Comfort Inn 2007 Annual Report Download - page 35

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As of December 31, 2007, the Company had 1,004 franchised hotels with 79,342 rooms under construction, awaiting
conversion or approved for development in its domestic system as compared to 860 hotels and 66,238 rooms at
December 31, 2006. The number of new construction franchised hotels in the Company’ s domestic pipeline increased
21% to 728 at December 31, 2007 from 602 at December 31, 2006. The Company had an additional 89 franchised hotels
with 8,640 rooms under development in its international system as of December 31, 2007 compared to 70 hotels and
6,317 rooms at December 31, 2006. While the Company’ s hotel pipeline provides a strong platform for growth, a hotel in
the pipeline does not always result in an open and operating hotel due to various factors.
A summary of the domestic franchised hotels under construction, awaiting conversion or approved for development
at December 31, 2007 and December 31, 2006 by brand is as follows:
December 31, 2007
December 31, 2006
Variance
Conversion
New
Construction
Total
Conversion
New
Construction
Total
Conversion
New
Construction
Total
Units
%
Units
%
Units
%
Comfort Inn...................
.
54 135 189 56 124 180 (2) (4)% 11 9% 9 5%
Comfort Suites...............
.
1 278 279 3 233 236 (2) (67)% 45 19% 43 18%
Sleep..............................
.
— 138 138 — 123 123 — NM 15 12% 15 12%
Midscale without
Food &
Beverage........
.
55 551 606 59 480 539 (4) (7)% 71 15% 67 12%
Quality...........................
.
71 15 86 76 10 86 (5) (7)% 5 50% — —
Clarion...........................
.
30 7 37 11 4 15 19 173% 3 75% 22 147%
Midscale with
Food &
Beverage........
.
101 22 123 87 14 101 14 16% 8 57% 22 22%
Econo Lodge .................
.
46 3 49 41 5 46 5 12% (2) (40)% 3 7%
Rodeway........................
.
68 3 71 66 3 69 2 3% — — 2 3%
Economy .............
.
114 6 120 107 8 115 7 7% (2) (25)% 5 4%
MainStay .......................
.
2 46 48 — 33 33 2 NM 13 39% 15 45%
Suburban........................
.
4 40 44 5 24 29 (1) (20)% 16 67% 15 52%
Extended Stay .....
.
6 86 92 5 57 62 1 20% 29 51% 30 48%
Cambria Suites ..............
.
— 63 63 — 43 43 — NM 20 47% 20 47%
276 728 1,004 258 602 860 18 7% 126 21% 144 17%
Net domestic franchise additions during 2007 increased 71 units to 234 compared to 163 for the same period a year
ago. Gross domestic franchise additions increased from 381 for 2006 to 435 for 2007. Net franchise terminations declined
to 201 for 2007 from 218 in 2006. During 2007, the Company has continued to execute its strategy to replace franchised
hotels that do not meet our brand standards or are underperforming in their market. As the competition gets stronger and
more focused on limited service franchising, the Company will continue to focus on improving its system hotels and
utilizing the domestic hotels under development as a strong platform for continued system growth.
International royalties increased $6.0 million or 37% from $16.2 million in 2006 to $22.2 million in 2007 primarily
due to the commencement of direct franchising operations in continental Europe which contributed $3.3 million of
additional royalties.
New domestic franchise agreements executed during 2007 totaled 770 representing 61,778 rooms compared to 720
agreements representing 57,365 rooms executed in the same period in 2006. During 2007, 327 of the executed agreements
were for new construction hotel franchises, representing 26,029 rooms, compared to 288 contracts, representing 22,035
rooms for 2006. Conversion hotel franchise executed contracts totaled 443 representing 35,749 rooms for the year ended
December 31, 2007 compared to 432 agreements representing 35,330 rooms for the year ended December 31, 2006.
Domestic initial fee revenue, included in the initial franchise and relicensing fees caption above, generated from executed
franchise agreements increased 17% to $21.0 million for 2007 from $17.9 million for 2006. The increased revenues
primarily reflect an increase in executed agreements and higher average initial fees than the prior year.
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