Choice Posts 1Q Earnings Gain; Unit Growth

SILVER SPRING, MD— Choice Hotels International, Inc. has reported first-quarter 2003 net income of $9.7 million, or $0.26 diluted earnings per share (EPS), a 30% increase in EPS over the same period of a year ago, exceeding consensus estimates by $0.02 per share. At the end of first quarter 2002, the company reported net income of $8.6 million, or $0.20 diluted EPS. The company also reported its operating income increased to $17.2 million for the quarter, a 7.4% gain over the $16 million reported in first-quarter 2002. “First quarter results were especially gratifying, given the sluggish economy and uncertainty in travel markets,” said Charles Ledsinger Jr., president/CEO. “Choice continues to enjoy very strong unit growth, with this quarter topping 5%.” The company reported royalty revenues of $27.3 million for first quarter compared to $26 million for the 2002 period in, an increase of 5%. Royalty revenues include $0.9 million attributable to Flag Choice Hotels, which the company began consolidating in July 2002. Systemwide domestic RevPAR was $25.78 in first quarter compared to $26.16 for first-quarter 2002. Choice domestic hotels open grew by 5.1% to 3,516 as of March 31 from 3,344 in the year-ago period. Net domestic property additions were 34 compared to 17 in the 2002 period. Choice executed 71 new domestic hotel franchise contracts representing 7,607 rooms in first quarter compared to 59 contracts representing 5,208 rooms for the year-ago period. In first quarter, 20 contracts for new construction hotels, representing 1,444 rooms were executed, compared to 10 contracts, representing 639 rooms for the same period a year ago. At the end of first quarter 2003, Choice had 297 hotels under development in its domestic hotel system, representing 24,719 rooms. As of March 31, the total number of Choice hotels worldwide grew 3% to 4,678 from 4,541 as of the same date a year ago, an increase of 3.5% in the number of rooms open to 375,859 from 363,074. At the end of first quarter, Choice had 385 hotels under development worldwide, representing 35,018 rooms. The company’s second-quarter 2003 earnings are expected to be in the range of $0.39 to $0.41. Full-year 2003 diluted EPS are expected to be between $1.65 and $1.68.