Comfort Inn 2007 Annual Report Download - page 19

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Reaching More Consumers. We believe hotel owners value the large volume of guests we deliver through corporate
and brand marketing, reservation systems, key account sales, and the Company’ s principal loyalty program, Choice
Privileges®. Our strategy is to maximize the effectiveness of these activities in delivering both leisure and business
travelers to Choice-branded hotels.
The Company will continue to increase awareness of its brands through its multi-branded national marketing
campaign which features re-imaged signs, our “We’ ll See You There” tagline and our loyalty program promotions. This
campaign is intended to generate the most compelling message in the midscale and economy segments and utilize our
significant size to create even greater awareness for our brands. Local and regional co-op marketing campaigns will
continue to leverage the national marketing programs to drive business to our properties at a local level. We expect our
efforts at marketing directly to guests will continue to be enhanced through the use of our customer relationship
management technology. Our continued focus on overall brand quality coupled with our marketing initiatives is designed
to stimulate room demand for our franchised hotels through improved guest awareness and satisfaction.
Our central reservations system is a critical technology used to deliver guests to our franchisees through multiple
channels, including our call centers and proprietary websites, and global distribution systems (e.g., SABRE, Amadeus,
and internet distribution sites). We believe our well-known brands, combined with our relationships with many internet
distribution web sites benefits our franchisees, by facilitating increased rate and reservations delivery, and reducing costs
and operational complexity.
Leveraging Size, Scale and Distribution. We continually focus on identifying methods for utilizing the significant
number of hotels in our system to reduce costs and increase returns for our franchisees. For example, we create
relationships with vendors to: (i) make low-cost products available to our franchisees; (ii) streamline the purchasing
process; and (iii) maintain brand standards and consistency. We plan to expand this business and identify new methods for
decreasing hotel-operating costs by increasing penetration internally and enhancing our existing vendor relationships
and/or creating new vendor relationships. We believe our efforts to leverage the Company’ s size, scale and distribution
benefit the Company by enhancing brand quality and consistency, improving our franchisees returns and satisfaction, and
creating brand solutions revenues.
Franchise System
Our franchises operate domestically under one of ten Choice brand names: Comfort Inn, Comfort Suites, Cambria
Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites and Suburban Extended Stay Hotel. The
following table presents key statistics related to our domestic franchise system over the five years ended December 31,
2007.
COMBINED DOMESTIC FRANCHISE SYSTEM
As of and For the Year Ended December 31,
2003
2004
2005
2006
2007
Number of properties, end of period..............................
.
3,636 3,834 4,048 4,211 4,445
Number of rooms, end of period....................................
.
294,268 309,586 329,353 339,441 354,139
Royalty fees ($000)........................................................
.
$ 141,150 $ 155,915 $ 175,588 $ 194,333 $ 212,519
Average royalty rate.......................................................
.
4.01% 4.04% 4.08% 4.09% 4.14%
Average occupancy percentage(1),(3) ...............................
54.7% 56.6% 57.6% 58.4% 57.9%
Average daily room rate (ADR)(1),(3) ..............................
.
$ 62.53 $ 63.56 $ 66.24 $ 68.71 $ 72.07
Revenue per available room (RevPAR)(1),(2),(3)...............
.
$ 34.21 $ 35.95 $ 38.15 $ 40.13 $ 41.75
(1) Suburban Extended Stay Hotel was acquired on September 28, 2005. Statistics for average occupancy percentage, ADR and
RevPAR for the year ended December 31, 2005 and prior years have been excluded since comparable pre-acquisition data is not
available.
(2) The Company calculates RevPAR based on information reported to the Company on a timely basis by franchisees.
(3) Amounts for 2007 exclude results from Cambria Suites properties opening during the year.
The Company conducts its international franchise operations through a combination of direct franchising and master
franchising relationships which allow the use of our brands by third parties in foreign countries. The Company has made
equity investments in certain non-domestic lodging franchise companies that conduct franchise operations for the
Company’ s brands under master franchising relationships. As a result of our use of master franchising relationships and
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