NEW YORK - Hotel franchisor Choice Hotels International Inc. reports second-quarter results after the market closes on Monday. The company franchises hotels under the Comfort Inn, Quality Inn, Clarion and Econo Lodge brands, among others. The following is a summary of key developments and analyst opinion related to the period.
| CHH | 31.68 |
OVERVIEW: In a hotel sector weakened by slowing consumer spending and soaring fuel prices, analysts said Choice Hotels' pure franchise model may have a competitive edge. As new Chief Executive Stephen P. Joyce said at a conference with analysts this month, the company's performance is driven by new contracts and franchise fees. It is less dependent on revenue per available room, or revpar, growth than many other hotel companies.
Joyce succeeded Chuck Ledsinger as chief executive near the end of the second quarter, about four months earlier than planned. Joyce joined the company in May from Marriott International, where he served as executive vice president. Ledsinger remains with the company as vice chairman.
During the quarter, Choice also continued to roll out its new Cambria Suites brand, which is designed to compete in what the company calls the upper-moderate to lower-upscale segment of the industry. In June, the Cambria Suites Indianapolis Airport hotel was the seventh location to open in the U.S. As of March 31, 63 Cambria Suites hotels were under development in the U.S. and Canada.
BY THE NUMBERS: Choice has forecast second-quarter profit of 47 cents on 1.5 percent revpar growth. Analysts polled by Thomson Financial also predict earnings of 47 cents per share on revenue of $164.1 million.
ANALYST TAKE: Soleil Securities Group analyst Michael Millman predicts that the company will meet its second-quarter earnings guidance. He said the company's franchise model and hotel locations will give it an advantage.
Millman expects, however, that Choice will reduce its 2008 revpar guidance in reaction to the weak industry and economic conditions.
Lehman Brothers analyst Felicia Hendrix said Choice may report revpar growth below the 1.5 percent estimate.
WHAT'S AHEAD: Choice has predicted full-year earnings per share will total $1.87 and revpar will grow 2 percent.
Earlier this month, Choice said it reached a deal for Ireland-based Kasterlee Ltd. to license and develop the Clarion brand in Great Britain, Germany and Russia. Under the agreement, at least 16 Clarion branded hotels will be developed within eight years. There are currently 45 Clarion properties open in Europe.

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