SILVER SPRING, MD— Choice Hotels International reported recurring net income of $21.9 million, or $0.54 recurring diluted earnings per share (EPS), for its third quarter compared to the $19.8 million of recurring net income and $0.45 recurring diluted EPS it reported for same period in 2001. Choice reported recurring EBITDA of $39.3 million for the third quarter and $88.4 million for the first nine months of 2002. This compares with $38.5 million for the third quarter of 2001 and $88.2 million for the first nine months of 2001. Franchise EBITDA margins were 72.7% for the third quarter of 2002 and 67.7% for the first nine months of 2002, compared to 73.3% and 67.7%, respectively, for the same periods a year ago. Royalty revenues for the just-ended quarter increased from $44.6 million to $46.3 million for the third quarter of 2002. Domestic RevPAR declined to $43.79 for the third quarter of 2002, compared to $44.85 for the same period a year ago. Included in the quarter’s net income is approximately $800,000 of federal and state tax credits. The impact of these credits increased diluted EPS by approximately $0.02 for the third quarter of 2002. These credits were offset by a $0.01 per share decrease in diluted EPS related to equity losses in Flag Choice Hotels recorded in the third quarter of 2002 as a result of the companys acquisition of a controlling interest in Flag on July 1, 2002. The companys results for the three months and nine months ended September 30, 2001, included equity losses of $11.7 million and $14.6 million, respectively, related to its investment in Friendly Hotels plc. The Friendly equity loss is excluded from the Choice’s recurring net income and recurring diluted EPS results for 2001. Going forward, Choice revised its 2002 diluted EPS estimate to range from $1.47 to $1.49. Meanwhile, Choice executed 82 hotel franchise contracts in the third quarter of 2002, compared to 74 contracts signed in the same period a year ago. For the nine months, the company signed 211 franchise contracts, representing 17,936 rooms, compared to 199 contracts, representing 16,312 rooms, for the comparable period a year ago. In the first nine months of 2002, 42 contracts for new construction hotels, representing 3,121 rooms, were executed. The company has signed 169 contracts to convert existing hotels to a Choice brand in the first nine months of 2002, up from 123 conversions from the same period a year ago. The total number of domestic Choice hotels on-line grew 4.2% from 3,296 as of Sept. 30, 2001 to 3,434 as of the Sept. 30, 2002. As of the same dates, the total number of domestic rooms increased 4.1% to 279,135 from 268,176. The company had 358 franchised hotels with 27,902 rooms either in design or under construction in its domestic hotel system as of September 30, 2002. The number of property terminations for the nine months ended September 30, 2002 decreased 15.1% from the comparable period in 2001.
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