Wednesday, Choice Hotels International, Inc., (CHH) reported a decline in profit for the second quarter, hurt by a 14% decline in revenue reflecting challenging industry-wide revenue per available room or RevPAR environment and significant decline in domestic hotel transactions. However, the company's per share earnings were above the market estimates by two cents.
Net income for the second quarter declined 6% to $25.50 million or $0.42 per share from $27.01 million or $0.43 per share in the previous year.
On an adjusted basis, net income for the quarter was $26.69 million or $0.44 per share, compared to $31.02 million or $0.49 per share a year ago. Adjusted results for the quarter include employee termination benefits amounted to $0.25 million and loss on sublease of office place of $0.94 million.
On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.42 per share. Analysts' estimates typically exclude special items.
Total revenues for the quarter declined 14% to $143.34 million from $167.12 million a year ago. Eight analysts had a consensus revenue estimate of $148.44 million for the company.
Royalty fees for the quarter declined to $54.93 million from $63.78 million a year ago. Initial franchise and re-licensing fees declined to $3.99 million from $8.15 million. Revenues from Procurement services increased to $6.77 million from $6.47 million and revenues from Marketing and Reservation declined to $75.30 million from $85.34 million a year ago.
Revenues from Hotel operations were $1.18 million, compared to $1.29 million last year. Other revenues declined to $1.17 million from $2.10 million a year ago.
Domestic system-wide RevPAR declined 15.7% to $35.58 for the second quarter of 2009 compared to $42.22 in the same period of 2008. Occupancy rate declined to 50.4% from 57.4% a year ago.
For the six-month period, net income declined to $41.81 million or $0.69 per share from $45.58 million or $0.72 million a year ago. Total revenues for the period declined to $257.50 million from $295.97 million last year.
Looking forward, the company expects earnings of $0.51 per share for the third quarter. Analysts currently expect third quarter earnings of $0.56.
For the fiscal 2009, earnings are expected to be $1.66 per share, while analysts expect earnings of $1.63.
RevPAR is expected to decline approximately 15% for the third quarter of 2009 and decline approximately 13% for the full-year of 2009.
CHH closed Wednesday's regular trading at $26.43, down 0.26 or 0.97%, on a volume of 365K shares on the NYSE.
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