Choice Hotels International, Inc. · NYSE:CHH
Choice Hotels International — Deutsche Bank 2013 Leveraged Finance Conference
32 slides from Choice Hotels International's conference presentation, Oct 1, 2013
Slide 1: Deutsche Bank 2013 Leveraged Finance Conference
Deutsche Bank 2013 Leveraged Finance Conference Exhibit 99.1
Slide 2: Disclaimer
Disclaimer Certain matters discussed throughout all of this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, our use of words such as “expect,” “estimate,” “believe,” “anticipate,” "should,“ “will,” “forecast,”
Slide 3: Company overview
Company overview
Slide 4: Choice Hotels overview
Choice Hotels overview Growing US hotel market share – 9.7% share of branded US hotels (+50 basis points over trailing 5 years)* – nd largest U.S. hotelier* Well-known, diversified brands Global pipeline of 448 hotels Stable, profitable, long-term growth throughout economic cycles Cumulative free ca
Slide 5: Diversified global footprint
Diversified global footprint* Source: Choice internal data *As of June 30, 2013. The Company includes its Caribbean properties within domestic operating statistics.
Slide 6: Portfolio overview
Upscale Upper Midscale Midscale Extended Stay Economy Portfolio overview Brand Number of properties Number of rooms Occupancy (%) Average daily room rate (ADR) RevPAR 7,521 64.6% $118.22 $76.36 2,094 NA NA NA 1,311 102,882 59.9% 82.49 49.37 45,339 62.4% 86.35 53.87 27,184 50.5% 74.99 37.86 27,478 57
Slide 7: Franchise portfolio growth
Franchise portfolio growth Worldwide hotels* Domestic pipeline* Worldwide unit growth has increased at a CAGR of 2.0% over the last 5 years Executed a total of 490 new domestic hotel franchise contracts during the trailing twelve months ended June 30, 2013, a 30% increase over the prior year Current
Slide 8: Strategy for Choice's brands, growth and shareholders
Strategy for Choice’s brands, growth and shareholders Improve and Grow Brands – Increase portfolio profitability of the Comfort brand family – Refresh Sleep Inn to improve long-term brand growth potential – Invest in and expand emerging brands/segments – Cambria, Ascend, International Capture Greate
Slide 9: Investment highlights
Investment highlights
Slide 10: Investment highlights summary
Established hotel franchising platform with global scale ent fee-for service trong and growing ss model with brand awareness CHOICE HOTELS RNATTONAT Asset light franchising model with strong retums on in’ trong, growing loyalty ram ong pipeline to continue to grow as global jomy improves CHOICE HOTE
Slide 11: Established hotel franchising platform with global scale
Established hotel franchising platform with global scale One of the largest hoteliers… … with a significant number of rooms in the portfolio Source: Various public companies’ filings as of June 30, 2013, except for Hilton which is as of December 31, 2012.
Slide 12: Resilient fee-for-service business model with stable cash flows
Resilient fee-for-service business model with stable cash flows ($ in millions) Source: Smith Travel Research, Management data, December 2012
Slide 13: Strong, growing loyalty program
Strong, growing loyalty program Choice Privileges revenue as percent of domestic gross room revenues* Source: Management Data, December 31, 2012, Company’s public filings * 2001-2008 Data Excludes Econo Lodge and Rodeway Inn brands Comprehensive loyalty rewards program 16.5 million members worldwide
Slide 14: Effective marketing and central reservation system
Effective marketing and central reservation system Consists of the telephone reservation system, proprietary internet site, mobile phone applications, global distribution systems and other internet reservation sites Central Reservation System (“CRS”) provides a data link to the Company’s franchised
Slide 15: Strong pipeline expected to continue to grow as the global economy improves
Strong pipeline expected to continue to grow as the global economy improves Historical international pipeline Source: Company’s public filings, Management data as of December 31, Historical domestic pipeline
Slide 16: Asset light franchising model with strong returns on investment
Asset light franchising model with strong returns on investment Capital light model generates strong after-tax returns on invested capital Virtually 100% of the properties are franchised* * The Company owns a limited number of hotels that it holds for strategic purposes. Source: Company’s public fil
Slide 17: Strong and growing brand awareness
Strong and growing brand awareness Source: Percentage of survey respondents. Millward Brown, December 2012. * Econo Lodge, Rodeway Inn and Suburban Extended Stay measured among economy hotel users.
Slide 18: Financial overview
Financial overview
Slide 19: Choice's franchise business model provides stable, growing cash flows
Choice’s franchise business model provides stable, growing cash flows, driven primarily through unit expansion, RevPAR growth and effective royalty rate growth Recent performance LTM Revenue LTM Adjusted EBITDA Choice has experienced consistent revenue growth over the past eight quarters Revenues ha
Slide 20: Historical operating metrics
Historical operating metrics RevPAR & occupancy Total worldwide rooms Source: Company’s public filings
Slide 21: Historical financial overview
Historical financial overview Revenue* Adjusted EBITDA *Excludes marketing and reservation revenues Source: Company’s public filings ($ in millions)
Slide 22: Historical capital expenditure overview
Historical capital expenditure overview ($ in millions) *Capital expenditures reflect tenant improvements related to the of its corporate offices in Rockville, MD during 2013. Source: Company’s public filings Company leasing extra space for a new technology center in Phoenix, AZ during 2010 and the
Slide 23: Credit Metrics
Credit Metrics ($ in millions) Captialization As of Mult LTM 6/30/2013 Adjusted EBITDA Total cash and equivalents $143.8 New revolver $72.2 0.4x Term Loan $142.5 0.7x Total secured debt $214.7 1.1x Senior Notes Due 2020 $250.0 1.2x Senior Notes Due 2022 $400.0 2.0x Other debt $2.2 0.0x Total debt $8
Slide 24: Questions and answers
Questions and answers
Slide 25: Disclaimer
DISCLAIMER Adjusted earnings before interest, taxes depreciation and amortization (EBITDA), return on average invested capital (ROIC), franchising revenues and free cash flows are non-GAAP financial measurements. These financial measurements are presented as supplemental disclosures because they are
Slide 26: Franchising Revenues
FRANCHISING REVENUES Source: Choice Internal Data, December 2012 ($ amounts in thousands) Year Ended 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, December 31, Total Revenues 691
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Slide 28: Return on Invested Capital
RETURN ON INVESTED CAPITAL (a) Operating income and tax rate for the year ended December 31, 2001 have been adjusted to exclude the effect of a $22.7 million impairment charge related to the write-off of the company’s investment in Friendly Hotels. Source: Choice Internal Data, December 2012 Year En
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Slide 30: Free Cash Flows
FREE CASH FLOWS Source: Choice Internal Data, June 30, 2013 Year to Date Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended June 30, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, ($ in thousands) Net
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Slide 32: Adjusted EBITDA
Source: Choice Internal Data, June 30, 2013 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, Operating Income 191,275 $ 193,142 $ 171,863 $ 160,762 $ 148,073 $ 174,596 $ Adjustments A
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