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Table of Contents
A summary of the domestic franchised hotels under construction, awaiting conversion or approved for development at December 31, 2012 and 2011 by
brand is as follows:


















Comfort Inn 


29
46
75
4
14%
3
7%
7
9%
Comfort Suites


1
90
91
—
—
(18)
(20%)
(18)
(20%)
Sleep


1
49
50
—
—
(6)
(12%)
(6)
(12%)
Quality 

29
5
34
7
24%
(2)
(40%)
5
15%
Clarion 

14
1
15
(2)
(14%)
—
—%
(2)
(13%)
Econo Lodge 

25
2
27
(1)
(4%)
(2)
(100%)
(3)
(11%)
Rodeway 

22
1
23
13
59%
(1)
(100%)
12
52%
MainStay


2
28
30
(2)
(100%)
(3)
(11%)
(5)
(17%)
Suburban


2
20
22
(1)
(50%)
(5)
(25%)
(6)
(27%)
Ascend Hotel
Collection 

6
4
10
5
83%
3
75%
8
80%
Cambria Suites


—
31
31
—
NM
(6)
(19%)
(6)
(19%)



131
277
408
23
18%
(37)
(13%)
(14)
(3%)
The Company had an additional 88 franchised hotels with 7,851 rooms under construction, awaiting conversion or approved for development in its
international system as of December 31, 2012 compared to 82 hotels and 7,089 rooms at December 31, 2011.
Other Revenue: Revenue increased $1.4 million or 18% to $9.2 million during the year ended December 31, 2012. The increase in other revenue is
primarily due to an increase in liquidated damage collections related to the early termination of franchise agreements.
Selling, General and Administrative Expenses: The cost to operate the franchising business is reflected in SG&A expenses on the consolidated
statements of income. SG&A expenses were $101.9 million for 2012, a decrease of $4.6 million from the 2011 total of $106.4 million. SG&A expenses for
the year ended December 31, 2012 included $0.5 million related to employee termination benefits, a $1.8 million loss on the settlement of a pension plan and
$1.5 million of additional expenses related to a litigation settlement with a former franchise. The loss on the settlement of the pension plan primarily consisted
of the recognition of previously unrecognized actuarial losses which had been recorded as a component of the Company's accumulated other comprehensive
loss on the Company's consolidated balance sheets. SG&A expenses for the year ended December 31, 2011 included $4.4 million of employee termination
benefits and reflect bad debt recoveries on impaired loans totaling $1.2 million. In addition, SG&A expenses for the year ended December 31, 2011 include
$1.4 million of lower compensation expense recognized on deferred compensation as described in more detail in Other Income and Expenses .
Excluding the items noted above, SG&A for the year ended December 31, 2012 declined by approximately $6.5 million from the prior year. This
decline is due to the measures implemented by the Company in the fourth quarter of 2011 to increase its productivity and streamline services.
Marketing and Reservations : The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation
system fees. The fees, which are primarily based on a percentage of the franchisees’ gross room revenues, are used exclusively by the Company for expenses
associated with providing franchise services such as central reservation systems, national marketing and media advertising. The Company is contractually
obligated to expend the marketing and reservation system fees it collects from franchisees in accordance with the franchise agreements; as such, no income or
loss to the Company is generated.
Total marketing and reservation system revenues increased $35.7 million or 10% from $349.0 million for the year ended December 31, 2011 to $384.8
million for the year ended December 31, 2012. The increase in revenue primarily resulted from improved system fees resulting from system growth and
RevPAR increases and increasing revenues from the Choice Privileges loyalty program resulting from the growth in program membership and the level of point
redemptions during 2012 compared to 2011. Depreciation and amortization attributable to marketing and reservation activities was $14.5 million and $13.3
million for the years ended December 31, 2012 and 2011, respectively. Interest expense attributable to reservation activities was $4.0 million and $4.1 million
for the years ended December 31, 2012 and 2011, respectively.
54