choice hotels international inc. (chh) april 17, 2019 · consumer discretionary – hotel &...

Important disclosures appear on the last page of this report.

The Henry Fund

Henry B. Tippie School of Management Zach Geerdes ([email protected])

Choice Hotels International Inc. (CHH) April 17, 2019

Consumer Discretionary – Hotel & Resort Stock Rating BUY

Investment Thesis Target Price $92-$98 We recommend a BUY rating for Choice Hotels Intentional Inc. (CHH). Choice Hotels’ strong margins due to their franchising business model, economic slowdown protection, and an ever expanding business model lead us to believe that Choice Hotels is currently undervalued. We believe that Choice Hotels currently has a 17% upside. Drivers of Thesis.

• A Superb Business Model – Utilizing a franchised business model has allowed Choice to side step tremendous ownership expenses. Thus allowing Choice to post considerably higher margins. For FY2019 – FY2022 we forecast operating margins to remain high between 30% & 32% as Choice benefits from hotel growth.

• Penetrating Vacation Market – Choice’s penetration into the vacation rental market will allow them to grow their “other” revenue at a forecasted five year compound annual growth rate of 13.72% prior to the CV year.

• Slowdown Price Protection – Choice Hotels has an average daily rate of $81.64, which means their average daily rate is 33% percent under the industry average. In an economic slowdown people downgrade and cut. We believe Choice Hotel’ brands would be the hotels they would swich to.

Risks to Thesis

• Occupancy Rates – Choice has much weaker occupancy rates compared to their competitors, most likely due to their franchising nature, because of this we do not expect any drastic changes to occupancy rates.

• Over Building – We believe there is a risk that major expansion could result in the hotel industry over building hotels.

• Alternative Lodging – With Choice’s expansion into vacation rentals, we believe that they are increasingly exposed to Airbnb and other similar companies.

Henry Fund DCF $96.10 Henry Fund DDM $75.10 Relative Multiple $85.35 Price Data Current Price $81.45 52wk Range $66.71- $84.55 Consensus 1yr Target $82.56 Key Statistics Market Cap (B) $4.547 Shares Outstanding (Th) 56,130 Five Year Beta 1.07 Dividend Yield 1.10% Est. 5yr EPS Growth 35.47% Price/Earnings (TTM) 21.11 Price/Earnings (FY1) 19.48 Total Hotels 7,021 Total Rooms 569,108 Profitability Operating Margin 30.58% Profit Margin 20.77%

Earnings Estimates Year 2016 2017 2018 2019E 2020E 2021E

Analysts $4.12 $4.38 $4.86

EPS $1.91 $2.16 $3.83 $4.33 $4.72 $5.26

growth - 13.09% 77.31% 13.15% 8.95% 11.40%

12 Month Performance Company Description

Source: Yahoo Finance

Choice Hotels International (CHH) is a hotel franchisor that owns brand names such as Comfort Inn, Comfort Suites, Quality Inn, and more. CHH’s hotel brands primarily operate in the mid to low-tier price ranges. The company operates worldwide with over 7,000 hotels in over 40 different countries. They are the largest hotel franchisor in the united states and one of the largest hotel chains in the United States. CHH was founded in 1939 and is currently headquartered in Rockville, Maryland. The current CEO is Pat Pacious, whom was appointed on Jan 1, 2018.

-20%

-10%

0%

10%

20%

A M J J A S O N D J F M

CHH S&P 500

1.9

3.3

4.4

2.22.6

4.6

3.8

2.1

4.8

0

1

2

3

4

5

EPS DEBT/EBITDA Avg. Royalty %

2016 2017 2018

Source: Factset

EXECUTIVE SUMMARY

We recommend a BUY rating for Choice Hotels International (CHH). We believe that the company’s strong margins will maintain profitability, the business model will allow for significant growth, and the protection from an economic slowdown will make this company more defensive than competitors. We believe CHH has a 17% upside.

CHH utilizes a franchise business model which allows their employees to focus on growing the business and becoming more efficient, as opposed to a corporate owned model which requires companies to worry about maintaining hotels and various other expenses. We also believe that the franchise business model helps CHH post tremendous margins year-over-year, despite having low occupancy rates. Lastly we believe that due to the lower cost nature of CHH hotels, they are better protected from a recession than their high cost competitors because people tend to go with lower cost alternative in times of economic pressure.

COMPANY DESCRIPTION

Choice Hotels International (CHH) is a franchisor of 12 main hotel brands. Their brands range from high-tier to low-tier brands. Most of their hotels are concentrated on the mid-tier to low-tier price range. CHH operates over 7,000 hotels with approximately 569,000 rooms and locations in 40 different countries. By room count they are the 4th largest hotel chain and they are also the largest hotel that uses a franchising model.

The franchise model that CHH utilizes receives revenues from five main categories: Marketing and Reservation System Fees, Royalty Fees, Procurement Services, Initial Franchising and Relicensing Fees, and Other. Below is a breakdown of their 2018 revenue:

Source: CHH’s 10-K

As mentioned before CHH owns 12 hotel brands domestically these brands are listed below in order of room count as of year-end 2018:

Domestic Hotels # of Hotels # of Rooms ADR

Quality 1,636 126,533 $80.15

Comfort Inn 1,056 82,901 $94.73

Econo Lodge 839 50,692 $63.44

Comfort Suites 571 44,381 $97.64

Rodeway Inn 612 35,124 $64.26

Woodspring Suites

249 29,911 $45.92

Sleep Inn 393 27,962 $84.71

Clarion 174 22,179 $84.45

Ascend Hotel 176 14,693 $126.86

Suburban 54 5,699 $55.81

Cambria Hotel 40 5,685 $146.71

Mainstay Suites 63 4,268 $83.08

Total 5,863 450,028 $81.64 Source: CHH’s 10-K

We forecast modest overall room growth for CHH. Between 2019 and 2022 total room growth will be between 2.30% – 2.90% before reaching a CV room growth rate of 2.16%.

Every hotel in the U.S. operates in a direct franchise model. This means that the franchisee has full licensing rights, they can open a CHH brand name hotel in the U.S. This is not the case internationally. Internationally CHH has around 42% of their hotels utilizing a direct franchise model. The other 58% follow a master franchise model. A master franchise model can be thought of as a subsidiary, CHH allows a master franchisee to operate a web of local franchisees. The master franchisee is responsible for costs like marketing, reservation, and quality assurance. In

36%

3%5%

52%

4%

2018 Revenue BreakdownRoyalty Fees

Initial franchise andrelicensing feesProcurement services

Marketing andreservation systemOther

direct financing, CHH covers these expenses for the franchisee.

The distinction between master franchising and direct franchising is important because CHH acknowledges that master financing is a lower margin model. This means that as a whole their international operations have lower margins. CHH did not provide a breakdown of international margins, this assumption is purely based on the fact that CHH acknowledged less profitability with master franchising.

Internationally CHH operates a total of 1,158 hotels that house 119,080 rooms. Below is a list of their presence internationally in order of room count:

International Hotels # of Hotels # of Rooms

Comfort Inn 489 42,904

Quality 334 36,751

Clarion 135 21,006

Ascend Hotel 80 9,230

Econo Lodge 67 3,098

Comfort Suites 22 2,854

Sleep Inn 22 2,525

Suburban 3 309

Rodeway Inn 5 303

Mainstay Suites 1 100

Cambria Hotel 0 0

Woodspring Suites 0 0

Total 1,158 119,080 Source: CHH’s 10-K

As one can see Comfort Inn and Quality hotel brands are easily the two largest hotel brands the company owns. It should also be noted that Clarion and Ascend Hotel’s have relatively high international presences compared to their totals. Clarion has 48% of their rooms internationally and Ascend Hotel’s has 38% internationally.

As CHH acquired Woodspring Suites in 2018 for $231 million. This acquisition was financed with cash and revolving credit(2). We believe that Woodspring Suites will see increased international presence moving forward because CHH will now be offering international franchising for the brand.

Revenue Segment Breakdown

As stated previously, there are five revenue segments that CHH uses to generate revenue.

Marketing and Reservation System Fees

This is CHH’s largest segment, making up 56% of CHH’s revenues. Marketing and reservation system fees are paid by the franchisees. This fee is used to provide all the marketing material that each franchisee needs and also a centralized room reservation system.

This segment is technically revenue, however, as one can see in the financial statements almost all of this revenue is used up on marketing material and reservation system maintenance. This revenue segment is one of the ways that CHH can host stronger margins than their competition. They are able to pass on the marketing and system maintenance expenses to their franchisees by charging them this fee. Thus allowing them to avoid a major expense that corporate backed hotels would incur. One can think of this segment as a prepay for services.

Marketing and Reservation system fees vary between 2.50% - 3.50% of gross room revenue depending on the brand. The more properties the brand has, the higher the percentage is.

Here is the comparison of CHH to their competitors.

Company Marketing and Revenue System Fee %

CHH 2.50% - 3.50%

MAR N/A

HLT 5.00%

IHG N/A

WH 3.00% - 5.00%

H N/A

Source: Company 10-K’s

We believe CHH is positioned in a great spot with this segment. CHH’s ability to maintain very low marketing and revenue system fees helps them recognize higher margins by allowing them to charge higher royalty fees. Here is CHH’s average marketing and reservation system fee rate compared to number of domestic hotels over the past five years:

Source: Company 10-K

This graph depicts what kind of economies of scale CHH has been able to take advantage of on the marketing fron. As we mentioned this allows CHH to charge higher royalty rates, without charging a significantly higher total fee. We believe that CHH will continue to reduce marketing and reservation system fees down to a rate between 2.00% - 3.00% by 2023.

As CHH grows they will be able to capitalize on economies of scale from a marketing stand point, which makes us believe that this segment will grow slowly at a 5 year CAGR of 5.67% before reaching a CV growth rate of 2.00%.

Royalty Fees

Royalty fees are CHH’s 2nd largest revenue segment making up 36% of CHH’s revenues(1). A royalty fee is a fee that allows CHH to take a percentage of the franchisees future earnings in exchange the franchisees get the right to build a CHH brand name hotel. CHH does not supply funds to build the individual hotels, unless there is a special arrangement among franchisee. CHH is more likely to offer a assistance in development if a franchisee wants to build in a location where CHH is under-represented.

This segment is driven by the performance of the individual franchisees, if the individual franchisees can generate larger revenues then CHH will show a larger amount of royalty fee revenue. This segment can also grow by CHH increasing their royalty fee rate, which would allow them to collect a higher percentage of revenues on future earnings.

The standard royalty fee rate for a franchise contract with CHH is 5.00% - 6.00% of gross room revenue. It is

important to note that each contract is negotiated so royalty fees can often come out lower. As of 2018 the average royalty fee for CHH was 4.75%. The following graph shows the progression of CHH’s royalty fee rates over the last 5 years compared to their hotel growth:


As you can see the average royalty fee percentage has been increasing much faster lately. Which leads us to believe that management has done a much better job on negotiating more favorable royalty rates.

Compared to their peers CHH is pretty much even with their royalty rate range:

Company Royalty Fee Range

Choice Hotels 5.00% - 6.00%

Marriot International (MAR) 4.00% - 6.00%

Hilton Worldwide (HLT) 5.00 %

InterContinental Hotel Group (IHG) 5.00% - 6.00%

Wyndham Hotels (WH) 4.00% - 5.00%

Hyatt Hotels (H) 5.00% - 7.00%


As one can see, CHH is even with their peers on standard royalty fee rate. It should be noted that similar to CHH, many of these companies average royalty rate could be outside of their standard ranges due to negotiations.

As previously stated we believe that as CHH expands they will be able to capitalize on economies of scale from a marketing stand point. Due to lower marketing & reservation system fees, CHH will be able to offset that with higher higher royalty fees. We believe CHH’s average royalty fee percentage will climb above 5.50% in the next

4800

5000

5200

5400

5600

5800

6000

2.80%

3.00%

3.20%

3.40%

3.60%

3.80%

2014 2015 2016 2017 2018

Do

mes

tic

Ho

tels

Mar

keti

ng

and

Res

erva

tio

n

Syst

em F

ees

Capturing Economies of Scale

Avg. Marketing and Reservation System Fee

Domestic Hotels

370,000

380,000

390,000

400,000

410,000

420,000

430,000

440,000

450,000

460,000

4.00%

4.10%

4.20%

4.30%

4.40%

4.50%

4.60%

4.70%

4.80%

2014 2015 2016 2017 2018

Royalty Fee Rate & Domestic Rooms

Royalty Fee Rate Number of Rooms

five years as they continue to prove that their brands have increased value. An increased royalty fee rate is huge for CHH, it means higher operating margins because royalty revenue does not have a direct operating expense that offsets the revenue like other segments. Without an economic downturn in the near future we believe this segment will grow at a 5 year CAGR of 5.33% before reaching a CV growth rate of 3.00% in 2023.

Lastly, it is interesting to note that over the past five years CHH has kept their total fee percentage (royalty + marketing and reservation system fees) very close.

Year *Marketing Royalty Fee Total

2014 3.64% 4.28% 7.92%

2015 3.63% 4.30% 7.93%

2016 3.31% 4.41% 7.72%

2017 3.25% 4.60% 7.85%

2018 3.19% 4.75% 7.94%

2019E 3.10% 4.85% 7.95%

2020E 3.00% 4.95% 7.95%

2021E 2.80% 5.15% 7.95%

2022E 2.65% 5.35% 8.00%

2023E (CV) 2.50% 5.50% 8.00% Source: Company10-k *Marketing is short for marketing and reservation system fees.

We believe that CHH has a target total fee rate around 7.90% - 8.00%. We believe that these expected targets are very attainable, especially since CHH currently sits in line with or behind competitors on fee rates.

Procurement Services

Procurement services are defined as, the acquisition of goods. CHH experiences this revenue with their “qualified vendors.” CHH signs contracts with “qualified vendors” to be exclusive providers of certain products to CHH franchisees. The contracts can either be a fixed amount or a percentage (similar to royalty fees) of the sales generated by the vendors. Essentially CHH acts as a salesman for their vendors, they market the vendors products to the franchisee. Every purchase by a franchisee gives a percentage of the sale to CHH.

This segment experienced growth in sales of 29% in 2018, making it the fastest growing segment in 2018. Procurement services is the third largest revenue segment and makes up only 5% of CHH’s revenues. We believe this segment is tightly correlated with the amount of

franchised hotels & rooms. However, we also recognize that as CHH continues to grow it may allow them to receive more favorable procurement contracts thus making this a more profitable business segment. Due to the difficulty of predicting their contracts we kept our growth percentage very similar to their historical growth in this segment. This results in a 5 year CAGR of 15.79% before reaching a CV growth of 2.50%.

Initial Franchising Fees & Relicensing Fees

This segment embodies the upfront fees that franchisee’s pay to get rights to CHH’s brands. This segment is the 4th largest and makes up 4% of CHH’s total revenue.

The initial fee depends on the hotel that is being built. Each brand has a different minimum fee, and each brand also has a different fee per room. The bigger the hotel the higher the initial fee. CHH puts a minimum initial fee charge on their hotels to encourage people to build larger hotels because they know this allows them more opportunity for royalty fees in the future.

The relicensing fee comes after the franchisee’s contract expires. Once the contract expires in 10-30 years, depending on the contract, the franchisee must pay a relicensing fee that is dependent on which brand of hotel they are in possession of. The following is a breakdown of the initial fees per room as well as the minimum fee and the relicensing fees:


This segments growth depends purely on the amount of franchisees that CHH can attract. If more hotels are being built, this area will see higher growth. That being said, we also believe that CHH will attempt to keep their initial fees and relicensing fees low. Keeping these fees low makes it easier for franchisees to open new hotels, allowing CHH to gain new royalty fee revenue. Due to these conditions we believe that this segment will grow at a 5 year CAGR of 10.40% before reaching a CV growth of 3.00%.

Other

Other revenue includes any revenue that is non-franchising revenue and non-marketing & reservation system revenue. The company states that they offer some SaaS services and they have vacation rentals which they contract with professional property managers to fill.

This segment has experienced tremendous growth over the last three years. The growth is most likely due to their vacation rentals that they have been expanding into. It is hard to quantify how much revenue they have been receiving from their vacation rentals but we believe that if the segment continues to grow, eventually CHH will be

forced to recognize or separate the revenue they are generating in the “other” category.

This segments revenue is very hard to predict, as the explanation from the company is very vague. For this reason we kept the growth consistent with 2018’s Other growth rate. We believe the 5 year CAGR will be 13.72% before reaching a CV growth rate of 1.50% in 2023. We understand this is a large change, we wanted to minimize the long-term impact of a revenue segment that we weren’t very certain on.

Hotel Franchising Revenue

This number is not an official revenue segment on the income statement. However, this number attempts to show the level of revenue CHH gains from their franchise business model. Franchising revenue sums: Royalty Fees, Initial Franchise Fees & Relicensing Fees, Procurement Services and a portion of Other Revenue. The segment excludes Marketing & Reservation system fees, as well as Other fees that are considered “non-franchising.”

Below is a table showing CHH’s 5-year hotel franchising revenue growth.


As one can see, the growth of franchising revenue has been very solid over the past 5 years. We expect CHH’s franchising revenue to increase over the next 5 years at a CAGR of 9.41% before reaching a CV growth of 3.56% in 2023. Franchising revenue growth is very important because most of this is the revenue that determines profits. Growth in non-franchising revenue is matched with an expense of equal value, so most of the non-franchising revenue makes no progress toward profits.

8.76%

6.37% 6.35%

10.48%

12.19%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

2014 2015 2016 2017 2018

Growth of Franchising Revenue

CHH Total Revenue Growth

When you sum all the parts together we believe that CHH will grow in 2019,2020,2021 and 2022 by: 8.20%, 8.32%, 8.45%,8.58%. In 2023 we believe they will achieve a CV growth rate of 2.34%.

RECENT DEVELOPMENTS

Choice Hotels is constantly expanding with franchisees opening new hotels all around the world. This section will cover the highlights: overall growth, big acquisitions, and earnings.

Overall Hotel Growth

Over the past 5 years the company has grown their overall number of hotels by 10.06%. What is more impressive is that CHH has been adding hotels faster and faster each year. Below is a graph of the growth of CHH hotels over the past 5 years:


It is important to note that the spike in growth in 2018 is mainly due to the acquisition of Woodspring Suites. However, if you adjust for that acquisition CHH still has higher hotel growth than the previous year. The increasing pace of growth is a very good sign for CHH. Hotel growth is very important for CHH as just about all of their revenues are dependent on the number of hotels they franchise or the number of sales their franchisees can make. More hotels means more opportunity to gain royalty fees.

Woodspring Suites Acquisition

CHH completed the acquisition of Woodspring Suites on Feb 1st, 2018. This acquisition cost roughly $230 million. Through this acquisition CHH gained 249 new hotels that

house 29,911 rooms. This acquisition was financed by cash and the revolving credit facility that CHH holds(2)

.

Woodspring Suites is an extended stay hotel. With this acquisition CHH now has 370 properties that are in the extended stay category, meaning that extended stay makes up 5.27% of CHH’s total property count. Of the 370 properties that are extended stay hotels, 366 or 99% of the hotels are domestic.

We believe that the Woodspring Suites acquisition may be a move from CHH to expand into the international market of extended stay hotels as they are very weak in that category. However, we also recognize that their will be challenges different cultural norms.

Expanding Vacation Rentals

Choice Hotels started partnering with property management companies in 2016 to offer vacation rentals originally they only offered 1,100 vacation rentals around the United States. As of April 2018, CHH now offers over 20,000 vacation rentals around the United States.

The model for this segment is very similar to Airbnb and VRBO. CHH makes money when people book through their website. The property management companies supply and maintain the actual property. CHH’s partnership approach for penetrating the vacation rentals industry is smart because they are not exposed to massive amount of debt that it would cost to buy and maintain the properties on their own.

2018 Annual Earnings & Forward Looking

CHH had a great year in 2018. They posted an EPS of $3.83 which is an increase of 77% from 2017’s EPS of $2.16. It should be noted that a big part of this change was due to taxes. CHH’s effective tax declined by 55% from 2017 to 2018. We forecast an EPS of $4.33 which will be an increase of 13%. This EPS forecast is made with the forecast of a strong economy.

FY2018 revenues increased by 10.62% from 2017. Part of this increase is due to the acquisition of Woodspring Suites, however we also believe that CHH has done a tremendous job on expanding their brands.

In 2018 operating income increased by 10.00%, continuing the strong growth from 2017. Below we have included a

0.62% 0.69%1.42%

1.73%

5.95%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8

GROWTH IN CHH HOTELS

graph of 2015-2018 and our forecast for CHH’s 2019 operating income and revenue:


As one can see 2016 was a bad year for CHH, the dip in revenues was accompanied by an increase in selling, general and administrative expenses. The revenue decline was caused by a decrease in Marketing & Reservation System revenue. We are uncertain why SG&A increased so much with a revenue fall. Overall the combination of falling revenues and increasing expenses caused the 17% decline in operating margin.

INDUSTRY TRENDS

Overall the hotel industry has been steadily increasing since the 2008 Financial Crisis. The following graph shows revenue growth over the past 15 years for the hotel industry:

Source: IBISWorld

The dip in 2009 due to the 2008 Financial Crisis amounted to a 10.4% decline in the entire industries revenue, this goes to show how sensitive the industry is to declines in the economy. After this shock to the industry it took three years for the industry to get back to where it was previously. One can also observe that revenue growth slowed prior to the financial crisis. This is expected because as people feel the economy is slowing down they will cut out travel as a saving method. When people cut out travel it carries over to the hotel industry as well(4)

.

Franchising

The franchise hotel model has become increasingly popular among the largest hotel chains. Today the four largest hotel chains all offer franchising contracts for some of their hotels. Of the top six peers: Wyndham Hotels, and Choice Hotels franchise the most, they franchise 95% or more of their hotels. In the middle is IHG, they franchise 82% of their hotels. On the lower side, Hilton Worldwide (72%), Marriot International (68%) and Hyatt Hotels (49%) still have a significant amount of their hotels with ownership/management models. It should come as no surprise that the ownership model has resulted in higher occupancy rates overall, while franchised models have lower occupancy rates because ownership and management models allow for more corporate control over the hotels. It should also be noted that ownership model hotels have higher ADR’s compared to franchised hotels. We believe this is because it is much more expensive to build a hotel that has high ADR’s. For example to franchise Hyatt’s more expensive hotels it will cost you at least an initial fee of $100,000(13). The most expensive hotels in CHH’s portfolio will cost you an initial fee of $50,000(1).

We believe that the franchising model is the superior business model in the hotel industry. The shift from ownership to franchising in major hotel chains indicates to us that the hotel industry believes this as well.

What is the impact on CHH?

CHH and Wyndham Hotels (WH) are easily the industry leader in franchising. They have the most franchised locations and they have been working with the franchise model longer than another other hotel chains.

The franchising business model allows CHH to host the best margins out of any of their peers year-over-year. We

2015 2016 2017 2018 2019

OperatingIncome

5.00% -17% 54.80% 10% 7.50%

Revenue 13.44% -6.04% 16.51% 10.62% 10.62%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

% C

HA

NG

E

% C H A N G E I N O P E R A T I N G

I N C O M E & R E V E N U E

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Growth % of Hotel Industry Revenues

believe this model is the most favorable way to run a hotel chain, because it also eliminates the debt expenses that a company would incur with an ownership model.

Increased Alternative Lodging

As technology advances so does the hotel industry. The industry is constantly improving making it easier for guests to find the hotels or housing that suits them best. The industry is also making it easier for guests to find alternative lodging methods. One of the largest competitors to the hotel industry are companies like AirBnB.

AirBnB is a company that allows ordinary people to rent out their houses to people for short term use. The owner of the property sets a rental price and then guests can book the property at the set price for however long the property is available. AirBnB takes care of the scheduling and money transfer, making it easy and accessible.

AirBnB users have been increasing, and are forecasted to increase moving forward. Below is a graph of the number of AirBnB users:

Source: Statista

The growth is projected to be slow, but consistent. Any growth in this segment should be seen as negative for the hotel industry because it means more people aware of alternative lodging options. We believe the trend of AirBnB user growth will continue, especially as the population ages. Below is a breakdown of the AirBnB’s age demographic by familiarity:

Source: Statista

As expected, the younger population is much more familiar with AirBnB and the older population is much less familiar with the site. In the above graph you can notice that about 2 out of 3 people in the 18 – 34 yr. old range are either “somewhat familiar” or “very familiar” with AirBnB. In the 35-54 yr. old range the same measure is roughly 3 out of 5 people. As people age we believe you will see substantial growth of people familiar with AirBnB.


We believe that AirBnB should be recognized as a threat to CHH, however we also believe that CHH (and the Hotel Industry) are competing for slightly different travelers. Below is a breakdown of the length of stay in AirBnB’s:

Source: Statista

As it can be seen above the majority of AirBnB guests stay between 2 and 10 nights, with a good majority staying

between 3 and 5 nights. These are not “weekenders.” We believe that AirBnB is capturing the vacation travelers. The travelers who have set vacations and have planned out the trip in advance.

The longer length of stay in AirBnB’s makes us believe they are a larger threat to extended stay hotels than they are traditional hotels. As we discussed earlier CHH has about a 5% exposure to extended stay hotels. We believe that 5% will be fighting with AirBnB for guests.

We believe that road travelers, business travelers, and even some vacation travelers will elect to stay at hotels. We believe this is the case for the following three reasons:

Convenience: CHH and Hotels offer convenience to their guests through a multitude of services such as: airport shuttles, on site food, conference rooms, and many other amenities designed for all sorts of travelers.

Low Planning: CHH and Hotels require very little planning. In fact a lot of CHH hotels are located along interstates to entice travelers to stop while they are travelling. Guests can walk in the front door and usually get a room at any hour. AirBnB does not quite operate the same way. When booking an AirBnB there is usually some sort of planning beforehand. Day of AirBnB bookings are extremely rare.

Consistency: CHH and Hotels provide a consistent experience to customers every time you stay at a CHH hotel you know what to expect from the service. AirBnB is the opposite, the properties you choose to stay at are based on pictures that the host posts. Each AirBnB is unique and you never know what you are walking into.

Overall we believe that AirBnB is something to monitor for CHH but it is not a concern to their traditional hotels, which make up a bulk of their hotels.

Over Building?

One major threat to the hotel industry is over building. If companies expand, and start crowding markets with too many hotels all the companies begin to see lower occupancy rates. Below is the industry occupancy rate for the past 18 years:

Source: Statista

The graph above shows that the industry is at historic highs for occupancy rates, however it should also be noted that occupancy rates have seen very little change since 2014. We believe that this suggest the industry is approaching full capacity.


CHH already has a weaker occupancy rate than the rest of the industry. Rapid growth of new franchises would most likely result in decreased occupancy rates for CHH.

Cutting out the Front Desk

An older trend has resurfaced in the hotel industry. Cutting out the front desk person at hotels first became a trend around 2010. This trend involved guests checking in and out using smartphones and applications instead of a front desk person.

This idea was met with a lot of push back in 2010. However, nearly a decade later the world may finally be ready to cut out the front desk employee. Hyatt is experimenting with the transition and has now completely cut the front desk person from their Andaz hotel chain(5)

. Marriot’s Courtyard brand is experimenting with a different lobby style, they have cut the front desk but still have an attendant to assist people. We believe Marriot is slowly moving towards a no-front desk employee atmosphere by slowly getting their Courtyard guests acquainted with the idea of not having a front desk.


CHH utilizes a franchise model, because of this they are not responsible for paying the front desk person. The individual franchisee would see greater profits from this transition however, CHH would not see any immediate benefit. In fact we believe that if this trend continued, CHH would have to incur expenses to upgrade their systems to be compatible with this trend.

The benefit that CHH would see would be indirect, it would come from increased demand for franchising if profits were desirable enough to attract new franchisees. In our opinion that is a very contingent laden situation. We believe if this trend continues it will benefit the ownership hotel model more than the franchise hotel model. We believe the more important overall theme here is that the hotel industry is looking for ways to cut costs.

MARKETS AND COMPETITION

Peer Comparisons

We believe CHH faces competition from the following companies within the hotel industry:

Company Ticker Hotels Rooms Avg Rooms

Marriot International

MAR 6,906 1,317,168 190

Choice Hotels CHH 7,021 569,108 81

Hilton Worldwide

HLT 5,634 904,593 160

InterContinental Hotel Group

IHG 5,603 836,541 149

Wyndham Hotels

WH 9,157 809,933 88

Hyatt Hotels H 892 228,663 256


As one can see Wyndham Hotels has by far the most locations, and Marriot has by far the most rooms available.

We compared the above competitors with CHH from a margin stand point. We looked at Gross Margin, EBIT Margin and Net Margin.

Ticker Gross Margin EBIT Margin Net Margin

CHH 47.3% 31.0% 20.7%

MAR 16.6% 12.1% 9.2%

HLT 21.6% 16.1% 8.6%

IHG 23.1% 15.1% 8.1%

WH 27.6% 21.2% 8.7%

H 14.6% 6.1% 17.3% Source: Factset

Margins - When looking at margins from the top competitors in the hotel industry it is clear that CHH holds the absolute best margins. We believe their margin advantage is a product of using a franchised model but also a product of CHH’s effective leadership. For example, WH has 95%+ hotels franchised and they have much lower margins than CHH. This shows that not all of their margin success is simply because of their model.

Despite stagnant margin improvement among the entire industry, we expect CHH to keep their margin dominance into the near future. CHH’s ability to maintain strong margins makes us believe that they will be able to continue to expand their brands and continue to grow.

Ticker ADR Occupancy RevPAR

CHH $81.64 63.30% $51.65

MAR $182.67 73.67% $134.58

HLT $147.22 75.81% $111.61

IHG $121.27 74.20% $89.74

WH - - $40.80

H $230.00 76.96% $177.00 Source: Company 10-K’s

ADR – Average daily rate is a number that shows the average price of a room across all the hotels in the company. This number is useful in showing tier the companies hotels are in, the higher the ADR the more expensive the hotel. Having a lower ADR usually means that your brands are focused more on the lower-tier price range.

It comes as no surprise to us that CHH has one of the lowest ADR’s because when compared against the other brands they definitely offer more reasonably priced hotels. This is a big part of the reason we believe they are “price protected” from a recession. If people are forced to travel during a recession, they will likely downgrade to a lower cost hotel. For this reason we do not believe that a higher ADR is necessarily better than a lower ADR.

We find it interesting that despite WH mentioning ADR and Occupancy rates are used to calculate their RevPAR, they never once gave out historical ADR or Occupancy numbers. This leads us to believe that these numbers were much lower than the industry (probably close to CHH’s).

Occupancy- The occupancy rate is determined by the amount of booked rooms divided by the total rooms for the year. The higher the occupancy rate the better off the company is doing with getting people into their rooms.

This is an area that CHH needs to improve. CHH’s occupancy rate of 63.3% trails all of their competitors dramatically. It should be noted that Hyatt (H) posted higher than normal numbers due to a property sell off. This number can also be skewed by adjusting the number of “total rooms available” because rooms that are considered “unavailable” do not count towards the total room count.

We believe that CHH has experienced a lag in occupancy rate for two reasons. First, they are a franchising model and we believe that franchising allows for less control of occupancy. As you can see above, with exception of IHG, ownership model hotels (MAR, HLT, H) have considerably higher margins than franchising. As stated before we believe that WH’s decision to not give ADR or Occupancy rate data means they are not performing as well as they would like. This is important to note, because WH is the closest competitor to CHH.

CHH has historically been at lower occupancy levels than the industry. We believe the second reason CHH is experiencing lower revenue is because the bulk of their brands are often along interstates, rather than in large cities. Which means they are targeting car travelers who are doing multiday trips. Where as their peers, such as HLT, MAR, H, IHG offer higher quality hotels and are more frequently located in city limits, making them very nice locations to stay for people who are in the city on business or vacation.

We believe there is significant opportunity for CHH to boost their occupancy rates. This will have to be done by marketing. Despite this low occupancy rate it, CHH is still able to generate the highest margins. If they can up this occupancy rate to a number closer to the competitors average, they will easily be the best positioned company in the space.

We also believe that we will see CHH’s occupancy remain steady or decrease slightly if a recession arises, as opposed to dropping drastically like their competitors.

RevPAR- Revenue per available room is the best industry specific metric that the hotel industry has. It measure the amount of revenue generated by one room. It multiples

the occupancy rate by the ADR. A lower RevPAR does not mean anything is wrong, what should be looked at is the trend of the companies RevPAR. If employees can continually improve their overall RevPAR it means they are becoming more efficient with the room count that they have.

Over the past five years CHH has managed to grow their RevPAR from $45.80 to $51.65 (1)

. This growth represents a 12.7% increase over five years. Yet this growth trails the industry.

Who Is Best Positioned

We believe that CHH’s ability to earn the highest margins on the lowest occupancy rate and average daily rates shows their significant potential. If CHH can increase occupancy rates we believe the company will experience even higher margins making them even more profitable and ultimately earnings a higher EPS. We believe that CHH will be able to increase occupancy rates as their hotels gain more and more notoriety from the public, and their rewards programs begins to take off. We also looks favorably upon CHH’s expansion into vacation rentals as we believe it could offer a different stream of revenues.

These reasons lead us to believe that CHH is the best positioned among these competitors.

ECONOMIC OUTLOOK

Disposable Income

Below is a graph of the total disposable income in the United States over the past 3 ½ years. The upward trend is definitely a good sign for the economy as it means that households have more money they can spend. The following graph shows the percent change in disposable income from the prior period:

Source: Bureau of Economic Analysis

One can see that disposable income growth has been strong over the last five years. Only one time since 2014 has disposable income actually decreased in percentage from the prior period. We believe this momentum will continue through 2019 and disposable income growth will remain strong into 2020.

Impact on Choice Hotels?

Choice Hotels is very dependent on strong disposable income growth because of the correlation with the travel industry. If disposable income goes down people will be more inclined to cut travel expenses from their budgets. However, if disposable income were to drop significantly, CHH would be better positioned than their competitors because of the affordability of the hotel brands they own.

Disposable income also plays a role in the amount of royalty and marketing fees that CHH can collect. If disposable income is high we believe that CHH will see an increased amount of franchisee’s, which in turn results in higher fee revenue.

Consumer Confidence

The below graph shows an overlay of consumer confidence on retail sales. Both of these metrics are thought to be leading economic indicators.

Source: Econoday

Consumer confidence had a strong bounce back in February after having consecutive month declines fueled by trade tensions and the United States government shutdown. These two economic issues have been showing promising progress resulting in consumers gaining more confidence in the economy. However, in March consumer confidence lost most of the Feb gains. Despite the recent stumble in consumer confidence, the levels remain very high. If trade tensions and the government shut down resurface, combined with an inverted yield curve and slowing home starts, we believe that consumer confidence could plummet as low as 110 over the next six months.

The low retail sales numbers were expected as consumer confidence went down people were not spending as much money on discretionary purchases. We expect the next release of retail sales to have a significant increase as consumer confidence has gone back up.


Overall consumer confidence is a great metric to look at for CHH. The hotel industry and the travel industry rely on high consumer confidence because high consumer confidence means that people are willing to spend more of their income.

As we stated above, we believe that consumer confidence could fall to as low as 110 over the next six months. This would be an unfavorable drop for CHH, but relative to competitors we believe that CHH would be better protected due to their affordable hotel rates.

Housing Starts

The below graph shows housing start levels with a trailing average (which is the blue line).

Source: Econoday

The 5 Month average for housing starts has been trending downward since March 2018. To make matters worse the Dec. 2018 housing starts level dropped 11.2% to the lowest level in two years(7) . Housing starts are often looked at as a leading indicator for the economy, when housing starts do well people are more confident in the economy and vice-versa.


While we recognize that housing start data does not factor in new hotel construction, we believe housing start data is very relevant to the hotel industry because building hotels embodies many of the same characteristics as building homes. Both building a home and building a hotel require long term capital commitments, both usually require some sort of debt to finance the commitment, and both are more common in bull markets. That being said, the downward trending 5-month average leads us to believe that hotel construction may also be slowing as people become more pessimistic towards starting new construction projects. If less hotels are being built it could mean that CHH will see, either, flat or declining royalty fees in the following periods.

Interest Rates

The 10 year treasury yield has been declining since November 2018, down to a current rate of 2.40%. The 10 year yield and 1 year yields inverted in March 2019, which is usually not a good sign for the future of the economy.

We are optimistic that in the short term, rates will revert back to normal and the 10 year treasury yield will slowly climb back up somewhere around 2.75%.

The 12-month LIBOR rates have been falling since November, 2018. In November the 12-Month LIBOR hit 3.12% (the highest in 10 years). The 12-Month LIBOR is currently around 2.70% which, relative to the last 10 years, is fairly high.


Choice Hotels has a roughly $750 million in debt currently, for reference that puts them at 2.12 Debt/EBITDA ratio, which is the lowest Debt/EBITDA CHH has had in the last five years. This debt is coming from loans on office buildings, special dividend debt borrowing, and their revolving credit facility.

Choice Hotels has a $600 million line of revolving credit. The rate on that debt is based on the 12-month LIBOR plus a spread between 90 – 150 basis points. Currently that would be a rate of 3.60% - 4.20% on any debt they incur on their revolving credit line.

Choice Hotels appears to still be in a growing state, after their recent acquisition of Woodsprings Hotels. if they continue to plan on acquiring companies or expanding then their debt interest rates could become a significant factor for them.

CATALYSTS FOR GROWTH

Increased foreign exposure, especially in the extended stay brands would allow CHH to create a more diversified portfolio of brands worldwide. They are currently heavily under-represented in the extended stay category internationally.

Strategic acquisitions would allow for solid growth in a market that is very saturated. We forecast that CHH will have plenty of cash on hand to make these acquisition without debt if they so choose.

Concentrating on improving occupancy rates for the entire chain will greatly benefit the bottom line for both franchisees and CHH.

INVESTMENT POSITIVES

• Strong Margins - When compared to the top competitors in the hotel industry CHH has the strongest: gross margins, operating margins, and net margins. This leads us to believe that CHH is very profitable.

• Superb Business Model – The franchise business model allows upper management to pass major expenses to franchisees, allowing management to spend more time focusing on brand expansion.

• Slowdown Price Protection– As CHH is a more reasonably priced hotel chain, we believe they will be the alternative that people will choose with the economy begins to slowdown.

INVESTMENT NEGATIVES

• Low Occupancy Rate – CHH’s low occupancy rates are very hard to justify. It is no secret that they are much lower than their competitors. While we expect improvement on this front, we also know that this will take time and they will likely post occupancy rates that lag their competitors for the coming future.

• Shifting Extended Stay Environment – With the increased awareness of sites like AirBnB, customers now have lower cost alternative to extended stay hotels. What is troubling for CHH is that they just increased their position in extended stay hotels. Which means they either have to double down and try and compete with these sites or eventually sell off.

VALUATION

Revenue Growth

Revenue was broken down into each segment and forecasted by appropriate growth rates. The segments were then summed to come up with total revenue. Overall in 2019 we forecast a 10.62% increase in revenue. The increase is fueled by the positive outlook on the hotel industry and CHH’s ability to generate higher royalty fees while increasing hotel numbers.

Below is a quick breakdown of what we expect the continuous value growth to be for each segment.

Marketing & Reservation System Fees – CHH ideally doesn’t want to increase this amount if they don’t have to, as there is always a corresponding expense that comes

with an increase in this segment. We believe that CHH will benefit from economies of scale in this segment, as marketing will carry over between hotels and make it more efficient. Due to the economies of scale impact and an overall desire to keep growth in this segment slow. We forecast a CV growth of 2.00%

Royalty Fees – We forecasted this segment with the idea that CHH has become better at negotiating royalty percentages since they are able to offer more value to their franchisees. This was demonstrated by a graph we showed earlier in the report. We believe that the added value that CHH can offer will allow this segment to grow at a CV growth rate of 3.00%

Procurement Services – This segment is dependent on CHH’s ability to negotiate contracts with their vendors. If CHH can attract premium vendors they will see this number increase more rapidly. This segment has been the fastest growing segment for CHH, however we believe that the exponential growth this segment is seeing will soon curve off and rest at a CV growth rate of 2.50%

Initial Franchising and Relicensing Fees – These fees are generated by new hotels, or expiring contracts renewing. CHH does not want to increase the price to start a new franchise too dramatically because they would scare away franchisees. We forecasted this at a CV growth rate 3.00% to match the royalty fees rate, since the two are both heavily dependent on hotel growth.

Other- This segment is hard to determine growth for. The 10-k tells us that this segment grows due to some SaaS work that the company does, and also some non-franchising revenue that they bring in. We grew the other revenue at a historical rate, but in the CV year we decided to grow it at 1.00% to minimize the future impact. We believe that if this segment continues to grow rapidly the company will have to separate out the other segment into their own segments.

Margins

Operating Margin – CHH is the industry leader in operating margin and we believe they will look to keep this title moving forward. We forecast operating margin between 30% - 32% from 2019 to 2023. We believe the operating margin will slowly increase as the company expands, benefitting from increased royalty rates while marketing & reservation system fees slowdown.

Profit Margin- The growth we have forecasted has also allowed us to forecast steady increases in profit margin. We believe that between 2019 and 2023, CHH will experience profit margins between 21% and 23%. We believe that similarly to operating margin, profit margin will also slowly increase.

Capital Expenditures

For our capital expenditures we took a three year historical average to arrive at our 2019 prediction. If we grew Capital Expenditures by the 2018 amount, we believe that the growth of our PPE would have been way overly exaggerated.

We grew Capital expenditures by the inflation rate, to give constant growth. With the company have very inconsistent capital expenditures, it made sense to minimize the impact of this item.

WACC

The weighted average cost of capital (WACC) for CHH was calculated at 7.20%. Below are the inputs that went into this calculation.

Risk Free Rate – The 10 Year Treasury Yield was used to get a risk free rate of 2..49%. The 10 year was selected to match the time period of the bond used for the cost of debt.

Beta- The beta of 1.07 is a 3-year monthly beta gathered from Yahoo Finance.

Cos of Debt – a 4.99% cost of debt was gathered from the debt information provided by the company. The company uses LIBOR plus a spread. We used 12-Month LIBOR plus a 100- 200 basis point spread.

Cost of Equity- Using a CAPM model and the Henry Fund consensus equity risk premium of 4.95%, a 7.79% cost of equity was calculated.

Equity Risk Premium – Estimated to be 4.95% after a conversation among Henry Fund analyst.

Valuation Models

We computed three main valuation models: Discounted cash flow (DCF), dividend discount model (DDM), and a relative valuation model.

Our favored valuation approach is the DCF model. We believe this model gave the most complete and most accurate picture of CHH’s current value. This model gave us a target stock price range of $92-98, with DCF price of $96.12. This calculated DCF price represents a 17% upside for CHH. This tremendous upside is most likely due to the predicted revenue growth we believe the company will have. We are fairly bullish on the revenue growth of CHH.

The next model we constructed was a DDM. Using this model we calculated a stock price of $75.13. While we considered this model we also recognized that the uncertainty around the companies dividend, a huge component of the model, posed a huge threat to the validity of the model. The dividend increase that we forecast are not based on any historical ratio, they are predicted based on a general 3 to 4 cent increase every two to three years. We certainly are not worried about CHH’s ability to pay the dividend, as we project their EPS to be more than enough to cover the dividend. It should also be noted that CHH has paid special dividends in the past, and if the stock starts performing poorly management may elect to provide another special dividend.

The final model we built was a relative valuation model. We compared CHH to: MAR, HLT, IHG, and WH. Orignally we included Hyatt Hotels (H), however on second thought we believe that they should be taken out due to their forward PE being outrageously high (55x). These companies are all in the hotel industry. While they are not all 100% franchised, they all have a majority of their hotels franchised. We calculated a Relative PE price of $85.35.

KEYS TO MONITOR

Travel Industry – One should be aware of how the travel industry is performing, as it determines the hotel industry. If a travel slowdown occurs, the hotel industry will follow.

CHH Margins vs. Competitors– If CHH’s margin differential with competitors begins to narrow, this would be a red flag. As it shows that CHH is losing their competitive advantage.

Industry Metrics – Monitoring the industry wide RevPAR, ADR, and Occupancy trends will allow someone to get an accurate picture of where CHH stands in the industry.

REFERENCES

1. CHH 10-K 2. Choice Hotels Company Website 3. Factset 4. Statista 5. Ditch The Front Desk

https://www.bizjournals.com/bizjournals/blog/seat2B/2010/09/hotels-increasingly-ditch-the-front-desks-with-emergence-of-younger-biz.html

6. IBISWorld – Hotel Industry https://clients1.ibisworld.com/reports/us/industry/currentperformance.aspx?entid=786

7. Housing Starts & Consumer Confidence https://us.econoday.com/byshoweventfull.asp?fid=498852&cust=us&year=2019&lid=0&prev=/byweek.asp#top

8. Bureau of Economic Analysis 9. Marriot International 10-K 10. Hilton Worldwide 10-K 11. Wyndham Hotels 10-K 12. IHG 20-F 13. Hyatt Hotels 10-K

IMPORTANT DISCLAIMER

Henry Fund reports are created by students enrolled in the Applied Securities Management program at the University of Iowa’s Tippie College of Business. These reports provide potential employers and other interested parties an example of the analytical skills, investment knowledge, and communication abilities of our students. Henry Fund analysts are not registered investment advisors, brokers or officially licensed financial professionals. The investment opinion contained in this report does not represent an offer or solicitation to buy or sell any of the aforementioned securities. Unless otherwise noted, facts and figures included in this report are from publicly available sources. This report is not a complete compilation of data, and its accuracy is not guaranteed. From time to time, the University of Iowa, its faculty, staff, students, or the Henry Fund may hold an investment position in the companies mentioned in this report.




https://clients1.ibisworld.com/reports/us/industry/currentperformance.aspx?entid=786

https://clients1.ibisworld.com/reports/us/industry/currentperformance.aspx?entid=786

https://us.econoday.com/byshoweventfull.asp?fid=498852&cust=us&year=2019&lid=0&prev=/byweek.asp#top



Choice Hotels International Inc.

Revenue Decomposition

Fiscal Years Ending Dec. 31 2016 2017 2018 2019E 2020E 2021E 2022E 2023E

Total Revenue 807,909.00 941,297.00 1,041,304.00 1,126,735.15 1,220,489.30 1,323,587.77 1,437,206.19 1,472,209.76

Total Growth % ‐6.04% 16.51% 10.62% 8.20% 8.32% 8.45% 8.58% 2.44%

Royalty Fees 317,699.00 341,745.00 376,676.00 401,923.65 428,863.58 457,609.23 488,281.63 502,930.08

Growth % 5.37% 7.57% 10.22% ‐ ‐ ‐ ‐ 3.00%

Initial franchise and relicensing fees 19,720.00 23,038.00 26,072.00 29,505.56 33,391.31 37,788.80 42,765.41 44,048.37

Growth % ‐20.10% 16.83% 13.17% ‐ ‐ ‐ ‐ 3.00%

Procurement services 35,844.00 40,451.00 52,088.00 62,563.72 75,146.27 90,259.36 108,411.94 111,122.24

Growth% 32.41% 12.85% 28.77% ‐ ‐ ‐ ‐ 2.50%

Marketing and reservation system 409,120.00 499,625.00 543,677.00 582,490.57 624,075.06 668,628.32 716,362.26 730,689.51

Growth % ‐16.29% 22.12% 8.82% ‐ ‐ ‐ ‐ 2.00%

Other 25,526.00 36,438.00 42,791.00 50,251.65 59,013.07 69,302.06 81,384.94 83,419.56

Growth % 42.95% 42.75% 17.44% ‐ ‐ ‐ ‐ 2.50%

Hotel Franchising Revenue

Total Revenues 807,909.00 941,297.00 1,041,304.00 1,126,735.15 1,220,489.30 1,323,587.77 1,437,206.19 1,472,209.76

Adjustment ‐ ‐ ‐

Marketing and Reservation system 409,120.00 499,625.00 543,677.00 582,490.57 624,075.06 668,628.32 716,362.26 730,689.51

Non‐Hotel franchising revenues 8,816.00 10,818.00 14,257.00 18,615.19 24,305.62 31,735.55 41,436.72 54,103.41

Hotel Franchising Revenues 389,973.00 430,854.00 483,370.00 601,105.75 648,380.69 700,363.87 757,798.98 784,792.92

Growth % 6.35% 10.48% 12.19% 24.36% 7.86% 8.02% 8.20% 3.56%

Industry Metrics by Hotel ‐Domestic

Comfort Inn

Number of Hotel Rooms 86,310.00 84,626.00 82,901.00 81,242.98 80,430.55 79,626.24 80,422.51 82,433.07

% Growth ‐3.61% ‐1.95% ‐2.04% ‐2.00% ‐1.00% ‐1.00% 1.00% 2.50%

Average occupancy percentage 65.60% 66.00% 65.20% 65.30% 65.40% 65.50% 66.00% 68.00%

Average Daily Rate (ADR) 92.56$ 94.23$ 94.73$ 95.23$ 95.74$ 96.25$ 96.76$ 97.27$

Revenue Per Available Room (RevPAR) 60.72$ 62.19$ 61.76$ 62.19$ 62.61$ 63.04$ 63.86$ 66.14$

Comfort Suites


% Growth ‐0.77% 0.96% 0.80% 0.75% 0.75% 0.75% 0.75% 0.75%




Quality


% Growth 4.06% 4.93% 5.25% 5.50% 5.75% 6.00% 5.00% 3.50%




Clarion


% Growth ‐6.17% ‐3.50% 0.19% 0.20% 1.00% ‐0.20% ‐0.20% 0.50%




Sleep Inn


% Growth 0.18% 1.16% 2.01% 2.25% 3.00% 1.00% 0.50% 0.50%




Mainstay


% Growth 6.81% 3.43% 0.45% 0.50% 0.25% 0.00% ‐0.50% ‐0.50%




Econo Lodge


% Growth ‐0.35% ‐2.95% ‐1.06% ‐1.50% ‐1.00% ‐2.00% 2.50% 1.00%




Rodeway Inn


% Growth 12.59% 6.07% 1.84% 1.75% 1.50% 1.25% 1.00% 0.50%




Suburban


% Growth ‐6.19% 2.09% ‐14.91% ‐5.00% ‐2.50% ‐1.00% 2.00% 1.50%




Cambria


% Growth 12.53% 40.37% 15.62% 12.50% 10.00% 8.00% 4.00% 2.00%




Ascend Hotel Collection


% Growth 10.84% 24.05% 13.02% 10.00% 9.00% 5.00% 4.00% 3.00%




WoodSpring

Number of Hotel Rooms 29,911.00 32,902.10 35,534.27 37,666.32 39,926.30 41,124.09

% Growth ‐ 10.00% 8.00% 6.00% 6.00% 3.00%

Average occupancy percentage ‐ ‐ 80.10% 80.10% 80.10% 80.10% 80.10% 80.10%

Average Daily Rate (ADR) ‐ ‐ 45.92$ 46.84$ 47.78$ 48.73$ 49.71$ 50.70$

Revenue Per Available Room (RevPAR) ‐ ‐ 36.78$ 37.52$ 38.27$ 39.03$ 39.81$ 40.61$

Total Hotels 404,498.00 413,015.00 450,028.00 461,097.36 474,014.53 485,255.50 498,943.19 509,730.70

Total % Growth 1.03% 2.11% 8.96% 2.46% 2.80% 2.37% 2.82% 2.16%

Choice Hotels International Inc.Income Statement (thousands)

Fiscal Years Ending Dec. 31 2016 2017 2018 2019E 2020E 2021E 2022E 2023ERevenues:

Royalty Fees 317,699.00 341,745.00 376,676.00 401,923.65 428,863.58 457,609.23 488,281.63 502,930.08 Franchise and relicensing fees 19,720.00 23,038.00 26,072.00 29,505.56 33,391.31 37,788.80 42,765.41 44,048.37 Procurement services 35,844.00 40,451.00 52,088.00 62,563.72 75,146.27 90,259.36 108,411.94 111,122.24 Marketing and reservation system 409,120.00 499,625.00 543,677.00 582,490.57 624,075.06 668,628.32 716,362.26 730,689.51 Other 25,526.00 36,438.00 42,791.00 50,251.65 59,013.07 69,302.06 81,384.94 83,419.56 Total revenues 807,909.00 941,297.00 1,041,304.00 1,126,735.15 1,220,489.30 1,323,587.77 1,437,206.19 1,472,209.76

Operating Expenses:Selling, general & administrative expenses 154,720.00 165,821.00 170,027.00 185,911.30 207,483.18 231,627.86 251,511.08 257,741.01 Depreciation & amortization expenses 6,996.00 6,680.00 14,330.00 27,974.36 27,909.78 27,690.82 28,521.67 29,306.23 Marketing & reservation system expense 459,765.00 479,400.00 534,266.00 572,407.71 613,272.38 657,054.42 716,362.26 730,689.51 Total operating expenses 621,481.00 651,901.00 718,623.00 786,293.36 848,665.34 916,373.10 996,395.01 1,017,736.75

Impairment of goodwill ‐ ‐ (4,289.00) ‐ ‐ ‐ ‐ ‐ Gain (loss) on sale of assets, net 627.00 257.00 82.00 ‐ ‐ ‐ ‐ ‐ Operating income 187,055.00 289,653.00 318,474.00 340,441.78 371,823.96 407,214.66 440,811.17 454,473.01

Other Income and Expenses:Interest expense 44,446.00 45,039.00 45,908.00 36,923.03 44,350.69 45,074.69 44,779.88 45,945.05 Interest income (3,535.00) (5,920.00) (7,452.00) (7,390.20) (8,005.13) (8,681.35) (9,426.57) (9,656.16) Other gains (losses) (1,504.00) (3,229.00) 1,437.00 1,437.00 1,437.00 1,437.00 1,437.00 1,437.00 Equity in net income (loss) of affiliates (492.00) 4,546.00 5,323.00 5,323.00 5,323.00 5,323.00 5,323.00 5,323.00 Total other income (expenses), net 38,915.00 40,436.00 45,216.00 22,772.83 29,585.56 29,633.34 28,593.31 29,528.89

Income from before income taxes 148,140.00 249,217.00 273,258.00 317,668.95 342,238.40 377,581.32 412,217.86 424,944.12 Income taxes 41,428.00 126,890.00 56,903.00 74,334.54 80,083.79 88,354.03 96,458.98 99,436.92 Income from discontinued operations ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

Net income 106,712.00 122,327.00 216,355.00 243,334.42 262,154.62 289,227.29 315,758.88 325,507.19

Weighted average shares outstanding ‐ basic 55,872.00 56,114.00 56,130.00 56,066.38 56,021.92 55,995.70 55,817.40 55,486.19Net earnings per share ‐ basic 1.91 2.16 3.83 4.34 4.68 5.17 5.66 5.87Dividends per common share 0.83 0.86 0.86 0.86 0.86 0.90 0.93 0.97

Choice Hotels International Inc.Balance Sheet (thousands)


Current assets:Cash & cash equivalents 202,463.00 235,336.00 26,642.00 204,942.60 785,801.4 777,088.3 1,432,527.39 1,383,962.21Receivables, net 107,336.00 125,870.00 138,018.00 140,613.87 152,314.1 165,180.6 179,359.9 183,728.2Income taxes receivable 316.00 ‐ 10,122.00 4,149.80 4,495.1 4,874.8 5,293.2 5,422.2Notes receivable, net of allowances 7,873.00 13,256.00 36,759.00 39,774.80 43,084.4 46,723.8 50,734.7 51,970.3Other current assets 26,885.00 25,967.00 32,243.00 29,641.85 32,108.31 34,820.59 37,809.64 38,730.50

Total current assets 344,873.00 400,429.00 243,784.00 419,122.91 1,017,803.43 1,028,688.21 1,705,724.94 1,663,813.57

Property & equipment, at cost, net 84,061.00 83,374.00 127,535.00 152,402.98 176,390.39 199,564.70 221,989.46 243,724.59 Goodwill 78,905.00 80,757.00 168,996.00 168,996.00 168,996.00 168,996.00 168,996.00 168,996.00 Intangible assets, net 15,738.00 100,492.00 271,188.00 251,088.00 232,588.00 215,788.00 199,588.00 183,988.00 Notes receivable, net of allowances 110,608.00 80,136.00 83,440.00 84,505.14 85,434.25 79,415.27 71,860.31 58,888.39 Investments, employee benefit plans, at fair value 16,975.00 20,838.00 19,398.00 27,126.35 34,159.86 36,482.80 38,185.83 39,891.78 Investments in unconsolidated entities 94,839.00 134,226.00 109,016.00 124,700.18 157,033.31 167,711.88 175,540.75 183,383.02 Deferred income taxes 52,812.00 27,224.00 30,613.00 48,043.03 51,758.82 57,103.95 62,342.25 64,266.92 Other assets 53,657.00 67,715.00 84,400.00 82,403.72 89,260.42 96,800.53 105,110.00 107,669.99

Total assets 852,468.00 995,191.00 1,138,370.00 1,358,388.31 2,013,424.50 2,050,551.33 2,749,337.55 2,714,622.25

Liabilities & Equity Current liabilities:

Accounts payable 48,071.00 67,839.00 73,511.00 79,425.86 86,034.78 93,302.41 101,311.60 103,779.07 Accrued expenses and other current liabilties 80,388.00 84,315.00 92,651.00 100,246.86 108,588.27 117,761.05 127,869.80 130,984.11 Deferred revenue 133,218.00 52,142.00 67,614.00 67,787.67 73,428.19 79,630.90 86,466.51 88,572.43 Liability for guest loyalty program ‐ 79,123.00 83,566.00 92,566.21 100,268.52 108,738.51 118,072.76 120,948.45 Current portion of long‐term debt 1,195.00 1,232.00 1,097.00 1,097.00 257,196.00 ‐ 404,496.00 91,822.00 Income taxes payable 796.00 ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total current liabilities 263,668.00 284,651.00 318,439.00 341,123.60 625,515.76 399,432.86 838,216.67 536,106.07

Long term debt 839,409.00 725,292.00 753,514.00 739,940.50 888,791.40 903,300.42 897,392.33 920,742.47 Long term deferred revenue ‐ 98,459.00 110,278.00 118,590.59 128,458.36 139,309.63 151,268.14 154,952.32 Deferred compensation and retirement plan obligations 21,595.00 25,566.00 24,212.00 30,505.65 33,043.99 35,835.31 38,911.46 39,859.16 Income taxes payable ‐ 29,041.00 26,276.00 25,669.05 27,654.36 30,510.23 33,309.01 34,337.35 Deferred income taxes 292.00 39.00 ‐ ‐ ‐ ‐ ‐ ‐ Liability for guest loyalty program ‐ 48,701.00 52,327.00 57,457.63 62,238.61 67,496.10 73,290.04 75,075.04 Other liabilties 38,853.00 42,043.00 37,096.00 48,216.88 52,228.94 56,640.88 61,503.01 63,000.93

Total liabilities 1,163,817.00 1,253,792.00 1,322,142.00 1,361,503.90 1,817,931.42 1,632,525.43 2,093,890.67 1,824,073.34

Common Stock & Additional Paid in Capital 159,996.00 183,399.00 214,121.00 232,465.88 250,810.76 269,155.64 278,328.09 278,328.09 Accumulated other comprehensive income (loss) (8,522.00) (4,699.00) (5,446.00) (5,446.00) (5,446.00) (5,446.00) (5,446.00) (5,446.00) Treasury stock, at cost (1,070,383.00) (1,064,573.00) (1,187,625.00) (1,220,430.79 (1,254,142.78 (1,288,786.00 (1,324,386.17 (1,360,969.72Retained earnings 607,560.00 627,272.00 795,178.00 990,295.33 1,204,271.09 1,443,102.26 1,706,950.96 1,978,636.54

Total shareholders' equity (deficit) (311,349.00) (258,601.00) (183,772.00) (3,115.58) 195,493.07 418,025.90 655,446.88 890,548.91

Total liabilties and equity 852,468.00 995,191.00 1,138,370.00 1,358,388.31 2,013,424.50 2,050,551.33 2,749,337.55 2,714,622.25

Choice Hotels International Inc.Cash Flow Statement (thousands)

Fiscal Years Ending Dec. 31 2019E 2020E 2021E 2022E 2023EScale Thousands Thousands Thousands Thousands Thousands

Cash Flows From Operating ActivitiesNet income 243,334.42 262,154.62 289,227.29 315,758.88 325,507.19 Depreciation and amortization 27,974.36 27,909.78 27,690.82 28,521.67 29,306.23 Receivables, net (2,595.87) (11,700.30) (12,866.44) (14,179.31) (4,368.36) Income taxes receivable 5,972.20 (345.30) (379.72) (418.46) (128.92) Notes receivable, net of allowances (3,015.80) (3,309.61) (3,639.47) (4,010.84) (1,235.66) Other current assets 2,601.15 (2,466.46) (2,712.29) (2,989.04) (920.86) Accounts payable 5,914.86 6,608.92 7,267.62 8,009.19 2,467.47 Accrued expenses and other current liabilties 7,595.86 8,341.41 9,172.78 10,108.75 3,114.31 Deferred revenue 173.67 5,640.52 6,202.70 6,835.62 2,105.92 Liability for guest loyalty program 9,000.21 7,702.31 8,469.99 9,334.25 2,875.70 Notes receivable, net of allowances (1,065.14) (929.12) 6,018.98 7,554.96 12,971.92 Deferred income taxes (17,430.03) (3,715.79) (5,345.13) (5,238.30) (1,924.67) Other assets 1,996.28 (6,856.71) (7,540.10) (8,309.48) (2,559.98) Deferred compensation and retirement plan obligations 8,312.59 9,867.77 10,851.27 11,958.51 3,684.18 Income taxes payable 6,293.65 2,538.34 2,791.33 3,076.15 947.70 Deferred income taxes (606.95) 1,985.32 2,855.86 2,798.78 1,028.34 Liability for guest loyalty program 5,130.63 4,780.97 5,257.49 5,793.95 1,785.00 Other liabilties 11,120.88 4,012.06 4,411.94 4,862.12 1,497.92

Cash Flows From Operating Activities 310,706.97 312,218.75 347,734.94 379,467.42 376,153.42

Cash Flows From Investing ActivitiesInvestments, employee benefit plans, at fair value (7,728.35) (7,033.51) (2,322.94) (1,703.03) (1,705.95) Investments in unconsolidated entities (15,684.18) (32,333.13) (10,678.57) (7,828.87) (7,842.26) Capital expenditures (32,742.34) (33,397.19) (34,065.13) (34,746.43) (35,441.36)

Cash Flows From Investing Activities (56,154.87) (72,763.83) (47,066.64) (44,278.34) (44,989.57)

Cash Flows From Financing ActivitiesLong term debt (13,573.50) 148,850.90 14,509.02 (5,908.09) 23,350.13 Current portion of long‐term debt ‐ 256,099.00 (257,196.00) 404,496.00 (312,674.00) Dividends paid (48,217.09) (48,178.85) (50,396.13) (51,910.18) (53,821.61) Treasury Stock (32,805.79) (33,711.99) (34,643.22) (35,600.17) (36,583.55) Common equity 18,344.88 18,344.88 18,344.88 9,172.44 ‐

Cash Flows From Financing Activities (76,251.50) 341,403.94 (309,381.44) 320,250.01 (379,729.03)

Increase (decrease) in cash & cash equivalents 178,300.60 580,858.86 (8,713.14) 655,439.08 (48,565.18) Cash & cash equivalents, including restricted cash, at beginning of year 26,642.00 204,942.60 785,801.45 777,088.31 1,432,527.39

Cash & cash equivalents, including restricted cash, at end of year 204,942.60 785,801.45 777,088.31 1,432,527.39 1,383,962.21

Choice Hotels International Inc.Cash Flow Statement (thousands)

Fiscal Years Ending Dec. 31 2014 2015 2016 2017 2018Cash flows from operating activities:

Net income 123,160.00 128,029.00 106,712.00 122,327.00 216,355.00

Depreciation & amortization 9,365.00 11,542.00 6,996.00 6,680.00 14,330.00

Depreciation & amortization ‐ marketing & reservation system ‐ ‐ 20,663.00 20,609.00 19,597.00

Franchise agreement acquisition cost amortization ‐ ‐ 6,423.00 7,191.00 9,239.00

Impairment of goodwill ‐ ‐ ‐ ‐ 4,289.00

Gain on disposal of asset (loss) (2,809.00) (1,521.00) (571.00) (237.00) (56.00)

Provision for bad debts, net 2,775.00 1,704.00 3,365.00 5,514.00 10,542.00

Non‐cash stock compensation & other charges 9,706.00 11,805.00 15,346.00 22,857.00 15,986.00

Non‐cash interest & other investment loss (income) 3,174.00 3,229.00 1,059.00 (772.00) 3,695.00

Deferred income taxes (22,899.00) 615.00 (29,723.00) 57,106.00 (3,510.00)

Equity in net losses from unconsolidated joint ventures, less distributions 2,200.00 3,279.00 1,025.00 6,579.00 7,389.00

Franchise agreement acquisition cost, net of reimbursements ‐ ‐ (17,410.00) (30,638.00) (52,929.00)

Change in working capital & other, net of acquisition 59,219.00 1,190.00 38,150.00 40,158.00 (2,031.00)

Net cash flows from operating activities 183,891.00 159,872.00 152,035.00 257,374.00 242,896.00

Investing Activities

Investment in property & equipment (20,946.00) (27,765.00) (25,191.00) (23,437.00) (47,673.00)

Investment in intangible assets ‐ ‐ (2,580.00) (2,517.00) (1,803.00)

Proceeds from sales of assets 15,612.00 6,347.00 11,462.00 1,000.00 3,053.00

Asset acquisition, net of cash acquired ‐ (13,269.00) (28,583.00) ‐ (3,179.00)

Business acquisition, net of cash acquired ‐ ‐ (1,341.00) ‐ (231,317.00)

Contributions to equity method investments (17,789.00) (23,737.00) (34,661.00) (50,554.00) (9,604.00)

Distributions from equity method investments ‐ 518.00 3,700.00 4,569.00 1,429.00

Purchase of investments, employee benefit plans (2,794.00) (3,220.00) (1,661.00) (2,447.00) (2,895.00)

Proceeds from sales of investments, employee benefit plans 964.00 3,170.00 1,911.00 2,245.00 2,825.00

Issuance of notes receivable (3,340.00) (36,884.00) (32,604.00) (19,738.00) (36,045.00)

Collections of notes receivable 11,289.00 4,849.00 11,070.00 655.00 4,997.00

Other items, net (642.00) (9,819.00) 11.00 109.00 (1,040.00)

Net cash flows from investing activities (17,646.00) (99,810.00) (98,467.00) (90,115.00) (321,252.00)

Financing Activities

Proceeds from issuance of long term debt 250.00 176.00 ‐ ‐ 9,037.00

Net borrowings (repayments) pursuant to revolving credit facilities ‐ 158,867.00 25,795.00 (115,003.00) 20,600.00

Principal payments on long‐term debt (10,108.00) (130,501.00) (988.00) (660.00) (603.00)

Proceeds from other debt agreements ‐ ‐ 550.00 ‐ ‐

Excess tax benefits from stock‐based compensation 3,721.00 5,207.00

Debt issuance costs ‐ (2,169.00) (284.00) ‐ (2,590.00)

Purchases of treasury stock (77,972.00) (72,873.00) (35,926.00) (9,807.00) (148,679.00)

Dividends paid (43,529.00) (45,214.00) (46,182.00) (48,651.00) (48,715.00)

Proceeds from transfer of interest in notes receivable ‐ ‐ ‐ 24,237.00 173.00

Proceeds from exercise of stock options 10,098.00 7,056.00 12,951.00 14,107.00 41,360.00

Net cash flows from financing activities (117,540.00) (79,451.00) (44,084.00) (135,777.00) (129,417.00)

Net change in cash & cash equivalents 48,705.00 (19,389.00) 9,484.00 31,482.00 (207,773.00)

Effect of foreign exchange rate changes on cash & cash equivalents (1,621.00) (2,049.00) (462.00) 1,391.00 (921.00)

Cash & cash equivalents at beginning of period 167,795.00 214,879.00 193,441.00 202,463.00 235,336.00

Cash & cash equivalents at end of period 214,879.00 193,441.00 202,463.00 235,336.00 26,642.00


Common Size Income Statement


Revenues:

Royalty Fees 39.32% 36.31% 36.17% 35.67% 35.14% 34.57% 33.97% 34.16%

Franchise and relicensing fees 2.44% 2.45% 2.50% 2.62% 2.74% 2.86% 2.98% 2.99%

Procurement services 4.44% 4.30% 5.00% 5.55% 6.16% 6.82% 7.54% 7.55%

Marketing and reservation system 50.64% 53.08% 52.21% 51.70% 51.13% 50.52% 49.84% 49.63%

Other 3.16% 3.87% 4.11% 4.46% 4.84% 5.24% 5.66% 5.67%

Total revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Operating Expenses:

Selling, general & administrative expenses 19.15% 17.62% 16.33% 16.50% 17.00% 17.50% 17.50% 17.51%

Depreciation & amortization expenses 0.87% 0.71% 1.38% 2.48% 2.29% 2.09% 1.98% 1.99%

Marketing & reservation system expense 112.38% 95.95% 98.27% 98.27% 98.27% 98.27% 100.00% 100.00%

Total operating expenses 76.92% 69.26% 69.01% 69.79% 69.53% 69.23% 69.33% 69.13%

Impairment of goodwill 0.00% 0.00% ‐0.41% 0.00% 0.00% 0.00% 0.00% 0.00%

Gain (loss) on sale of assets, net 0.08% 0.03% 0.01% 0.00% 0.00% 0.00% 0.00% 0.00%

Operating income 23.15% 30.77% 30.58% 30.21% 30.47% 30.77% 30.67% 30.87%

Other Income and Expenses:

Interest expense 5.50% 4.78% 4.41% 3.28% 3.63% 3.41% 3.12% 3.12%

Interest income ‐0.44% ‐0.63% ‐0.72% ‐0.66% ‐0.66% ‐0.66% ‐0.66% ‐0.66%

Other gains (losses) ‐0.19% ‐0.34% 0.14% 0.13% 0.12% 0.11% 0.10% 0.10%

Equity in net income (loss) of affiliates ‐0.06% 0.48% 0.51% 0.47% 0.44% 0.40% 0.37% 0.36%

Total other income (expenses), net 4.82% 4.30% 4.34% 2.02% 2.42% 2.24% 1.99% 2.01%

Income from before income taxes 18.34% 26.48% 26.24% 28.19% 28.04% 28.53% 28.68% 28.86%

Income taxes 5.13% 13.48% 5.46% 6.60% 6.56% 6.68% 6.71% 6.75%

Income from discontinued operations 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Net income 13.21% 13.00% 20.78% 21.60% 21.48% 21.85% 21.97% 22.11%


Common Size Balance Sheet

Fiscal Years Ending Dec. 31 2016 2017 2018 2019E 2020E 2021E 2022E 2023EAssets

Current assets:

Cash & cash equivalents 25.06% 25.00% 2.56% 18.19% 64.38% 58.71% 99.67% 94.01%

Receivables, net 13.29% 13.37% 13.25% 12.48% 12.48% 12.48% 12.48% 12.48%

Income taxes receivable 0.04% 0.00% 0.97% 0.37% 0.37% 0.37% 0.37% 0.37%

Notes receivable, net of allowances 0.97% 1.41% 3.53% 3.53% 3.53% 3.53% 3.53% 3.53%

Other current assets 3.33% 2.76% 3.10% 2.63% 2.63% 2.63% 2.63% 2.63%

Total current assets 42.69% 42.54% 23.41% 37.20% 83.39% 77.72% 118.68% 113.01%

Property & equipment, at cost, net 10.40% 8.86% 12.25% 13.53% 14.45% 15.08% 15.45% 16.56%

Goodwill 9.77% 8.58% 16.23% 15.00% 13.85% 12.77% 11.76% 11.48%

Intangible assets, net 1.95% 10.68% 26.04% 22.28% 19.06% 16.30% 13.89% 12.50%

Notes receivable, net of allowances 13.69% 8.51% 8.01% 7.50% 7.00% 6.00% 5.00% 4.00%

Investments, employee benefit plans, at fair value 2.10% 2.21% 1.86% 2.41% 2.80% 2.76% 2.66% 2.71%

Investments in unconsolidated entities 11.74% 14.26% 10.47% 11.07% 12.87% 12.67% 12.21% 12.46%

Deferred income taxes 6.54% 2.89% 2.94% 4.26% 4.24% 4.31% 4.34% 4.37%

Other assets 6.64% 7.19% 8.11% 7.31% 7.31% 7.31% 7.31% 7.31%

Total assets 105.52% 105.73% 109.32% 120.56% 164.97% 154.92% 191.30% 184.39%

Liabilities & Equity

Current liabilities:

Accounts payable 5.95% 7.21% 7.06% 7.05% 7.05% 7.05% 7.05% 7.05%

Accrued expenses and other current liabilties 9.95% 8.96% 8.90% 8.90% 8.90% 8.90% 8.90% 8.90%

Deferred revenue 16.49% 5.54% 6.49% 6.02% 6.02% 6.02% 6.02% 6.02%

Liability for guest loyalty program 0.00% 8.41% 8.03% 8.22% 8.22% 8.22% 8.22% 8.22%

Income taxes payable 0.10% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total current liabilities 32.64% 30.24% 30.58% 30.28% 51.25% 30.18% 58.32% 36.42%

Long term debt 103.90% 77.05% 72.36% 65.67% 72.82% 68.25% 62.44% 62.54%

Long term deferred revenue 0.00% 10.46% 10.59% 10.53% 10.53% 10.53% 10.53% 10.53%

Deferred compensation and retirement plan obligations 2.67% 2.72% 2.33% 2.71% 2.71% 2.71% 2.71% 2.71%

Income taxes payable 0.00% 3.09% 2.52% 2.28% 2.27% 2.31% 2.32% 2.33%

Deferred income taxes 0.04% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Liability for guest loyalty program 0.00% 5.17% 5.03% 5.10% 5.10% 5.10% 5.10% 5.10%

Other liabilties 4.81% 4.47% 3.56% 4.28% 4.28% 4.28% 4.28% 4.28%

Total liabilities 144.05% 133.20% 126.97% 120.84% 148.95% 123.34% 145.69% 123.90%

Common Stock & Additional Paid in Capital 19.80% 19.48% 20.56% 20.63% 20.55% 20.34% 19.37% 18.91%

Accumulated other comprehensive income (loss) ‐1.05% ‐0.50% ‐0.52% ‐0.48% ‐0.45% ‐0.41% ‐0.38% ‐0.37%

Treasury stock, at cost ‐132.49% ‐113.10% ‐114.05% ‐108.32% ‐102.76% ‐97.37% ‐92.15% ‐92.44%

Retained earnings 75.20% 66.64% 76.36% 87.89% 98.67% 109.03% 118.77% 134.40%

Total shareholders' equity (deficit) ‐38.54% ‐27.47% ‐17.65% ‐0.28% 16.02% 31.58% 45.61% 60.49%

Total liabilties and equity 105.52% 105.73% 109.32% 120.56% 164.97% 154.92% 191.30% 184.39%


Value Driver Estimation (thousands)


Revenue 807,909.00 941,297.00 1,041,304.00 1,126,735.15 1,220,489.30 1,323,587.77 1,437,206.19 1,472,209.76

Less Depreciation & Ammortization 6,996.00 6,680.00 14,330.00 27,974.36 27,909.78 27,690.82 28,521.67 29,306.23

Less Marketing & Reservation System Expense 459,765.00 479,400.00 534,266.00 572,407.71 613,272.38 657,054.42 716,362.26 730,689.51

Less SG&A Expense 154,720.00 165,821.00 170,027.00 185,911.30 207,483.18 231,627.86 251,511.08 257,741.01

Plus Implied Interest on Operating Leases (4.99%) 2,596.10 2,398.28 1,655.03 1,977.74 2,289.03 2,589.76 2,880.77 3,162.83

EBITA 189,024.10 291,794.28 324,336.03 342,419.52 374,112.99 409,804.43 443,691.94 457,635.84

Tax Adjustment

Income Tax Expense 41,428.00 126,890.00 56,903.00 74,334.54 80,083.79 88,354.03 96,458.98 99,436.92

Marginal Tax Rate 41.00% 39.00% 23.40% 23.40% 23.40% 23.40% 23.40% 23.40%

Plus Tax Shield on Interest Expense 18,222.86 17,565.21 10,742.47 8,639.99 10,378.06 10,547.48 10,478.49 10,751.14

Plus Tax Shield on Impairment of Goodwill ‐ ‐ (1,003.63) ‐ ‐ ‐ ‐ ‐

Plus Tax Shield on interest of Operating Leases 1,064.40 935.33 387.28 462.79 535.63 606.00 674.10 740.10

Plus Tax Shield on Other Operating Expenses 616.64 1,259.31 ‐ ‐ ‐ ‐ ‐ ‐

Less Total Adjusted Tax 61,331.90 146,649.85 67,029.12 83,437.32 90,997.48 99,507.51 107,611.57 110,928.17

Plus Change In Deferred Tax 10,592.00 (25,335.00) 3,428.00 17,430.03 3,715.79 5,345.13 5,238.30 1,924.67

NOPLAT 138,284.20 119,809.43 260,734.91 276,412.24 286,831.30 315,642.04 341,318.67 348,632.34

Invested Capital

Normal Cash (5% of sales) 40,395.45 47,064.85 52,065.20 56,336.76 61,024.46 66,179.39 71,860.31 73,610.49

Accounts Recievable 107,336.00 125,870.00 138,018.00 140,613.87 152,314.16 165,180.61 179,359.92 183,728.28

Other Current Assets 26,885.00 25,967.00 32,243.00 29,641.85 32,108.31 34,820.59 37,809.64 38,730.50

Non‐Interest Bearing Current Operating Assets 174,616.45 198,901.85 222,326.20 226,592.47 245,446.94 266,180.59 289,029.86 296,069.27

Less Accounts Payable 48,071.00 67,839.00 73,511.00 79,425.86 86,034.78 93,302.41 101,311.60 103,779.07

Less Liability for Rewards Program ‐ 79,123.00 83,566.00 92,566.21 100,268.52 108,738.51 118,072.76 120,948.45

Less Income tax payable 796.00 ‐ ‐ ‐ ‐ ‐ ‐ ‐

Less Accrued Expenses and Other Liabilities 80,388.00 84,315.00 92,651.00 100,246.86 108,588.27 117,761.05 127,869.80 130,984.11

Non‐Interest Bearing Current Operating Liabilities 129,255.00 231,277.00 249,728.00 272,238.93 294,891.57 319,801.96 347,254.16 355,711.64

Net Operating Working Capital 45,361.45 (32,375.15) (27,401.80) (45,646.45) (49,444.63) (53,621.37) (58,224.30) (59,642.37)

Net property, plant & equipment 84,061.00 83,374.00 127,535.00 152,402.98 176,390.39 199,564.70 221,989.46 243,724.59

Plus PV of Operating Leases 52,026.09 48,061.78 33,166.90 39,634.10 45,872.29 51,899.03 57,730.84 63,383.30

Plus Intangible Assets 15,738.00 100,492.00 271,188.00 251,088.00 232,588.00 215,788.00 199,588.00 183,988.00

Plus other operating assets 53,657.00 67,715.00 84,400.00 82,403.72 89,260.42 96,800.53 105,110.00 107,669.99

Plus Net Other Operating Asses 205,482.09 299,642.78 516,289.90 525,528.80 544,111.11 564,052.25 584,418.31 598,765.88

Less Long Term Liability for Rewards Program ‐ 48,701.00 52,327.00 57,457.63 62,238.61 67,496.10 73,290.04 75,075.04 Less Other Operating Liabilities 38,853.00 42,043.00 37,096.00 48,216.88 52,228.94 56,640.88 61,503.01 63,000.93

Invested Capital 211,990.54 176,523.63 399,465.10 374,207.83 380,198.92 386,293.90 391,400.95 401,047.53

WACC 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30% 7.30%

Beginning Invested Capital 122,425.38 211,990.54 176,523.63 399,465.10 374,207.83 380,198.92 386,293.90 391,400.95

Change in Invested Capital 89,565.16 (35,466.91) 222,941.48 (25,257.27) 5,991.09 6,094.98 5,107.05 9,646.58

Ending Invested Capital 211,990.54 176,523.63 399,465.10 374,207.83 380,198.92 386,293.90 391,400.95 401,047.53

ROIC ( NOPLAT/Beginning IC) 112.95% 56.52% 147.71% 69.20% 76.65% 83.02% 88.36% 89.07%

FCF ( NOPLAT ‐ Change in IC) 48,719.04 155,276.34 37,793.43 301,669.51 280,840.21 309,547.06 336,211.61 338,985.76

EP (Beginning IC * ( ROIC ‐ WACC )) 129,349.63 104,338.42 247,852.26 247,259.39 259,521.72 287,895.23 313,127.05 320,068.01

NOPLAT: 138,284.20 119,809.43 260,734.91 276,412.24 286,831.30 315,642.04 341,318.67 348,632.34

Less: change in IC (IC1‐IC0): 89,565.16 (35,466.91) 222,941.48 (25,257.27) 5,991.09 6,094.98 5,107.05 9,646.58

FCF: 48,719.04 155,276.34 37,793.43 301,669.51 280,840.21 309,547.06 336,211.61 338,985.76

NOPLAT: 138,284.20 119,809.43 260,734.91 276,412.24 286,831.30 315,642.04 341,318.67 348,632.34

IC0: 122,425.38 211,990.54 176,523.63 399,465.10 374,207.83 380,198.92 386,293.90 391,400.95

ROIC: 112.95% 56.52% 147.71% 69.20% 76.65% 83.02% 88.36% 89.07%

IC0: 122,425.38 211,990.54 176,523.63 399,465.10 374,207.83 380,198.92 386,293.90 391,400.95

Multiplied by: (ROIC‐ WACC) : 105.66% 49.22% 140.41% 61.90% 69.35% 75.72% 81.06% 81.77%

EP: 129,349.63 104,338.42 247,852.26 247,259.39 259,521.72 287,895.23 313,127.05 320,068.01


Weighted Average Cost of Capital (WACC) Estimation

Risk Free Rate 2.60%

Equity Risk Premium 4.95%Beta 1.07

Cost of Equity 7.90%

Pre Tax Cost of Debt 4.99%Marginal Tax Rate 23.40%

After Tax Cost of Debt 3.82%

Total Shares Outstanding 56,130.00 Share Price $81.50

Value of Equity $4,574,595.00

Current Portion of LT debt and ST debt 1,097.00

Long‐Term Debt 753,514.00 PV of Operating Leases 33,166.90

Value of Debt 787,777.90

Total Value $5,362,372.90

Weight of Equity 85.31%

Weight of Debt 14.69%

Weighted Cost of Equity 6.74%Weighted Cost of Debt 0.56%

WACC 7.30%

Choice Hotels International Inc.Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models

Key Inputs: CV Growth 2.14% CV ROIC 89.07% WACC 7.30% Cost of Equity 7.90%CV ROE 36.55%

Fiscal Years Ending Dec. 31 2019E 2020E 2021E 2022E 2023E

1 2 3 4 4DCF Model

NOPLAT 276,412.24 286,831.30 315,642.04 341,318.67 348,632.34 Change in Invested Capital (25,257.27) 5,991.09 6,094.98 5,107.05 9,646.58 FCF 301,669.51 280,840.21 309,547.06 336,211.61 338,985.76 CV 6,600,042.74 Discount Factor 1.0730 1.1513 1.2353 1.3255 1.3255PV of FCF 281,151.18 243,936.20 250,583.32 253,656.89 4,979,442.28

Value of Operating Assets 6,008,769.87

EP Model

Economic Profit 247,259.39 259,521.72 287,895.23 313,127.05 320,068.01 CV 6,208,641.78 Discount Factor 1.0730 1.1513 1.2353 1.3255 1.3255 PV 230,441.81 225,419.09 233,055.81 236,240.60 4,684,147.45 Sum of PV's 5,609,304.77 Beg IC 399,465.10

Value of Operating Assets 6,008,769.87

Investments, employee benefit plans, at fair value 19398.00

Investments in unconsolidated entities 109016.00Value of Non‐Operating Assets 109016.00

Current Portion of Debt 1097.00Long Term Debt 753,514.00 Retirement Benefit Obligation Liabilities 24,212.00 ESOP 16,525.10 PV of Operating Leases 33,166.90 Value of Non‐Operating Liabilties 827,418.00

Value of Equity 5,290,367.87 Next FYE 12/31/2019Shares Outstanding 56,130.00 Last FYE 12/31/2018Intrinsic Value ( As of 12/31) 94.25 Days in FY 365 Adjustment 96.12 Days to FYE 108


Dividend Discount Model (DDM) or Fundamental P/E Valuation Model

Fiscal Years Ending Dec. 31 2019E 2022E 2021E 2022E 2023CV

EPS 4.34$ 4.68$ 5.17$ 5.66$ 5.87$

Key Assumptions

CV growth 2.14%

CV ROE 36.55%

Cost of Equity 7.90%

Future Cash Flows

P/E Multiple (CV Year) 16.36

EPS (CV Year) 5.87

Future Stock Price 95.98

Dividends Per Share 0.86 0.86 0.90 0.93 0.97

Discount Period 1.00 2.00 3.00 4.00 4.00

Discount Factor 1.08 1.16 1.26 1.36 1.36

Discounted Cash Flows 0.797$ 0.739$ 0.717$ 0.686$ 70.821$

Intrinsic Value( As of 12/31) 73.76$

Adjustment 75.13$


Relative Valuation Models

EPS EPS

Ticker Company Price 2019E 2020E P/E19 P/E20

IHG Intercontinental Hotel $61.44 $3.16 $3.45 19.4 17.8

HLT Hilton Worldwide $85.04 $3.78 $4.27 22.5 19.9

MAR Marriot A $128.50 $6.12 $7.05 21.0 18.2

WH Wyndham Hotels $41.10 $3.21 $3.65 15.7 13.8

Average 19.7 17.4

CHH Choice Hotels International Inc. $79.07 4.34 4.68 18.2 16.9

Implied Value:

Relative P/E (EPS19) $ 85.35

Relative P/E (EPS20) 81.60$


Key Management Ratios


Liquidity Ratios

Quick Ratio (CA ‐ Cash)/CL 0.54 0.58 0.68 0.63 0.37 0.63 0.33 0.52

Current Ratio ( CA/CL) 1.31 1.41 0.77 1.23 1.63 2.58 2.03 3.10

Cash Ratio (Cash/CL) 0.77 0.83 0.08 0.60 1.26 1.95 1.71 2.58

Operaing Cash Flow Ratio (OCF/CL) 0.58 0.90 0.76 0.91 0.50 0.87 0.45 0.70

Activity or Asset‐Management Ratios

Receivable Turnover ( Sales / AR) 7.53 7.48 7.54 8.01 8.01 8.01 8.01 8.01

Total Asset Turnover ( Sales/TA) 0.95 0.95 0.91 0.83 0.61 0.65 0.52 0.54

Net WC Turnover (Sales/NWC) 9.95 8.13 (13.95) 14.45 3.11 2.10 1.66 1.31

Financial Leverage Ratios

Debt to Equity ( TL / TE) (3.74) (4.85) (7.19) (437.00) 9.30 3.91 3.19 2.05

Equity Multiplier ( TA/TE) (2.74) (3.85) (6.19) (436.00) 10.30 4.91 4.19 3.05

Debt to Asset ( TL /TA) 1.37 1.26 1.16 1.00 0.90 0.80 0.76 0.67

Debt to EBITDA 4.33 2.45 2.26 2.01 2.22 2.08 1.91 1.90

Profitability Ratios

Return on Equity (DuPont Analysis) ‐34.27% ‐47.30% ‐117.73% ‐7810.24% 134.10% 69.19% 48.17% 36.55%

Return on Asset (NI/TA) 82.83% 66.51% 54.39% 44.81% 49.69% 46.56% 42.60% 42.67%

Operating Margin (EBIT/ Sales) 23.15% 30.77% 30.58% 30.21% 30.47% 30.77% 30.67% 30.87%

Net Profit Margin (Net Income/Sales) 13.21% 13.00% 20.78% 21.60% 21.48% 21.85% 21.97% 22.11%

Payout Policy Ratios

Dividend Payout Ratio (Dividend/EPS) 43.46% 39.81% 22.45% 19.82% 18.38% 17.42% 16.44% 16.53%

Present Value of Operating Lease Obligations (2018) Present Value of Operating Lease Obligations (2017) Present Value of Operating Lease Obligations (2016) Present Value of Operating Lease Obligations (2015) Present Value of Operating Lease Obligations (2014)

Operating Operating Operating Operating Operating

Fiscal Years Ending Dec. 31 Leases Fiscal Years Ending Dec. 31 Leases Fiscal Years Ending 0.025 Leases Fiscal Years Ending 82.2292360837224 Leases Fiscal Years Ending 100.725429374215 Leases

2019 12633 2018 12642 2017 12171 2016 12342 2015 11604

2020 10638 2019 11621 2018 10962 2017 11670 2016 11532

2021 9258 2020 10112 2019 10122 2018 10474 2017 10856

2022 886 2021 8998 2020 8995 2019 9697 2018 9897

2023 3514 2022 8728 2021 7814 2020 8586 2019 9286

Thereafter 0 Thereafter 3339 Thereafter 11114 Thereafter 18183 Thereafter 26403

Total Minimum Payments 36929 Total Minimum Payments 55440 Total Minimum Payments 61178 Total Minimum Payments 70952 Total Minimum Payments 79578

Less: Interest 3762 Less: Interest 7378 Less: Interest 9152 Less: Interest 11632 Less: Interest 14397

PV of Minimum Payments 33167 PV of Minimum Payments 48062 PV of Minimum Payments 52026 PV of Minimum Payments 59320 PV of Minimum Payments 65181

Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases

Pre‐Tax Cost of Debt 4.99% Pre‐Tax Cost of Debt 4.99% Pre‐Tax Cost of Debt 4.99% Pre‐Tax Cost of Debt 4.99% Pre‐Tax Cost of Debt 4.99%

Number Years Implied by Year 6 Payment 1.0 Number Years Implied by Year 6 Payment 1.0 Number Years Implied by Year 6 Payment 1.4 Number Years Implied by Year 6 Payment 2.1 Number Years Implied by Year 6 Payment 2.8

Lease PV Lease Lease PV Lease Lease PV Lease Lease PV Lease Lease PV Lease

Year Commitment Payment Year Commitment Payment Year Commitment Payment Year Commitment Payment Year Commitment Payment

1 12633 12032.6 1 12642 12041.1 1 12171 11592.5 1 12342 11755.4 1 11604 11052.5

2 10638 9650.8 2 11621 10542.6 2 10962 9944.8 2 11670 10587.1 2 11532 10461.9

3 9258 7999.7 3 10112 8737.6 3 10122 8746.3 3 10474 9050.4 3 10856 9380.5

4 886 729.2 4 8998 7405.5 4 8995 7403.0 4 9697 7980.8 4 9897 8145.4

5 3514 2754.6 5 8728 6841.9 5 7814 6125.4 5 8586 6730.6 5 9286 7279.3

6 & beyond 0 0.0 6 & beyond 3339 2493.0 6 & beyond 7814 8214.1 6 & beyond 8586 13216.3 6 & beyond 9286 18861.6

PV of Minimum Payments 33166.9 PV of Minimum Payments 48061.8 PV of Minimum Payments 52026.1 PV of Minimum Payments 59320.5 PV of Minimum Payments 65181.1

Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding

Number of Options Outstanding (shares): 1,186,180

Average Time to Maturity (years): 3.50

Expected Annual Number of Options Exercised: 338,908.571

Current Average Strike Price: 54.13$

Cost of Equity: 7.90%

Current Stock Price: $81.50

2019E 2020E 2021E 2022E 2023E

Increase in Shares Outstanding: 338.91 338.91 338.91 169.45

Average Strike Price: 54.13$ 54.13$ 54.13$ 54.13$

Increase in Common Stock Account: 18,344.88 18,344.88 18,344.88 9,172.44 ‐

Change in Treasury Stock 32,806 33,712 34,643 35,600 36,584

Expected Price of Repurchased Shares: 81.50$ 87.94$ 94.88$ 102.37$ 110.46$

Number of Shares Repurchased: 403 383 365 348 331

Shares Outstanding (beginning of the year) 56,130.00 56,066.38 56,021.92 55,995.70 55,817.40

Plus: Shares Issued Through ESOP 338.91 338.91 338.91 169.45 0.00

Less: Shares Repurchased in Treasury 402.53 383.37 365.13 347.75 331.21

Shares Outstanding (end of the year) 56,066.38 56,021.92 55,995.70 55,817.40 55,486.19

VALUATION OF OPTIONS GRANTED IN ESOP

Ticker Symbol CHH

Current Stock Price $81.50

Risk Free Rate 2.60%

Current Dividend Yield 1.06%

Annualized St. Dev. of Stock Returns 14.02%

Average Average B‐S Value

Range of Number Exercise Remaining Option of Options

Outstanding Options of Shares Price Life (yrs) Price Granted

34.13 ‐ 39.00 52,664.00 36.76 1.1

39.01 ‐ 48.75 417,591.00 45.59 2.2

48.76 ‐ 65.00 610,415.00 56.73 4

65.01 ‐ 81.55 105,510.00 81.55 6.20 13.93$ 16,525$

Total 1,186,180.00 54.13$ 3.50 32.25$ 16,525.10$

Beta Tax Rate

96.12$ 0.77 0.87 0.97 1.07 1.17 1.27 1.37 96.12$ 20.40% 21.40% 22.40% 23.40% 24.40% 25.40% 26.40%

2.30% 141.79 125.74 112.72 101.93 92.86 85.12 78.44 0.50% 103.32 101.07 98.84 96.61 94.41 92.21 90.03

2.40% 138.18 122.83 110.32 99.93 91.16 83.65 77.16 1.00% 103.14 100.90 98.67 96.45 94.25 92.05 89.88

2.50% 134.73 120.04 108.01 97.99 89.50 82.23 75.92 1.50% 102.97 100.73 98.50 96.28 94.08 91.90 89.72

Risk Free Rate 2.60% 131.44 117.36 105.79 96.12 87.90 80.84 74.71 Inflation 2.00% 102.79 100.55 98.33 96.12 93.92 91.73 89.56

2.70% 128.28 114.78 103.65 94.30 86.35 79.50 73.53 2.50% 102.60 100.37 98.15 95.95 93.75 91.57 89.41

2.80% 125.26 112.31 101.58 92.55 84.84 78.19 72.39 3.00% 102.42 100.19 97.98 95.77 93.58 91.41 89.24

2.90% 122.37 109.92 99.58 90.85 83.38 76.92 71.27 3.50% 102.24 100.01 97.80 95.60 93.41 91.24 89.08

Rd CV Growth

96.12$ 4.39% 4.59% 4.79% 4.99% 5.19% 5.39% 5.59% 96.12$ 0.64% 1.14% 1.64% 2.14% 2.64% 3.14% 3.64%

7.30% 109.76 109.16 108.58 107.99 107.41 106.84 106.27 4.05% 89.59 96.91 105.74 116.60 130.30 148.10 172.18

7.50% 105.37 104.82 104.27 103.73 103.19 102.66 102.13 4.35% 84.99 91.55 99.40 108.95 120.82 135.98 156.02

7.70% 101.29 100.77 100.27 99.76 99.26 98.76 98.27 4.65% 80.77 86.69 93.70 102.15 112.52 125.57 142.47

Re 7.90% 97.48 97.00 96.52 96.05 95.59 95.12 94.66 Risk Premium 4.95% 76.91 82.26 88.55 96.07 105.20 116.53 130.95

8.10% 93.92 93.47 93.02 92.58 92.14 91.71 91.28 5.25% 73.35 78.20 83.88 90.60 98.69 108.60 121.03

8.30% 90.58 90.16 89.74 89.33 88.92 88.51 88.10 5.55% 70.06 74.48 79.62 85.66 92.86 101.59 112.40

8.50% 87.44 87.05 86.65 86.27 85.88 85.50 85.12 5.85% 67.00 71.05 75.72 81.17 87.62 95.36 104.82

SG&A Expense Depreciation

96.12$ 1.87% 2.07% 2.27% 2.47% 2.67% 2.87% 3.07% 96.12$ 0.50% 1.25% 2.00% 6.17% 3.50% 4.25% 5.00%

1.87% 103.88 101.18 98.62 96.20 93.90 91.72 89.64 0.00% 102.80 101.58 100.50 96.32 98.66 97.89 97.21

2.07% 103.88 101.18 98.62 96.20 93.90 91.72 89.64 0.10% 102.78 101.56 100.48 96.30 98.64 97.87 97.19

2.27% 103.88 101.18 98.62 96.20 93.90 91.72 89.64 0.60% 102.67 101.46 100.38 96.21 98.54 97.78 97.10

Marketing & System Expense 2.47% 103.88 101.18 98.62 96.20 93.90 91.72 89.64 Amortization 1.10% 102.57 101.36 100.28 96.11 98.44 97.68 97.00

2.67% 103.88 101.18 98.62 96.20 93.90 91.72 89.64 3.10% 102.11 100.91 99.83 95.69 98.01 97.25 96.57

2.87% 103.88 101.18 98.62 96.20 93.90 91.72 89.64 5.10% 101.61 100.41 99.34 95.22 97.53 96.77 96.10

3.07% 103.88 101.18 98.62 96.20 93.90 91.72 89.64 7.10% 101.06 99.88 98.81 94.72 97.01 96.26 95.59

choice hotels international inc. (chh) april 17, 2019 · consumer discretionary – hotel &...

Documents