Choice Hotels International, Inc. · NYSE:CHH
Choice Hotels International — Deutsche Bank 2012 Leveraged Finance Conference
32 slides from Choice Hotels International's conference presentation, Oct 10, 2012
Slide 1: Deutsche Bank 2012 Leveraged Finance Conference
Exhibit 99.1 Deutsche Bank 2012 Leveraged Finance Conference
Slide 2: Disclaimer
Investor Presentation Disclaimer Certain matters discussed throughout all of this presentation constitute forward-looking statements within the meaning of the federal securities laws. Generally, our use of words such as “expect,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “plan,” “proj
Slide 3: Company overview
Investor Presentation Company overview 3
Slide 4: Choice Hotels overview
Investor Presentation Choice Hotels overview Strong, growing, global hotel franchising Highly attractive business model with strong business financial returns Growing US hotel market share* Stable, profitable, long-term growth throughout economic cycles – 9.6% share of branded US hotels (+60 basis p
Slide 5: Diversified global footprint
Investor Presentation Diversified global footprint* Canada Hotels open 308 Hotels under development 37 Europe Rooms open & under dev. 28,407 Hotels open 416 Hotels under development 15 Rooms open & under dev. 45,374 United States & Caribbean Hotels open 5,024 Central America Hotels under development
Slide 6: Portfolio overview
Investor Presentation Portfolio overview Average daily room Brand Number of properties Number of rooms Occupancy (%) rate (ADR) RevPAR 52 4,652 61.5% $113.84 $70.03 Upscale 19 2,221 NA NA NA 1,379 107,895 58.7% 80.36 47.20 Upper 608 46,903 60.6% 84.30 51.08 Midscale 189 27,534 48.1% 74.30 35.71 391
Slide 7: Franchise portfolio growth
Investor Presentation Franchise portfolio growth Worldwide hotels* Domestic pipeline* 84 6,199 New Construction Conversion 6,178 6,174 6,142 6,128 6,138 65 6,117 6,091 6,074 41 42 32 26 23 21 15 16 13 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2010 2010 2011 2011 2011 2011 2012 2012 Upscale Midscale Extended S
Slide 8: Strategy for Choice’s brands, growth and shareholders
Investor Presentation Strategy for Choice’s brands, growth and shareholders Improve and Grow Brands – Increase portfolio profitability of the Comfort brand family – Refresh Sleep Inn to improve long-term brand growth potential – Invest in and expand emerging brands/segments – Cambria, Ascend, Intern
Slide 9: Investment highlights
Investor Presentation Investment highlights 9
Slide 10: Investment highlights
Investor Presentation Investment highlights Established hotel franchising platform with global scale Strong and growing Resilient fee-for service brand awareness business model with stable cash flows Asset light franchising model with strong Strong, growing loyalty returns on investment program Stro
Slide 11: Established hotel franchising platform with global scale
Investor Presentation Established hotel franchising platform with global scale One of the largest hoteliers… 8,000 7,170 7,000 6,199 6,000 4,542 4,426 5,000 3,800 3,748 4,000 3,000 2,000 1,319 1,112 492 1,000 0 WYN CHH IHG ACC Hilton MAR Carlson HOT H … with a significant number of rooms in the port
Slide 12: Resilient fee-for-service business model with stable cash flows
Investor Presentation Resilient fee-for-service business model with stable cash flows ($ in millions) 15.0% $350 10.0% $300 5.0% $250 0.0% $200 (5.0%) $150 (10.0%) $100 (15.0%) $50 (20.0%) $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CHH RevPAR STR Chain Scale (Supply Wei
Slide 13: Strong, growing loyalty program
Investor Presentation Strong, growing loyalty program Loyalty program Comprehensive loyalty rewards program 68 14 million members worldwide – contribute over ¼ of domestic gross room revenues 38 28 2.1 million new members added in 2011 15 14 12 8 Delivers incremental business to all Choice brand hot
Slide 14: Effective marketing and central reservation system
Investor Presentation Effective marketing and central reservation system Description Size, scale and distribution Consists of the telephone reservation system, Expertise and innovation in on-line, targeted interactive proprietary internet site, mobile phone applications, marketing to influence guest
Slide 15: Strong pipeline expected to continue to grow as the global economy improves
Investor Presentation Strong pipeline expected to continue to grow as the global economy improves Historical domestic pipeline 800 728 723 700 602 600 533 500 413 380 400 258 264 277 300 276 190 194 136 131 200 100 0 Conv. New Conv. New Conv. New Conv. New Conv. New Conv. New Conv. New Const. Const.
Slide 16: Asset light franchising model with strong returns on investment
Investor Presentation Asset light franchising model with strong returns on investment Virtually 100% of the properties are franchised* 100% 6% 1% 5% 14% 19% 80% 31% 47% 48% 60% 100% 56% 94% 86% 15% 40% 67% 20% 46% 38% 25% 0% CHH WYN IHG MAR HOT H ACC Franchised Managed Owned / Leased Capital light m
Slide 17: Strong and growing brand awareness
Investor Presentation Strong and growing brand awareness 98% 98% 93% 89% 87% 87% 81% 77% 72% 56% 53% 2001 50% 2011 43% 24% 22% 18% 14% 14% NA NA NA NA Source: Percentage of survey respondents. Millward Brown, December 2011. * Econo Lodge, Rodeway Inn and Suburban Extended Stay measured among economy
Slide 18: Financial overview
Investor Presentation Financial overview 18
Slide 19: Recent performance
Investor Presentation Recent performance Choice’s franchise business model provides stable, growing cash flows, driven primarily through unit expansion and RevPAR growth ($ in millions) LTM Revenue LTM Adjusted EBITDA $195.9 $661.0 $652.7 $189.6 $638.8 $184.3 $627.9 $181.5 $619.4 $603.9 $172.3 $173.
Slide 20: Historical operating metrics
Investor Presentation Historical operating metrics RevPAR & occupancy Total worldwide rooms $60 60.0% 500,000 497,205 497,837 495,145 57.9% 487,410 58.0% $50 55.3% $39.73 56.0% 480,000 $41.75 $40.98 $38.44 54.8% 472,526 $40 $35.18 $36.18 53.5% 54.0% $30 52.0% 460,000 51.3% 452,027 49.4% 50.0% $20 48
Slide 21: Historical financial overview
Investor Presentation Historical financial overview ($ in millions) Revenue* Adjusted EBITDA $320 $225 $305 $299 $300 $200 $300 $198 $200 $196 $290 $184 $280 $175 $171 $164 $267 $259 $260 $150 $240 $125 $220 $100 2007 2008 2009 2010 2011 LTM Q2 2007 2008 2009 2010 2011 LTM Q2 2012 2012 *Excludes mar
Slide 22: Historical capital expenditure overview
Investor Presentation Historical capital expenditure overview ($ in millions) $30 $25 $24 $20 $15 $13 $12 $12 $11 $11 $10 $5 $0 2007 2008 2009 2010* 2011 LTM Q2 2012 *The spike in 2010 was due to the Company leasing extra space for a new technology center in Phoenix, AZ. Source: Company’s public fil
Slide 23: Pro forma capitalization – $600 million Special Cash Dividend
Investor Presentation Pro forma capitalization – $600 million Special Cash Dividend ($ in millions) Pro forma capitalization As of Mult LTM Pro forma Mult LTM 6/30/2012 Adjusted EBITDA Adjustments 6/30/2012 Adjusted EBITDA Total cash and equivalents $485.4 ($396.1) $89.3 New revolver -- 0.0x $53.9 $
Slide 24: Questions and answers
Investor Presentation Questions and answers 24
Slide 25: Disclaimer
Investor Presentation DISCLAIMER Adjusted earnings before interest, taxes depreciation and amortization (EBITDA), return on average invested capital (ROIC) and free cash flows are non-GAAP financial measurements. These financial measurements are presented as supplemental disclosures because they are
Slide 26: Franchising Revenues
Investor Presentation FRANCHISING REVENUES ($ amounts in thousands) Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31,December 31,December 31,December 31,December 31,December 31,December 31, 2011 2010 2009 2008 2007 2006 2005 Total Revenues $ 638,793 $ 596,076
Slide 27: Franchising Revenues (Continued)
Investor Presentation FRANCHISING REVENUES (Continued) ($ amounts in thousands) Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31,December 31,December 31,December 31, December 31, December 31, December 31, 2004 2003 2002 2001 2000 1999 1998 Total Revenues $ 428
Slide 28: Return on Invested Capital
Investor Presentation RETURN ON INVESTED CAPITAL Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, ($ in thousands) 2011 2010 2009 2008 2007 2006 2005 Operating Income (a) $171.9 $16
Slide 29: Return on Invested Capital (Continued)
Investor Presentation RETURN ON INVESTED CAPITAL (Continued) Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, ($ in thousands) 2004 2003 2002 2001 2000 1999 1998 Operating Income (a
Slide 30: Free Cash Flows
Investor Presentation FREE CASH FLOWS YTD Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended June 30, December 31, December 31, December 31, December 31, December 31, December 31, December 31, ($ in thousands) 2012 2011 2010 2009 2008 2007 2006 2005 Net Cash Provided
Slide 31: Free Cash Flows (Continued)
Investor Presentation FREE CASH FLOWS (Continued) Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, ($ in thousands) 2004 2003 2002 2001 2000 1999 1998 Net Cash Provided by Operating
Slide 32: Adjusted EBITDA
Investor Presentation ADJUSTED EBITDA LTM Year Ended Year Ended Year Ended Year Ended Year Ended ($ in thousands) June 30, December 31, December 31, December 31, December 31, December 31, 2012 2011 2010 2009 2008 2007 Operating Income $ 183,717 $ 171,863 $ 160,762 $ 148,073 $ 174,596 $ 185,199 Adjus
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