Choice Hotels Reports 3rd Quarter Net Income Up 6%; Diluted EPS Increases 12%

SILVER SPRING, Md. (October 16, 2000) - Choice Hotels International, Inc. (NYSE:CHH) today reported third quarter 2000 net income of $19.4 million, or $0.37 diluted earnings per share (EPS), increases of 5.8% and 12.1% respectively, over the $18.3 million in net income and $0.33 diluted EPS reported for third quarter 1999.


Earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $35.5 million for the quarter, an increase of 11.3% over the $31.9 million for the third quarter of 1999. EBITDA margins increased to 71.3% for the quarter from 67.7% for the third quarter of 1999.


“As a result of a very strong summer season, our franchised hotels delivered a robust performance this quarter,” said Charles A. Ledsinger, Jr., president and chief executive officer. “The continued improvement in our brands’ quality and amenities helped attract more guests, resulting in improved room rates. RevPAR gains, improvement in effective royalty rates, successful cost control and room supply additions resulted in solid EBITDA growth and expanding EBITDA margins.”


“Revenue on bookings through our central reservations system is up 9% for the year to date, with revenue from global distribution sources up 21% and from our proprietary Internet site up 124%,” he added. “Our Web site volume has doubled in the past year, and now represents more than 6% of our bookings, generated almost $75 million in revenue through September.”


He continued, “Looking ahead, the recently announced restructuring of our note from Sunburst Hospitality, under which Choice will receive approximately $76 million in cash, will significantly strengthen an already solid balance sheet. Choice will be better positioned to take advantage of new growth opportunities and to continue to buy back stock at accretive valuations.”

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The company reported royalty revenues of $43.4 million for third quarter 2000, compared to $40.5 million for third quarter 1999, an increase of 7.2%. The system-wide domestic effective royalty rate also increased from 3.82% in third quarter 1999 to 3.88% for the third quarter of 2000. Domestic revenue per available room (RevPAR) increased 5.6% from $43.42 in third quarter 1999 to $45.85 in the quarter just ended.


For the first nine months of 2000, Choice reported recurring net income of $43.6 million or $0.82 recurring diluted EPS, increases of 2.8% and 7.9% respectively, over the $42.4 million and $0.76 recurring diluted EPS reported for the first nine months of 1999.


Royalty revenues for the first three quarters of 2000 increased 7.4% to $102.6 million from the $95.5 million for the same period a year ago. The system-wide domestic effective royalty rate increased 6 basis points for the first nine months of 2000 to 3.84% from 3.78% for the same period a year ago. Domestic RevPAR also was up 4.3% from $35.24 for the first three quarters of 1999 to $36.76 for the first nine months of 2000.


Notable Events:
Among the notable company events occurring since the previous earnings report:


* Appointed Wayne Wielgus as senior vice president, marketing, and Gary Thomson, senior vice president and chief information officer.

* Named Don Brockway, vice president, worldwide reservations operations, and Janna Morrison, vice president, property systems, as officers of the company.

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