Comfort Inn 2013 Annual Report Download - page 45
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Table of Contents
A summary of the domestic hotels and available rooms at December 31, 2013 and 2012 by brand is as follows:
Comfort Inn
1,349
105,471
(47)
(3.5)%
(3,798)
(3.6%)
Comfort Suites
597
46,045
(8)
(1.3)%
(594)
(1.3%)
Sleep
387
28,087
(5)
(1.3)%
(464)
(1.7%)
Quality
1,152
98,078
71
6.2 %
3,065
3.1%
Clarion
191
27,441
(1)
(0.5)%
60
0.2%
Econo Lodge
817
49,951
13
1.6 %
743
1.5%
Rodeway
410
23,370
28
6.8 %
1,307
5.6%
MainStay
41
3,165
2
4.9 %
166
5.2%
Suburban
63
7,291
—
— %
(124)
(1.7%)
Ascend Hotel Collection
57
4,982
45
78.9 %
4,224
84.8%
Cambria Suites
19
2,221
(1)
(5.3)%
(102)
(4.6%)
5,083
396,102
97
1.9 %
4,483
1.1 %
Domestic hotels open and operating increased by 97 hotels during the year ended December 31, 2013 compared to an increase of 82 domestic hotels open
and operating during the year ended December 31, 2012. Gross domestic franchise additions increased from 308 for the year ended December 31, 2012 to 340
for the same period in 2013. New construction hotels represented 34 of the gross domestic additions during year ended December 31, 2013 compared to 27
hotels in the same period of the prior year. The increase in new construction hotel openings reflect a slight improvement in the lending environment and
willingness of developers to build new product in the hotel chain scales in which we operate. Gross domestic additions for conversion hotels during the year
ended December 31, 2013 increased by 25 from 281 hotels during the year ended December 31, 2012 to 306 hotels. Conversion hotel openings increased 9%
primarily due to a 14% increase in the number of domestic conversion franchise agreements executed in 2013 compared to 2012 partially offset by the timing
of openings. The timing of conversion hotel openings are impacted by various factors including the complexity of the property improvement plans required to
be completed prior to opening but typically open within three to four months after the execution of a franchise agreement. The Company expects the number of
new franchise units that will open during 2014 to increase from 340 hotels in 2013 to 345 hotels. Although there has been an increase in the number of
projected hotel openings, new construction and conversion openings continue to be impacted by the restrictive lending environment, retention efforts
implemented by other hotel brand companies and increased competition for existing hotels seeking a new brand affiliation.
Net domestic franchise terminations increased by 17 units from 226 for the year ended December 31, 2012 to 243 for the year ended December 31,
2013. The increase in net terminations is primarily related to the removal of hotels for non-compliance with the Company's rules, regulations and standards as
well as non-payment of franchise fees partially offset by increased retention efforts implemented by the Company to reduce the number of franchisees
converting to competitor brands or independent status. Under certain circumstances, as an alternative to terminating a hotel from the franchise system, the
Company will seek to reposition hotels that are under-performing or that no longer meet the quality and brand standards of their particular brand to another
one of its brands. As a result of this strategy, the Company repositioned 37 Comfort Inn hotels during the year ended December 31, 2013 to other brands. As
industry supply growth continues to improve and return to historical levels, the Company will continue to execute its strategy to replace franchised hotels that
do not meet our brand standards or are under-performing in their market.
International royalties decreased $0.4 million from $25.1 million in the year ended December 31, 2012 to $24.7 million for the same period in 2013
despite a 2.3% increase in the number of rooms available primarily due to RevPAR performance in the various countries in which we operate and the negative
impact of foreign currency fluctuations. International available rooms increased by 2,322 rooms to 105,473 as of December 31, 2013 from 103,151 as of
December 31, 2012. The total number of international hotels on-line totaled 1,160 at both December 31, 2013 and 2012.
Initial Franchise and Relicensing Fees
Domestic initial franchise fee revenue, included in the initial franchise and relicensing fees caption above, generated from executed franchise agreements
increased 26% to $11.0 million for 2013 from $8.7 million for 2012. Initial franchise fee revenue increased due to a 12% increase in the number of new
executed franchise agreements executed and an increase in the
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