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"We're pleased to report positive domestic RevPAR for the first time since the second quarter of 2008, due in large part to gains in occupancy and a gradually improving average daily rate environment from this year's first quarter. We expect RevPAR to continue to show improvement for the remainder of the year, however we believe the hotel transaction environment will remain difficult and thus continue to adversely impact our franchise sales results.  We are squarely focused on enhancing our ability to deliver reservations to our franchisees' hotels and strengthening our range of centralized support services designed to enhance our franchisees' profitability."

-Stephen P. Joyce, president and chief executive officer.


  • Outlook
    • 3Q Diluted EPS: $0.57
    • FY 2010 Diluted EPS: $1.70-$1.72
    • FY 2010 Adjusted EBITDA: $167.5-$170 MM
    • Unit growth: 1% to 2%
    • RevPAR: 6% for 3Q2010 and 0-2% FY2010
    • Royalty rate: increase 6bps
    • Share count: same as current
    • Tax rate: 35.8% for 3Q2010 and FY2010
    • No refinancing of credit facility


  • Saw relatively consistent increase in REVPAR in 2Q. Continue to see REVPAR growth for reminder of 2010.
  • Near-term franchise sales environment--"choppy"; YoY 50% decrease in domestic franchise sales--blame weak transaction environment; that's why unit growth forecast is weak.
  • Leisure travel
    • Roughly 2/3 of their business is leisure; people plan on taking vacations but shorter ones and a little less distance involved. However, they are encouraged that they are taking vacations. Leisure trends relatively stable for now. Upscale brands more aggressive on pricing will benefit transient leisure business.
  • Transactions/conversion market
    • brokers talking about higher level of applications; in general sense, banks are more aggressive of taking properties back
    • 1st mortgage financing environment improving
    • gap between buyer and sellers closing
    • "creeping" capital coming back from lenders for existing hotels
    • New build development will not pick up until at least 12 months
    • Because of capital limits and some uncertainty, transaction flow will be a gradual increase vs. significant inflow
  • For 2010, modest GDP growth and flattish employment are their expectation
  • Need to see improving signs of domestic franchise environment; transaction market should improve for rest of 2010.
  • Cambria Suites--great potential growth; priority is on the investment programs
  • Domestic royalty fee- $51.7MM ($50MM last year)
  • Continued weakness in application flow; in 2Q, declined by 28% (1Q declined by 29%); Outlook for year does not reflect strong REVPAR growth in 2Q due to this concern.
  •  Adjusted SG&A cuts sustainable?
    • In 2Q, retirement plans loss turns into credit for SG&A expense; for outlook, previously, adjusted SG&A up in low single-digit area--now looking flat for 2010.
  • Purchasing a brand?
    • Aggressively pursuing transactions but no opportunities yet
  • Sliver brand investment program for Cambria--will help the brand, ROI: "high single, low double-digits"
  • Cambria: consumer reaction to Cambria is very strong; to help brand. May need help from balance sheet; supporting Cambria owners through sales and distribution networks
  • Gulf impact on franchisees: do not see big drop off (similar to what happened with Katrina) since cleanup crews will help business; the issue will be in 2011 and 2012 (3-4 year impact from spill) on whether beach-goers will come back after beaches are cleaned up.
  • Special servicers opportunities: can give sliver money, lower costs for servicers who are looking to flip to another owner--can help in a more normalized conversion environment in near-term.
  • 12 Repos in 2Q
  • Corporate RFPs pickup further? Too early to tell. Major initiative underway to grow that base. More trade-down than trade-up.
  • Trailing 12 months: contribution to our US franchisees through direct channels (vs. 3rd party sites) has been increasing. The trend is also true globally.
  • US Central reservation contribution better YoY; Global central reservation: 3rd Party playing a bigger role.
  • Did not bid on Tryp brand that Wyndham acquired.