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Choice Hotels Q4 Profit Rises - Update

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Choice Hotels International Inc. (CHH: Quote) Monday reported an increased fourth-quarter profit, as higher royalty and, marketing and reservation fees boosted the hotel operator's revenues. The company's profit for the quarter surpassed analysts' estimates, so did revenues.

The company also detailed a robust earnings outlook for the first quarter and full year 2012.

The Silver Spring, Maryland-headquartered company's profit for the quarter rose to $24.8 million or $0.42 per share from $24.1 million $0.40 per share last year.

On an adjusted basis, net income for the quarter improved to $27.1 million or $0.46 per share from $24.9 million or $0.42 per share last year. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude one-time items.

Choice Hotels, whose brands include Comfort Inn, Comfort Suites and Clarion, said total revenues for the quarter grew 7 percent to $165.9 million from $155.0 million last year. Wall Street analysts on a consensus estimated revenues of $163.83 million for the quarter.

Royalty revenues for the quarter rose 7 percent to $63.3 million, while marketing and reservation revenues advanced 4 percent to $90.8 million. Initial franchise and relicensing fees for the quarter surged 77 percent to $4.9 million.

"We are pleased with the continued strong gains we achieved in domestic RevPAR during the fourth quarter and the growth of our global franchise system," said Stephen P. Joyce, president and chief executive officer. "While the near term franchise sales environment remains challenging, we believe that our well-known diversified brands will continue to resonate with developers and hotel owners due to our focus on owners' property-level profitability and return on investment."

Choice Hotels' domestic system-wide revenue per available room increased 7.8 percent to $39.03 from last year as occupancy rates rose 260 basis points. Investors consider revenue per available room as a key gauge of a hotel operator's performance.

The company also saw its average daily rate increase to $71.98 from $70.09 a year earlier.

Looking forward, the company expects first-quarter earnings of at least $0.30 per share. For the full year 2012, the company expects earnings in a range of $1.99 to $2.04 per share. Analysts currently expect earnings of $0.28 per share and $1.92 per share for first quarter and full year respectively.

The hotel operator expects revenue per available room to increase about 8 percent for first quarter and increase between about 4 and 6 percent for full-year 2012.

CHH closed Monday's trading at $35.60, up 0.31 percent on the NYSE.

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by RTT Staff Writer

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