 %

74.14

125.16

61.2 %

76.57

10.3 %

(750)

bps

(3.2) %

Total

$            84.04

57.4 %

$       48.21

$            81.83

57.7 %

$       47.18

2.7 %

(30)

bps

2.2 %

For the Three Months December 31, 2021

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)

$            99.68

58.2 %

$       58.02

$            90.72

57.3 %

$       51.96

9.9 %

90

bps

11.7 %

Sleep

87.05

56.4 %

49.06

81.19

55.5 %

45.06

7.2 %

90

bps

8.9 %

Quality

83.70

50.2 %

42.05

75.35

48.8 %

36.78

11.1 %

140

bps

14.3 %

Clarion(3)

88.66

41.1 %

36.44

79.29

43.9 %

34.80

11.8 %

(280)

bps

4.7 %

Econo Lodge

67.19

46.8 %

31.46

60.30

43.7 %

26.32

11.4 %

310

bps

19.5 %

Rodeway

67.49

47.5 %

32.09

60.73

44.9 %

27.25

11.1 %

260

bps

17.8 %

WoodSpring Suites

54.01

78.7 %

42.50

46.34

70.7 %

32.78

16.6 %

800

bps

29.7 %

MainStay

81.48

59.9 %

48.78

80.08

59.0 %

47.21

1.7 %

90

bps

3.3 %

Suburban

58.40

65.8 %

38.42

53.70

61.3 %

32.93

8.8 %

450

bps

16.7 %

Cambria Hotels

140.35

59.5 %

83.48

146.52

62.1 %

91.05

(4.2) %

(260)

bps

(8.3) %

Ascend Hotel Collection

137.14

51.7 %

70.85

120.31

56.7 %

68.25

14.0 %

(500)

bps

3.8  %

Total

$            85.11

54.9 %

$       46.73

$            77.73

52.8 %

$       41.04

9.5 %

210

bps

13.9  %

Effective Royalty Rate

For the Quarter Ended

For the Year Ended

12/31/2021

12/31/2019

12/31/2021

12/31/2019

System-wide(4)

5.04 %

4.91 %

5.01 %

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 2019 ADR, Occupancy and RevPAR are reflected in the table above.

(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

Exhibit 6

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

(UNAUDITED)

December 31, 2021

December 31, 2020

Variance

Hotels

Rooms

Hotels

Rooms

Hotels

Rooms

%

%

Comfort(1)

1,668

131,302

1,648

129,711

20

1,591

1.2 %

1.2 %

Sleep

414

29,194

408

28,790

6

404

1.5 %

1.4 %

Quality

1,652

123,549

1,697

128,807

(45)

(5,258)

(2.7) %

(4.1) %

Clarion(2)

189

21,837

183

22,072

6

(235)

3.3 %

(1.1) %

Econo Lodge

734

44,107

777

47,023

(43)

(2,916)

(5.5) %

(6.2) %

Rodeway

528

30,275

559

31,828

(31)

(1,553)

(5.5) %

(4.9) %

WoodSpring Suites

302

36,374

291

35,020

11

1,354

3.8 %

3.9 %

MainStay

101

6,994

90

6,374

11

620

12.2 %

9.7 %

Suburban

71

6,395

66

6,470

5

(75)

7.6 %

(1.2) %

Cambria Hotels

57

7,869

54

7,697

3

172

5.6 %

2.2 %

Ascend Hotel Collection

204

21,286

194

20,890

10

396

5.2 %

1.9 %

Domestic Franchises(3)

5,920

459,182

5,967

464,682

(47)

(5,500)

(0.8) %

(1.2) %

International Franchises

1,110

120,564

1,180

133,295

(70)

(12,731)

(5.9) %

(9.6) %

Total Franchises

7,030

579,746

7,147

597,977

(117)

(18,231)

(1.6) %

(3.0) %

(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

Exhibit 7

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)

REVENUES, EXCLUDING MARKETING AND RESERVATION ACTIVITIES

(dollar amounts in thousands)

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

Total Revenues

$        284,638

$        193,393

$      1,069,298

$        774,072

Adjustments:

     Marketing and reservation system revenues

(144,463)

(105,365)

(528,843)

(402,568)

Revenues, excluding marketing and reservation activities

$        140,175

$          88,028

$        540,455

$        371,504

ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

(dollar amounts in thousands)

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

Total Selling, General and Administrative Expenses

$          45,776

$          44,812

$        145,623

$        148,910

Mark to market adjustments on non-qualified retirement plan investments

(2,153)

(3,157)

(5,555)

(4,085)

Operational restructuring charges

(89)

(918)

(813)

(9,564)

Share-based compensation

(3,028)

(2,186)

(11,427)

(3,810)

Exceptional allowances attributable to COVID-19

(2,080)

(3,333)

(5,167)

(7,296)

Expenses associated with legal claims

—

(3,000)

(3,000)

(3,000)

Adjusted Selling, General and Administrative Expenses

$          38,426

$          32,218

$        119,661

$        121,155

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

ADJUSTED EBITDA MARGINS

(dollar amounts in thousands)

Three Months Ended December 31,

Year Ended December 31,

2021

2020

2021

2020

Net income

$          64,083

$            7,865

$        288,957

$          75,387

Income tax expense (benefit)

20,256

(6,474)

87,535

(22,381)

Interest expense

11,574

11,875

46,680

49,028

Interest income

(1,264)

(1,411)

(4,981)

(7,688)

Other gains

(2,228)

(3,675)

(5,134)

(4,533)

Loss on extinguishment of debt

—

—

—

16,565

Equity in operating net (gain) loss of affiliates, net of impairments

(140)

1,854

3,408

9,026

Loss on sale of affiliates, business & assets, and impairments, net

14,793

15,498

12,737

21,014

Depreciation and amortization

6,296

6,522

24,773

25,831

Mark to market adjustments on non-qualified retirement plan investments

2,153

3,157

5,555

4,085

Operational restructuring charges

89

918

813

9,564

Share-based compensation

3,028

2,186

11,427

3,810

Exceptional allowances attributable to COVID-19

2,080

3,333

5,167

7,296

Expenses associated with legal claims

—

3,000

3,000

3,000

Marketing and reservation system reimbursable (surplus) deficit

(27,191)

7,918

(83,897)

44,279

Franchise agreement acquisition costs amortization

1,983

1,657

7,517

6,416

Adjusted EBITDA

$          95,512

$          54,223

$        403,557

$        240,699

Revenues, excluding marketing and reservation activities

$        140,175

$          88,028

$        540,455

$        371,504

Adjusted EBITDA margins

68.1 %

61.6 %

74.7 %

64.8 %

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,

2021

2020

2021

2020

Net income

$          64,083

$            7,865

$        288,957

$          75,387

Adjustments:

Loss on extinguishment of debt

—

—

—

12,457

Loss on sale of affiliates, business & assets, and impairments, net

11,065

11,640

9,642

15,802

Operational restructuring charges

65

689

582

7,190

Exceptional allowances attributable to COVID-19

1,556

2,506

3,911

5,487

Expenses associated with legal claims

—

2,256

2,271

2,256

Marketing and reservation system reimbursable (surplus) deficit

(20,602)

6,554

(64,337)

35,167

Sale of tax credits on historical building

—

—

—

(1,857)

Foreign tax benefit on international restructuring

—

(3,395)

—

(28,848)

Adjusted Net Income

$          56,167

$          28,115

$        241,026

$        123,041

Diluted Earnings Per Share

$              1.14

$              0.14

$              5.15

$              1.35

Adjustments:

Loss on extinguishment of debt

—

—

—

0.22

Loss on sale of affiliates, business & assets, and impairments, net

0.19

0.21

0.17

0.29

Operational restructuring costs

—

0.01

0.01

0.13

Exceptional allowances attributable to COVID-19

0.03

0.04

0.07

0.10

Expenses associated with legal claims

—

0.04

0.04

0.04

Marketing and reservation system reimbursable (surplus) deficit

(0.37)

0.12

(1.15)

0.63

Sale of tax credits on historical building

—

—

—

(0.03)

Foreign tax benefit on international restructuring

—

(0.06)

—

(0.52)

Adjusted Diluted Earnings Per Share (EPS)

$              0.99

$              0.50

$              4.29

$              2.21

SOURCE Choice Hotels International, Inc.