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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________
FORM 10-Q
_____________________________________________
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 001-13393
_____________________________________________
CHOICE HOTELS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________

Delaware |  | 52-1209792
(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
1 Choice Hotels Circle |  | 20850
Rockville, | Maryland |
(Address of Principal Executive Offices) |  | (Zip Code)

(Registrant’s telephone number, including area code): (301) 592-5000
(Former name, former address and former fiscal year, if changed since last report): N/A
________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class |  | Trading Symbol(s) |  | Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01 per share |  | CHH |  | New York Stock Exchange

_____________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of common stock outstanding on April 28, 2023 was 50,991,519.

Table of Contents
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX

| PAGE NO.
PART I. FINANCIAL INFORMATION |
Item 1—Financial Statements (Unaudited) | 3
Consolidated Statements of Income -- For the three months ended March 31, 2023 and 2022 | 3
Consolidated Statements of Comprehensive Income -- For the three months ended March 31, 2023 and 2022 | 4
Consolidated Balance Sheets -- As of March 31, 2023 and December 31, 2022 | 5
Consolidated Statements of Cash Flows -- For the three months ended March 31, 2023 and 2022 | 6
Consolidated Statements of Shareholders' Equity -- For the three months ended March 31, 2023 and 2022 | 7
Notes to Consolidated Financial Statements | 8
Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19
Item 3—Quantitative and Qualitative Disclosures About Market Risk | 31
Item 4—Controls and Procedures | 32
PART II. OTHER INFORMATION |
Item 1—Legal Proceedings | 33
Item 1A—Risk Factors | 33
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds | 33
Item 3—Defaults Upon Senior Securities | 33
Item 4—Mine Safety Disclosures | 33
Item 5—Other Information | 33
Item 6—Exhibits | 34
SIGNATURES | 35

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PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

| Three Months Ended |  |
| March 31, |  |
| 2023 |  | 2022 |  |  |  |
REVENUES |  |  |  |  |  |  |
Royalty, licensing and management fees | $ | 107,492 |  |  | $ | 90,739 |  |  |  |  |
Initial franchise fees | 7,882 |  |  | 8,402 |  |  |  |  |
Platform and procurement services fees | 13,843 |  |  | 11,683 |  |  |  |  |
Owned hotels | 22,332 |  |  | 12,037 |  |  |  |  |
Other | 10,627 |  |  | 8,229 |  |  |  |  |
Other revenues from franchised and managed properties | 170,616 |  |  | 126,637 |  |  |  |  |
Total revenues | 332,792 |  |  | 257,727 |  |  |  |  |
OPERATING EXPENSES |  |  |  |  |  |  |
Selling, general and administrative | 59,283 |  |  | 30,324 |  |  |  |  |
Depreciation and amortization | 10,023 |  |  | 6,231 |  |  |  |  |
Owned hotels | 17,146 |  |  | 8,154 |  |  |  |  |
Other expenses from franchised and managed properties | 168,489 |  |  | 113,650 |  |  |  |  |
Total operating expenses | 254,941 |  |  | 158,359 |  |  |  |  |
Gain on sale of business and assets, net | — |  |  | 29 |  |  |  |  |
Operating income | 77,851 |  |  | 99,397 |  |  |  |  |
OTHER INCOME AND EXPENSES, NET |  |  |  |  |  |  |
Interest expense | 14,084 |  |  | 11,470 |  |  |  |  |
Interest income | (1,883) |  |  | (1,280) |  |  |  |  |
Other (gain) loss | (1,908) |  |  | 1,716 |  |  |  |  |
Equity in net loss (gain) of affiliates | 63 |  |  | (244) |  |  |  |  |
Total other income and expenses, net | 10,356 |  |  | 11,662 |  |  |  |  |
Income before income taxes | 67,495 |  |  | 87,735 |  |  |  |  |
Income tax expense | 14,675 |  |  | 20,344 |  |  |  |  |
Net income | $ | 52,820 |  |  | $ | 67,391 |  |  |  |  |
Basic earnings per share | $ | 1.02 |  |  | $ | 1.21 |  |  |  |  |
Diluted earnings per share | $ | 1.02 |  |  | $ | 1.20 |  |  |  |  |
Cash dividends declared per share | $ | 0.2875 |  |  | $ | 0.2375 |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.
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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
(UNAUDITED)

| Three Months Ended |  |
| March 31, |  |
| 2023 |  | 2022 |  |  |  |
Net income | $ | 52,820 |  |  | $ | 67,391 |  |  |  |  |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Foreign currency translation adjustment | 394 |  |  | (134) |  |  |  |  |
Other comprehensive income (loss), net of tax | 394 |  |  | (134) |  |  |  |  |
Comprehensive income | $ | 53,214 |  |  | $ | 67,257 |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.
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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

| March 31, 2023 |  | December 31, 2022
ASSETS |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 31,679 |  |  | $ | 41,566 |
Accounts receivable (net of allowance for credit losses of $24,558 and $23,435, respectively) | 214,103 |  |  | 216,614 |
Income taxes receivable | 4,736 |  |  | 4,759 |
Notes receivable (net of allowance for credit losses of $3,988 and $4,125, respectively) | 53,093 |  |  | 52,466 |
Prepaid expenses and other current assets | 37,477 |  |  | 32,517 |
Total current assets | 341,088 |  |  | 347,922 |
Property and equipment, at cost (net of accumulated depreciation and amortization of $266,825 and $253,323, respectively) | 434,282 |  |  | 427,306 |
Operating lease right-of-use assets | 66,398 |  |  | 68,985 |
Goodwill | 220,187 |  |  | 218,653 |
Intangible assets (net of accumulated amortization of $205,769 and $201,401, respectively) | 750,179 |  |  | 742,190 |
Notes receivable (net of allowance for credit losses of $6,370 and $6,047, respectively) | 56,382 |  |  | 55,577 |
Investments, employee benefit plans, at fair value | 34,758 |  |  | 31,645 |
Investments in affiliates | 33,216 |  |  | 30,647 |
Deferred income taxes | 80,593 |  |  | 88,182 |
Other assets | 89,140 |  |  | 91,068 |
Total assets | $ | 2,106,223 |  |  | $ | 2,102,175 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
Current liabilities |  |  |
Accounts payable | $ | 93,135 |  |  | $ | 118,863 |
Accrued expenses and other current liabilities | 78,842 |  |  | 131,410 |
Deferred revenue | 103,599 |  |  | 92,695 |
Current portion of long-term debt | 4,416 |  |  | 2,976 |
Liability for guest loyalty programs | 89,582 |  |  | 89,954 |
Total current liabilities | 369,574 |  |  | 435,898 |
Long-term debt | 1,374,814 |  |  | 1,200,547 |
Long-term deferred revenue | 132,520 |  |  | 134,149 |
Deferred compensation and retirement plan obligations | 40,420 |  |  | 36,673 |
Income taxes payable | 15,482 |  |  | 15,482 |
Operating lease liabilities | 69,708 |  |  | 70,994 |
Liability for guest loyalty programs | 48,420 |  |  | 47,381 |
Other liabilities | 8,277 |  |  | 6,391 |
Total liabilities | 2,059,215 |  |  | 1,947,515 |
Commitments and Contingencies |  |  |
Common stock, $0.01 par value; 160,000,000 shares authorized; 95,065,638 shares issued at March 31, 2023 and December 31, 2022; 51,174,432 and 52,200,903 shares outstanding at March 31, 2023 and December 31, 2022, respectively | 951 |  |  | 951 |
Additional paid-in-capital | 299,952 |  |  | 298,053 |
Accumulated other comprehensive loss | (4,817) |  |  | (5,211) |
Treasury stock, at cost; 43,891,206 and 42,864,735 shares at March 31, 2023 and December 31, 2022, respectively | (1,842,913) |  |  | (1,694,857) |
Retained earnings | 1,593,835 |  |  | 1,555,724 |
Total shareholders’ equity | 47,008 |  |  | 154,660 |
Total liabilities and shareholders’ equity | $ | 2,106,223 |  |  | $ | 2,102,175 |

The accompanying notes are an integral part of these consolidated financial statements.
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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

| Three Months Ended
| March 31,
| 2023 |  | 2022
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
Net income | $ | 52,820 |  |  | $ | 67,391 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 10,023 |  |  | 6,231 |
Depreciation and amortization – marketing and reservation system | 9,276 |  |  | 7,154 |
Gain on sale and disposal of business and assets, net | — |  |  | (29) |
Amortization - franchise agreement acquisition cost | 4,637 |  |  | 3,784 |
Non-cash stock compensation and other charges | 10,630 |  |  | 7,555 |
Non-cash interest and investment (income) loss | (1,442) |  |  | 1,909 |
Deferred income taxes | 7,566 |  |  | (3,119) |
Equity in net loss of affiliates, less distributions received | 421 |  |  | 230 |
Franchise agreement acquisition costs, net of reimbursements | (28,092) |  |  | (12,435) |
Change in working capital and other | (53,806) |  |  | (14,747) |
Net cash provided by operating activities | 12,033 |  |  | 63,924 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
Investment in property and equipment | (19,566) |  |  | (26,809) |
Investment in intangible assets | (1,097) |  |  | (1,208) |
Proceeds from sale of business and assets | — |  |  | 8,494 |
Contributions to investments in affiliates | (3,620) |  |  | (268) |
Proceeds from sale of equity method investments | 868 |  |  | — |
Purchases of investments, employee benefit plans | (2,670) |  |  | (2,818) |
Proceeds from sales of investments, employee benefit plans | 716 |  |  | 1,853 |
Issuance of notes receivable | (3,660) |  |  | (1,245) |
Collections of notes receivable | 337 |  |  | 63 |
Other items, net | (771) |  |  | (529) |
Net cash used in investing activities | (29,463) |  |  | (22,467) |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
Net borrowings pursuant to revolving credit facilities | 176,000 |  |  | — |
Debt issuance costs | (755) |  |  | — |
Purchases of treasury stock | (160,488) |  |  | (14,802) |
Dividends paid | (12,821) |  |  | (13,204) |
Proceeds from exercise of stock options | 5,504 |  |  | 2,211 |
Net cash provided by (used in) financing activities | 7,440 |  |  | (25,795) |
Net change in cash and cash equivalents | (9,990) |  |  | 15,662 |
Effect of foreign exchange rate changes on cash and cash equivalents | 103 |  |  | (58) |
Cash and cash equivalents at beginning of period | 41,566 |  |  | 511,605 |
Cash and cash equivalents at end of period | $ | 31,679 |  |  | $ | 527,209 |
Supplemental disclosure of cash flow information: |  |  |
Cash payments during the period for |  |  |
Income taxes, net of refunds | $ | 1,603 |  |  | $ | 513 |
Interest, net of capitalized interest | $ | 13,396 |  |  | $ | 14,462 |
Non-cash investing and financing activities |  |  |
Dividends declared but not paid | $ | 14,985 |  |  | $ | 13,250 |
Investment in property, equipment and intangibles acquired in accounts payable and accrued liabilities | $ | 6,704 |  |  | $ | 4,129 |

The accompanying notes are an integral part of these consolidated financial statements.
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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

| Common Stock - Shares Outstanding |  | Common Stock - Par Value |  | Additional Paid-in- Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Treasury Stock |  | Retained Earnings |  | Total
Balance as of December 31, 2021 | 55,609,226 |  |  | $ | 951 |  |  | $ | 259,317 |  |  | $ | (4,574) |  |  | $ | (1,265,032) |  |  | $ | 1,275,220 |  |  | $ | 265,882 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 67,391 |  |  | 67,391 |
Other comprehensive income (loss), net of tax | — |  |  | — |  |  | — |  |  | (134) |  |  | — |  |  | — |  |  | (134) |
Share-based payment activity(1) | 262,008 |  |  | — |  |  | 6,068 |  |  | — |  |  | 3,486 |  |  | 4 |  |  | 9,558 |
Dividends declared ($0.2375 per share)(1) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,250) |  |  | (13,250) |
Treasury purchases | (100,912) |  |  | — |  |  | — |  |  | — |  |  | (14,802) |  |  | — |  |  | (14,802) |
Balance as of March 31, 2022 | 55,770,322 |  |  | $ | 951 |  |  | $ | 265,385 |  |  | $ | (4,708) |  |  | $ | (1,276,348) |  |  | $ | 1,329,365 |  |  | $ | 314,645 |

| Common Stock - Shares Outstanding |  | Common Stock - Par Value |  | Additional Paid-in- Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Treasury Stock |  | Retained Earnings |  | Total
Balance as of December 31, 2022 | 52,200,903 |  |  | $ | 951 |  |  | $ | 298,053 |  |  | $ | (5,211) |  |  | $ | (1,694,857) |  |  | $ | 1,555,724 |  |  | $ | 154,660 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 52,820 |  |  | 52,820 |
Other comprehensive income (loss), net of tax | — |  |  | — |  |  | — |  |  | 394 |  |  | — |  |  | — |  |  | 394 |
Share-based payment activity(1) | 315,049 |  |  | — |  |  | 1,899 |  |  | — |  |  | 13,497 |  |  | — |  |  | 15,396 |
Dividends declared ($0.2875 per share)(1) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (14,709) |  |  | (14,709) |
Treasury purchases(2) | (1,341,520) |  |  | — |  |  | — |  |  | — |  |  | (161,553) |  |  | — |  |  | (161,553) |
Balance as of March 31, 2023 | 51,174,432 |  |  | $ | 951 |  |  | $ | 299,952 |  |  | $ | (4,817) |  |  | $ | (1,842,913) |  |  | $ | 1,593,835 |  |  | $ | 47,008 |

(1) During the year ended December 31, 2022, the Company declared cash dividends at a quarterly rate of $0.2375 per share of common stock. In March 2023, the Company's board of directors approved a 21% increase in the quarterly cash dividend to $0.2875 per share, effective with the dividend payable on April 18, 2023 to shareholders of record on April 3, 2023. This increase will result in a projected 2023 annual dividend rate of $1.15 per share, subject to future declarations by the board of directors. During certain periods presented, accumulated dividends were paid to certain shareholders upon vesting of performance vested restricted stock units ("PVRSU") which are captured in Share-based payment activity.
(2) Beginning January 1, 2023, Treasury purchases include excise tax as imposed by the Inflation Reduction Act of 2022.
The accompanying notes are an integral part of these consolidated financial statements.
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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements of Choice Hotels International, Inc. and its subsidiaries (together "Choice" or the "Company") have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are necessary to fairly present the Company's financial position and results of operations. Except as otherwise disclosed, all adjustments are of a normal recurring nature.
Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. Although we believe the disclosures made are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2023. Interim results are not necessarily indicative of the entire year results.
Acquisition of Radisson Hotels Americas
On August 11, 2022, the Company completed the acquisition (the "Transaction") of (1) all of the issued and outstanding shares of Radisson Hospitality, Inc. and (2) certain trademarks held by Radisson Hospitality Belgium BV/SRL (collectively referred to as "Radisson Hotels Americas").
The Company determined it is the accounting acquirer of Radisson Hotels Americas and accounted for the Transaction as a business combination using the acquisition method of accounting. Accordingly, assets acquired and liabilities assumed were recorded at their fair values as of the August 11, 2022 acquisition date, with the exception of certain asset and liabilities which were accounted for in accordance with provisions of ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). Refer to Note 14.
Accordingly, our consolidated statements of income include Radisson Hotels Americas' results of operations in the three months ended March 31, 2023, but exclude Radisson Hotels Americas' results of operations in the three months ended March 31, 2022, as this period was prior to the acquisition date of the Transaction.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are detailed in the “Summary of Significant Accounting Policies” section of Note 1 in the Annual Report on Form 10-K for the year ended December 31, 2022, inclusive of elements attributable to Radisson Hotels Americas balances and activity.
Recently Adopted Accounting Standards
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses ("ASU 2022-02"). ASU 2022-02 eliminates the recognition and measurement guidance on troubled debt restructuring for creditors that have adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) ("Topic 326"), requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty, and includes new guidance on current-period gross write-offs presentation. ASU 2022-02 is effective for annual reporting periods beginning after December 15, 2022 and interim periods within those fiscal years. The Company adopted ASU 2022-02 on a prospective basis effective January 1, 2023, and concluded there is no impact to the consolidated financial statements or disclosures for the first quarter of 2023.
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2. Revenue
Contract Liabilities
Contract liabilities relate to (i) advance consideration received, such as initial franchise fees paid when a franchise agreement is executed and system implementation fees paid at time of installation, for services considered to be part of the brand intellectual property performance obligation and (ii) amounts received when loyalty points are issued, but for which revenue is not yet recognized since the related loyalties points have not been redeemed.
Deferred revenues from initial fees and system implementation fees are typically recognized over a five- to ten-year period, unless the franchise agreement is terminated and the hotel exits the franchise system whereby remaining deferred amounts are recognized to revenue in the period of termination. Loyalty points are typically redeemed within three years of issuance.
Significant changes in the contract liabilities balances during the period December 31, 2022 to March 31, 2023 are as follows:

(in thousands) |
Balance as of December 31, 2022 | $ | 209,359 |
Increases to the contract liability balance due to cash received | 24,053 |
Revenue recognized in the period | (27,549) |
Balance as of March 31, 2023 | $ | 205,863 |

Remaining Performance Obligations
The aggregate amount of transaction price allocated to unsatisfied or partially unsatisfied performance obligations is $205.9 million as of March 31, 2023. This amount represents fixed transaction price that will be recognized as revenue in future periods, which is captured in the consolidated balance sheet as current and non-current deferred revenue.
Based on practical expedient elections permitted by ASU 2014-09, Revenue From Contracts with Customers (Topic 606) and subsequent amendments ("Topic 606"), the Company does not disclose the value of unsatisfied performance obligations for (i) variable consideration subject to the sales or usage-based royalty constraint or comprising a component of a series (including franchise, partnership, qualified vendor, and software as a service ("SaaS") agreements), (ii) variable consideration for which we recognize revenue at the amount to which we have the right to invoice for services performed, or (iii) contracts with an expected original duration of one year or less.
Disaggregation of Revenue

| Three Months Ended |  | Three Months Ended
| March 31, 2023 |  | March 31, 2022
(in thousands) | Over time |  | Point in time |  | Total |  | Over time |  | Point in time |  | Total
Royalty, licensing and management fees | $ | 107,492 |  |  | $ | — |  |  | $ | 107,492 |  |  | $ | 90,739 |  |  | $ | — |  |  | $ | 90,739 |
Initial franchise fees | 7,882 |  |  | — |  |  | 7,882 |  |  | 8,402 |  |  | — |  |  | 8,402 |
Platform and procurement services fees | 13,239 |  |  | 604 |  |  | 13,843 |  |  | 11,131 |  |  | 552 |  |  | 11,683 |
Owned hotels | 16,893 |  |  | 5,440 |  |  | 22,333 |  |  | 10,040 |  |  | 1,997 |  |  | 12,037 |
Other | 10,627 |  |  | — |  |  | 10,627 |  |  | 8,229 |  |  | — |  |  | 8,229 |
Other revenues from franchised and managed properties | 155,438 |  |  | 15,178 |  |  | 170,616 |  |  | 112,259 |  |  | 14,378 |  |  | 126,637 |
Total revenues | $ | 311,571 |  |  | $ | 21,222 |  |  | $ | 332,793 |  |  | $ | 240,800 |  |  | $ | 16,927 |  |  | $ | 257,727 |

Owned hotels point in time revenues represent goods and services purchased independently of the hotel stay, such as food and beverage, incidentals, and parking fees. The remaining point in time revenues represent loyalty points redeemed by members for benefits (with both franchisees and third-party partners), net of the cost of redemptions.
As presented in Note 11, the Corporate & Other segment revenue amounts represent $26.1 million and $14.3 million for the three months ended March 31, 2023 and 2022, and are included in the Over time column of Other revenue and the Owned hotels revenue row. The remaining revenues relate to the Hotel Franchising & Management reportable segment.
Royalty, licensing and management fees and Other revenues from franchised and managed properties are presented net of intersegment revenues of $2.3 million and $0.9 million for the three months ended March 31, 2023 and 2022, respectively.
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3. Receivables and Allowance for Credit Losses
Notes Receivable
The Company has provided financing in the form of notes receivable loans to franchisees to support the development of properties in strategic markets. The Company's credit quality indicator is the level of security in the note receivable.
The composition of notes receivable balances by credit quality indicator and the allowance for credit losses is as follows:

(in thousands) | March 31, 2023 |  | December 31, 2022
Senior | $ | 98,339 |  |  | $ | 95,466 |
Subordinated | 16,577 |  |  | 17,075 |
Unsecured | 4,917 |  |  | 5,674 |
Total notes receivable | 119,833 |  |  | 118,215 |
Total allowance for notes receivable credit losses | 10,358 |  |  | 10,172 |
Total notes receivable, net of allowance | $ | 109,475 |  |  | $ | 108,043 |
Current portion, net of allowance | $ | 53,093 |  |  | $ | 52,466 |
Long-term portion, net of allowance | $ | 56,382 |  |  | $ | 55,577 |

Amortized cost basis by year of origination and credit quality indicator are as follows:

(in thousands) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Total
Senior | $ | 3,480 |  |  | $ | — |  |  | $ | 8,018 |  |  | $ | — |  |  | $ | 28,819 |  |  | $ | 58,022 |  |  | $ | 98,339 |
Subordinated | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,577 |  |  | 16,577 |
Unsecured | — |  |  | 390 |  |  | 1,288 |  |  | 953 |  |  | 203 |  |  | 2,083 |  |  | 4,917 |
Total notes receivable | $ | 3,480 |  |  | $ | 390 |  |  | $ | 9,306 |  |  | $ | 953 |  |  | $ | 29,022 |  |  | $ | 76,682 |  |  | $ | 119,833 |

The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses:

(in thousands) | March 31, 2023 |  | December 31, 2022
Beginning balance | $ | 10,172 |  |  | $ | 16,779 |
Provision for credit losses | 342 |  |  | (938) |
Write-offs | (156) |  |  | (5,669) |
Ending balance | $ | 10,358 |  |  | $ | 10,172 |

As of both March 31, 2023 and December 31, 2022, one loan with a senior tranche met the definition of collateral-dependent and is collateralized by membership interests in the borrowing entities and the associated land parcel. The Company used a discounted cash flow ("DCF") market approach via quoted market prices to value the underlying collateral. The Company reviewed the borrower's financial statements, economic trends, industry projections for the market, and comparable sales capitalization rates, which represent significant inputs to the cash flow projections. These nonrecurring fair value measurements are classified as level three of the fair value measurement hierarchy, as there are unobservable inputs which are significant to the overall fair value. Based on these analyses, the fair value of collateral secures substantially all of the carrying value of each loan. Allowances for credit losses attributable to collateral-dependent loans are $0.9 million as of both March 31, 2023 and December 31, 2022, respectively.
As of December 31, 2022, two loans had revised provisions as a result of loan repayments being made timely and a favorable reassessment of the underlying collateral's performance. The write-offs for the year ended December 31, 2022 are primarily associated with a loan previously classified as collateral-dependent that was settled in exchange for an operating hotel on April 14, 2022, as well as a loan that was settled under negotiated terms and therefore written off.
The Company considers loans past due and in default when payments are not made when due in accordance with then current loan provisions or terms extended to borrowers, including loans with concessions or interest deferral. The Company suspends the accrual of interest when payments on loans are more than 30 days past due or upon a loan being classified as collateral-dependent. The Company applies payments received for loans on non-accrual status first to interest and then to principal. The Company does not resume interest accrual until all delinquent payments are received based on then current loan provisions. The amortized cost basis of notes receivable on non-accrual status was $18.4 million and $18.7 million at March 31, 2023 and December 31, 2022, respectively.
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The Company has identified loans totaling approximately $4.8 million as of both March 31, 2023 and December 31, 2022, respectively, with stated interest rates that are less than market rate, representing a total unamortized discount of $0.1 million as of both March 31, 2023 and December 31, 2022, respectively. These discounts are reflected as a reduction of the outstanding loan amounts and are amortized over the life of the related loan.
The past due balances by credit quality indicator of notes receivable are as follows:

(in thousands) | 1- 30 days Past Due |  | 31-89 days Past Due |  | > 90 days Past Due |  | Total Past Due |  | Current |  | Total Notes Receivable
As of March 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Senior | $ | — |  |  | $ | 12,897 |  |  | $ | 15,200 |  |  | $ | 28,097 |  |  | $ | 70,242 |  |  | $ | 98,339 |
Subordinated | — |  |  | — |  |  | 2,053 |  |  | 2,053 |  |  | 14,524 |  |  | 16,577 |
Unsecured | — |  |  | — |  |  | 400 |  |  | 400 |  |  | 4,517 |  |  | 4,917 |
| $ | — |  |  | $ | 12,897 |  |  | $ | 17,653 |  |  | $ | 30,550 |  |  | $ | 89,283 |  |  | $ | 119,833 |
As of December 31, 2022 |  |  |  |  |  |  |  |  |  |  |
Senior | $ | — |  |  | $ | 15,200 |  |  | $ | — |  |  | $ | 15,200 |  |  | $ | 80,266 |  |  | $ | 95,466 |
Subordinated | — |  |  | — |  |  | 2,209 |  |  | 2,209 |  |  | 14,866 |  |  | 17,075 |
Unsecured | 20 |  |  | 40 |  |  | 40 |  |  | 99 |  |  | 5,575 |  |  | 5,674 |
| $ | 20 |  |  | $ | 15,240 |  |  | $ | 2,249 |  |  | $ | 17,508 |  |  | $ | 100,707 |  |  | $ | 118,215 |

The Company evaluated its off-balance-sheet credit exposure for loan commitments and determined the likelihood of having to perform is remote as of March 31, 2023. Refer to Note 12.
Variable Interest through Notes Issued
The Company has issued notes receivables to certain entities that have created variable interests in these borrowers totaling $105.3 million and $103.2 million as of March 31, 2023 and December 31, 2022, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs").
Accounts Receivable
Accounts receivable consist primarily of franchise and related fees due from hotel franchisees and are recorded at the invoiced amount.
During the three months ended March 31, 2023, the Company recorded provisions for credit losses on accounts receivable of $1.8 million in selling, general and administrative ("SG&A") expenses and $2.1 million in marketing and reservation system expenses. During the three months ended March 31, 2022, the Company recorded reversal of provisions for credit losses on accounts receivable of $0.5 million in SG&A expenses and provisions of $0.3 million in marketing and reservation system expenses. During the three months ended March 31, 2023 and 2022, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $2.8 million and $0.3 million, respectively.
4. Investments in Affiliates
The Company maintains equity method investments in affiliates related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels in strategic markets. The Company has investments in affiliates that represent VIEs totaling $26.1 million and $24.5 million on the consolidated balance sheets at March 31, 2023 and December 31, 2022, respectively. The Company has determined that it is not the primary beneficiary of any of these VIEs, however it does exercise significant influence through its equity ownership and as a result the investment in these affiliates is accounted for under the equity method. For the three months ended March 31, 2023 and 2022, the Company recognized losses totaling $1.4 million and $0.8 million, respectively, from these investments that represent VIEs. The Company's maximum exposure to losses related to its investments in VIEs is limited to its equity investments as well as certain limited payment guaranties described in Note 12 of these financial statements.
The Company recognized no impairment charges related to equity method investments during the three months ended March 31, 2023 and 2022.
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5. Debt
Debt consists of the following:

| March 31, 2023 |  | December 31, 2022
| (in thousands)
$450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86%, less a discount and deferred issuance costs of $4.8 million and $4.9 million at March 31, 2023 and December 31, 2022, respectively | $ | 445,232 |  |  | $ | 445,080 |
$400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88%, less a discount and deferred issuance costs of $4.0 million and $4.2 million at March 31, 2023 and December 31, 2022, respectively | 395,989 |  |  | 395,838 |
$850 million senior unsecured revolving credit facility with an effective interest rate of 5.87% less deferred issuance costs of $2.4 million and $1.8 million at March 31, 2023 and December 31, 2022, respectively (1) | 533,593 |  |  | 358,189 |
Economic development loans with an effective interest rate of 3.00% at March 31, 2023 and December 31, 2022, respectively | 4,416 |  |  | 4,416 |
Total debt | $ | 1,379,230 |  |  | $ | 1,203,523 |
Less current portion | 4,416 |  |  | 2,976 |
Long-term debt | $ | 1,374,814 |  |  | $ | 1,200,547 |

(1) On February 14, 2023, the Company entered into a Third Amendment to the Amended and Restated Senior Unsecured Credit Agreement (the "Amendment"). The Amendment provides, among other things, for (i) an increase in the aggregate amount of commitments under the Company's existing $600 million unsecured credit facility (the "Revolver") by $250 million (the “Increased Commitments”) to an aggregate amount of $850 million and (ii) the replacement of the interest reference rate for U.S. dollar-denominated borrowings under the Revolver from LIBOR to an adjusted Secured Overnight Financing Rate. The pricing and other terms applicable to the Increased Commitments are the same as those applicable to the existing revolving loan commitments that were in effect prior to the Amendment. Except as amended by the Amendment, the remaining terms of the unsecured credit facility remain in full force and effect.
Refer to Note 12 and the Liquidity and Capital Resources header of "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information.
6. Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2023 and 2022 are as follows:

(in thousands) |  |  |
Balance as of December 31, 2022 |  |  | $ | (5,211) |
Other comprehensive income (loss) before reclassification |  |  | 394 |
Balance as of March 31, 2023 |  |  | $ | (4,817) |

(in thousands) |  |  |
Balance as of December 31, 2021 |  |  | $ | (4,574) |
Other comprehensive income (loss) before reclassification |  |  | (134) |
Balance as of March 31, 2022 |  |  | $ | (4,708) |

The other comprehensive income (loss) before reclassification for both the three months ended March 31, 2023 and 2022 relate to foreign currency items, and there were no amounts reclassified from accumulated other comprehensive loss during either period.
7. Fair Value Measurements
The Company estimates the fair value of its financial instruments utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The following summarizes the three levels of inputs, as well as the assets that the Company values using those levels of inputs on a recurring basis.
Level 1: Quoted prices in active markets for identical assets and liabilities. The Company’s Level 1 assets consist of marketable securities (primarily mutual funds) held in the Deferred Compensation Plan.
Level 2: Observable inputs, other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable. The Company’s Level 2 assets consist of money market funds held in the Company's Deferred Compensation Plan.
Level 3: Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument. The Company does not currently have any assets recorded at fair value whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the three months ended March 31, 2023 and year ended December 31, 2022.
As of March 31, 2023 and December 31, 2022, the Company had the following assets recorded in the consolidated balance sheets measured at fair value on a recurring basis:

| Fair Value Measurements at Reporting Date Using
(in thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
As of March 31, 2023 |  |  |  |  |  |  |
Mutual funds (1) | $ | 32,649 |  |  | $ | 32,649 |  |  | $ | — |  |  | $ | — |
Money market funds (1) | 3,521 |  |  | — |  |  | 3,521 |  |  | — |
Total | $ | 36,170 |  |  | $ | 32,649 |  |  | $ | 3,521 |  |  | $ | — |
As of December 31, 2022 |  |  |  |  |  |  |
Mutual funds (1) | $ | 29,143 |  |  | $ | 29,143 |  |  | $ | — |  |  | $ | — |
Money market funds (1) | 3,242 |  |  | — |  |  | 3,242 |  |  | — |
Total | $ | 32,385 |  |  | $ | 29,143 |  |  | $ | 3,242 |  |  | $ | — |

(1) Included in Investments, employee benefit plans, at fair value and Prepaid expenses and other current assets on the consolidated balance sheets.
Other financial instruments disclosure
The Company believes that the fair values of its current assets and current liabilities approximate their reported carrying amounts due to the short-term nature of these items. In addition, the interest rates of the senior unsecured revolving credit facility adjust frequently based on current market rates; accordingly, we believe its carrying amount approximates fair value.
The fair values of the Company's senior unsecured notes are classified as Level 2, as the significant inputs are observable in an active market. Refer to Note 5 for further information on debt. At March 31, 2023 and December 31, 2022, the carrying amounts and fair values are as follows:

| March 31, 2023 |  | December 31, 2022
(in thousands) | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
2020 Senior Notes | $ | 445,232 |  |  | $ | 400,586 |  |  | $ | 445,080 |  |  | $ | 384,647 |
2019 Senior Notes | 395,989 |  |  | 360,244 |  |  | 395,838 |  |  | 349,368 |

Fair value estimates are made at a specific point in time, are subjective in nature and involve uncertainties and matters of significant judgment. Settlement of such fair value amounts may not be possible or a prudent management decision.
8. Income Taxes
The effective income tax rates were 21.7% and 23.2% for the three months ended March 31, 2023 and 2022, respectively.
The effective income tax rates for the three months ended March 31, 2023 and 2022 were higher than the U.S. federal income tax rate of 21% primarily due to the impact of state income taxes, partially offset by excess tax benefits from share-based compensation.
9. Share-Based Compensation and Capital Stock
The components of the Company’s pretax share-based compensation activity are as follows for the three months ended March 31, 2023 and 2022:

| Three Months Ended March 31, |  |
(in thousands) | 2023 |  | 2022 |  |  |  |
Stock options | $ | 1,388 |  |  | $ | 1,052 |  |  |  |  |
Restricted stock awards | 3,699 |  |  | 3,043 |  |  |  |  |
Performance vested restricted stock units | 4,684 |  |  | 3,354 |  |  |  |  |
Total share-based compensation expense | $ | 9,771 |  |  | $ | 7,449 |  |  |  |  |

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A summary of share-based award activity as of and changes during the three months ended March 31, 2023 are presented below:

| Stock Options |  | Restricted Stock |  | Performance Vested Restricted Stock Units
| Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Outstanding at January 1, 2023 | 1,010,647 |  |  | $ | 94.97 |  |  |  |  | 399,099 |  |  | $ | 128.47 |  |  | 437,180 |  |  | $ | 140.05 |
Granted | 88,733 |  |  | 123.62 |  |  |  |  | 35,361 |  |  | 123.71 |  |  | 104,128 |  |  | 128.88 |
Performance-Based Leveraging (1) | — |  |  | — |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Exercised/Vested | (107,252) |  |  | 52.25 |  |  |  |  | (68,432) |  |  | 93.31 |  |  | (120,308) |  |  | 145.41 |
Expired | — |  |  | — |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Forfeited | (645) |  |  | 123.71 |  |  |  |  | (4,201) |  |  | 106.66 |  |  | (960) |  |  | 139.95 |
Outstanding at March 31, 2023 | 991,483 |  |  | $ | 102.13 |  |  | 6.3 |  | 361,827 |  |  | $ | 134.91 |  |  | 420,040 |  |  | $ | 135.78 |
Options exercisable at March 31, 2023 | 596,997 |  |  | $ | 90.05 |  |  | 4.8 |  |  |  |  |  |  |  |

(1) There has been no change to PVRSUs outstanding in the three months ended March 31, 2023 based on the Company's performance relative to the targeted performance conditions contained in PVRSUs.
The fair value of the restricted stock awards and the PVRSUs with performance conditions granted during the three months ended March 31, 2023 were equal to the market price of the Company’s common stock on date of grant. The fair value of the PVRSUs with market conditions based on the Company’s total shareholder return relative to a predetermined peer group was estimated using a Monte Carlo simulation method as of the grant date. The requisite service periods for restricted stock and PVRSUs granted was between 9 months and 48 months. PVRSU award vesting ranges between 0% and 230% of the initial units granted.
The stock options granted by the Company had an exercise price equal to the market price of the Company's common stock on the date of grant. The fair value of the options granted during the three months ended March 31, 2023 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate | 4.10 | %
Expected volatility | 30.90 | %
Expected life of stock option | 6.0 years
Dividend yield | 0.9 | %
Requisite service period | 4 years
Contractual life | 10 years
Weighted average fair value of options granted (per option) | $ | 42.59 |

10. Earnings Per Share
The Company’s shares of restricted stock contain rights to receive nonforfeitable dividends and thus are participating securities requiring the computation of basic EPS using the two-class method. As the shares of restricted stock are both potential shares of common stock and participating securities, the Company calculates diluted earnings per share by the more dilutive of the treasury stock method or the two-class method. The calculation of EPS for net income available to common shareholders excludes the distribution of dividends and undistributed earnings attributable to participating securities from the numerator. The diluted earnings weighted average shares of common stock outstanding includes stock options, PVRSUs and RSUs.
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The computation of basic and diluted earnings per share of common stock is as follows:

| Three Months Ended |  |
| March 31, |  |
(in thousands, except per share amounts) | 2023 |  | 2022 |  |  |  |
Numerator: |  |  |  |  |  |  |
Net income | $ | 52,820 |  |  | $ | 67,391 |  |  |  |  |
Income allocated to participating securities | (272) |  |  | (324) |  |  |  |  |
Net income available to common shareholders | $ | 52,548 |  |  | $ | 67,067 |  |  |  |  |
Denominator: |  |  |  |  |  |  |
Weighted average shares of common stock outstanding – basic | 51,269 |  |  | 55,412 |  |  |  |  |
Basic earnings per share | $ | 1.02 |  |  | $ | 1.21 |  |  |  |  |
Numerator: |  |  |  |  |  |  |
Net income | $ | 52,820 |  |  | $ | 67,391 |  |  |  |  |
Income allocated to participating securities | (272) |  |  | (324) |  |  |  |  |
Net income available to common shareholders | $ | 52,548 |  |  | $ | 67,067 |  |  |  |  |
Denominator: |  |  |  |  |  |  |
Weighted average shares of common stock outstanding – basic | 51,269 |  |  | 55,412 |  |  |  |  |
Dilutive effect of stock options and PVRSUs | 445 |  |  | 642 |  |  |  |  |
Weighted average shares of common stock outstanding – diluted | 51,714 |  |  | 56,054 |  |  |  |  |
Diluted earnings per share | $ | 1.02 |  |  | $ | 1.20 |  |  |  |  |

The following securities have been excluded from the calculation of diluted weighted average shares of common stock outstanding as the inclusion of these securities would have an anti-dilutive effect:

| Three Months Ended |  |
| March 31, |  |
(in thousands) | 2023 |  | 2022 |  |  |  |
Stock options | 240 |  |  | 156 |  |  |  |  |
PVRSUs | — |  |  | 76 |  |  |  |  |

11. Reportable Segment Information
The Hotel Franchising & Management reportable segment includes the Company's hotel franchising operations consisting of its 22 brands and brand extensions and hotel management operations of 13 Radisson Hotels Americas hotels (inclusive of 3 owned hotels). The 22 brands and brand extensions and hotel management operations are aggregated within this reportable segment considering their similar economic characteristics, types of customers, distribution channels and regulatory business environments. Revenues from the hotel franchising and management business include royalty fees, initial franchise fees and relicensing fees, cost reimbursement revenues, procurement services revenue, base and incentive management fees, and other hotel franchising and management related revenue. The Company provides certain services under its hotel franchise and management agreements which result in direct and indirect reimbursements. The cost reimbursement revenues received from franchisees are included in hotel franchising and management revenues and are offset by related expenses to calculate hotel franchising operating income. Equity in earnings or losses from hotel franchising related investment in affiliates is allocated to the Company's Hotel Franchising & Management reportable segment.
The Company evaluates its Hotel Franchising & Management reportable segment based primarily on the results of the segment without allocating corporate expenses, indirect general and administrative expenses, interest expense, interest income, other gains and losses or income taxes, which are included in the Corporate & Other column. Corporate & Other revenues include owned hotel revenues and revenues related to the Company's SaaS technology solutions division which provide cloud-based property management software to non-franchised hoteliers.
Intersegment revenue adjustment is from the elimination of Hotel Franchising & Management revenue which include royalty fees, management and cost reimbursement fees charged to our owned hotels against franchise and management fee expense recognized by our owned hotels in Corporate & Other operating income (loss).
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Our President and Chief Executive Officer, who is our chief operating decision maker, does not use assets by operating segment when assessing performance or making operating segment resource allocations decisions and therefore assets by segment are not disclosed below.
The following table presents the financial information for the Company's segments:

| Three Months Ended March 31, 2023 |  | Three Months Ended March 31, 2022
(in thousands) | Hotel Franchising & Management |  | Corporate & Other |  | Intersegment Eliminations |  | Consolidated |  | Hotel Franchising & Management |  | Corporate & Other |  | Intersegment Eliminations |  | Consolidated
Revenues | $ | 309,047 |  |  | $ | 26,064 |  |  | $ | (2,319) |  |  | $ | 332,792 |  |  | $ | 244,371 |  |  | $ | 14,260 |  |  | $ | (904) |  |  | $ | 257,727 |
Operating income (loss) | $ | 105,491 |  |  | $ | (27,640) |  |  | $ | — |  |  | $ | 77,851 |  |  | $ | 107,320 |  |  | $ | (7,923) |  |  | $ | — |  |  | $ | 99,397 |
Income (loss) before income taxes | $ | 105,428 |  |  | $ | (37,933) |  |  | $ | — |  |  | $ | 67,495 |  |  | $ | 107,564 |  |  | $ | (19,829) |  |  | $ | — |  |  | $ | 87,735 |

12. Commitments and Contingencies
The Company is not a party to any litigation other than litigation in the ordinary course of business. The Company's management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or collectively, will have a material adverse effect on the Company's financial position, results of operations or cash flows.
Contingencies
The Company entered into various limited payment guaranties with regards to the Company’s VIEs supporting their efforts to develop and own hotels franchised under the Company’s brands. Under these limited payment guaranties, the Company has agreed to guarantee a portion of the outstanding debt until certain conditions are met such as (a) the loan matures, (b) certain debt covenants are achieved, (c) the maximum amount guaranteed by the Company is paid in full or (d) the Company, through its affiliates, ceases to be a member of the VIE. The maximum exposure of principal incidental to these limited payment guaranties is $5.7 million, plus unpaid expenses and accrued unpaid interest. As of March 31, 2023 and December 31, 2022, the Company believed the likelihood of having to perform under the aforementioned limited payment guaranties was remote. In the event of performance, the Company has recourse for one of the transactions in the form of a membership interest pledge as collateral for the guaranty.
Commitments
The Company has the following commitments outstanding at March 31, 2023:
•The Company provides financing in the form of franchise agreement acquisition payments to franchisees for property improvements, hotel development efforts and other purposes. These payments are typically made at commencement of construction or hotel opening, in accordance with agreed upon provisions in individual franchise agreements. At March 31, 2023, the Company had commitments to extend an additional $334.6 million for these purposes provided the conditions of the payment are met by its franchisees.
•As part of the acquisition of Radisson Hotels Americas, the Company entered into a long-term management arrangement, with an expiration date of July 31, 2031, to manage eight hotel properties owned by a third-party. In conjunction with the management arrangement, the Company entered into a guarantee with the third-party to fund any shortfalls in the payment of the third-party owner’s priority stipulated in the management agreement. The maximum guarantee under the agreement is $22 million. The Company believes the future performance is expected to be sufficient on both an annual basis and over the duration of the agreement. Accordingly, no liability was recorded as of March 31, 2023 in accrued liabilities within the consolidated balance sheets.
•To the extent existing unconsolidated affiliates proceed to the hotel construction phase, the Company is committed to make capital contributions totaling $11.6 million to support their efforts to construct Cambria hotels.
•The Company committed to provide financing in the form of loans or credit facilities to franchisees for Choice brand development efforts. At March 31, 2023, the Company has remaining commitments of approximately $0.7 million, upon certain conditions being met.
•The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation system fees. In accordance with terms of our franchise agreements, the Company is obligated to use the marketing and reservation system revenues it collects from the current franchisees comprising its various hotel brands to provide
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marketing and reservation services appropriate to support the operation of the overall system. To the extent revenues collected exceed expenditures incurred, the Company has a commitment to the franchisee system to make expenditures in future years. Conversely, to the extent expenditures incurred exceed revenues collected, the Company has the contractual enforceable right to assess and collect such amounts.
In the ordinary course of business, the Company enters into numerous agreements that contain standard indemnities whereby the Company indemnifies another party for breaches of representations and warranties. Such indemnifications are granted under various agreements, including those governing (i) purchases or sales of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) access to credit facilities, (v) issuances of debt or equity securities, and (vi) certain operating agreements. The indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) franchisees in licensing agreements, (iv) financial institutions in credit facility arrangements, (v) underwriters in debt or equity security issuances and (vi) parties under certain operating agreements. In addition, these parties are also generally indemnified against any third-party claim resulting from the transaction that is contemplated in the underlying agreement. While some of these indemnities extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of future payments that the Company could be required to make under these indemnities, nor is the Company able to develop an estimate of the maximum potential amount of future payments to be made under these indemnifications as the triggering events are not subject to predictability. With respect to certain of the aforementioned indemnities, such as indemnifications of landlords against third-party claims for the use of real estate property leased by the Company, the Company maintains insurance coverage that mitigates potential liability.
13. Transactions with Unconsolidated Affiliates
The Company has a management fee arrangement for marketing services with a partner in an unconsolidated affiliate. For the three months ended March 31, 2023 and 2022, fees earned and payroll costs reimbursed under this arrangement totaled $0.7 million and $0.4 million, respectively.
The Company has entered into franchise agreements with certain of the unconsolidated affiliates discussed in Note 4. Pursuant to these franchise agreements, for the three months ended March 31, 2023 and 2022, the Company recorded royalty and marketing reservation system fees of approximately $5.8 million and $4.2 million, respectively. The Company recorded $4.1 million and $3.9 million as a receivable due from these affiliates as of March 31, 2023 and December 31, 2022, respectively.
As part of the acquisition of Radisson Hotels Americas as discussed in Note 14, the Company has a management fee arrangement with an investment in an unconsolidated affiliate accounted for under the cost method. For the three months ended March 31, 2023, fees earned and payroll costs reimbursed under this arrangement totaled $1.0 million.
14. Acquisitions
August 2022 Radisson Hotels Americas Acquisition
On August 11, 2022, the Company completed the acquisition of Radisson Hotels Americas. The accounting purchase price for the Transaction was $673.9 million, which includes the base purchase price of $675.2 million, adjusted for Disclosed Leakage (as defined in the Share Sale and Purchase Agreement) and certain other prepaid expenses. To fund the Transaction, Choice drew $175.0 million on the Company's existing senior unsecured credit facility, and funded the remainder with cash on hand.
Additionally, in connection with the acquisition, we recorded $10.4 million of transaction, transition, and severance expense, included within Selling, general and administrative, during the three months ended March 31, 2023.
Preliminary Fair Values of Assets Acquired and Liabilities Assumed
The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets acquired and liabilities assumed as of August 11, 2022. These preliminary fair values are based on management’s estimates and assumptions, using the best information available at the time of this filing.
During the fourth quarter of 2022 and first quarter of 2023, the Company recorded net measurement period adjustments that revised goodwill by a $9.1 million reduction and $1.5 million increase, respectively, as presented in the table below. The Company made these measurement period adjustments to reflect facts and circumstances that existed as of the acquisition date and did not result from intervening events subsequent to such date. The measurement period adjustments resulted in no impact to our consolidated statements of income.
The final valuation and related allocation of the purchase price will be completed no later than 12 months after the closing date. The final acquisition accounting adjustments may b e materially different and may include (1) changes in fair value of property and equipment and associated salvage values, (2) changes in allocations to intangible assets, such trade names, acquired
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franchise and management agreements, above and below market leases, as well as goodwill; and (3) other changes to assets and liabilities, such as working capital.
The preliminary allocation of the purchase price, including measurement period adjustments, as presented in our consolidated balance sheets:

(in thousands) | August 11, 2022 - original |  | Measurement Period Adj - 4th quarter 2022 |  | Measurement Period Adj - 1st quarter 2023 |  | August 11, 2022 - as adjusted
Cash and cash equivalents | $ | 113,023 |  |  | $ | — |  |  | $ | — |  |  | $ | 113,023 |
Restricted cash | 10,403 |  |  | — |  |  | — |  |  | 10,403 |
Accounts receivable | 32,972 |  |  | 8,752 |  |  | (1,941) |  |  | 39,783 |
Notes receivable - current | 1,709 |  |  | — |  |  | (860) |  |  | 849 |
Prepaid expenses and other current assets | 8,139 |  |  | — |  |  | — |  |  | 8,139 |
Property and equipment | 125,441 |  |  | — |  |  | — |  |  | 125,441 |
Operating lease right-of-use of assets | 42,315 |  |  | (2,016) |  |  | — |  |  | 40,299 |
Intangible assets | 447,400 |  |  | (300) |  |  | — |  |  | 447,100 |
Notes receivable - noncurrent | 2,592 |  |  | — |  |  | — |  |  | 2,592 |
Investment in affiliates | 471 |  |  | — |  |  | — |  |  | 471 |
Other assets | 2,129 |  |  | — |  |  | — |  |  | 2,129 |
Total assets acquired | $ | 786,594 |  |  | $ | 6,436 |  |  | $ | (2,801) |  |  | $ | 790,229 |
Accounts payable | $ | 8,295 |  |  | $ | (1,566) |  |  | $ | (1,941) |  |  | $ | 4,788 |
Accrued expenses and other current liabilities | 15,987 |  |  | 425 |  |  | 674 |  |  | 17,086 |
Deferred revenue - current(1) | 5,745 |  |  | 1,566 |  |  | — |  |  | 7,311 |
Liability for guest loyalty program - current(1) | 3,542 |  |  | 3,792 |  |  | — |  |  | 7,334 |
Long-term debt | 55,975 |  |  | — |  |  | — |  |  | 55,975 |
Long-term deferred revenue(1) | 26,499 |  |  | (3,915) |  |  | — |  |  | 22,584 |
Deferred compensation and retirement plan obligations | 9,265 |  |  | — |  |  | — |  |  | 9,265 |
Operating lease liabilities | 42,705 |  |  | (2,016) |  |  | — |  |  | 40,689 |
Liability for guest loyalty program - noncurrent(1) | 10,180 |  |  | (1,443) |  |  | — |  |  | 8,737 |
Other liabilities | 3,052 |  |  | 543 |  |  | — |  |  | 3,595 |
Total liabilities assumed | $ | 181,245 |  |  | $ | (2,614) |  |  | $ | (1,267) |  |  | $ | 177,364 |
Fair value of net assets acquired | $ | 605,349 |  |  | $ | 9,050 |  |  | $ | (1,534) |  |  | $ | 612,865 |
Goodwill | 68,507 |  |  | (9,050) |  |  | 1,534 |  |  | 60,991 |
Total purchase consideration | $ | 673,856 |  |  | $ | — |  |  | $ | — |  |  | $ | 673,856 |

(1) The Deferred revenue (including deferred affiliation fees) and Liability for guest loyalty program balances were assumed at their carrying value at the date of the acquisition pursuant to the application of ASU 2021-08. Refer to Note 1.
Property and Equipment
The following table presents the preliminary estimates of fair value of the acquired property and equipment, which is primarily concentrated at three acquired hotel properties, and their estimated weighted average remaining useful lives.

| Estimated Useful Life |  | Estimated Fair Value
| (in years) |  | (in thousands)
Land | N/A |  | $ | 7,159 |
Construction in progress | N/A |  | 3,190 |
Building and leasehold improvements | 24.4 |  | 93,934 |
Site improvements | 23.1 |  | 586 |
Furniture, fixtures and equipment | 3.9 |  | 8,334 |
Computer equipment and software | 2.0 |  | 12,238 |
Total |  |  | $ | 125,441 |

We provisionally estimated the value of the property and equipment through a combination of income, cost and market approaches, which are primarily based on significant Level 2 and Level 3 assumptions, such as estimates of future income
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growth, discount rates, capitalization rates and capital expenditure needs of the hotels. We are continuing to assess the marketplace assumptions and property conditions, which could result in changes to these provisional values.
Identified Intangible Assets
The following table presents our preliminary estimates of the fair value of the acquired identified intangible assets and their estimated useful lives:

| Estimated Useful Life |  | Estimated Fair Value
| (in years) |  | (in thousands)
Trade names | N/A |  | $ | 223,700 |
Franchise agreements | 15.5 |  | 220,100 |
Management agreements | 15.5 |  | 3,300 |
Total |  |  | $ | 447,100 |

The fair value of the trade names was provisionally estimated using the relief-from-royalty method. This method applies an estimated royalty rate to forecasted future cash flows, discounted to present value. The fair value of the franchise and management agreements was preliminarily estimated using a multi-period excess earnings method, a variation of the income approach. This method uses the present value of incremental after-tax cash flows attributable to the intangible asset to estimate fair value. These valuation methodologies utilize Level 3 assumptions, and we are continuing to assess the assumptions used in estimating these values as well as the respective useful lives, which could result in changes to these provisional values.
Debt Assumed
As part of the Transaction, we assumed a mortgage related to an acquired hotel property. The mortgage had an associated interest rate cap agreement with an effective date of July 30, 2021 through August 6, 2024. Subsequent to the acquisition closing date, the mortgage, inclusive of the outstanding interest and fees, was repaid in full in the amount of $56.0 million using cash we acquired. Additionally, the interest rate cap agreement was terminated, which resulted in a payment to Choice in the amount of $1.9 million. Related to the mortgage, we acquired $10.4 million in restricted cash, for which restrictions were lifted upon repayment.
Operating Leases
The Company measured operating lease liabilities assumed at the present value of remaining payments as of the acquisition date, discounted using Choice's applicable incremental borrowing rate, in accordance with Leases (Topic 842). The corresponding right-of-use assets acquired were measured at the value of the lease liabilities, further adjusted for favorable or unfavorable lease terms as compared to market terms. We are continuing to assess market assumptions, which could change our preliminary estimate.
Income Taxes
Pursuant to the terms of the Transaction, the parties agree to jointly make a valid, timely election under Section 338(h)(10) of the U.S. Internal Revenue Code and under any similar provisions of state or local law with respect to the purchase of the shares of Radisson Hotels Americas. Under this election, the parties agreed to treat the Transaction for federal income tax purposes as if it had been structured as an asset sale and purchase. As a result of this election, the tax basis of the assets acquired and liabilities assumed by Choice were reset to fair value at the time of the acquisition, which results in the elimination of previously established deferred income tax balances and the establishment of new balances that reflect the new tax basis, including tax deductible goodwill. Because the accounting for the Transaction is ongoing, the resulting deferred tax balances are still being finalized.
Pro Forma Results of Operations
The following unaudited pro forma information presents the combined results of operations of Choice and Radisson Hotels Americas as if we had completed the Transaction on January 1, 2021, but using our preliminary fair values of assets acquired and liabilities assumed as of the acquisition date. The unaudited pro forma information reflects adjustments relating to (i) the allocation of purchase price and related adjustments, including incremental depreciation and amortization expense based on the preliminary fair values of the property and equipment assets and intangible assets acquired; (ii) the incremental impact of the
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Revolver draw on interest expense and amortization of financing costs; (iii) nonrecurring transaction costs; and (iv) income tax impact of the aforementioned pro forma adjustments.
As required by GAAP, these unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the transaction had occurred at the beginning of the period presented, nor are they indicative of future results of operations.

| Three Months Ended
(in thousands) | March 31, 2022
Revenues | $ | 311,469 |
Net income | 63,700 |

Radisson Hotels Americas Results of Operations
The results of Radisson Hotels Americas have been consolidated with the Company since August 11, 2022 and are included in the Company’s Consolidated Statement of Income for the three months ended March 31, 2023. The following table presents these results.

| Three Months Ended
(in thousands) | March 31, 2023
Revenues | $ | 62,383 |
Net income | 3,273 |

Goodwill
The $61.0 million excess value recorded in goodwill is primarily attributable to value we expect to realize from the existing customer base, improvements in RevPAR, cost synergies and new agreements signed with new franchisees and developers. Goodwill for the Transaction is fully attributable to the Hotel Franchising & Management reportable segment and is fully deductible for tax purposes.
The following table details the carrying amount of the Company's goodwill, including goodwill arising from the acquisition of Radisson Hotels Americas, as of March 31, 2023.

(in thousands) |
Goodwill, excluding goodwill arising from Radisson Hotels Americas acquisition | $ | 166,774 |
Accumulated impairment losses | (7,578) |
Goodwill arising from Radisson Hotels Americas acquisition | 60,991 |
Goodwill, net carrying amount | $ | 220,187 |

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the consolidated financial condition and results of operations of Choice Hotels International, Inc. and its subsidiaries (together "Choice" or the "Company", "we", "us", or "our") contained in this report. MD&A is provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the accompanying notes.
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Overview
We are primarily a hotel franchisor with franchise agreements and owned hotels representing 7,467 hotels open comprising 626,824 rooms and 988 hotels with 96,111 rooms under construction, awaiting conversion, approved for development or committed to future franchise development on outstanding master development agreements ("MDAs") as of March 31, 2023, located in 50 states, the District of Columbia and approximately 50 countries and territories outside the United States. Our brand names include Comfort Inn®, Comfort Suites®, Quality®, Clarion®, Clarion Pointe™, Ascend Hotel Collection®, Sleep Inn®, Econo Lodge®, Rodeway Inn®, MainStay Suites®, Suburban Studios™, WoodSpring Suites®, Everhome Suites®, and Cambria® Hotels (collectively, the "legacy Choice brands"). Additionally, through the Radisson Hotels Americas acquisition completed on August 11, 2022, our brands expanded to include Radisson Blu®, Radisson RED®, Radisson®, Park Plaza®, Country Inn & Suites® by Radisson, Radisson Inn & Suites SM, Park Inn by Radisson®, Radisson Individuals®, and Radisson Collection® (collectively, the "legacy Radisson brands"), which are located across the United States, Canada, the Caribbean and Latin America.
The hotel franchising business represents the Company's primary operations. The Company's domestic operations are conducted through direct franchising relationships, the ownership of six Cambria and three legacy Radisson Hotels Americas open and operating hotels, and the management of 13 legacy Radisson Hotels Americas hotels (inclusive of the Radisson Hotels Americas owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships. Master franchising relationships are governed by master franchising agreements which generally provide the master franchisee with the right to use our brands and sub-license the use of our brands in a specific geographic region, usually for a fee. As a result of master franchise relationships and international market conditions, our revenues are primarily concentrated in the United States. Therefore, our description of our business is primarily focused on the domestic operations, which encompasses the United States.
Our Company generates revenues, income and cash flows primarily from our hotel franchising operations. Revenues are also generated from partnerships with qualified vendors and travel partners that provide value-added solutions to our platform of guests hotels, owned hotels, and other sources. Historically, the hotel industry has been seasonal in nature. For most hotels, demand is ordinarily lower in November through February than during the remainder of the year. Our principal source of revenue is franchise fees based on the gross room revenues or number of rooms of our franchised properties. The Company’s franchise and managed fees, as well as its owned hotels revenues, normally reflect the industry’s seasonality and historically have been lower in the first and fourth quarters than in the second and third quarters.
With a primary focus on hotel franchising, we benefit from the economies of scale inherent in the franchising business. The fee and cost structure of our franchising business provides opportunities to improve operating results by increasing the number of franchised hotel rooms and effective royalty rates of our franchise contracts resulting in increased initial fee revenue, ongoing royalty fees, procurement services and licensing revenues. In addition, our operating results can also be improved through our company-wide efforts related to improving property-level performance and expanding the number of partnerships with travel-related and other companies with product and services that appeal to our guests.
The principal factors that affect the Company’s results are: the number and relative mix of hotel rooms in the various hotel lodging price categories; growth in the number of hotel rooms owned and under franchise; occupancy and room rates achieved by the hotels in our system; the effective royalty rate achieved on our franchise agreements; the level of franchise sales and relicensing activity; the number of qualified vendor arrangements and partnerships and the level of engagement with these partners by our franchisees and guests; and our ability to manage costs. The number of rooms in our hotel system and the occupancy and room rates at those properties significantly affect the Company’s results because our fees are based upon room revenues or the number of rooms at owned and franchised hotels. The key industry standard for measuring hotel-operating performance is Revenue per Available Room ("RevPAR"), which is calculated by multiplying the percentage of occupied rooms by the average daily room rate realized. Our variable overhead costs associated with franchise system growth of our established brands have historically been less than incremental royalty fees generated from new franchises. Accordingly, over the long-term, continued growth of our franchise business should enable us to realize benefits from the operating leverage in place and improve operating results.
We are required by our legacy Choice franchise agreements to use marketing and reservation system fees we collect for system-wide marketing and reservation system activities. These expenditures, which include advertising costs and costs to maintain our central reservations and property management systems, enhance awareness and consumer preference for our brands and deliver guests to our franchisees. Greater awareness and preference promotes long-term growth in business delivery to our franchisees and increases the desirability of our brands to hotel owners and developers, which ultimately increases franchise fees earned by the Company. The legacy Radisson Hotels Americas franchise agreements have similar provisions regarding marketing fees to be used for marketing activities. Additionally, the legacy Radisson Hotels Americas management agreements include cost reimbursements, primarily related to payroll costs at managed hotels where the Company is the employer.
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Our Company articulates its mission as a commitment to our franchisees’ profitability by providing our franchisees with hotel franchises that strive to generate the highest return on investment of any hotel franchise. We have developed an operating system dedicated to our franchisees’ success that focuses on delivering guests to hotels and reducing hotel operating costs.
We believe that executing our strategic priorities creates value for our shareholders. Our Company focuses on the following strategic priorities:
Profitable Growth. Our success is dependent on improving the performance of our hotels, increasing our system size by selling additional hotel franchises with a focus on revenue-intense chain scales and markets, improving our effective royalty rate, expanding our qualified vendor and partnership platform programs and maintaining a disciplined cost structure. We attempt to improve our revenues and overall profitability by providing a variety of products and services designed to increase business delivery and/or reduce operating and development costs. These products and services include national marketing campaigns, a guest loyalty program, a central reservation system, property and yield management programs and systems, revenue management services, quality assurance standards, qualified vendor relationships and partnerships with companies that provide services to our franchisees and guests. We believe that healthy brands, which deliver a compelling return on investment, will enable us to sell additional hotel franchises and raise royalty rates. We have multiple brands that meet the needs of many types of guests, and can be developed at various price points and applied to both new and existing hotels. This ensures that we have brands suitable for creating growth in a variety of market conditions. Improving the performance of the hotels in our system, strategically growing the system through additional franchise sales, and improving franchise agreement pricing while maintaining a disciplined cost structure are the keys to profitable growth. The addition of the legacy Radisson brands in the Americas increased Choice's footprint in the upper midscale and upscale chain scales and introduced presence in the upper upscale chain scale. We expect that the Radisson Americas acquisition will enable us to strengthen our presence in the upper midscale chain scale, expand our market presence in certain geographies in the United States and further build on our momentum in the upscale chain scale, accelerating the growth of our Cambria Hotels and Ascend Hotel Collection brands and allowing us to expand the Radisson portfolio.
Maximizing Financial Returns and Creating Value for Shareholders. Our capital allocation decisions, including capital structure and uses of capital, are intended to maximize our return on invested capital and create value for our shareholders. Since our business has not historically required significant reinvestment of capital, we typically utilize cash in ways that management believes provides the greatest returns to our shareholders, which include acquisitions, share repurchases and dividends. Refer to the Liquidity and Capital Resources header of MD&A for more information regarding capital returns to shareholders.
In addition to our hotel franchising business, we have also developed or acquired six Cambria and three legacy Radisson Hotels Americas open and operating hotels. We intend to continue to strategically develop hotels to increase the presence of our brands in the United States, drive greater guest satisfaction and brand preference, and ultimately increase the number of franchise agreements awarded. When developing hotels, we seek key markets with strong growth potential that will deliver strong operating performance and improve the recognition of our brands. For legacy Choice brands, our hotel development and ownership efforts currently focus on the Cambria Hotels and Everhome Suites brands. We believe our owned hotels provide us the opportunity to support and accelerate growth of our brands. We do not anticipate owning hotels on a permanent basis and expect to target dispositions to a franchisee encumbered with a long-term Choice franchise agreement in the future.
The Company also allocates capital to financing, investment and guaranty support to incentivize franchise development for certain brands in strategic markets; and to explore growth opportunities in business areas that are adjacent or complementary to our core hotel franchising business, which leverage our core competencies and are additive to our franchising business model. The timing and amount of these investments are subject to market and other conditions.
We believe our growth investments and strategic priorities, when properly implemented, will enhance our profitability, maximize our financial returns and continue to generate value for our shareholders. The ultimate measure of our success will be reflected in the items below.
Results of Operations: Royalty fees, licensing and management fees, operating income, net income and diluted EPS represent key measurements of our financial performance. These measurements are primarily driven by the operations of our hotel franchise system and therefore, our analysis of the Company's operations is primarily focused on the size, performance and potential growth of the hotel franchise system as well as our variable overhead costs.
Our discussion of results generally excludes the Company’s other revenues and expenses from franchised and managed properties, which reflect franchise marketing and reservation system revenues and expenses and management agreement cost reimbursements. The Company's legacy Choice franchise agreements require the payment of marketing and reservation system fees to be used exclusively by the Company for expenses associated with providing franchise services such as national marketing, media advertising, and central reservation systems. The Company is obligated to expend the marketing and
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reservation system fees it collects from franchisees in accordance with the franchise agreements. Furthermore, franchisees are required to reimburse the Company for any deficits generated by these marketing and reservation system activities. Over time, the Company expects cumulative revenues and expenses to break even and, therefore, no income or loss will be generated from marketing and reservation system activities. The franchised and management contracts acquired in the Radisson Hotels Americas acquisition have similar terms as those described above with the exceptions of certain contractual elements concerning reservation fees, which are not required to breakeven over time and which are insignificant to overall operating net income. As a result, the Company generally excludes the other revenues and expenses from franchised and managed properties from the analysis of its operations.
Due to the seasonal nature of the Company’s hotel franchising and management business and the multi-year investments required to support franchise operations, quarterly and/or annual deficits may be generated. During the three months ended March 31, 2023 and 2022, other franchised and managed revenues exceeded expenses by $2.1 million and $13.0 million, respectively.
Refer to the Operations Review header of MD&A for additional analysis of our results.
Liquidity and Capital Resources: Historically, the Company has generated significant cash flows from operations. Since our business has not historically required significant reinvestment of capital, we typically utilize cash in ways that management believes provide the greatest returns to our shareholders, which include acquisitions, share repurchases and dividends.
We believe the Company’s cash flow from operations and available financing capacity is sufficient to meet the expected future operating, investing and financing needs of the business. Refer to Liquidity and Capital Resources header of MD&A for additional analysis.
Inflation: We believe that moderate increases in the rate of inflation will generally result in comparable or greater increases in hotel room rates. We are monitoring future inflation trends and any resulting impacts on our business.
Non-GAAP Financial Statement Measurements
The Company utilizes certain measures which do not conform to generally accepted accounting principles accepted in the United States ("GAAP") when analyzing and discussing its results with the investment community. This information should not be considered as an alternative to any measure of performance as promulgated under GAAP. The Company’s calculation of these measurements may be different from the calculations used by other companies and therefore, comparability may be limited. We have included a reconciliation of these measures to the comparable GAAP measurement below as well as our reasons for reporting these non-GAAP measures.
Revenues excluding reimbursable revenue from franchised and managed properties. The Company’s other revenues from franchised and managed properties financial statement line item reflect franchise marketing and reservation system revenues and management agreement cost reimbursements. The legacy Choice franchise marketing and reservation activities and legacy Radisson Hotels Americas franchise marketing activities and management agreement cost reimbursements operate at break-even based on the Company's contractual commitments regarding the manner such fees will be utilized. The legacy Radisson Hotels Americas reservation revenue, which is also recorded in the other revenues from franchised and managed properties, does not break even, based on the legacy Radisson Hotels Americas franchise contracts.
As a result, the Company excludes reimbursable revenue from franchised and managed properties when analyzing the performance of the business.
A similar non-GAAP measure is a commonly used measure of performance in our industry and facilitates comparisons between the Company and its competitors.
Calculation of Revenues excluding reimbursable revenue from franchised and managed properties

| Three Months Ended March 31, |  |
(in thousands) | 2023 |  | 2022 |  |  |  |
Total revenues | $ | 332,792 |  |  | $ | 257,727 |  |  |  |  |
Adjustments: |  |  |  |  |  |  |
Reimbursable revenue from franchised and managed properties | (157,782) |  |  | (126,637) |  |  |  |  |
Revenues excluding reimbursable revenue from franchised and managed properties | $ | 175,010 |  |  | $ | 131,090 |  |  |  |  |

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Operations Review
Comparison of Operating Results for the Three-Month Periods Ended March 31, 2023 and 2022
Summarized financial results for the three months ended March 31, 2023 and 2022 are set forth in the table below. In accordance with GAAP, our income statements include Radisson Hotels Americas’ results of operations in the three months ended March 31, 2023, but do not include Radisson Hotels Americas' results of operations in the three months ended March 31, 2022, as we did not acquire Radisson Hotels America until August 11, 2022.

(in thousands) | 2023 |  | 2022
REVENUES |  |  |
Royalty, licensing and management fees | $ | 107,492 |  |  | $ | 90,739 |
Initial franchise fees | 7,882 |  |  | 8,402 |
Platform and procurement services fees | 13,843 |  |  | 11,683 |
Owned hotels | 22,332 |  |  | 12,037 |
Other | 10,627 |  |  | 8,229 |
Other revenues from franchised and managed properties | 170,616 |  |  | 126,637 |
Total revenues | 332,792 |  |  | 257,727 |
OPERATING EXPENSES |  |  |
Selling, general and administrative | 59,283 |  |  | 30,324 |
Depreciation and amortization | 10,023 |  |  | 6,231 |
Owned hotels | 17,146 |  |  | 8,154 |
Other expenses from franchised and managed properties | 168,489 |  |  | 113,650 |
Total operating expenses | 254,941 |  |  | 158,359 |
Gain on sale of business and assets, net | — |  |  | 29 |
Operating income | 77,851 |  |  | 99,397 |
OTHER INCOME AND EXPENSES, NET |  |  |
Interest expense | 14,084 |  |  | 11,470 |
Interest income | (1,883) |  |  | (1,280) |
Other (gain) loss | (1,908) |  |  | 1,716 |
Equity in net loss (gain) of affiliates | 63 |  |  | (244) |
Total other income and expenses, net | 10,356 |  |  | 11,662 |
Income before income taxes | 67,495 |  |  | 87,735 |
Income tax expense | 14,675 |  |  | 20,344 |
Net income | $ | 52,820 |  |  | $ | 67,391 |

Results of Operations
The Company recorded income before income taxes of $67.5 million for the three-month period ended March 31, 2023, a $20.2 million decrease from the same period of the prior year. The decrease in income before income taxes primarily reflects a $21.5 million decrease in operating income and an increase in interest expense of $2.6 million, partially offset by a decrease in other (gain) loss of $3.6 million from the three-month period ended March 31, 2022.
Operating income decreased $21.5 million primarily due to a $10.8 million decrease in the net surplus generated from other franchised and managed properties activities and a $10.4 million increase in selling, general and administrative ("SG&A") expense related to operational restructuring charges, consisting primarily of salary and benefit continuation payments, and transition costs related to integration of the Radisson Hotels Americas business acquired in August 2022. In addition, SG&A expenses increased $3.5 million related to increases in the Company's deferred compensation assets based on increases in the underlying investments. This increase as well as a $3.8 million increase in depreciation and amortization expense due to the acquisition of three hotels and identifiable intangible assets as part of the Radisson Hotels Americas transaction was partially offset by growth of the legacy Choice business and the operations of the newly acquired Radisson Hotels Americas business.
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The primary reasons for these fluctuations, inclusive of the impact from the legacy Radisson brands as acquired on August 11, 2022, are described in more detail below.
Royalty, licensing and management fees
Domestic royalty fees increased $11.2 million to $98.2 million for the three months ended March 31, 2023 from $87.0 million for the three months ended March 31, 2022. The increase in domestic royalties is attributable to $9.4 million of fees from legacy Radisson brands in the three months ended March 31, 2023 and an overall domestic RevPAR increase of 5.9%. System-wide RevPAR increased due to a 5.2% increase in average daily rates and a 34 basis point increase in occupancy. The increase in domestic royalties is also due to a system-wide 6 basis point increase in the effective royalty rate from 4.93% for the three months ended March 31, 2022 to 4.99% for the three months ended March 31, 2023, and an 8.2% increase in the number of domestic franchised hotel rooms in the comparative period.
A summary of the Company's domestic franchised hotels operating performance organized by chain scale is as follows.

| Three Months Ended |  | Three Months Ended |  | Change
| March 31, 2023 |  | March 31, 2022 |
| Average Daily Rate |  | Occupancy |  | RevPAR |  | Average Daily Rate |  | Occupancy |  | RevPAR |  | Average Daily Rate |  | Occupancy |  | RevPAR
Upscale & Above(1) | $ | 139.86 |  |  | 51.2 | % |  | $ | 71.59 |  |  | $ | 130.68 |  |  | 47.1 | % |  | $ | 61.57 |  |  | 7.0 | % |  | 407 |  | bps |  | 16.3 | %
Midscale & Upper Midscale(2) | 95.18 |  |  | 52.2 | % |  | 49.70 |  |  | 91.65 |  |  | 51.4 | % |  | 47.09 |  |  | 3.9 | % |  | 83 |  | bps |  | 5.5 | %
Extended Stay(3) | 62.79 |  |  | 71.3 | % |  | 44.74 |  |  | 59.87 |  |  | 73.9 | % |  | 44.24 |  |  | 4.9 | % |  | (264) |  | bps |  | 1.1 | %
Economy(4) | 67.71 |  |  | 44.8 | % |  | 30.34 |  |  | 65.97 |  |  | 45.7 | % |  | 30.16 |  |  | 2.6 | % |  | (89) |  | bps |  | 0.6 | %
Total(5) | $ | 91.21 |  |  | 52.7 | % |  | $ | 48.08 |  |  | $ | 86.67 |  |  | 52.4 | % |  | $ | 45.38 |  |  | 5.2 | % |  | 34 |  | bps |  | 5.9 | %

(1) Includes Cambria, Ascend, Radisson Blu, Radisson Red, Park Plaza, Radisson Individuals and Radisson brands.
(2) Includes Country, Comfort, Clarion, Sleep, Quality and Park brands.
(3) Includes WoodSpring, Mainstay, Suburban and Everhome brands.
(4) Includes Econo Lodge and Rodeway brands.
(5) Radisson Hotels Americas was acquired on August 11, 2022. To enhance comparability, ADR, Occupancy, and RevPAR reflect operating performance for the three months ended March 31, 2022 as if the legacy Radisson brands were acquired on January 1, 2022.
A summary of domestic hotels and rooms in our franchise system at March 31, 2023 and 2022 by brand is as follows:

| March 31, 2023 |  | March 31, 2022 |  | Variance
| Hotels |  | Rooms |  | Hotels |  | Rooms |  | Hotels |  | Rooms |  | % |  | %
Ascend Hotel Collection | 198 |  |  | 22,528 |  |  | 201 |  |  | 20,639 |  |  | (3) |  |  | 1,889 |  |  | (1.5) | % |  | 9.2 | %
Cambria Hotels | 66 |  |  | 9,000 |  |  | 58 |  |  | 7,996 |  |  | 8 |  |  | 1,004 |  |  | 13.8 | % |  | 12.6 | %
Radisson(1) | 68 |  |  | 15,887 |  |  | — |  |  | — |  |  | 68 |  |  | 15,887 |  |  | NM |  | NM
Comfort(3) | 1,684 |  |  | 132,264 |  |  | 1,659 |  |  | 130,644 |  |  | 25 |  |  | 1,620 |  |  | 1.5 | % |  | 1.2 | %
Country(2) | 432 |  |  | 34,494 |  |  | — |  |  | — |  |  | 432 |  |  | 34,494 |  |  | NM |  | NM
Clarion(4) | 179 |  |  | 19,707 |  |  | 188 |  |  | 21,464 |  |  | (9) |  |  | (1,757) |  |  | (4.8) | % |  | (8.2) | %
Quality | 1,622 |  |  | 120,136 |  |  | 1,641 |  |  | 122,576 |  |  | (19) |  |  | (2,440) |  |  | (1.2) | % |  | (2.0) | %
Sleep | 425 |  |  | 29,968 |  |  | 416 |  |  | 29,332 |  |  | 9 |  |  | 636 |  |  | 2.2 | % |  | 2.2 | %
Park | 4 |  | 363 |  | — |  |  | — |  |  | 4 |  | 363 |  | NM |  | NM
Everhome | 1 |  |  | 98 |  |  | — |  |  | — |  |  | 1 |  | 98 |  | NM |  | NM
MainStay | 116 |  |  | 7,956 |  |  | 102 |  |  | 7,072 |  |  | 14 |  |  | 884 |  |  | 13.7 | % |  | 12.5 | %
WoodSpring | 214 |  |  | 25,834 |  |  | 306 |  |  | 36,854 |  |  | (92) |  |  | (11,020) |  |  | (30.1) | % |  | (29.9) | %
Suburban | 75 |  |  | 6,700 |  |  | 70 |  |  | 6,246 |  |  | 5 |  |  | 454 |  |  | 7.1 | % |  | 7.3 | %
Econo Lodge | 690 |  |  | 41,157 |  |  | 726 |  |  | 43,534 |  |  | (36) |  |  | (2,377) |  |  | (5.0) | % |  | (5.5) | %
Rodeway | 494 |  |  | 27,787 |  |  | 521 |  |  | 30,062 |  |  | (27) |  |  | (2,275) |  |  | (5.2) | % |  | (7.6) | %
Total Domestic Franchises(5) | 6,268 |  |  | 493,879 |  |  | 5,888 |  |  | 456,419 |  |  | 380 |  |  | 37,460 |  |  | 6.5 | % |  | 8.2 | %

(1) Includes Radisson Blu, Radisson Red, Radisson Individuals and Radisson brands.
(2) Includes Country Inn & Suites and Park Plaza brands.
(3) Includes Comfort family of brand extensions including Comfort and Comfort Suites.
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(4) Includes Clarion family of brand extensions including Clarion and Clarion Pointe.
(5) In 2022, the Company reclassified six properties located in the Caribbean from Domestic Franchises to International Franchises.
International royalty fees increased $2.7 million to $6.4 million for the three months ended March 31, 2023 from $3.8 million three months ended March 31, 2022. The increase in international royalty fees is attributable to $1.8 million of fees from legacy Radisson brands in the three months ended March 31, 2023 and as a result of improvements in RevPAR performance and an increase of international franchise system size, inclusive of legacy Radisson brands, by 91 hotels (from 1,108 as of March 31, 2022 to 1,199 as of March 31, 2023) and 11,650 rooms (from 121,295 as of March 31, 2022 to 132,945 as of March 31, 2023).
Initial Franchise Fees
Initial franchise fee revenue decreased $0.5 million from $8.4 million to $7.9 million for the three months ended March 31, 2022 and March 31, 2023, respectively. The decline is primarily attributable to the timing of domestic franchise agreements awards, openings, and terminations for new construction hotels as well as domestic relicensing contracts compared to the prior year.
Initial franchise fees are generally paid to the Company when a franchisee executes a franchise agreement for a new property entering the system or an existing franchised property at the time of an ownership change (referred to as a relicensing) or agreement renewal, however, the recognition of revenue is deferred until the hotel associated with the franchise agreement is open or the franchise agreement is terminated. Upon hotel opening, revenue is recognized ratably as services are provided over the enforceable period of the franchise license agreement. Upon the termination of a franchise agreement, previously deferred initial franchise fees are recognized immediately in the period the agreement is terminated.
At March 31, 2023, the Company had 988 franchised hotels with 96,111 rooms under construction, awaiting conversion, approved for development or committed to future franchise development on outstanding MDAs (collectively, "pipeline") in its global system, as compared to 925 franchised hotels and 84,210 rooms at March 31, 2022. Approximately 94% of our pipeline is located in the United States and approximately 77% of the domestic pipeline is new construction. After the execution of a franchise agreement, new construction hotels typically average 18 to 36 months to open, while conversion hotels typically average three to six months to open.
Fluctuations in the Company’s pipeline are primarily due to the timing of hotel openings and the timing of awarding new franchise agreements. 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 macroeconomic factors which could impact items such as access to liquidity, availability of construction labor and materials, and local governmental approvals and entitlements.
Platform and procurement services fees: Revenues increased $2.1 million from $11.7 million for the three months ended March 31, 2022 to $13.8 million the three months ended March 31, 2023. These results reflect an increase in fees generated from travel-related partnerships and qualified vendors driven by increased occupancy during the first quarter of 2023 at our franchised hotels, inclusive of activity from legacy Radisson brand hotels.
Other Revenues: Other revenues increased $2.4 million from $8.2 million for the three months ended March 31, 2022 to $10.6 million for the three months ended March 31, 2023 driven by an increase in non-compliance fees and other franchising revenues, inclusive of activity from the newly acquired Radisson brand hotels.
Selling, General and Administrative Expenses: The cost to operate the business is reflected in SG&A on the consolidated statements of income. SG&A expenses were $59.3 million and $30.3 million for the three months ended March 31, 2023, and 2022, respectively. SG&A expenses experienced an increase resulting from the acquisition of Radisson Hotels Americas, inclusive of $10.4 million of operational restructuring, consisting primarily of salary and benefit continuation payments, and transition related-costs incurred; general corporate purposes, including compensation, benefits, travel, and professional fees; and the provision for credit losses in accounts receivable in accordance with Topic 326. SG&A expenses reflect a $3.5 million increase in the Company's deferred compensation liabilities based on increases in the underlying investments.
Depreciation and amortization: Depreciation and amortization expense was $10.0 million and $6.2 million for the three months ended March 31, 2023 and 2022, respectively, increasing primarily due to the acquisition of Radisson Hotels Americas and associated amortization from the portion of the purchase price allocated to contract asset acquisition costs as well as the three hotels acquired in the transaction.
Interest expense: The Company recorded interest expense of $14.1 million for the three months ended March 31, 2023, an increase of $2.6 million from the comparable 2022 period. The increase in interest expense is a result of increased borrowings and interest rates on the Company's revolving credit facility; refer to discussion under the Liquidity and Capital Resources header of MD&A.
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Other (gain) loss: The Company recorded other net gain of $1.9 million for the three months ended March 31, 2023, compared to other net loss of $1.7 million for the three months ended March 31, 2022. The current period gains relate to increases in the Company's deferred compensation assets based on increases in the underlying investments and foreign currency transaction gains.
Income tax expense: The effective income tax rates were 21.7% and 23.2% for the three months ended March 31, 2023 and 2022, respectively.
The effective income tax rates for the three months ended March 31, 2023 and 2022 were higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes, partially offset by excess tax benefits from share-based compensation.
Liquidity and Capital Resources
Our Company historically generates strong and predictable operating cash flows primarily from our hotel franchising operations. Our capital allocation decisions, including capital structure and uses of capital, are intended to maximize our return on invested capital and create value for our shareholders, while maintaining a strong balance sheet and financial flexibility. The Company's short-term and long-term liquidity requirements primarily arise from working capital needs, debt obligations, income tax payments, dividend payments, share repurchases, capital expenditures and investments in growth opportunities.
The Company's primary sources of liquidity as of March 31, 2023 consisted of $345.7 million in cash and available borrowing capacity through its senior unsecured revolving credit facility. As of March 31, 2023, the Company was in compliance with the financial covenants of its credit agreements and expects to remain in such compliance. Based on our business model and information known at this time, the Company believes that cash and available borrowing capacity and cash flows from operations provide sufficient liquidity to meet the expected future operating, investing and financing needs of the business.
Our board of directors authorized a program which permits us to offer financing, investment, and guaranty support to qualified franchisees, and allows us to acquire or develop and resell hotels to incentivize franchise development of our brands in strategic markets. With respect to these activities, the Company had approximately $502.0 million in support of the Cambria Hotels and Everhome Suites brands currently reflected on the balance sheet as of March 31, 2023, which it generally targets to recycle within a five year period, and expects our outstanding investment to not exceed $975 million at any point in time based on current board of directors' authorization.
The Company also strategically deploys capital in the form of franchise agreement acquisition payments across our brands to incentivize franchise development. As of March 31, 2023, the Company had commitments to extend an additional $334.6 million for these purposes provided the conditions of the payment are met by its franchisees.
The Company has historically generated cash flow from operating activities in excess of capital needed to invest in growth opportunities and service debt obligations. As a result, the Company maintains a share repurchase program and pays a quarterly dividend. As of March 31, 2023, the Company had 3.4 million shares remaining under the current share repurchase authorization. In addition, in March 2023, the Company's board of directors approved a 21% increase in the quarterly cash dividend to $0.2875 per share, effective with the dividend payable on April 18, 2023 to shareholders of record on April 3, 2023. This increase will result in a projected 2023 annual dividend rate of $1.15 per share or approximately $56.5 million in aggregate dividend payments, subject to future declarations by our board of directors.
Operating Activities
During the three months ended March 31, 2023 and 2022, net cash provided by operating activities totaled $12.0 million and $63.9 million, respectively. Operating cash flows decreased $51.9 million primarily due to a decrease in the net surplus generated from other franchised and managed properties activities; an increase in SG&A expenses related to operational restructuring charges; due diligence and transition costs related to the integration of the Radisson Hotels Americas business acquired in August 2022; an increase in franchise agreement acquisition cost payments; an increase in borrowing costs; and timing of working capital items.
In conjunction with brand and development programs, we strategically make certain payments to franchisees as an incentive to enter into new franchise agreements or perform designated improvements to properties under existing franchise agreements ("franchise agreement acquisition costs"). If the franchisee remains in the franchise system in good standing over the term specified in the incentive agreement, the Company forgives the incentive ratably. If the franchisee exits our franchise system or is not operating their franchise in accordance with our quality or credit standards and is terminated, the franchisee must repay the unamortized incentive payment plus interest. During the three months ended March 31, 2023 and 2022, the Company's net advances for these purposes totaled $28.1 million and $12.4 million, respectively. The timing and amount of these cash flows are dependent on various factors including the implementation of various development and brand incentive programs, the level
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of franchise sales and the ability of our franchisees to complete construction or convert their hotels to one of the Company’s brands. At March 31, 2023, the Company had commitments to extend an additional $334.6 million for these purposes provided the conditions of the payment are met by its franchisees.
The Company’s legacy Choice franchise agreements require the payment of marketing and reservation system fees. In accordance with the terms of our franchise agreements, the Company is obligated to use these marketing and reservation system fees to provide marketing and reservation services. To the extent revenues collected exceed expenditures incurred, the Company has a commitment to the franchisee system to make expenditures in future years. Conversely, to the extent expenditures incurred exceed revenues collected, the Company has the contractual enforceable right to recover such advances in future periods through additional fee assessments or reduced spending. The franchised and management contracts acquired in the Radisson Hotels Americas acquisition have similar terms as those described above with the exceptions of certain contractual elements concerning reservation fees, which are not required to breakeven over time and which are insignificant to overall operating net income. During the three months ended March 31, 2023 and 2022, net surplus generated from other franchised and managed properties activities was $2.1 million and $12.9 million, respectively.
Investing Activities
Our board of directors authorized a program which permits us to offer financing, investment, and guaranty support to qualified franchisees, and allows us to acquire or develop and resell hotels to incentivize franchise development of our brands in strategic markets. We are currently engaged in these financial support activities to encourage acceleration of the growth of our Cambria Hotels and Everhome Suites brands, primarily in strategic markets and locations. With respect to our hotel development and ownership, affiliate investments, and lending, the Company had approximately $502.0 million outstanding in support of the Cambria Hotels and Everhome Suites brands currently reflected on the balance sheet as of March 31, 2023, which it generally targets to recycle within a five year period, and expects our outstanding investment to not exceed $975 million at any point of time based on current board of directors' authorization. We expect to continue to deploy capital in these manners in support of our brands. The deployment and annual pace of future financial support activities will depend upon market and other conditions, including among others, our franchise sales results, the environment for new construction hotel development and the hotel lending environment.
Cash utilized for investing activities totaled $29.5 million and $22.5 million for the three months ended March 31, 2023 and 2022, respectively. The change in cash utilized for investing activities for the three months ended March 31, 2023 primarily reflects the following:
During the three months ended March 31, 2023 and 2022, capital expenditures in property and equipment totaled $19.6 million and $26.8 million, respectively. These capital expenditures primarily reflect costs incurred to support the continued growth of the Cambria Hotels and Everhome Suites brands, including ongoing construction and acquisition of land parcels for hotel development.
During the three months ended March 31, 2022, the Company realized net proceeds of $8.5 million from the sale of one parcel of land.
The Company maintains equity method investments in affiliates related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites in strategic markets. During the three months ended March 31, 2023 and 2022, the Company invested $3.6 million and $0.3 million, respectively, to support these efforts. In addition, during the three months ended March 31, 2023, the Company received distributions and sales proceeds from these affiliates totaling $0.9 million. The Company received no distribution and sales proceeds from these affiliates for the three months ended March 31, 2022. To the extent that existing unconsolidated affiliates proceed to the hotel construction phase, the Company is committed to make additional capital contributions totaling $11.6 million to support these efforts.
The Company has entered into various limited payment guaranties with regards to the Company’s investments in affiliates. The maximum exposure of principal incidental to these limited payment guaranties is $5.7 million, plus unpaid expenses and accrued unpaid interest. The Company believes the likelihood of having to perform under the aforementioned limited payment guaranties was remote as of March 31, 2023 and 2022. In the event of performance, the Company has recourse for one of the transactions in the form of a membership interest pledge as collateral for our guaranty. Refer to Note 12 to our consolidated financial statements for further discussion.
The Company provides financing to franchisees for hotel development efforts and other purposes in the form of notes receivable. These loans bear interest and are expected to be repaid in accordance with the terms of the loan arrangements. During the three months ended March 31, 2023, the Company advanced $3.7 million and received repayments totaling $0.3 million for these purposes. For the three months ended March 31, 2022, the Company advanced $1.2 million amounts and
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received repayments totaling $0.1 million for these purposes. At March 31, 2023, the Company had commitments to extend an additional $0.7 million for these purposes provided certain conditions are met by its franchisees.
Financing Activities
Financing cash flows relate primarily to the Company's borrowings, open market treasury stock repurchases, acquisition of shares in connection with the exercise or vesting of equity awards, and dividends.
Debt
Restated Senior Unsecured Credit Facility
On August 20, 2018, the Company entered into the Restated Senior Unsecured Credit Agreement (the "Restated Credit Agreement"), which amended and restated the Company’s existing senior unsecured revolving credit agreement, dated July 21, 2015. The Restated Credit Agreement provided for a $600 million unsecured credit facility with an original maturity date of August 20, 2023, subject to optional one-year extensions that could be requested by the Company prior to each of the first, second and third anniversaries of the closing date of the Restated Credit Agreement in exchange for fees. The Company has exercised multiple one-year extension options on the Restated Credit Agreement resulting in a new maturity date of August 20, 2026. The Restated Credit Agreement also provides that up to $35 million of borrowings under the Restated Credit Agreement may be used for alternative currency loans and up to $25 million of borrowings under the Restated Credit Agreement may be used for swingline loans. The Company may from time to time designate one or more wholly owned subsidiaries of the Company as additional borrowers under the Restated Credit Agreement, subject to the consent of the lenders and certain customary conditions.
There are no subsidiary guarantors under the Restated Credit Agreement. On February 18, 2020, the Company entered into the First Amendment to the Amended and Restated Senior Unsecured Credit Agreement which, among other things, removed a springing guarantee (requiring subsidiaries to guarantee the Company's obligations under the Restated Credit Agreement if the subsidiary incurs certain recourse debt) and other provisions and references in the Restated Credit Agreement related to the potential existence of subsidiary guarantors.
On February 14, 2023, the Company entered into a Third Amendment to the Amended and Restated Senior Unsecured Credit Agreement. This amendment provides, among other things, for (i) an increase in the aggregate amount of commitments under the Company's existing $600 million unsecured credit facility (the "Revolver") by $250 million (the “Increased Commitments”) to an aggregate amount of $850 million and (ii) the replacement of the interest reference rate for U.S. dollar-denominated borrowings under the Revolver from LIBOR to an adjusted Secured Overnight Financing Rate.
The Restated Credit Agreement requires the Company to pay a fee on the total commitments, calculated on the basis of the actual daily amount of the commitments (regardless of usage) times a percentage per annum ranging from 0.075% to 0.25% (depending on the Company’s senior unsecured long-term debt rating or under circumstances as set forth in the Restated Credit Agreement, the Company’s total leverage ratio in the event that such total leverage ratio is less than 2.5 to 1.0).
The Restated Credit Agreement requires that the Company and its restricted subsidiaries comply with various covenants, including with respect to restrictions on liens, incurring indebtedness, making investments and effecting mergers and/or asset sales. With respect to dividends, the Company may not declare or make any payment if there is an existing event of default or if the payment would create an event of default.
The Restated Credit Agreement imposes financial maintenance covenants requiring the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 and a total leverage ratio of not more than 4.5 to 1.0 or, on up to two nonconsecutive occasions, 5.5 to 1.0 for up to three consecutive quarters following a material acquisition commencing with the fiscal quarter in which such material acquisition occurred. The Company maintains an Investment Grade Rating, as defined in the Restated Credit Agreement, and therefore is not currently required to comply with the consolidated fixed charge coverage ratio covenant.
The Restated Credit Agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of the Company under the Restated Credit Agreement to be immediately due and payable. At March 31, 2023, the Company maintained a total leverage ratio of 2.39x, including outstanding debt of approximately $533.6 million on the senior unsecured revolving credit facility, and was in compliance with all financial covenants under the Restated Credit Agreement.
Debt issuance costs incurred in connection with the Restated Credit Agreement are amortized on a straight-line basis, which is not materially different than the effective interest method, through maturity. Amortization of these costs is included in interest expense in the consolidated statements of income.
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The proceeds of the Restated Credit Agreement are generally expected to be used for general corporate purposes, including working capital, debt repayment, stock repurchases, dividends, investments and other permitted uses set forth in the Restated Credit Agreement.
Senior Unsecured Notes Due 2031
On July 23, 2020, the Company issued unsecured senior notes in the principal amount of $450 million (the "2020 Senior Notes") bearing a coupon of 3.70%. The 2020 Senior Notes will mature on January 15, 2031, with interest to be paid semi-annually on January 15 th and July 15 th beginning January 15, 2021. The Company used the net proceeds of the 2020 Senior Notes, after deducting underwriting discounts, commissions and other offering expenses, to repay in full the $250 million Term Loan entered in April 2020 and fund the purchase price of the 2012 Senior Notes tendered and accepted by the Company for purchase pursuant to the tender offer (discussed below under "Senior Unsecured Notes due 2022").
The interest rate payable on the 2020 Senior Notes will be subject to adjustment based on certain rating events. The Company may redeem the 2020 Senior Notes, in whole or in part, at its option at the applicable redemption price before maturity. If the Company redeems the 2020 Senior Notes prior to October 15, 2030 (three months prior to the maturity date) (the “2020 Notes Par Call Date”), the redemption price will be equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, or (b) the sum of the present values of the remaining scheduled principal and interest payments that would have been payable had the 2020 Senior Notes matured on the 2020 Notes Par Call Date, discounted to the redemption date on a semi-annual basis at the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest. If the Company redeems the 2020 Senior Notes on or after the 2020 Notes Par Call Date, the redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. Additionally, at the option of the holders of the 2020 Senior Notes, the Company may be required to repurchase all or a portion of the 2020 Senior Notes of a holder upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
Senior Unsecured Notes Due 2029
On November 27, 2019, the Company issued unsecured senior notes in the principal amount of $400 million (the "2019 Senior Notes") at a discount of $2.4 million, bearing a coupon of 3.70% with an effective rate of 3.88%. The 2019 Senior Notes will mature on December 1, 2029, with interest to be paid semi-annually on December 1 st and June 1 st. The Company used the net proceeds of this offering, after deducting underwriting discounts, commissions and other offering expenses, to repay the previously outstanding senior notes in the principal amount of $250 million due August 28, 2020, and for working capital and other general corporate purposes.
The Company may redeem the 2019 Senior Notes, in whole or in part, at its option at the applicable redemption price before maturity. If the Company redeems the 2019 Senior Notes prior to September 1, 2029 (three months prior to the maturity date) (the “2019 Notes Par Call Date”), the redemption price will be equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, or (b) the sum of the present values of the remaining scheduled principal and interest payments that would have been payable had the 2019 Senior Notes matured on the 2019 Notes Par Call Date, discounted to the redemption date on a semi-annual basis at the applicable Treasury Rate plus 30 basis points, plus accrued and unpaid interest. If the Company redeems the 2019 Senior Notes on or after the 2019 Notes Par Call Date, the redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. Additionally, at the option of the holders of the 2019 Senior Notes, the Company may be required to repurchase all or a portion of the 2019 Senior Notes of a holder upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
Senior Unsecured Notes Due 2022
On June 27, 2012, the Company issued unsecured senior notes with a principal amount of $400 million (the "2012 Senior Notes") at par, bearing a coupon of 5.75% with an effective rate of 6.00%. The Company utilized the net proceeds of this offering, after deducting underwriting discounts, commissions and other offering expenses, together with borrowings under the Company's senior unsecured senior credit facility, to pay a special cash dividend to shareholders totaling approximately $600.7 million paid on August 23, 2012.
On July 9, 2020, the Company commenced the tender offer (the "Tender Offer") to purchase up to $160.0 million aggregate principal amount of the 2012 Senior Notes subject to increase or decrease. The Tender Offer was subsequently upsized to $180.0 million aggregate principal amount of the 2012 Notes. On July 23, 2020, the Company amended the Tender Offer by increasing the aggregate principal maximum tender amount from $180.0 million to $183.4 million. The Tender Offer settled on July 24, 2020 for $197.8 million, including an early tender premium, settlement fees, and accrued interest paid. In combination with the early pay off of the Term Loan, the Company recorded a loss on extinguishment of debt of $16.0 million in the third quarter of 2020.
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The 2012 Senior Notes matured on July 1, 2022. The outstanding principal of $216.6 million was re-paid at maturity.
Economic Development Loans
The Company entered into economic development agreements with various governmental entities in conjunction with the relocation of its corporate headquarters in April 2013. In accordance with these agreements, the governmental entities agreed to advance approximately $4.4 million to the Company to offset a portion of the corporate headquarters relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees within the jurisdictions. At March 31, 2023, the Company had been fully advanced the amounts due pursuant to these agreements. These advances bear interest at a rate of 3% per annum.
Repayment of the advances is contingent upon the Company achieving certain performance conditions. Performance conditions are measured annually on December 31 st and primarily relate to maintaining certain levels of employment within the various jurisdictions. If the Company fails to meet an annual performance condition, the Company may be required to repay a portion or all of the advances including accrued interest by April 30 th following the measurement date. Any outstanding advances at the expiration in 2023 of the Company's current ten-year corporate headquarters lease will be forgiven in full. The advances will be included in debt in the Company's consolidated balance sheets until the Company determines that the future performance conditions will be met over the entire term of the agreement and the Company will not be required to repay the advances. The Company accrues interest on the portion of the advances that it expects to repay. The Company was in material compliance with all applicable current performance conditions as of March 31, 2023.
Dividends
During the year ended December 31, 2022, the Company declared cash dividends at a quarterly rate of $0.2375 per share of common stock. In March 2023, the Company's board of directors approved a 21% increase in the quarterly cash dividend to $0.2875 per share, effective with the dividend payable on April 18, 2023 to shareholders of record on April 3, 2023.
During the three months ended March 31, 2023, the Company paid $12.8 million in cash dividends. We expect that cash dividends will continue to be paid in the future, subject to declaration by our board of directors, future business performance, economic conditions, changes in tax regulations and other matters. Based on our present dividend rate and outstanding share count, aggregate annual regular dividends for 2023 are projected to be $1.15 per share or approximately $56.5 million in aggregate dividend payments.
The Company may not declare or make any payment if there is an existing event of default under the Restated Credit Agreement or if the payment would create an event of default.
Share Repurchases and Redemptions
In 1998, we instituted a share repurchase program. Treasury stock activity is recorded at cost in the consolidated balance sheets.
During the three months ended March 31, 2023, the Company repurchased 1.2 million shares of its common stock under the share repurchase program at a total cost of $146.8 million. In total through March 31, 2023, the Company repurchased 56.6 million shares of its common stock (including 33.0 million prior to the two-for-one stock split effected in October 2005) under the program at a total cost of $2.1 billion. Considering the effect of the two-for-one stock split, the Company has repurchased 89.6 million shares at an average price of $23.10 per share. As of March 31, 2023, the Company had 3.4 million shares remaining under the current share repurchase authorization.
During the three months ended March 31, 2023, the Company redeemed 0.1 million shares of common stock at a total cost of $13.7 million from employees to satisfy the option exercise price and statutory minimum tax-withholding requirements related to the exercising of stock options and vesting of PVRSUs and restricted stock grants. These redemptions were outside the share repurchase program. During the three months ended March 31, 2023, the Company received proceeds of $5.5 million from stock options exercised by employees.
Critical Accounting Policies
Our accounting policies comply with principles generally accepted in the United States. Discussion of these policies is included in Note 1 to our consolidated financial statements as of and for the year ended December 31, 2022 included in our Annual Report on Form 10-K, which incorporates description of our critical accounting policies that involve subjective and complex judgments that could potentially affect reported results.
New Accounting Standards
Refer to Note 1 for information related to our evaluation of new accounting standards.
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FORWARD-LOOKING STATEMENTS
Certain matters discussed in this quarterly report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "expect," "estimate," "believe," "anticipate," "should," "will," "forecast," "plan," "project," "assume" or similar words of futurity. All statements other than historical facts are forward-looking statements. These forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the Company's revenue, expenses, Adjusted EBITDA, earnings, debt levels, ability to repay outstanding indebtedness, payment of dividends, repurchases of common stock, and other financial and operational measures, including occupancy and open hotels, RevPAR, our ability to benefit from any rebound in travel demand, and our liquidity, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.
Several factors could cause our actual results, performance or achievements to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions, including access to liquidity and capital; the Company’s ability to successfully integrate Radisson Hotels Americas’ employees and operations; the ability to realize the anticipated benefits and synergies of the acquisition of Radisson Hotels Americas as rapidly or to the extent anticipated; the resurgence or worsening of the COVID-19 pandemic, including with respect to new strains or variants, and the related impact on the global hospitality industry, particularly but not exclusively the U.S. travel market; changes in consumer demand and confidence, including consumer discretionary spending and the demand for travel, transient and group business; the timing and amount of future dividends and share repurchases; future domestic or global outbreaks of epidemics, pandemics or contagious diseases or fear of such outbreaks; changes in law and regulation applicable to the travel, lodging or franchising industries, including with respect to the status of our relationship with employees of our franchisees; foreign currency fluctuations; impairments or declines in the value of our assets; operating risks common in the travel, lodging or franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees and our relationships with our franchisees; our ability to keep pace with improvements in technology utilized for marketing and reservations systems and other operating systems; the commercial acceptance of our SaaS technology solutions division's products and services; our ability to grow our franchise system; exposure to risks related to our hotel development, financing, and ownership activities; exposures to risks associated with our investments in new businesses; fluctuations in the supply and demand for hotel rooms; our ability to realize anticipated benefits from acquired businesses; impairments or losses relating to acquired businesses; the level of acceptance of alternative growth strategies we may implement; the impact of inflation; cyber security and data breach risks; climate change and sustainability related concerns; ownership and financing activities; hotel closures or financial difficulties of our franchisees; operating risks associated with our international operations, especially in areas that continue to be affected by the COVID-19 pandemic; labor shortages; the outcome of litigation; and our ability to effectively manage our indebtedness and secure our indebtedness, including additional indebtedness incurred as a result of the acquisition of Radisson Hotels Americas. These and other risk factors are discussed in detail in the Risk Factors section of this Quarterly Report on Form 10-Q and of the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 1, 2023. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates and the impact of fluctuations in foreign currencies on the Company's foreign investments and operations. The Company manages its exposure to these market risks through the monitoring of its available financing alternatives including, in certain circumstances, the use of derivative financial instruments. We are also subject to risk from changes in debt and equity prices from our non-qualified retirement savings plan investments in debt securities and common stock, which have a carrying value of $36.2 million and $32.4 million at March 31, 2023 and December 31, 2022, respectively, which we account for as trading securities. The Company will continue to monitor the exposure in these areas and make the appropriate adjustments as market conditions dictate.
At March 31, 2023, the Company had $536.0 million of variable interest rate debt instruments outstanding at an effective rate of 5.87%. A hypothetical change of 10% in the Company’s effective interest rate from March 31, 2023 levels would increase or decrease annual interest expense by $3.1 million. The Company expects to refinance its fixed and variable long-term debt obligations prior to their scheduled maturities.
The Company does not presently have any derivative financial instruments.
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ITEM 4.CONTROLS AND PROCEDURES
Management’s Evaluation of Disclosure Controls and Procedures
The Company has a disclosure review committee whose membership includes the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), among others. The disclosure review committee’s procedures are considered by the CEO and CFO in performing their evaluations of the Company’s disclosure controls and procedures and in assessing the accuracy and completeness of the Company’s disclosures.
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), as of the end of the period covered by this quarterly report as required by Rules 13a-15(b) or 15d-15(b) under the Exchange Act. Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
An evaluation was performed under the supervision and with the participation of the Company’s CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2023.
Changes in internal control over financial reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2023, that materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
The Company is not a party to any material litigation other than litigation in the ordinary course of business. The Company's management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or collectively, will have a material adverse effect on the Company's financial position, results of operations or cash flows.
ITEM 1A.RISK FACTORS
There have been no material changes in our risk factors from those disclosed in Part I, "Item 1A. Risk Factors" to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, all of which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table sets forth purchases and redemptions of Choice Hotels International, Inc. common stock made by the Company during the three months ended March 31, 2023. Refer to the Liquidity and Capital Resources header of "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information.

Month Ending |  | Total Number of Shares Purchased or Redeemed |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |  | Maximum Number of Shares that may yet be Purchased Under the Plans or Programs, End of Period
January 31, 2023 |  | 554,622 |  |  | $ | 118.66 |  |  | 554,622 |  |  | 4,120,542 |
February 28, 2023 |  | 404,509 |  |  | 124.03 |  |  | 404,509 |  |  | 3,716,033 |
March 31, 2023 |  | 382,389 |  |  | 119.44 |  |  | 272,089 |  |  | 3,443,944 |
Total |  | 1,341,520 |  |  | $ | 120.50 |  |  | 1,231,220 |  |  | 3,443,944 |

(1) During the three months ended March 31, 2023, the Company redeemed 110,300 shares of common stock from employees to satisfy the option price and minimum tax-withholding requirements related to the exercising of options and vesting of restricted stock and performance vested restricted stock unit grants. These redemptions were not part of the board repurchase authorization.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
None.
ITEM 5.OTHER INFORMATION
None.
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ITEM 6.EXHIBITS
Exhibit Number and Description

Exhibit Number |  | Description
3.01(a) |  | Restated Certificate of Incorporation of Choice Hotels Franchising, Inc. (renamed Choice Hotels International, Inc.)
3.02(b) |  | Amendment to the Restated Certificate of Incorporation of Choice Hotels International, Inc.
3.03(c) |  | Amended and Restated Bylaws of Choice Hotels International, Inc.
3.04(d) |  | Amendment to the Amended and Restated Bylaws of Choice Hotels International, Inc.
3.05(e) |  | Amendment to the Amended and Restated Bylaws of Choice Hotels International, Inc.
31.1* |  | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
31.2* |  | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32* |  | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
10.1(f) |  | Third Amendment to the Amended and Restated Senior Unsecured Credit Agreement, dated February 14, 2023 among Choice Hotels International, Inc., Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto.
10.2(f) |  | Successor Agency Agreement, dated February 14, 2023, by and among Wells Fargo Bank, National Association, as successor agent, Deutsche Bank AG New York Branch, as resigning agent, and Choice Hotels International, Inc.
101.INS* |  | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* | Filed herewith

(a) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Registration Statement on Form S-4, filed August 31, 1998 (Reg. No. 333-62543).
(b) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K filed May 1, 2013.
(c) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K filed February 16, 2010.
(d) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K filed April 29, 2015.
(e) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K filed on January 13, 2016.
(f) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K filed on February 14, 2023.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| CHOICE HOTELS INTERNATIONAL, INC.
May 9, 2023 | By: | /s/ PATRICK S. PACIOUS
|  | Patrick S. Pacious
|  | President & Chief Executive Officer
| CHOICE HOTELS INTERNATIONAL, INC.
May 9, 2023 | By: | /s/ DOMINIC E. DRAGISICH
|  | Dominic E. Dragisich
|  | Chief Financial Officer

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