Comfort Inn 2007 Annual Report Download - page 40

As of December 31, 2006, the Company had 860 franchised hotels with 66,238 rooms under construction, awaiting
conversion or approved for development in its domestic system as compared to 603 hotels and 46,464 rooms at
December 31, 2005. The number of new construction franchised hotels in the Company’ s domestic pipeline increased
46% to 602 at December 31, 2006 from 413 at December 31, 2005. The Company had an additional 70 franchised hotels
with 6,317 rooms under development in its international system as of December 31, 2006 compared to 84 hotels and
7,611 rooms at December 31, 2005. 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, 2006 and December 31, 2005 by brand is as follows:
December 31, 2006
December 31, 2005
Variance
Conversion
New
Construction
Total
Conversion
New
Construction
Total
Conversion
New
Construction
Total
Units % Units % Units %
Comfort Inn .................. 56 124 180 41 85 126 15 37% 39 46% 54 43%
Comfort Suites.............. 3 233 236 2 165 167 1 50% 68 41% 69 41%
Sleep............................. — 123 123 1 88 89 (1) (100)% 35 40% 34 38%
Midscale without
Food &
Beverage.......... 59 480 539 44 338 382 15 34% 142 42% 157 41%
Quality.......................... 76 10 86 54 12 66 22 41 % (2) (17)% 20 30%
Clarion.......................... 11 4 15 13 4 17 (2) (15)% — 0% (2) (12)%
Midscale with
Food &
Beverage.......... 87 14 101 67 16 83 20 30% (2) (13)% 18 22%
Econo Lodge................. 41 5 46 41 9 50 — 0% (4) (44)% (4) (8)%
Rodeway....................... 66 3 69 35 — 35 31 89% 3 NM 34 97%
Economy............... 107 8 115 76 9 85 31 41% (1) (11)% 30 35%
MainStay ...................... — 33 33 1 29 30 (1) (100)% 4 14% 3 10%
Suburban....................... 5 24 29 2 9 11 3 150% 15 167% 18 164%
Extended Stay .... 5 57 62 3 38 41 2 67% 19 50% 21 51%
Cambria Suites ............. — 43 43 — 12 12 — NM 31 258% 31 258%
258 602 860 190 413 603 68 36% 189 46% 257 43%
Excluding the acquisition of Suburban on September 28, 2005, net domestic franchise additions during 2006
increased 14 units to 163 compared to 149 for the same period a year ago. Gross domestic franchise additions increased
from 339 for 2005 to 381 for 2006. Net franchise terminations increased to 218 for 2006 from 190 in 2005.
International royalties increased $5.2 million or 47% from $11.0 million in 2005 to $16.2 million in 2006 primarily
due to the commencement of royalty payments by over 300 properties in continental Europe under our master franchise
agreement with RHC. Prior to January 1, 2006, only reservation fees were assessed to the properties in RHC’ s portfolio.
Beginning in January 2006, the Company began to assess royalty and marketing fees in addition to the reservation fees.
Domestic initial fee revenue, included in the initial franchise and relicensing fees caption above, generated from
executed domestic franchise agreements increased 18.5% to $17.9 million for 2006 from $15.1 million for 2005. The
increased revenues primarily reflect increased sales of our new construction brands, most notably our Cambria Suites and
Comfort Suites offerings, which carry a higher average initial fee than our other brands. New domestic franchise
agreements executed in 2006 totaled 720 representing 57,365 rooms compared to 639 agreements representing 52,862
rooms executed in 2005. During 2006, 288 of the executed agreements were for new construction hotel franchises,
representing 22,035 rooms, compared to 237 contracts, representing 18,096 rooms for the same period a year ago, both
increases of approximately 22%. The growth in conversion hotel franchise executed contracts increased 7% from 402 for
2005 to 432 for 2006. During 2006, the Company executed 30 new franchise agreements for its Cambria Suites brand
bringing the total contracts executed since its launch in January 2005 to 43.
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