Comfort Inn 2013 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2013 Comfort Inn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 142

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142

Table of Contents

Other assets consist of the following at:




Notes receivable (See Note 3) 
$35,103
Equity method investments 
27,453
Deferred financing fees 
11,174
Land 
1,300
Other assets 
983
Total 
$ 76,013
Land represents the Company’s purchase of real estate as part of its program to incent franchise development in strategic markets for certain brands.
The Company has acquired this real estate with the intent to resell it to third-party developers for the construction of hotels operated under the Company’s
brands or contribute the land into joint ventures for the same purpose. The real estate is carried at the lower of its carrying value or its estimated fair value
(based on comparable sales), less estimated costs to sell.
Equity Method Investments - Variable Interest Entities
Equity method investments include $28.9 million and $24.3 million of investments in joint ventures at December 31, 2013 and 2012, respectively, that
the Company has determined to be variable interest entities. These investments relate to the Company's program to offer equity support to qualified franchisees
to develop and operate Cambria Suites hotels in strategic markets. Based on an analysis of who has the power to direct the activities that most significantly
impact these entities performance and who has an obligation to absorb losses of these entities or a right to receive benefits from these entities that could
potentially be significant to the entity, the Company has determined that it is not the primary beneficiary of any of its joint venture investments. The Company
based its quantitative analysis on the forecasted cash flows of the entity and its qualitative analysis on a review of the design of the entity, its organizational
structure including decision-making ability and the relevant development, operating management and financial agreements. As a result, the Company's
investment in these entities is accounted for under the equity method. For the year ended December 31, 2013 and 2012, the Company recognized $8 thousand
and $0.1 million of net income from the investment in these entities.
Equity Method Investment - Choice Hotels Canada
The Company conducts operations in Canada for all brands except Cambria Suites, Mainstay Suites and Suburban Extended Stay Hotel through
Choice Hotels Canada, Inc. ("CHC"), a joint venture in which the Company has a 50% interest. During 2013, 2012 and 2011, the Company recorded equity
method income related to this investment in the accompanying consolidated statements of income totaling $1.6 million, $1.5 million, and $1.5 million
respectively, based on CHC’s results for the twelve months ended November 30, 2013, 2012 and 2011. The Company received dividends from CHC of $1.4
million, $1.3 million and $1.1 million for the years ended December 31, 2013, 2012 and 2011, respectively. During 2013, 2012 and 2011, the Company
recognized in the accompanying consolidated statements of income, revenues of $14.7 million, $14.4 million and $13.7 million, respectively, including
royalty, marketing and reservation system fees and other revenues from CHC.
86