10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 _____________________________________________ 

FORM 10-Q

 _____________________________________________ 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2018

OR

o 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, SUITE 400

ROCKVILLE, MD 20850

(Address of principal executive offices)

(Zip Code)

(301) 592-5000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

_____________________________________________  

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, and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months.    Yes  x     No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o
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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o No  x

CLASS	SHARES OUTSTANDING AT MARCH 31, 2018
Common Stock, Par Value $0.01 per share	56,660,639

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, 2018 and 2017	3
Consolidated Statements of Comprehensive Income -- For the three months ended March 31, 2018 and 2017	4
Consolidated Balance Sheets -- As of March 31, 2018 and December 31, 2017	5
Consolidated Statements of Cash Flows -- For the three months ended March 31, 2018 and 2017	6
Notes to Consolidated Financial Statements	7
Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3—Quantitative and Qualitative Disclosures About Market Risk	48
Item 4—Controls and Procedures	48
PART II. OTHER INFORMATION:
Item 1—Legal Proceedings	49
Item 1A—Risk Factors	50
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3—Defaults Upon Senior Securities	51
Item 4—Mine Safety Disclosures	51
Item 5—Other Information	51
Item 6—Exhibits	52
SIGNATURE	53

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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,
	2018			2017
REVENUES
Royalty fees	$	76,698		$	68,294
Initial franchise and relicensing fees	6,214			5,806
Procurement services	9,938			7,363
Marketing and reservation system	107,001			98,853
Other	9,543			8,552
Total revenues	209,394			188,868
OPERATING EXPENSES
Selling, general and administrative	40,864			33,745
Depreciation and amortization	3,053			1,726
Marketing and reservation system	119,228			107,994
Total operating expenses	163,145			143,465
Operating income	46,249			45,403
OTHER INCOME AND EXPENSES, NET
Interest expense	11,309			11,205
Interest income	(1,609		)	(1,264		)
Other (gains) losses	120			(897		)
Equity in net loss of affiliates	5,968			2,080
Total other income and expenses, net	15,788			11,124
Income before income taxes	30,461			34,279
Income taxes	5,375			10,010
Net income	$	25,086		$	24,269
Basic earnings per share	$	0.44		$	0.43
Diluted earnings per share	$	0.44		$	0.43
Cash dividends declared per share	$	0.215		$	0.215

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,
	2018		2017
Net income	$	25,086	$	24,269
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215		215
Foreign currency translation adjustment	855		568
Other comprehensive income, net of tax	1,070		783
Comprehensive income	$	26,156	$	25,052

The accompanying notes are an integral part of these consolidated financial statements.

4

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(UNAUDITED)

	March 31, 2018			December 31, 2017
ASSETS
Current assets
Cash and cash equivalents	$	36,834		$	235,336
Receivables (net of allowance for doubtful accounts of $14,608 and $12,221, respectively)	143,028			125,870
Income taxes receivable	664			—
Notes receivable, net of allowance	17,254			13,256
Other current assets	34,065			25,967
Total current assets	231,845			400,429
Property and equipment, at cost, net	98,403			83,374
Goodwill	174,538			80,757
Intangible assets, net	246,925			100,492
Notes receivable, net of allowances	78,286			80,136
Investments, employee benefit plans, at fair value	20,142			20,838
Investments in unconsolidated entities	128,157			134,226
Deferred income taxes	24,601			27,224
Other assets	49,120			67,715
Total assets	$	1,052,017		$	995,191
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	62,730		$	67,839
Accrued expenses and other current liabilities	58,953			84,315
Deferred revenue	62,247			52,142
Current portion of long-term debt	1,265			1,232
Liability for guest loyalty program	84,075			79,123
Total current liabilities	269,270			284,651
Long-term debt	795,745			725,292
Long-term deferred revenue	96,351			94,153
Deferred compensation and retirement plan obligations	24,513			25,566
Income taxes payable	29,041			29,041
Deferred income taxes	—			39
Liability for guest loyalty program	51,749			48,701
Other liabilities	45,265			46,349
Total liabilities	1,311,934			1,253,792
Commitments and Contingencies
Common stock, $0.01 par value, 160,000,000 shares authorized; 95,065,638 shares issued at March 31, 2018 and December 31, 2017 and 56,660,639 and 56,679,968 shares outstanding at March 31, 2018 and December 31, 2017, respectively	951			951
Additional paid-in-capital	195,651			182,448
Accumulated other comprehensive loss	(3,629		)	(4,699		)
Treasury stock (38,404,999 and 38,385,670 shares at March 31, 2018 and December 31, 2017, respectively), at cost	(1,093,066		)	(1,064,573		)
Retained earnings	640,176			627,272
Total shareholders’ deficit	(259,917		)	(258,601		)
Total liabilities and shareholders’ deficit	$	1,052,017		$	995,191

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,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	25,086		$	24,269
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,053			1,726
Depreciation and amortization – marketing and reservation system	5,071			5,290
Franchise agreement acquisition cost amortization	2,154			1,489
Provision for bad debts, net	3,389			941
Non-cash stock compensation and other charges	3,787			3,472
Non-cash interest and other (income) loss	974			(301		)
Deferred income taxes	2,582			(4,529		)
Equity in net losses from unconsolidated joint ventures, less distributions received	6,735			2,386
Franchise agreement acquisition cost, net of reimbursements	(11,925		)	(4,483		)
Change in working capital and other, net of acquisition	(36,354		)	(6,046		)
Net cash provided by operating activities	4,552			24,214
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(4,996		)	(4,718		)
Investment in intangible assets	(1,193		)	(2,088		)
Business acquisition, net of cash acquired	(231,317		)	—
Contributions to equity method investments	(1,455		)	(31,610		)
Distributions from equity method investments	766			510
Purchases of investments, employee benefit plans	(1,669		)	(1,424		)
Proceeds from sales of investments, employee benefit plans	1,029			843
Issuance of mezzanine and other notes receivable	(2,500		)	(9,863		)
Collections of mezzanine and other notes receivable	150			522
Other items, net	—			(4		)
Net cash used in investing activities	(241,185		)	(47,832		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	70,000			22,800
Principal payments on long-term debt	(111		)	(153		)
Purchase of treasury stock	(41,869		)	(7,271		)
Dividends paid	(12,265		)	(12,139		)
Debt issuance costs	(914		)	—
Proceeds from issuance of long term debt	212			—
Proceeds from exercise of stock options	23,052			4,963
Net cash provided by financing activities	38,105			8,200
Net change in cash and cash equivalents	(198,528		)	(15,418		)
Effect of foreign exchange rate changes on cash and cash equivalents	26			427
Cash and cash equivalents at beginning of period	235,336			202,463
Cash and cash equivalents at end of period	$	36,834		$	187,472
Supplemental disclosure of cash flow information:
Cash payments during the period for:
Income taxes, net of refunds	$	5,034		$	1,454
Interest, net of capitalized interest	$	19,882		$	19,874
Non-cash investing and financing activities:
Dividends declared but not paid	$	12,117		$	12,195
Investment in property and equipment acquired in accounts payable	$	374		$	724

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 the "Company") have been prepared by the Company in accordance with United States of America generally accepted accounting principles (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). These unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, 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. The Company believes the disclosures made are adequate to make the information presented not misleading.

The consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2017 and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2018 (the "10-K"). Interim results are not necessarily indicative of the entire year results. All inter-company transactions and balances between Choice Hotels International, Inc. 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.

On February 1, 2018, the Company acquired 100% of the issued and outstanding equity interest of WoodSpring Hotels Franchise Services (“WoodSpring”). The transaction has been accounted for using the acquisition method of accounting and accordingly, assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date. The results of WoodSpring have been consolidated with the Company since February 1, 2018. See Note 16 for additional information.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1 “Summary of Significant Accounting Policies” in the Annual Report on Form 10-K for the year ended December 31, 2017. The significant accounting policies that changed during the quarter are set forth below.

Recently Adopted Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue From Contracts with Customers (Topic 606) and issued subsequent amendments to the initial guidance at various points of 2015 and 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20 (these ASUs collectively referred to as "Topic 606"). The Company adopted Topic 606 as of January 1, 2018 using the full retrospective method of adoption. The provisions of Topic 606 impacted the Company’s revenue recognition as follows:

• Initial and relicensing fees earned upon execution of a franchise agreement are recognized as revenue ratably as services are provided over the enforceable period of the franchise license arrangement. This represents a change from prior practice, whereby the Company typically recognized revenue for initial and relicensing fees in full in the period of agreement execution.

• Sales commissions, which are paid upon the execution of a franchise agreement, are recognized ratably over the period a hotel is expected to remain in the Company's franchise system rather than expensed as incurred.

• Franchise agreement acquisition costs are capitalized as intangible assets, as opposed to notes receivable. Amortization of franchise agreement acquisition costs are recognized as a reduction of revenue rather than as a component of depreciation and amortization.

• Revenue related to the Choice Privileges program, which is reported as a component of marketing and reservation system fees, is deferred as points are awarded and recognized upon point redemption, net of reward reimbursements paid to a third-party. Previously, revenue was recognized on a gross basis at the time the points were issued with a

7

corresponding deferral of revenue equal to the expected future costs of the award. Deferred revenue was then recognized as actual points were redeemed and costs for those redemptions incurred.

• Topic 606 also impacted the Company’s accounting for surpluses and deficits generated from marketing and reservation system activities. The Companyhas historically, consistent with its existing agreements, not earned a profit or generated a loss from marketing and reservation activities, and as a result, the Company recorded excess marketing and reservation system revenues or expenses as assets or liabilities on the Company’s balance sheet prior to the adoption of Topic 606. However, as a result of the the adoption of Topic 606, the Company will no longer defer revenues and expenses or record assets and liabilities when system revenues exceed expenses in the current period or vice versa. The Company intends to manage these activities to break-even over time but anticipates that net income or loss may be generated quarterly due to the seasonal nature of the hotel industry and annually based on the level of investments needed for new initiatives that benefit our franchisees.

All amounts and disclosures set forth in this Form 10-Q reflect the necessary adjustments required for the adoption of Topic 606, including the reclassification of prior year balances to conform to current year presentation. See Note 2 for further details on the adoption of Topic 606 and impact to the Company's significant accounting policies. In accordance with Topic 606 requirements, the disclosure of the impact of adoption on the Company's prior period consolidated statements of income and balance sheet is presented below. The adoption of Topic 606 had no impact to cash from or used in operating, financing, or investing, but resulted in certain reclassifications within cash flows from operating activities, on the prior period consolidated statement of cash flows.

	Three Months Ended March 31, 2017
	As Previously Reported		Adoption of Topic 606			As Adjusted
Income Statement	(in thousands, except per share amounts)
Total revenues	$	197,898	$	(9,030	)	$	188,868
Total operating expenses	145,391		(1,926		)	143,465
Income before income taxes	41,383		(7,104		)	34,279
Income taxes	12,639		(2,629		)	10,010
Net income	28,744		(4,475		)	24,269
Diluted earnings per share	0.51		(0.08		)	0.43

	December 31, 2017
	As Previously Reported (1)(2)		Adoption of Topic 606			As Adjusted
Balance Sheet	(in thousands)
Receivables (net of allowance for doubtful accounts)	$	125,452	$	418		$	125,870
Current notes receivable, net of allowances	13,904		(648		)	13,256
Other current assets	28,241		(2,274		)	25,967
Intangible assets, net	14,672		85,820			100,492
Notes receivable, net of allowances	147,993		(67,857		)	80,136
Deferred income tax asset	13,335		13,889			27,224
Other assets	29,479		38,236			67,715
Accounts payable(1)	67,839		—			67,839
Accrued expenses and other current liabilities(1)	84,315		—			84,315
Current deferred revenue(2)	13,190		38,952			52,142
Current liability for guest loyalty program(2)	79,183		(60		)	79,123
Deferred revenue(2)	14,029		80,124			94,153
Liability for guest loyalty program(2)	48,738		(37		)	48,701
Other liabilities(2)	51,245		(4,896		)	46,349
Retained earnings	673,771		(46,499		)	627,272

⁽¹⁾ The Company performed reclassifications of certain payroll taxes from Accrued expenses and other current liabilities to Accounts payable totaling $4.3 million, and the entirety of Income taxes payable to Accrued expenses and other current liabilities totaling $2.8 million.

8

⁽²⁾ As a result of adoption of Topic 606 and in accordance with reporting requirements, the Company performed revisions to presentation within Total liabilities in the consolidated balance sheet to add non-current Deferred revenue and current and non-current Liability for guest loyalty program line items. Amounts originally captured in current Deferred revenue and Other liabilities have been reclassified to the new line items in the table above.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15") and in November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash ("ASU 2016-18"), which collectively provide additional guidance on nine specific cash flow issues. The Company adopted ASU 2016-15 and ASU 2016-18 on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16").  ASU 2016-16 provides guidance on recognition of current income tax consequences for inter-company asset transfers (other than inventory) at the time of transfer.  The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and adds guidance for partial sales of nonfinancial assets. The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize most leases on their balance sheet by recording a liability for its lease obligation and an asset for its right to use the underlying asset as of the lease commencement date. The standard requires entities to determine whether an arrangement contains a lease or a service agreement as the accounting treatment is significantly different between the two arrangements. The standard also requires the lessee to evaluate whether a lease is a financing lease or an operating lease as the accounting and presentation guidance between the two are different. ASU 2016-02 also modifies the classification criteria and accounting for sales-type and direct financing leases for lessors. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company intends to adopt the standard on January 1, 2019 and apply the package of practical expedients available upon adoption. The Company is currently assessing the potential impact that ASU 2016-02 will have on its financial statements and disclosures.

2. Revenue

Revenue Recognition

Revenues are primarily derived from franchise agreements with third-party hotel owners. The majority of the Company’s performance obligations are a series of distinct services, as described in more detail below, for which the Company receives variable consideration through franchise fees. The Company enters into franchise agreements to provide franchisees with a limited non-exclusive license to utilize the Company’s registered brand trade names and trademarks, marketing and reservation services, and other miscellaneous franchise services. These agreements typically have an initial term from five to thirty years, with provisions permitting franchisees or the Company to terminate the franchise agreement upon designated anniversaries of the hotel opening before the end of the initial term. An up-front initial or relicensing fee is assessed to third-party hotel owners to affiliate with our brands, which is typically paid prior to agreement execution and is non-refundable. After hotel opening, fees are generated based on a percentage of gross room revenues or as designated transactions and events occur (such as when a reservation is delivered to the hotel through a specified channel) and are due to the Company in the following month.

The franchise agreements are comprised of multiple performance obligations, which may require significant judgment in identifying. The primary performance obligations are as follows:

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• License of brand intellectual property and related services (“brand intellectual property”): Grants the right to access the Company’s intellectual property associated with brand trade names, trademarks, reservation systems, property management systems and related services.

• Material rights for free or discounted goods or services to hotel guests: Primarily consists of the points issued under the Company’s guest loyalty program, Choice Privileges.

• Point in time sale of goods: The Company administers the delivery of chip-enabled credit card readers to its franchisees to aid in compliance with industry standards in exchange for a fee. Revenue is recognized at the point in time shipment is made to the franchisee within Other revenue. The Company determined the standalone selling price is equal to the amount invoiced to the franchisee.

Brand intellectual property

Fees generated from the brand intellectual property are recognized to revenue over time as hotel owners pay for access to these services for the duration of the franchise agreement. Franchise fees are typically based on the sales or usage of the underlying hotel, with the exception of fixed up-front fees that usually represent an insignificant portion of the transaction price. The variable consideration is recognizable after the completion of a hotel stay. As a result, variable transaction price is determined for the period when the underlying gross room revenues and transactions or events which generate fees are known.

Franchise fees include the following:

• Royalty fees. Royalty fees are earned in exchange for a license to brand intellectual property typically based on a percentage of gross room revenues. These fees are billed and collected monthly and revenues are recognized in the same period that the underlying gross room revenues are earned by the Company’s franchisees.

• Initial franchise and relicensing fees. Initial and relicensing fees are charged when (i) new hotels enter the franchise system; (ii) there is a change of ownership; or (iii) existing franchise agreements are extended. These revenues are recognized as revenue ratably as services are provided over the enforceable period of the franchise agreement. The enforceable period is the period from hotel opening to the first point the franchisee or the Company can terminate the franchise agreement without incurring a significant penalty. Deferred revenues from initial and relicensing fees will typically be 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 will be recognized to revenue in the period of termination.

• Other revenue. Other revenue is a combination of miscellaneous non-marketing and reservation system fees, inclusive of quality assurance non-compliance and franchisee training fees, and is recognized in the period the designated transaction or event has occurred.

The Company’s franchise agreements require the payment of marketing and reservation system fees. The Company is obligated to use these marketing and reservation system fees to provide marketing and reservation services such as advertising, providing a centralized reservation and property management system, providing reservation and revenue management services, and performing certain franchise services to support the operation of the overall franchise system. These services are comprised of multiple fees including the following:

• Fees based on a percentage of gross room revenues are recognized in the period the gross room revenue was earned, based on the underlying hotel’s sales or usage.

• Fees based on the occurrence of a designated transaction or event are recognized in the period the transaction or event occurred.

• System implementation fees charged to franchisees are deferred and recognized as revenue over the enforceable period of the franchise agreement.

• Marketing and reservation system activities also include revenues generated from the Company’s guest loyalty program. The revenue recognition of this program is discussed in Material rights for free or discounted good or services to hotel guests below.

Marketing and reservation system expenses are those expenses incurred to facilitate the delivery of marketing and reservation system services, including direct expenses and an allocation of costs for certain administrative activities required to carry out marketing and reservation services. Marketing and reservation system expenses are recognized as services are incurred or goods are received, and as such may not equal marketing and reservation system revenues in a specific period but are expected to equal revenues earned from franchisees over time. The Company’s franchise agreements provide the Company the right to advance monies to the franchise system when the needs of the system

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surpass the balances currently available and recover such advances in future periods through additional fee assessments or reduced spending.

Material rights for free or discounted good or services to hotel guests

Choice Privileges is the Company’s frequent guest loyalty program, which enables members to earn points based on their spending levels with the Company’s franchisees. The points, which the Company accumulates and tracks on the members’ behalf, may be redeemed for free accommodations or other benefits (e.g., gift cards to participating retailers). The Company collects from franchisees a percentage of program members’ gross room revenue from completed stays to operate the program. At such time points are redeemed for free accommodations or other benefits, the Company reimburses franchisees or third parties based on a rate derived in accordance with the franchise or vendor agreement.

Loyalty points represent a performance obligation attributable to usage of the points, and thus revenues are recognized at the point in time when the loyalty points are redeemed by members for benefits. The transaction price is variable and determined in the period when the loyalty points are earned and the underlying gross room revenues are known. No loyalty program revenues are recognized at the time the loyalty points are issued.

The Company is an agent in coordinating delivery of the services between the loyalty program member and franchisee or third party, and as a result, revenues are recognized net of the cost of redemptions. The estimated fair value of future redemptions is reflected in current and non-current Liability for guest loyalty program in our consolidated balance sheets. The liability for guest loyalty program is developed based on an estimate of the eventual redemption rates and point values using various actuarial methods. These significant judgments determine the required point liability attributable to outstanding points, which is relieved as redemption costs are processed. The amount of the loyalty program fees in excess of the point liability represents current and non-current Deferred revenue, which is recognized to revenue as points are redeemed including an estimate of future forfeitures (“breakage”). The anticipated redemption pattern of the points is the basis for current and non-current designation of each liability. As of March 31, 2018, the current and non-current deferred revenue balances are $27.4 million and $16.9 million, respectively. Loyalty program point redemption revenues are recognized within marketing and reservation system revenue in the consolidated statements of income.

The Company also earns revenues on contracts incidental to the support of operations for franchised hotels, including purchasing operations.

Partnerships

The Company maintains various agreements with third-party partners, including the co-branding of the Choice Privileges credit card. The agreements typically provide for use of the Company’s marks, limited access to the Company’s distribution channels, and sale of Choice Privileges points, in exchange for fees primarily comprising variable consideration paid each month. Choice Privileges members can earn points through participation in the partner’s program.

Partnership agreements include multiple performance obligations. The primary performance obligations are brand intellectual property and material rights for free or discounted goods or services to hotel guests. Allocation of fixed and variable consideration to the performance obligations is based on standalone selling price as estimated based on market and income methods, which represent significant judgments. The amounts allocated to brand intellectual property are recognized on a gross basis over time using the output measure of time elapsed, primarily within Procurement services revenue. The amounts allocated to material rights for free or discounted goods or services to hotel guests are recognized to revenue as points are redeemed including an estimate of breakage, primarily within Marketing and reservation system revenue.

Qualified Vendors

The Company generates procurement services revenues from qualified vendors. Procurement services revenues are generally based on marketing services provided by the Company on behalf of the qualified vendors to hotel owners and guests. The Company provides these services in exchange for either fixed consideration or a percentage of revenues earned by the qualified vendor pertaining to purchases by the Company’s franchisees or guests. Fixed consideration is paid in installments based on a contractual schedule, with an initial payment typically due at contract execution. Variable consideration is typically paid quarterly after sales to franchisees or guests have occurred.

Qualified vendor agreements comprise a single performance obligation, which is satisfied over time based on the access afforded and services provided to the qualified vendor for the stated duration of the agreement. Fixed

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consideration is allocated and recognized ratably to each period over the term of the agreement. Variable consideration is determined and recognized in the period when sales to franchisees or guests from vendors are known or cash payment has been remitted. Qualified vendor revenues are recognized within Procurement services revenue.

Other

The Company is party to other non-franchising agreements that generate revenue within Other revenue in the income statement which are primarily Software as a Service (“SaaS”) arrangements. SaaS agreements typically include fixed consideration for installment and other initiation fees paid at contract onset, and variable consideration for recurring subscription revenue paid monthly. SaaS agreements comprise a single performance obligation, which is satisfied over time based on the access to the software for the stated duration of the agreement. Fixed consideration is allocated and recognized ratably to each period over the term of the agreement. Variable consideration is determined at the conclusion of each period, and allocated to and recognized in the current period.

Contract Liabilities

Contract liabilities relate to (i) advance consideration received, such as initial franchise and relicensing 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 points are issued under the Choice Privileges loyalty program but for which revenue is not yet recognized since the related points have not been redeemed. Initial and relicensing fees paid on WoodSpring franchise agreements executed after February 1, 2018 are included in the "Increases to the contract liability balance due to cash received" caption in the table below. No WoodSpring amounts are included in the Revenue recognized in the period" caption, as WoodSpring balances were not included in the contract liability balance as of December 31, 2017. See Note 16 for additional information.

Significant changes in the contract liabilities balances during the period December 31, 2017 to March 31, 2018 are as follows:

	(in thousands)
Balance as of December 31, 2017	$	132,339
Increases to the contract liability balance due to cash received	17,947
Revenue recognized in the period	(12,726		)
Balance as of March 31, 2018	$	137,560

Remaining Performance Obligations

The aggregate amount of transaction price allocated to unsatisfied or partially unsatisfied performance obligations is $137.6 million as of March 31, 2018. This amount represents fixed transaction price that will be recognized as revenue in future periods, which is primarily captured in the balance sheet as current and non-current deferred revenue.

Based on practical expedient elections permitted by 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 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. Additionally, as part of transition to Topic 606, the Company elected to not disclose the amount of the transaction price allocated to the remaining performance obligations as of December 31, 2017 or provide an explanation of when revenue is expected to be recognized.

Capitalized Franchise Agreement Costs

Sales commissions earned by Company personnel upon execution of a franchise agreement (“franchise sales commissions”) meet the requirement to be capitalized as an incremental cost of obtaining a contract with a customer. Capitalized franchise sales commission are amortized on a straight-line basis over the estimated benefit period of the arrangement, unless the franchise agreement is terminated and the hotel exits the system whereby remaining capitalized amounts will be expensed in the period of termination. The estimated benefit period is equal to or greater than the period of enforceable rights on the franchise agreement. Capitalized franchise sales commissions are $45.1 million within Other assets as of March 31, 2018. Amortization expense and impairment loss in the period was $1.9 million and is reflected within selling, general and administrative expenses.

The Company makes certain payments to customers as an incentive to enter in to new franchise agreements (“Franchise agreement acquisition cost”). These payments are recognized as an adjustment to transaction price and capitalized as an

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intangible asset. Franchise agreement acquisition cost intangibles are amortized on a straight-line basis over the estimated benefit period of the arrangement as an offset to royalty fees and marketing and reservation system fees. Impairments from hotel terminations are recorded within the selling, general and administrative expenses and marketing and reservations expenses.

Sales Taxes

The Company presents taxes collected from customers and remitted to governmental authorities on a net basis and therefore they are excluded from revenues in the consolidated financial statements.

Disaggregation of Revenue

The following table presents our revenues by over time and point in time recognition:

	Three Months Ended						Three Months Ended
	March 31, 2018						March 31, 2017
	Over time		Point in time		Total		Over time		Point in time		Total
Revenues:	(in thousands)						(in thousands)
Royalty fees	$	76,698	$	—	$	76,698	$	68,294	$	—	$	68,294
Initial franchise and relicensing fees	6,214		—		6,214		5,806		—		5,806
Procurement services	9,565		373		9,938		7,133		230		7,363
Marketing and reservation system	101,128		5,873		107,001		92,852		6,001		98,853
Other	8,520		672		9,192		6,737		1,478		8,215
Total Topic 606 revenues	$	202,125	$	6,918	209,043		$	180,822	$	7,709	188,531
Non-Topic 606 revenues					351						337
					$	209,394					$	188,868

Non-Topic 606 revenues represent revenue from operations of office buildings and parking lots and are presented in Other revenues in the consolidated income statement.

As presented in Note 13, the Corporate & Other amounts represent $3.8 million and $2.6 million of total revenues for the three months ended March 31, 2018 and 2017, respectively, and are included in the Over time column of Other revenues and Non-Topic 606 revenues row. The remaining revenues relate to the hotel franchising segment.

3. Other Current Assets

Other current assets consist of the following:

	March 31, 2018		December 31, 2017
	(in thousands)
Prepaid expenses	$	16,998	$	14,205
Other current assets	7,096		4,762
Land held for sale	9,971		7,000
Total	$	34,065	$	25,967

Land held for sale represents the Company's purchase of real estate as part of its program to incent franchise development in strategic markets for the Company's Cambria Hotels brand. During the three months ended March 31, 2018, the Company reclassified one parcel of land with a total book value of $3.0 million to Land held for sale. As of March 31, 2018, the Company has a total of $10.0 million of Land held for sale, as it is expected that these sites will be sold within the next twelve months.

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4. Notes Receivable and Allowance for Losses

The following table shows the composition of the Company's notes receivable balances:

	March 31, 2018		December 31, 2017
Credit Quality Indicator	(in thousands)
Senior	$	73,643	$	73,700
Subordinated	20,975		18,647
Unsecured	3,059		3,182
Total notes receivable	97,677		95,529
Allowance for losses on non-impaired loans	1,647		1,647
Allowance for losses on receivables specifically evaluated for impairment	490		490
Total loan reserves	2,137		2,137
Net carrying value	$	95,540	$	93,392
Current portion, net	$	17,254	$	13,256
Long-term portion, net	78,286		80,136
Total	$	95,540	$	93,392

The Company utilizes the level of security it has in the mezzanine and other notes receivable as its primary credit quality indicator (i.e., senior, subordinated or unsecured) when determining the appropriate allowances for uncollectible loans. The Company considers loans to be past due and in default when payments are not made when due. Although the Company considers loans to be in default if payments are not received on the due date, the Company does not suspend the accrual of interest until those payments are more than 30 days past due. The Company applies payments received for loans on non-accrual status first to interest and then principal. The Company does not resume interest accrual until all delinquent payments are received. For impaired loans, the Company recognizes interest income on a cash basis.

The Company determined that approximately $1.8 million of its subordinated mezzanine and other notes receivable were impaired at both March 31, 2018 and December 31, 2017, and recorded allowance for credit losses on these impaired loans totaling $1.6 million at both March 31, 2018 and December 31, 2017. The average mezzanine and other notes receivable on non-accrual status was approximately $1.8 million and $1.9 million for the three months ended March 31, 2018 and 2017, respectively. The Company recognizes interest income for impaired loans on a cash basis. Approximately $44 thousand of interest income on impaired loans was recognized during the three months ended March 31, 2017. No interest income on impaired loans was recognized during the three months ended March 31, 2018. The Company provided loan reserves on non-impaired loans totaling $0.5 million at March 31, 2018 and December 31, 2017. There were no changes in total loan reserves between December 31, 2017 and March 31, 2018.

Past due balances of mezzanine and other notes receivable by credit quality indicators are as follows:

	30-89 days Past Due		> 90 days Past Due		Total Past Due		Current		Total  Notes Receivable
	(in thousands)
As of March 31, 2018
Senior	$	—	$	—	$	—	$	73,643	$	73,643
Subordinated	—		—		—		20,975		20,975
Unsecured	—		—		—		3,059		3,059
	$	—	$	—	$	—	$	97,677	$	97,677
As of December 31, 2017
Senior	$	—	$	—	$	—	$	73,700	$	73,700
Subordinated	—		—		—		18,647		18,647
Unsecured	—		—		—		3,182		3,182
	$	—	$	—	$	—	$	95,529	$	95,529

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Variable Interest through Notes Issued

The Company has issued mezzanine and other notes receivables to certain entities that have created variable interests in these borrowers totaling $37.9 million and $35.2 million as of March 31, 2018 and December 31, 2017, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities. Each of these loans have stated fixed and/or variable interest amounts. The Company has identified loans totaling approximately $4.6 million and $2.1 million, respectively, with stated interest rates that are less than market rate, representing a total discount of $0.3 million and $0.1 million, respectively, as of March 31, 2018 and December 31, 2017. These discounts are reflected as a reduction of the outstanding loan amounts and are amortized over the life of the related loan.

Transfer of interest

On September 12, 2017, the Company entered into an agreement to transfer $24.2 million of a $49.1 million outstanding note receivable with a maturity date of November 30, 2019 to a third party. In the first quarter of 2018, an additional $0.2 million was transferred for a total of $24.4 million. The transaction did not qualify as a sale and therefore the outstanding note receivable was not de-recognized on the balance sheet.  The one-time cash proceeds were recorded as unrestricted cash and the future obligation to transfer principal and interest received under the note has been recorded within Other Long-Term liabilities.  The Company retains responsibility for collecting and distributing cash received on the note and interest paid to the participant is reflected as interest expense in the Company’s consolidated statements of income. At March 31, 2018 and December 31, 2017, Other Long-Term liabilities includes $24.4 million and $24.2 million, respectively, pursuant to this transaction.

5. Investments in Unconsolidated Entities

The Company maintains a portfolio of investments owned through noncontrolling interest in equity method investments with one or more partners. Investments in unconsolidated entities include investments in joint ventures totaling $124.0 million and $130.2 million at March 31, 2018 and December 31, 2017, respectively, that the Company determined to be variable interest entities ("VIEs"). These investments relate to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria hotels in strategic markets. Based on an analysis of who has the power to direct the activities that most significantly impact these entities performance and who has an obligation to absorb losses of these entities or a right to receive benefits from these entities that could potentially be significant to the entity, the Company determined that it is not the primary beneficiary of any of its VIEs. The Company based its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and the relevant development, operating management and financial agreements. Although the Company is not the primary beneficiary of these VIEs, it does exercise significant influence through its equity ownership and as a result the Company's investment in these entities is accounted for under the equity method. For the three months ended March 31, 2018 and 2017, the Company recognized losses totaling $6.4 million and $2.5 million, respectively, from these investments. The Company's maximum exposure to losses related to its investments in VIEs is limited to its equity investments as well as certain guarantees described in Note 14 "Commitments and Contingencies" of these financial statements.

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6. Debt

Debt consists of the following:

	March 31, 2018		December 31, 2017
	(in thousands)
$400 million senior unsecured notes with an effective interest rate of 6.0% less deferred issuance costs of $3.8 million and $3.9 million at March 31, 2018 and December 31, 2017, respectively	$	396,249	$	396,057
$250 million senior unsecured notes with an effective interest rate of 6.19% less a discount and deferred issuance costs of $0.7 million and $0.8 million at March 31, 2018 and December 31, 2017, respectively	249,259		249,182
$450 million senior unsecured credit facility with an effective interest rate of 3.14% and 2.84%, less deferred issuance costs of $1.9 million and $2.1 million at March 31, 2018 and December 31, 2017, respectively	138,080		67,936
Fixed rate collateralized mortgage with an effective interest rate of 4.57%, plus a fair value adjustment of $0.5 million and $0.6 million at March 31, 2018 and December 31, 2017, respectively	8,692		8,853
Economic development loans with an effective interest rate of 3.0% at March 31, 2018 and December 31, 2017, respectively	3,712		3,712
Other notes payable	1,018		784
Total debt	$	797,010	$	726,524
Less current portion	1,265		1,232
Total long-term debt	$	795,745	$	725,292

For additional information regarding the senior unsecured credit facility and other debt, see the "Debt" caption under the "Liquidity and Capital Resources" section in Management's Discussion and Analysis of Financial Condition and Results of Operations.

7. Accumulated Other Comprehensive Loss

The following represents the changes in accumulated other comprehensive loss, net of tax, by component for the three months ended March 31, 2018:

	Loss on Cash Flow Hedge			Foreign Currency Items			Total
	(in thousands)
Beginning balance, December 31, 2017	$	(2,298	)	$	(2,401	)	$	(4,699	)
Other comprehensive income before reclassification	—			855			855
Amounts reclassified from accumulated other comprehensive loss	215			—			215
Net current period other comprehensive income	215			855			1,070
Ending balance, March 31, 2018	$	(2,083	)	$	(1,546	)	$	(3,629	)

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The amounts reclassified from accumulated other comprehensive loss during the three months ended March 31, 2018 were reclassified to the following line items in the Company's Consolidated Statements of Income.

Component	Amount Reclassified from Accumulated Other Comprehensive Loss		Affected Line Item in the Consolidated Statement of Income
	Three Months Ended March 31, 2018
	(in thousands)
Loss on cash flow hedge
Interest rate contract	$	215	Interest expense
	—		Tax (expense) benefit
	$	215	Net of tax

8. 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.

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 Company's 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 and those recorded in cash and cash equivalents.

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 whose fair value was determined using Level 3 inputs.

The Company's policy is to recognize transfers in and transfers out of the three levels of the fair value hierarchy as of the end of each quarterly reporting period. There were no transfers between Level 1, 2 and 3 assets during the three months ended March 31, 2018.

As of March 31, 2018 and December 31, 2017, the Company had the following assets measured at fair value on a recurring basis:

	Fair Value Measurements at Reporting Date Using
	Total		Level 1		Level 2		Level 3
Assets	(in thousands)
As of March 31, 2018
Mutual funds(1)	$	21,388	$	21,388	$	—	$	—
Money market funds(1)	1,703		—		1,703		—
	$	23,091	$	21,388	$	1,703	$	—
As of December 31, 2017
Money market funds, included in cash and cash equivalents	$	50,419	$	—	$	50,419	$	—
Mutual funds(1)	20,869		20,869		—		—
Money market funds(1)	1,702		—		1,702		—
	$	72,990	$	20,869	$	52,121	$	—

________________________ 

(1) Included in Investments, employee benefit plans at fair value and other current assets on the consolidated balance sheets.

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Other Financial Instruments

The Company believes that the fair value 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 Company's Credit Facility adjust frequently based on current market rates; accordingly its carrying amount approximates fair value.

The Company estimates the fair value of notes receivable, which approximate their carrying value, utilizing an analysis of future cash flows and credit worthiness for similar types of arrangements. Based upon the availability of market data, the notes receivable have been classified as Level 3 inputs. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. For further information on the notes receivables, see Note 4.

The money market funds previously included in cash and cash equivalents were used to fund the WoodSpring acquisition as of March 31, 2018. See Note 16 for further information on the acquisition. The fair values of the Company's $250 million and $400 million senior notes are classified as Level 2 as the significant inputs are observable in an active market. At March 31, 2018 and December 31, 2017, the $250 million senior notes had an approximate fair value of $261.8 million and $269.2 million, respectively. At March 31, 2018 and December 31, 2017, the $400 million senior notes had an approximate fair value of $424.9 million and $440.1 million, respectively.

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 and may not be a prudent management decision.

9. Income Taxes

The effective income tax rates were 17.6% and 29.2% for the three months ended March 31, 2018 and 2017, respectively. The effective income tax rate for the three months ended March 31, 2018 was lower than the U.S. federal income tax rate of 21% due to the impact of foreign operations and $1.6 million of excess tax benefits from share-based compensation, partially offset by state income taxes. The effective income tax rate for the three months ended March 31, 2017 was lower than the U.S. federal income tax rate of 35% due to the impact of foreign operations and $1.2 million of excess tax benefits from share-based compensation, partially offset by state income taxes.

The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax rate from 35.0% to 21.0%, requires companies to pay a one-time transition tax on earnings of foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign-sourced earnings. The Company applied the guidance in Staff Accounting Bulletin 118 when accounting for the enactment-date effects of the Act. As of March 31, 2018, the Company made a reasonable estimate of the tax effects of the Act and will continue to refine its calculations as additional analysis is completed. Estimates may also be affected as additional clarification and understanding of the tax law is provided. These changes could be material to income tax expense.

The Act subjects a U.S. shareholder to a minimum tax on “global intangible low-taxed income” ("GILTI") earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred. The Company has elected to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred and expects to incur tax for the year ended December 31, 2018.

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10. Share-Based Compensation and Capital Stock

The components of the Company’s pretax share-based compensation expense and associated income tax benefits are as follows for the three months ended March 31, 2018 and 2017:

	Three Months Ended
	March 31,
(in millions)	2018		2017
Stock options	$	0.7	$	1.1
Restricted stock	1.7		1.7
Performance vested restricted stock units	1.1		1.0
Total	$	3.5	$	3.8
Income tax benefits	$	0.8	$	1.4

A summary of stock-based award activity as of March 31, 2018 and changes during the three months ended 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, 2018	1,976,326		$	50.80		348,876		$	57.05	294,204		$	56.95
Granted	109,045		81.55			72,671		81.55		93,809		81.55
Exercised/Vested	(414,116	)	55.66			(70,450	)	54.94		(25,232	)	63.47
Expired	(2,018	)	63.47			—		—		—		—
Forfeited	(10,095	)	54.08			(13,509	)	51.67		(6,833	)	60.42
Outstanding at March 31, 2018	1,659,142		$	51.57	4.0 years	337,588		$	62.98	355,948		$	62.90
Options exercisable at March 31, 2018	1,169,868		$	47.44	3.5 years

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 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2018 Grants
Risk-free interest rate	2.58		%
Expected volatility	21.17		%
Expected life of stock option	4.6 years
Dividend yield	1.05		%
Requisite service period	4 years
Contractual life	7 years
Weighted average fair value of options granted (per option)	$	16.27

Restricted stock awards generally vest ratably over the service period beginning with the first anniversary of the grant date. Vesting service period of shares granted during the three months ended March 31, 2018 range from 36 - 48 months.

The Company has granted performance vested restricted stock units ("PVRSU") to certain employees. The vesting of these stock awards is contingent upon the Company achieving performance targets over a 36 month performance period and the employees' continued employment. The performance conditions affect the number of shares that will ultimately vest and can range between 0% and 200% of the shares granted.

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Share Repurchases and Redemptions

The Company purchased 432,165 shares of common stock under the share repurchase program at a total cost of $35.0 million during the three months ended March 31, 2018.

During the three months ended March 31, 2018, the Company redeemed 85,674 shares of common stock at a total cost of approximately $6.9 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 performance vested restricted stock units and restricted stock grants. These redemptions were outside the share repurchase program.

11. Earnings Per Share

The computation of basic and diluted earnings per common share is as follows:    

	Three Months Ended
	March 31,
(In thousands, except per share amounts)	2018			2017
Computation of Basic Earnings Per Share:
Numerator:
Net income	$	25,086		$	24,269
Income allocated to participating securities	(155		)	(174		)
Net income available to common shareholders	$	24,931		$	24,095
Denominator:
Weighted average common shares outstanding – basic	56,464			55,941
Basic earnings per share	$	0.44		$	0.43
Computation of Diluted Earnings Per Share:
Numerator:
Net income	$	25,086		$	24,269
Income allocated to participating securities	(154		)	(174		)
Net income available to common shareholders	$	24,932		$	24,095
Denominator:
Weighted average common shares outstanding – basic	56,464			55,941
Diluted effect of stock options and PVRSUs	647			345
Weighted average common shares outstanding – diluted	57,111			56,286
Diluted earnings per share	$	0.44		$	0.43

The Company's unvested restricted shares contain rights to receive non-forfeitable dividends, and thus are participating securities requiring the two-class method of computing earnings per share ("EPS"). The calculation of EPS for common stock shown above excludes the income attributable to the unvested restricted share awards from the numerator and excludes the dilutive impact of those awards from the denominator.

At March 31, 2018 and 2017, the Company had 1.7 million and 2.2 million outstanding stock options, respectively. Stock options are included in the diluted earnings per share calculation using the treasury stock method and average market prices during the period, unless the stock options would be anti-dilutive. For the three months ended March 31, 2018, 0.1 million anti-dilutive stock options were excluded from the diluted earnings per share calculation. For the three months ended March 31, 2017, the Company excluded 0.6 million of anti-dilutive stock options from the diluted earnings per share calculation.

PVRSUs are also included in the diluted earnings per share calculation when the performance conditions have been met at the reporting date. However, at March 31, 2018 and 2017, PVRSUs totaling 338,204 and 354,167, respectively, were excluded from the computation since the performance conditions had not been met.

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12. Condensed Consolidating Financial Statements

The Company’s Senior Notes due 2020 and 2022 are guaranteed jointly, severally, fully and unconditionally, subject to certain customary limitations, by certain of the Company’s domestic subsidiaries. There are no legal or regulatory restrictions on the payment of dividends to Choice Hotels International, Inc. from subsidiaries that do not guarantee the Senior Notes. As a result of the guarantee arrangements, the following condensed consolidating financial statements are presented. Investments in subsidiaries are accounted for under the equity method of accounting. The financial results for the 2017 periods have been updated to reflect the Company's adoption of Topic 606 as discussed in Note 1.

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

For theThree Months Ended March 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES
Royalty fees	$	71,615		$	36,209	$	8,470		$	(39,596	)	$	76,698
Initial franchise and relicensing fees	6,052			—		162			—			6,214
Procurement services	9,679			124		278			(143		)	9,938
Marketing and reservation system	88,395			106,426		3,746			(91,566		)	107,001
Other	6,002			—		3,633			(92		)	9,543
Total revenues	181,743			142,759		16,289			(131,397		)	209,394
OPERATING EXPENSES
Selling, general and administrative	41,357			32,614		6,790			(39,897		)	40,864
Marketing and reservation system	109,247			95,855		5,626			(91,500		)	119,228
Depreciation and amortization	1,649			549		855			—			3,053
Total operating expenses	152,253			129,018		13,271			(131,397		)	163,145
Operating income	29,490			13,741		3,018			—			46,249
OTHER INCOME AND EXPENSES, NET
Interest expense	10,991			—		318			—			11,309
Equity in earnings of consolidated subsidiaries	(10,766		)	1,071		—			9,695			—
Other items, net	(497		)	5,616		(640		)	—			4,479
Total other income and expenses, net	(272		)	6,687		(322		)	9,695			15,788
Income before income taxes	29,762			7,054		3,340			(9,695		)	30,461
Income taxes	4,676			727		(28		)	—			5,375
Net income	$	25,086		$	6,327	$	3,368		$	(9,695	)	$	25,086

21

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2017

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES
Royalty fees	$	63,596		$	30,735	$	10,514		$	(36,551	)	$	68,294
Initial franchise and relicensing fees	5,611			—		195			—			5,806
Procurement services	7,301			—		62			—			7,363
Marketing and reservation system	87,700			93,724		3,473			(86,044		)	98,853
Other	6,287			40		2,412			(187		)	8,552
Total revenues	170,495			124,499		16,656			(122,782		)	188,868
OPERATING EXPENSES
Selling, general and administrative	37,448			27,271		5,787			(36,761		)	33,745
Marketing and reservation system	102,681			87,642		3,692			(86,021		)	107,994
Depreciation and amortization	384			511		831			—			1,726
Total operating expenses	140,513			115,424		10,310			(122,782		)	143,465
Operating income	29,982			9,075		6,346			—			45,403
OTHER INCOME AND EXPENSES, NET
Interest expense	11,063			—		142			—			11,205
Equity in earnings of consolidated subsidiaries	(13,192		)	455		—			12,737			—
Other items, net	(364		)	928		(645		)	—			(81		)
Total other income and expenses, net	(2,493		)	1,383		(503		)	12,737			11,124
Income before income taxes	32,475			7,692		6,849			(12,737		)	34,279
Income taxes	8,206			2,026		(222		)	—			10,010
Net income	$	24,269		$	5,666	$	7,071		$	(12,737	)	$	24,269

22

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedMarch 31, 2018

(Unaudited, in thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	25,086	$	6,327	$	3,368	$	(9,695	)	$	25,086
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	855		—		855		(855		)	855
Other comprehensive income, net of tax	1,070		—		855		(855		)	1,070
Comprehensive income	$	26,156	$	6,327	$	4,223	$	(10,550	)	$	26,156

23

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedMarch 31, 2017

(Unaudited, in thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	24,269	$	5,666	$	7,071	$	(12,737	)	$	24,269
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	568		—		568		(568		)	568
Other comprehensive income, net of tax	783		—		568		(568		)	783
Comprehensive income	$	25,052	$	5,666	$	7,639	$	(13,305	)	$	25,052

24

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

As of March 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	11,415		$	52	$	25,367	$	—		$	36,834
Receivables	126,154			5,555		11,725		(406		)	143,028
Other current assets	16,611			64,530		13,231		(42,389		)	51,983
Total current assets	154,180			70,137		50,323		(42,795		)	231,845
Property and equipment, at cost, net	46,996			16,888		34,519		—			98,403
Goodwill	159,196			—		15,342		—			174,538
Intangible assets, net	141,483			93,646		11,796		—			246,925
Notes receivable, net of allowances	20,346			—		57,940		—			78,286
Investments, employee benefit plans, at fair value	—			20,142		—		—			20,142
Investments in affiliates	283,439			47,882		—		(331,321		)	—
Advances to affiliates	10,704			109,042		11		(119,757		)	—
Deferred income taxes	16,982			10,050		170		(2,601		)	24,601
Other assets	417			154,978		21,882		—			177,277
Total assets	$	833,743		$	522,765	$	191,983	$	(496,474	)	$	1,052,017
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	16,489		$	42,869	$	3,778	$	(406	)	$	62,730
Accrued expenses and other current liabilities	60,724			27,752		12,866		(42,389		)	58,953
Deferred revenue	31,101			28,515		2,631		—			62,247
Current portion of long-term debt	—			—		1,265		—			1,265
Liability for guest loyalty program	—			83,843		232		—			84,075
Total current liabilities	108,314			182,979		20,772		(42,795		)	269,270
Long-term debt	783,588			3,712		8,445		—			795,745
Long-term deferred revenue	72,259			22,436		1,656		—			96,351
Deferred compensation & retirement plan obligations	—			24,499		14		—			24,513
Advances from affiliates	115,267			1,371		3,119		(119,757		)	—
Income tax payable	—			—		29,041		—			29,041
Other liabilities	14,232			64,859		20,524		(2,601		)	97,014
Total liabilities	1,093,660			299,856		83,571		(165,153		)	1,311,934
Total shareholders’ (deficit) equity	(259,917		)	222,909		108,412		(331,321		)	(259,917		)
Total liabilities and shareholders’ deficit	$	833,743		$	522,765	$	191,983	$	(496,474	)	$	1,052,017

25

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

As of December 31, 2017

(in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	12,671		$	38	$	222,627	$	—		$	235,336
Receivables	107,470			6,120		12,480		(200		)	125,870
Other current assets	12,507			60,569		9,930		(43,783		)	39,223
Total current assets	132,648			66,727		245,037		(43,983		)	400,429
Property and equipment, at cost, net	47,736			18,114		17,524		—			83,374
Goodwill	65,813			—		14,944		—			80,757
Intangible assets, net	5,122			83,441		11,929		—			100,492
Notes receivable, net of allowances	22,193			—		57,943		—			80,136
Investments, employee benefit plans, at fair value	—			20,838		—		—			20,838
Investments in affiliates	475,434			47,172		—		(522,606		)	—
Advances to affiliates	10,517			120,466		—		(130,983		)	—
Deferred income taxes	20,548			9,335		169		(2,828		)	27,224
Other assets	189			160,045		41,707		—			201,941
Total assets	$	780,200		$	526,138	$	389,253	$	(700,400	)	$	995,191
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	15,326		$	48,213	$	4,500	$	(200	)	$	67,839
Accrued expenses and other current liabilities	73,225			41,814		13,059		(43,783		)	84,315
Deferred revenue	24,984			25,301		1,857		—			52,142
Current portion of long-term debt	—			—		1,232		—			1,232
Liability for guest loyalty program	—			78,899		224		—			79,123
Total current liabilities	113,535			194,227		20,872		(43,983		)	284,651
Long-term debt	713,175			3,712		8,405		—			725,292
Long-term deferred revenue	71,100			20,513		2,540		—			94,153
Deferred compensation & retirement plan obligations	—			25,552		14		—			25,566
Advances from affiliates	126,691			1,294		2,998		(130,983		)	—
Income taxes payable	—			—		29,041		—			29,041
Other liabilities	14,300			62,845		20,772		(2,828		)	95,089
Total liabilities	1,038,801			308,143		84,642		(177,794		)	1,253,792
Total shareholders’ (deficit) equity	(258,601		)	217,995		304,611		(522,606		)	(258,601		)
Total liabilities and shareholders’ deficit	$	780,200		$	526,138	$	389,253	$	(700,400	)	$	995,191

26

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

For the Three Months EndedMarch 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	197,590		$	4,159		$	5,087		$	(202,284	)	$	4,552
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(2,904		)	(837		)	(1,255		)	—			(4,996		)
Investment in intangible assets	(1,193		)	—			—			—			(1,193		)
Business acquisition, net of cash acquired	(231,317		)	—			—			—			(231,317		)
Contributions to equity method investments	—			(1,432		)	(23		)	—			(1,455		)
Distributions from equity method investments	—			564			202			—			766
Issuance of mezzanine and other notes receivable	(2,500		)	—			—			—			(2,500		)
Collections of mezzanine and other notes receivable	150			—			—			—			150
Purchases of investments, employee benefit plans	—			(1,669		)	—			—			(1,669		)
Proceeds from sales of investments, employee benefit plans	—			1,029			—			—			1,029
Advances to and investments in affiliates	—			(2,450		)	—			2,450			—
Divestment in affiliates	—			650			—			(650		)	—
Net cash used in investing activities	(237,764		)	(4,145		)	(1,076		)	1,800			(241,185		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	70,000			—			—			—			70,000
Principal payments on long-term debt	—			—			(111		)	—			(111		)
Proceeds from the issuance of long-term debt	—			—			212			—			212
Purchase of treasury stock	(41,869		)	—			—			—			(41,869		)
Debt issuance costs	—			—			(914		)	—			(914		)
Proceeds from exercise of stock options	23,052			—			—			—			23,052
Proceeds from contributions from affiliates	—			—			2,450			(2,450		)	—
Distributions to affiliates	—			—			(650		)	650			—
Dividends paid	(12,265		)	—			(202,284		)	202,284			(12,265		)
Net cash provided by (used in) financing activities	38,918			—			(201,297		)	200,484			38,105
Net change in cash and cash equivalents	(1,256		)	14			(197,286		)	—			(198,528		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			26			—			26
Cash and cash equivalents at beginning of period	12,671			38			222,627			—			235,336
Cash and cash equivalents at end of period	$	11,415		$	52		$	25,367		$	—		$	36,834

27

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

For the Three Months EndedMarch 31, 2017

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided (used) by operating activities	$	(13,926	)	$	33,440		$	4,700		$	—		$	24,214
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(3,832		)	(710		)	(176		)	—			(4,718		)
Investment in intangible assets	(1,369		)	(719		)	—			—			(2,088		)
Contributions to equity method investments	—			(31,592		)	(18		)	—			(31,610		)
Distributions from equity method investments	—			—			510			—			510
Issuance of mezzanine and other notes receivable	(330		)	—			(9,533		)	—			(9,863		)
Collections of mezzanine and other notes receivable	522			—			—			—			522
Purchases of investments, employee benefit plans	—			(1,424		)	—			—			(1,424		)
Proceeds from sales of investments, employee benefit plans	—			843			—			—			843
Advances to and investments in affiliates	—			(484		)	—			484			—
Divestment in affiliates	—			510			—			(510		)	—
Other items, net	—			—			(4		)	—			(4		)
Net cash used in investing activities	(5,009		)	(33,576		)	(9,221		)	(26		)	(47,832		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	22,800			—			—			—			22,800
Principal payments on long-term debt	—			—			(153		)	—			(153		)
Purchase of treasury stock	(7,271		)	—			—			—			(7,271		)
Proceeds from exercise of stock options	4,963			—			—			—			4,963
Proceeds from contributions from affiliates	—			—			484			(484		)	—
Distributions to affiliates	—			—			(510		)	510			—
Dividends paid	(12,139		)	—			—			—			(12,139		)
Net cash provided by (used in) financing activities	8,353			—			(179		)	26			8,200
Net change in cash and cash equivalents	(10,582		)	(136		)	(4,700		)	—			(15,418		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			427			—			427
Cash and cash equivalents at beginning of period	14,696			159			187,608			—			202,463
Cash and cash equivalents at end of period	$	4,114		$	23		$	183,335		$	—		$	187,472

28

13. Reportable Segment Information

Hotel Franchising: Hotel franchising includes the Company's hotel franchising operations consisting of its twelve brands. The twelve brands are aggregated within this segment considering their similar economic characteristics, types of customers, distribution channels and regulatory business environments. Revenues from the hotel franchising business include royalty fees, initial franchise and relicensing fees, marketing and reservation system fees, procurement services revenue and other franchising related revenue. The Company is obligated under its hotel franchise agreements to provide marketing and reservation services appropriate for the operation of its systems. These services do not represent separate reportable segments as their operations are directly related to the Company's hotel franchising business. The revenues received from franchisees that are used to pay for part of the Company's ongoing operations are included in hotel franchising revenues and are offset by the related expenses paid for marketing and reservation activities to calculate hotel franchising operating income.

The financial results for the three months ended March 31, 2017 have been updated to reflect the Company's adoption of Topic 606 as discussed in Note 1. In addition, the financial results related to SkyTouch are now reported as a component of Corporate & Other.

The Company evaluates its hotel franchising segment based primarily on the results of the segment without allocating corporate expenses, income taxes or indirect general and administrative expenses, which are included in the Corporate & Other column. Corporate & Other revenues include rental income related to an office building owned by the Company, as well as revenues related to the Company's vacation rental initiatives and its SkyTouch operations related to providing cloud-based technology products to hoteliers not under franchise agreements with the Company. Equity in earnings or losses from hotel franchising related joint ventures is allocated to the Company's hotel franchising segment. The Company does not allocate interest expense, interest income, other gains and losses or income taxes to its hotel franchising segment.

The following table presents the financial information for the Company's hotel franchising segment:

	Three Months Ended March 31, 2018							Three Months Ended March 31, 2017
(In thousands)	Hotel Franchising		Corporate & Other			Consolidated		Hotel Franchising		Corporate & Other			Consolidated
Revenues	$	205,622	$	3,772		$	209,394	$	186,313	$	2,555		$	188,868
Operating income (loss)	$	59,358	$	(13,109	)	$	46,249	$	58,256	$	(12,853	)	$	45,403
Income (loss) before income taxes	$	53,389	$	(22,928	)	$	30,461	$	56,176	$	(21,897	)	$	34,279

14. 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

On October 9, 2012, the Company entered into a limited payment guaranty with regards to a VIE's $18.0 million bank loan for the construction of a hotel franchised under one of the Company's brands in the United States. Under the terms of the limited guaranty, the Company agreed to guarantee 25% of the outstanding principal balance for a maximum exposure of $4.5 million and accrued unpaid interest, as well as any unpaid expenses incurred by the lender. The limited guaranty shall remain in effect until the maximum amount guaranteed by the Company is paid in full. In addition to the limited guaranty, the Company entered into an environmental indemnity agreement, which indemnifies the lending institution from and against any damages relating to or arising out of possible environmental contamination issues with regards to the property.

On September 4, 2015, the Company entered into a limited payment guaranty with regards to a VIE's $13.3 million bank loan for the design, development, and construction of a new hotel franchised under one of the Company's brands in the United States.  Under the terms of the limited guaranty, the Company has agreed to guarantee a maximum of $1.8 million of the VIE’s obligations under the loan. The limited guaranty shall remain in effect until the earlier of (i) the VIE’s bank loan is paid in full

29

to the lender; (ii) the maximum amount guaranteed by the Company is paid in full; or (iii) the Company, through its affiliate, ceases to be a member of the VIE. 

On June 2, 2016, one of the Company’s VIEs obtained a $61.0 million term loan for purposes of refinancing a $46.2 million construction loan. In connection with the refinancing, the Company entered into three limited guarantees. Under the terms of the limited guarantees, the Company agreed to guarantee a maximum obligation of $3.3 million in the aggregate, in addition to a percentage of any operating expenses and capital expenditures not covered by operating revenues and unpaid expenses incurred. The limited guarantees will remain in effect until the loan is repaid in full or the VIE reaches a specified debt yield for two consecutive quarters under the loan covenants. The maturity date of the VIE's loan is June 2019.

The Company believes the likelihood of having to perform under the aforementioned limited payment guarantees was remote atMarch 31, 2018 and December 31, 2017.

On September 12, 2017, the Company transferred a portion of an outstanding note receivable to a third party for $24.2 million.  In the first quarter of 2018, an additional $0.2 million was transferred for a total of $24.4 million. Under the agreement, the counter party may require the Company to purchase the outstanding interest in the note if the Company declares a default against the borrower and enters into foreclosure proceedings.  The Company believes the likelihood of foreclosure on the note is remote as of March 31, 2018.

Commitments

The Company has the following commitments outstanding at March 31, 2018:

• The Company provides financing in the form of franchise agreement acquisition costs to franchisees for property improvements, hotel development efforts and other purposes. At March 31, 2018, the Company had commitments to extend an additional $215.1 million for these purposes provided certain conditions are met by its franchisees.

• The Company committed to make additional capital contributions totaling $13.5 million to existing joint ventures related to the construction of various hotels to be operated under the Company's Cambria Hotels brand.

• In October 2017, the Company committed to provide financing to a development company to construct a Cambria hotel. The Company has committed to provide an aggregate of $3.8 million, if certain conditions are met. As of March 31, 2018, no funds have been disbursed.

• In March 2018, the Company entered into a construction loan agreement for the rehabilitation and development of a former office building into a hotel through a consolidated joint venture with a commercial lender, which is secured by the building. The construction loan can be drawn up to $34.9 million. The Company has a carve-out guaranty and the unaffiliated joint venture partner has a completion guaranty in relation to the loan, in which both parties are required to meet certain financial covenants relating to liquidity and net worth. The rehabilitation of the building is considered a qualified asset in which requires a significant amount of time to prepare for its intended use. Therefore, any interest costs incurred during the development period of the building is considered an element of the historical cost of the qualifying asset. For the three months ended March 31, 2018, the Company has not drawn on the construction loan or recorded any capitalized interest costs. The Company committed to make additional capital contributions totaling $14.4 million for the development of the hotel to be operated under the Company's Cambria Hotels brand.

• The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation system fees. These fees are described in Note 2 Revenue. 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 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

30

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.

15. Transactions with Unconsolidated Joint Ventures

The Company has a management fee arrangement for marketing services with a joint venture partner. For both the three months ended March 31, 2018 and 2017, fees earned and payroll costs reimbursed under this arrangement totaled $0.3 million.

The Company has entered into franchise agreements with certain of the unconsolidated joint ventures discussed in Note 5. Pursuant to these franchise agreements, for the three months ended March 31, 2018 and 2017, the Company recorded royalty and marking reservation system fees of approximately $4.6 million and $3.9 million, respectively. The Company recorded $1.1 million and $1.3 million as a receivable due from these joint ventures as of March 31, 2018 and December 31, 2017, respectively. In addition, the Company paid commissions of $44 thousand and $22 thousand for the three months ended March 31, 2018 and 2017 to an on-line travel agent for which the Company is a joint venture member.

16. Acquisition

On February 1, 2018, the Company acquired 100% of the issued and outstanding equity interest of WoodSpring. At the time of the acquisition, WoodSpring franchised 239 economy extended stay hotels across 35 U.S. states. The total consideration was $231.6 million, which consisted of cash paid, net of cash acquired, of $231.3 million as well as liabilities assumed of $0.4 million and a preliminary working capital adjustment of $0.1 million. The transaction has been accounted for using the acquisition method of accounting and accordingly, assets acquired, and liabilities assumed were recorded at their fair values as of the acquisition date. The results of WoodSpring have been consolidated with the Company since February 1, 2018 and are included in the Company’s hotel franchising segment.

The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets and liabilities assumed as of February 1, 2018. The Company continues to gather information concerning the valuation of assets acquired and liabilities assumed and is in the process of reviewing the preliminary assessment with its valuation specialists and as a result the allocation is not final. The preliminary fair value of the assets and liabilities is as follows:

	(in thousands)
Cash	$	250
Accounts receivables	1,258
Prepaid	23
Contract assets	115,000
Tradename	22,000
Goodwill	93,384
Accounts payable	(348		)
Total Consideration	$	231,567

The purchase price, subject to customary adjustments, was based on the projected business growth and cash flows over the next several years and indicated a value that was in excess of the current net book value of the business, resulting in the recognition of various identifiable intangible assets and goodwill as follows:

31

	(in thousands)		Useful Life
Franchise agreements acquired	$	115,000	12-20 years
WoodSpring tradename	22,000		Indefinite
Goodwill	93,384		Indefinite
Total	$	230,384

The excess value recorded in goodwill is expected to be recovered through growth within the existing customer base, improvements in hotel RevPAR and new agreements signed with new franchisees and developers. The full amount of goodwill is deductible for tax purposes. The Company's pro forma results of operations for this acquisition have not been presented here because the effect of this acquisition was not material to the Company's consolidated results of operations.

17. Subsequent Events

On April 19, 2018, the Company's Board of Directors declared a cash dividend on the Company's common stock of $0.215 per share. The dividend is payable on July 17, 2018, to stockholders of record on July 2, 2018.

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 the "Company") 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.

Effective January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, Revenue From Contracts with Customers (Topic 606) and subsequent amendments to the initial guidance (“Topic 606”). The Company adopted Topic 606 under the full retrospective method. As a result, the Company’s results from operations for the three months ended March 31, 2017 have been revised to reflect the requirements of Topic 606.

Overview

We are primarily a hotel franchisor with franchise agreements representing 6,853 hotels open and 956 hotels under construction, awaiting conversion or approved for development as of March 31, 2018, with 554,320 rooms and 78,969 rooms, respectively, in 50 states, the District of Columbia and over 40 countries and territories outside the United States. Our brand names include Ascend Hotel Collection®, Cambria® Hotels, Comfort®, Sleep Inn®, Quality®, Clarion®, MainStay Suites®, Suburban Extended Stay Hotel®, WoodSpring Suites®, Econo Lodge®, Rodeway Inn®, and Vacation Rentals by Choice Hotels® (collectively, the "Choice brands").

On February 1, 2018, the Company acquired all of the issued and outstanding equity interests of WoodSpring Hotels Franchise Services LLC (“WSFS”). WSFS is the franchisor of WoodSpring Suites and at acquisition had 239 units (28,680 rooms) operating in the economy extended stay segment in 35 states in the United States. The transaction has been accounted for using the acquisition method of accounting and accordingly, assets acquired and liabilities assumed were recorded at their fair values of the acquisition date. The acquisition allowed the Company to accelerate its growth in the economy extended stay segment. The results of WSFS have been consolidated within the Company’s hotel franchising segment since February 1, 2018.

The Company's domestic franchising operations are conducted through direct franchising relationships 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.

Our business strategy is to conduct direct franchising in those international markets where both franchising is an accepted business model and we believe our brands can achieve significant scale. We typically elect to enter into master franchise agreements in those markets where direct franchising is currently not a prevalent or viable business model. When entering into master franchising relationships, we strive to select partners that have professional hotel and asset management capabilities together with the financial capacity to invest in building the Choice brands in their respective markets. Master franchising relationships typically provide lower revenues to the Company as the master franchisees are responsible for managing certain necessary services (such as training, quality assurance, reservations and marketing) to support the franchised hotels in the

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master franchise area and therefore, retain a larger percentage of the hotel franchise fees to cover their expenses. In certain circumstances, the Company has and may continue to make equity investments in our master franchisees. As a result of master franchise relationships and international market conditions, our revenues are primarily concentrated in the United States. Therefore, our description of the franchise system is primarily focused on the domestic operations.

Our Company generates revenues, income and cash flows primarily from initial, relicensing and continuing royalty fees attributable to our franchise agreements. Revenues are also generated from qualified vendor arrangements and other sources. The hotel industry is seasonal in nature. For most hotels, demand is lower in November through February than during the remainder of the year. Our principal source of revenues is franchise fees based on the gross room revenues of our franchised properties. The Company’s franchise fee revenues 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 focus on hotel franchising instead of ownership, we benefit from the economies of scale inherent in the franchising business. The fee and cost structure of our 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 and relicensing fee revenue; ongoing royalty fees and procurement services revenues. In addition, our operating results can also be improved through our company-wide efforts related to improving property level performance. The Company currently estimates, based on its current domestic portfolio of hotels under franchise, that a 1% change in revenue per available room ("RevPAR") or rooms under franchise would increase or decrease royalty revenues by approximately $3.7 million and a 1 basis point change in the Company's effective royalty rate would increase or decrease annual domestic royalties by approximately $0.8 million. In addition to these revenues, we also collect marketing and reservation system fees to support centralized marketing and reservation activities for the franchise system.

The principal factors that affect the Company’s results are: the number and relative mix of franchised hotel rooms in the various hotel lodging price categories; growth in the number of hotel rooms under franchise; occupancy and room rates achieved by the hotels under franchise; the effective royalty rate achieved; the level of franchise sales and relicensing activity; and our ability to manage costs. The number of rooms at franchised properties and 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 franchised hotels. The key industry standard for measuring hotel-operating performance is 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, 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 franchise agreements to use the marketing and reservation system fees we collect for system-wide marketing and reservation activities. These expenditures, which include advertising costs and costs to maintain our central reservations and property management systems, help to 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.

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 our franchised hotels and reducing costs for our hotel owners.

We believe that executing our strategic priorities creates value for our shareholders. Our Company focuses on two key goals:

Profitable Growth. Our success is dependent on improving the performance of our hotels, increasing our system size by selling additional hotel franchises, effective royalty rate improvement and maintaining a disciplined cost structure. We attempt to improve our franchisees’ revenues and overall profitability by providing a variety of products and services designed to increase business delivery to and/or reduce operating and development costs for our franchisees. These products and services include national marketing campaigns, maintaining a guest loyalty program, a central reservation system, property and yield management programs and systems, revenue management services, quality assurance standards and qualified vendor relationships. We believe that healthy brands, which deliver a compelling return on investment for franchisees, 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 under franchise, growing the system through additional franchise sales and improving franchise agreement pricing while maintaining a disciplined cost structure are the keys to profitable growth.

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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. We believe our strong and predictable cash flows create a strong financial position that provides us a competitive advantage. We maintain a capital structure that generates high financial returns and use our excess cash flow to provide returns to our shareholders primarily through share repurchases, dividends or investing in growth opportunities.

Historically, we have returned value to our shareholders through share repurchases and dividends. In 1998, we instituted a share repurchase program which has generated substantial value for our shareholders. Since the program's inception through March 31, 2018, we have repurchased 49.1 million shares (including 33.0 million prior to the two-for-one stock split effected in October 2005) of common stock at a total cost of $1.3 billion. Considering the effect of the two-for-one stock split, the Company has repurchased 82.1 million shares at an average price of $15.73 per share. The Company purchased 0.4 million shares of common stock under the share repurchase program at a total cost of $35.0 million during the three months ended March 31, 2018. At March 31, 2018, we had approximately 3.6 million shares remaining under the current share repurchase authorization. We currently believe that our cash flows from operations will support our ability to complete the current repurchase authorization. Upon completion of the current authorization, our board of directors will evaluate the advisability of additional share repurchases.

The Company commenced paying quarterly dividends in 2004 and in 2012 the Company elected to pay a special cash dividend totaling approximately $600 million. The Company currently maintains the payment of a quarterly dividend on its common shares outstanding; however, the declaration of future dividends is subject to the discretion of the board of directors. During the first quarter of 2017, the Company's board of directors announced a quarterly cash dividend rate to $0.215 per common share outstanding. The projected annual dividend in 2018 is $0.86 per common share outstanding. During the three months ended March 31, 2018, we paid cash dividends totaling approximately $12.3 million. We expect to continue to pay dividends in the future, subject to declaration by our board of directors as well as future business performance, economic conditions, changes in income tax regulations and other factors including limitations in the Company's credit facility. Based on the present dividend rate and outstanding share count, we expect that aggregate annual regular dividends for 2018 would be approximately $48.8 million.

The Company also allocates capital to financing, investment and guaranty support to incent franchise development for certain brands in strategic markets and to exploring 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.

Notwithstanding investments in these alternative growth strategies, the Company expects to continue to return value to its shareholders over time through a combination of share repurchases and dividends.

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, operating income, net income and diluted earnings per share ("EPS") represent key measurements of these value drivers. 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. Since our hotel franchising activities represents approximately 98% of total revenues, our discussion of our results from operations primarily relate to our hotel franchising activities.

Our discussion of the hotel franchising activities also excludes the Company’s marketing and reservation system revenues and expenses. The Company's 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 central reservation systems, national marketing and media advertising. The Company is obligated to expend the marketing and 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. As a result, the Company excludes the financial impacts of this program from the analysis of its operations.

Due to the seasonal nature of the Company’s hotel franchising business or multi-year investments that are required to support franchise operations, quarterly or annual deficits and surpluses may be generated. During the three months ended March 31, 2018 and 2017, marketing and reservation system expenses exceeded revenues by $12.2 million and $9.1 million, respectively.

Refer to MD&A heading "Operations Review" for additional analysis of our results.

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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 share repurchases and dividends. However, we may determine to utilize cash for acquisitions and other investments in the future. 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 MD&A heading "Liquidity and Capital Resources" for additional analysis.

Inflation: Inflation has been moderate in recent years and has not had a significant impact on our business.

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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.

Hotel Franchising Revenues: The Company utilizes franchising revenues, which exclude revenues from marketing and reservation system activities, non-franchised hotel property management software activities, vacation rental activities, which include operations that provides SaaS technology solutions to vacation rental management companies, and revenue generated from the ownership of an office building that is leased to a third-party, rather than total revenues when analyzing the performance of the business. Marketing and reservation activities are excluded from hotel franchising revenues since the Company is contractually required by its franchise agreements to utilize the fees collected specifically for franchisee marketing and reservation activities. Our non-franchised hotel property management software and vacation rental activities are excluded from hotel franchising revenues since those operations do not reflect the Company's core hotel franchising business but represent adjacent, complimentary lines of business. This non-GAAP measure is a commonly used measure of performance in our industry and facilitates comparisons between the Company and its competitors.

Calculation of Hotel Franchising Revenues

	Three Months Ended March 31,
	(In thousands)
	2018			2017
Total Revenues	$	209,394		$	188,868
Adjustments:
Marketing and reservation system revenues	(107,001		)	(98,853		)
Non-hotel franchising activities	(3,772		)	(2,555		)
Hotel Franchising Revenues	$	98,621		$	87,460

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Operations Review

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2018 and 2017

Summarized financial results for the three months ended March 31, 2018 and 2017 are as follows:

(in thousands)	2018			2017
REVENUES
Royalty fees	$	76,698		$	68,294
Initial franchise and relicensing fees	6,214			5,806
Procurement services	9,938			7,363
Marketing and reservation system	107,001			98,853
Other	9,543			8,552
Total revenues	209,394			188,868
OPERATING EXPENSES
Selling, general and administrative	40,864			33,745
Depreciation and amortization	3,053			1,726
Marketing and reservation system	119,228			107,994
Total operating expenses	163,145			143,465
Operating income	46,249			45,403
OTHER INCOME AND EXPENSES, NET
Interest expense	11,309			11,205
Interest income	(1,609		)	(1,264		)
Other (gains) losses	120			(897		)
Equity in net loss of affiliates	5,968			2,080
Total other income and expenses, net	15,788			11,124
Income before income taxes	30,461			34,279
Income taxes	5,375			10,010
Net income	$	25,086		$	24,269

Results of Operations

The Company recorded income before income taxes of $30.5 million for the three month period ended March 31, 2018, a $3.8 million or 11%decrease from the same period of the prior year. The decrease in income before income taxes primarily reflects a $3.9 millionincrease in equity in net losses from affiliates and a $1.0 milliondecrease in other gains (losses) partially offset by an $0.8 millionincrease in operating income and a $0.3 millionincrease in interest income.

Operating income increased $0.8 million primarily due to a $11.2 million or 13%increase in the Company's hotel franchising revenues and a $1.2 millionincrease in non-hotel franchising revenues partially offset by a $7.1 million increase in SG&A expenses, a $1.3 million increase in depreciation and amortization expenses and a $3.1 millionincrease in the net deficit generated from marketing and reservation system activities. The primary reasons for these fluctuations are described in more detail below.

Hotel Franchising Revenues

Hotel franchising revenues were $98.6 million for the three months ended March 31, 2018 compared to $87.5 million for the three months ended March 31, 2017, an increase of $11.2 million or 13%. The increase in hotel franchising revenues is primarily due to a $8.4 million or 12%increase in royalty revenues, a $2.6 million or 35%increase in procurement services revenues, and an increase of approximately $0.2 million in non-compliance and other revenues.

Royalty Fees

Domestic royalty fees for the three months ended March 31, 2018 increased $8.1 million to $71.8 million from $63.7 million for the three months ended March 31, 2017, an increase of 13%. The increase in domestic royalty fees reflects an additional $3.3 million recognized as a result of the acquisition of WSFS on February 1, 2018.

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Excluding the acquisition of WSFS, the increase in domestic royalties is attributable to a 3.1% increase in domestic RevPAR, a 2.5% increase in the number of domestic franchised hotel rooms and an increase in the effective royalty rate. System-wide RevPAR increased due to a 2.4% increase in average daily rates, accompanied by a 40 basis point increase in occupancy rates. The Company's effective royalty rate for the domestic hotel system, excluding WSFS, increased from 4.55% for the three months ended March 31, 2017 to 4.68% for the three months ended March 31, 2018. The increase in the effective royalty rate is attributable to improved royalty rate pricing on recently executed domestic franchise agreements as well as annual contractual royalty rate increases contained in existing franchise agreements.

A summary of the Company's domestic franchised hotels operating information is as follows:

	For the Three Months Ended March 31, 2018						For the Three Months Ended March 31, 2017						Change
	Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy			RevPAR
Comfort Inn	$	88.73	58.2	%	$	51.59	$	87.03	58.5	%	$	50.90	2.0	%	(30	)	bps	1.4	%
Comfort Suites	95.13		65.7	%	62.46		93.40		65.1	%	60.84		1.9	%	60		bps	2.7	%
Sleep	81.40		59.9	%	48.76		79.20		60.0	%	47.54		2.8	%	(10	)	bps	2.6	%
Quality	75.83		54.2	%	41.07		73.76		53.1	%	39.20		2.8	%	110		bps	4.8	%
Clarion	79.62		51.9	%	41.34		78.05		53.6	%	41.83		2.0	%	(170	)	bps	(1.2	)%
Econo Lodge	58.74		49.4	%	29.02		57.33		48.6	%	27.84		2.5	%	80		bps	4.2	%
Rodeway	60.06		51.9	%	31.19		59.63		51.1	%	30.49		0.7	%	80		bps	2.3	%
MainStay	77.38		63.6	%	49.24		71.66		61.7	%	44.21		8.0	%	190		bps	11.4	%
Suburban	53.50		73.7	%	39.43		51.01		74.2	%	37.82		4.9	%	(50	)	bps	4.3	%
Cambria Hotels	129.05		66.4	%	85.68		122.24		68.1	%	83.26		5.6	%	(170	)	bps	2.9	%
Ascend Hotel Collection	115.98		53.1	%	61.55		117.29		51.3	%	60.21		(1.1	)%	180		bps	2.2	%
Total*	$	80.30	56.5	%	$	45.33	$	78.41	56.1	%	$	43.98	2.4	%	40		bps	3.1	%

* Total operating statistics exclude the statistics for the WoodSpring Suites brand, which was acquired on February 1, 2018

The number of total domestic rooms on-line increased by 9.7% to 441,743 rooms as of March 31, 2018 from 402,700 as of March 31, 2017. The total number of domestic hotels on-line increased by 7.4% to 5,739 as of March 31, 2018 from 5,343 as of March 31, 2017. The increase in units and rooms reflects the acquisition of WSFS, which added 239 hotels and 28,680 rooms on the date of acquisition.

A summary of domestic hotels and rooms on-line at March 31, 2018 and 2017 by brand is as follows:

	March 31, 2018		March 31, 2017		Variance
	Hotels	Rooms	Hotels	Rooms	Hotels		Rooms		%		%
Comfort Inn	1,072	83,958	1,103	85,583	(31	)	(1,625	)	(2.8	)%	(1.9	)%
Comfort Suites	565	43,875	566	43,740	(1	)	135		(0.2	)%	0.3	%
Sleep	385	27,443	382	27,301	3		142		0.8	%	0.5	%
Quality	1,562	121,665	1,457	114,837	105		6,828		7.2	%	5.9	%
Clarion	162	21,547	161	22,159	1		(612	)	0.6	%	(2.8	)%
Econo Lodge	833	50,808	845	52,113	(12	)	(1,305	)	(1.4	)%	(2.5	)%
Rodeway	603	34,538	558	32,103	45		2,435		8.1	%	7.6	%
WoodSpring Suites	241	28,909	—	—	241		28,909		NM		NM
MainStay	58	4,111	57	4,148	1		(37	)	1.8	%	(0.9	)%
Suburban	58	6,349	59	6,598	(1	)	(249	)	(1.7	)%	(3.8	)%
Cambria Hotels	37	5,301	28	3,667	9		1,634		32.1	%	44.6	%
Ascend Hotel Collection	163	13,239	127	10,451	36		2,788		28.3	%	26.7	%
Total Domestic Franchises	5,739	441,743	5,343	402,700	396		39,043		7.4	%	9.7	%

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International royalty fees for the three months ended March 31, 2018 increased $0.3 million to $4.9 million, an increase of 8% compared to the three months ended March 31, 2017.

The increase in international royalty fees resulted primarily from improvements in RevPAR in the countries in which we operate partially offset by a decline in the number of international rooms on-line. International rooms on-line declined by 95 from 112,672 as of March 31, 2017 to 112,577 as of March 31, 2018 with the total number of hotels on-line decreasing by 37 from 1,151 as of March 31, 2017 to 1,114 as of March 31, 2018.

The net decline in rooms is at a lower rate than the net decline in hotels due to a focus on new entrants with higher per unit room counts than currently in the Company's international franchised hotel portfolio.

Initial Franchise and Relicensing Fees

Initial franchise fees are fees paid to the Company when a franchisee executes a franchise agreement; relicensing fees include fees charged to new owners of a franchised property whenever an ownership change occurs and the property remains in the franchise system as well as fees required to renew existing franchise agreements.

During the first quarter of 2018, the Company executed 122 domestic franchise agreements representing 10,477 rooms compared to 106 franchising agreements representing 7,271 rooms for the first quarter of 2017. The acquisition of WSFS resulted in 31 new construction franchise agreements, including 19 with WoodSpring's largest franchisee in the first quarter of 2018. Domestic franchise agreements executed for new construction hotels totaled 66 representing 5,832 rooms during the three months ended March 31, 2018 compared to 38 contracts representing 2,458 rooms for the three months ended March 31, 2017. Conversion hotel executed franchise agreements totaled 56 representing 4,645 rooms for the three months ended March 31, 2018 compared to 68 agreements representing 4,813 rooms for the same period a year ago.

The Company executed 110 domestic relicensing contracts during the three months ended March 31, 2018, compared to 111 executed during the three months ended March 31, 2017. The Company executed 5 domestic renewal agreements during both the three months ended March 31, 2018 and 2017.

Initial franchise and relicensing fees are generally collected at the time the franchise agreement is executed. However, the recognition of revenue is deferred until the hotel 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 and relicensing fees are recognized immediately in the period the agreement is terminated. Initial franchise and relicensing fee revenue increased $0.4 million or 7% from $5.8 million to $6.2 million the three months ended March 31, 2017 and March 31, 2018, respectively.

As of March 31, 2018, the Company had 914 franchised hotels with 74,443 rooms under construction, awaiting conversion or approved for development in its domestic system as compared to 724 hotels and 55,375 rooms at March 31, 2017. The number of new construction franchised hotels in the Company's domestic pipeline increased 17% to 591 at March 31, 2018 from 505 at March 31, 2017. The growth in the number of new construction hotels in the domestic pipeline reflects the increase in new construction franchise agreements executed over the last several years and the acquisition of WSFS on February 1, 2018. New construction hotels typically average 18 to 36 months to open after the franchise agreement is executed. The number of conversion franchised hotels in the Company's domestic pipeline increased by 11 hotels or 5% from 219 hotels at March 31, 2017 to 230 hotels at March 31, 2018, primarily due to the timing of hotel openings and the timing of signing new conversion franchise agreements. Conversion hotels typically open three to four months after the execution of a franchise agreement. The Company had an additional 42 franchised hotels with 4,526 rooms under construction, awaiting conversion or approved for development in its international system as of March 31, 2018 compared to 71 hotels and 7,113 rooms at March 31, 2017. While the Company's hotel pipeline provides a strong platform for growth, a hotel in the pipeline does not always result in an open and operating hotel due to various factors.

Procurement Services: Revenues increased$2.6 million or 35% from $7.4 million for the three months ended March 31, 2017 to $9.9 million for the three months ended March 31, 2018. The increase in revenues primarily reflects the implementation of new brand programs as well as an increase in the volume of business transacted with existing and new qualified vendors and strategic alliance partners.

Other Revenue: Revenue increased$1.0 million from the three months ended March 31, 2017 to $9.5 million for the three months ended March 31, 2018. The increase in other income primarily reflects a $1.2 million increase in revenues related to the Company's non-hotel franchising divisions.

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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 $40.9 million for the three months ended March 31, 2018, which increased$7.1 million from the three months ended March 31, 2017.

SG&A expenses for the three months ended March 31, 2018 and 2017 include approximately $5.0 million and $3.7 million, respectively, related to the Company's alternative growth initiatives and expenses related to operations of an office building leased to a third party. SG&A from non-franchising activities increased $1.3 million from the same period of the prior year primarily due increased expenses to support the growth of the division that provides SaaS technology solutions to vacation rental management companies.

Excluding SG&A expenses for non-hotel franchising divisions, SG&A for the three months ended March 31, 2018 increased $5.8 million or 19% to $35.9 million in the current year primarily due to $4.2 million in transaction and transition related costs incurred in conjunction with the acquisition of WSFS on February 1, 2018. Excluding the impact of these transaction and transition costs, SG&A increased $1.6 million or 5% due to general costs increases to support the hotel franchising business.

Depreciation and Amortization: Depreciation and amortization expense for the three months ended March 31, 2018increased$1.3 million to $3.1 million from the same period of the prior year primarily due to the acquisition of WSFS on February 1, 2018. Amortization totaling $1.3 million was recorded related to the portion of the purchase price allocated to the contract asset acquisition costs.

Interest Income: Interest income increased$0.3 million from $1.3 million for the three months ended March 31, 2017 to $1.6 million for the same period of the current year. The increase in interest income primarily reflects the issuance of additional notes receivable related to the Company’s program to incent development of its Cambria Hotel brand in new markets.

Other (Gains) and Losses: Other gains and losses declined from a gain of $0.9 million for the three months ended March 31, 2017 to a loss of $0.1 million for the three months ended March 31, 2018. The decline is primarily due to losses resulting from the fluctuation in the fair value of the investments held in the Company’s non-qualified employee benefit plans in the current year period compared to gains in the prior year quarter.

Equity in Net Loss of Affiliates: The Company recorded net losses of $6.0 million from its unconsolidated joint ventures for the three months ended March 31, 2018, compared net losses of $2.1 million for the three months ended March 31, 2017. The fluctuations in net losses from affiliates is primarily attributable to the results from operations during the ramp-up period of operations for several recently opened hotel projects owned by unconsolidated joint ventures. These investments relate to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels in strategic markets.

Income Taxes: The effective income tax rates were 17.6% and 29.2% for the three months ended March 31, 2018 and 2017, respectively. The effective income tax rate for the three months ended March 31, 2018 was lower than the U.S. federal income tax rate of 21.0% due to the impact of foreign operations and $1.6 million of ASU 2016-09 benefits from share-based compensation, partially offset by state income taxes. The effective income tax rate for the three months ended March 31, 2017 was lower than the U.S. federal income tax rate of 35.0% due to the impact of foreign operations and $1.2 million of ASU 2016-09 benefits from share-based compensation, partially offset by state income taxes.

Liquidity and Capital Resources

The Company believes that cash flows from operations and available financing capacity are adequate to meet the expected future operating, investing and financing needs of the business.

Operating Activities

During the three months ended March 31, 2018 and 2017, net cash provided by operating activities totaled $4.6 million and $24.2 million, respectively. Operating cash flows decreased$19.6 million primarily due to an increase in cash outflows in contract acquisition costs and timing of working capital items.

In conjunction with brand and development programs, we make certain payments to franchisees as an incentive to enter in to new franchise agreements or perform designated improvements to properties under existing franchise agreements. We recognize such payments as an adjustment to transaction price and capitalize as an intangible asset. These intangibles are amortized on a straight-line basis over the estimated benefit period of the arrangement as an offset to revenues. If the franchisee

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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, the franchisee must repay the unamortized incentive payment plus interest. During the three months ended March 31, 2018 and 2017, the Company's net advances for these purposes totaled $11.9 million and $4.5 million, respectively. The timing and amount of these cash flows is dependent on various factors including the implementation of various development and brand incentive programs, the level of franchise sales and the timing of hotel openings. At March 31, 2018, the Company had commitments to extend an additional $215.0 million for these purposes provided certain conditions are met by its franchisees.

The Company’s 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 such as advertising, providing a centralized reservation and property management system, providing reservation and revenue management services, and performing certain franchise services to support the operation of the overall franchise system.

Marketing and reservation system expenses are those expenses incurred to facilitate the delivery of marketing and reservation system services, including direct expenses and an allocation of costs for certain administrative activities required to carry out marketing and reservation services. Marketing and reservation system expenses are recognized as services are incurred or goods are received, and as such may not equal marketing and reservation system revenues in a specific period but are expected to equal revenues earned from franchisees over time. 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.

Investing Activities

Cash utilized for investing activities totaled $241.2 million and $47.8 million for the three months ended March 31, 2018 and 2017, respectively. The increase in cash utilized for investing activities for the three months ended March 31, 2018 primarily reflects the following items:

During the three months ended March 31, 2018 and 2017, the Company completed the acquisition of the brand and franchise business of Woodspring Suites. The acquisition closed on February 1, 2018 and added 239 new extended-stay hotels in 35 states to the Company's portfolio. The acquisition was funded with cash on hand and available borrowings. The total consideration was $231.3 million, which consisted of cash paid, net of cash acquired. Of the cash paid at closing, $0.5 million will be held in escrow for a three month period after closing when the final net working capital adjustment will be determined.

During the three months ended March 31, 2018 and 2017, the Company invested $1.5 million and $31.6 million, respectively, in joint ventures accounted under the equity method of accounting. In addition, the Company received distributions from these joint ventures totaling $0.8 million and $0.5 million for the three months ended March 31, 2018 and 2017, respectively. The Company's investment in these joint ventures primarily relate to ventures that support the Company's efforts to promote growth of our emerging brands. The Company expects to make additional capital contributions totaling $13.5 million to existing joint ventures supporting these efforts.

The Company provides financing to franchisees for hotel development efforts and other purposes in the form of notes receivables. 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, 2018, the Company advanced and received repayments totaling $2.5 million and $0.2 million for these purposes, respectively. For the three months ended March 31, 2017, the Company advanced and received repayments totaling $9.9 million and $0.5 million for these purposes, respectively. At March 31, 2018, the Company had commitments to extend an additional $3.8 million for these purposes provided certain conditions are met by its franchisees.

From time to time, our board of directors authorizes specific transactions and general programs which permit us to provide financing, investment and guarantees and similar credit support to qualified franchisees, as well as to acquire and resell real estate to incent franchise development. Since 2006, we have engaged in these financial support activities to encourage acceleration of the growth of our Cambria Hotels brand, primarily in strategic markets and locations. Over the next three to five years, depending on market and other conditions, we expect to continue to deploy capital in support of this brand and expect our investment to total approximately $475 million over that time period. The 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. Our support of the Cambria Hotels brand’s growth is expected to be primarily in the form of joint venture investments, forgivable key money loans, senior mortgage loans, development loans, mezzanine lending, and through the operation of a land-banking program. With respect to our lending and

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joint venture investments, we generally expect to recycle these loans and investments within a five year period. At March 31, 2018, the Company had approximately $260.9 million outstanding pursuant to these financial support activities.

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

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 2012 Senior Notes will mature on July 1, 2022, with interest to be paid semi-annually on January 1^st and July 1^st. The Company utilized the net proceeds of this offering, after deducting underwriting discounts and commissions and other offering expenses, together with borrowings under the Company's senior credit facility, to pay a special cash dividend totaling approximately $600.7 million paid to stockholder on August 23, 2012. The Company's 2012 Senior Notes are guaranteed jointly, severally, fully and unconditionally, subject to certain customary limitations by certain of the Company's domestic subsidiaries.

The Company may redeem the 2012 Senior Notes at its option at a redemption price equal to the greater of (a) 100% of the principal amount of the notes to be redeemed and (b) the sum of the present values of the remaining scheduled principal and interest payments from the redemption date to the date of maturity discounted to the redemption date on a semi-annual basis at the Treasury rate, plus 50 basis points.

Senior Unsecured Notes due 2020

On August 25, 2010, the Company issued unsecured senior notes with a principal amount of $250 million (the "2010 Senior Notes") at a discount of $0.6 million, bearing a coupon of 5.70% with an effective rate of 6.19%. The 2010 Senior Notes will mature on August 28, 2020, with interest on the 2010 Senior Notes to be paid semi-annually on February 28^th and August 28^th. The Company used the net proceeds from the offering, after deducting underwriting discounts and other offering expenses, to repay outstanding borrowings and other general corporate purposes. The Company's 2010 Senior Notes are guaranteed jointly, severally, fully and unconditionally, subject to certain customary limitations, by certain of the Company’s domestic subsidiaries.

The Company may redeem the 2010 Senior Notes at its option at a redemption price equal to the greater of (a) 100% of the principal amount of the notes to be redeemed and (b) the sum of the present values of the remaining scheduled principal and interest payments from the redemption date to the date of maturity discounted to the redemption date on a semi-annual basis at the Treasury rate, plus 45 basis points.

Revolving Credit Facility

On July 21, 2015, the Company refinanced its existing $350 million senior secured credit facility, comprised of a $200 million revolving credit tranche and a $150 million term loan tranche by entering into a new senior unsecured revolving credit agreement (“Credit Agreement”), with Deutsche Bank AG New York Branch, as administrative agent.

The Credit Agreement provides for a $450 million unsecured revolving credit facility (the “Revolver”) with an initial maturity date of July 21, 2020, subject to optional one-year extensions that can be requested by the Company prior to each of the first, second and third anniversaries of the closing date of the Revolver. The effectiveness of any such extensions is subject to the consent of the lenders under the Credit Agreement and certain customary conditions. On July 5, 2016, the Company exercised its option to extend the maturity date of the Revolver by one year. The new maturity date of the Revolver is July 21, 2021.

Up to $35 million of borrowings under the Revolver may be used for alternative currency loans and up to $15 million of borrowings under the Revolver may be used for swing line loans.

The Revolver is unconditionally guaranteed, jointly and severally, by certain of the Company’s domestic subsidiaries, which are considered restricted subsidiaries under the Credit Agreement. The subsidiary guarantors currently include all subsidiaries that guarantee the obligations under the Company's Indenture governing the terms of its 5.75% senior notes due 2022 and its 5.70% senior notes due 2020. If the Company achieves and maintains an Investment Grade Rating, as defined in the Credit

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Agreement, then the subsidiary guarantees will at the election of the Company be released and the Revolver will not be guaranteed.

The Company may at any time prior to the final maturity date increase the amount of the Revolver by up to an additional $150 million to the extent that any one or more lenders commit to being a lender for the additional amount and certain other customary conditions are met.

The Company currently may elect to have borrowings under the Revolver bear interest at a rate equal to (i) LIBOR plus a margin ranging from 135 to 175 basis points based on the Company’s total leverage ratio or (ii) a base rate plus a margin ranging from 35 to 75 basis points based on the Company’s total leverage ratio. If the Company achieves an Investment Grade Rating, then the Company may elect to use a different, ratings-based, pricing grid set forth in the Credit Agreement.

The Credit Agreement requires the Company to pay a fee on the undrawn portion of the Revolver, calculated on the basis of the average daily unused amount of the Revolver multiplied by 0.20% per annum. If the Company achieves an Investment Grade Rating and it elects to use the ratings-based pricing grid set forth in the Credit Agreement, then the Company will be required to pay a fee on the total commitments under the Revolver, calculated on the basis of the actual daily amount of the commitments under the Revolver (regardless of usage) times a percentage per annum ranging from 0.10% to 0.25% (depending on the Company’s senior unsecured long-term debt rating).

The 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. In addition, if the Company’s total leverage ratio exceeds 4.0 to 1.0, the Company is generally restricted from paying aggregate dividends in excess of $50 million in any calendar year.

The Credit Agreement imposes financial maintenance covenants requiring the Company to maintain a total leverage ratio of not more than 4.5 to 1.0 and a consolidated fixed charge coverage ratio of at least 2.5 to 1.0. If the Company achieves and maintains an Investment Grade Rating, then the Company will not need to comply with the consolidated fixed charge coverage ratio covenant.

The 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 Credit Agreement to be immediately due and payable.

At March 31, 2018, the Company maintained a total leverage ratio of 2.31x and a consolidated fixed charge ratio of 8.16x and was in compliance with all financial covenants under the Credit Agreement.

The proceeds of the Revolver are 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 Credit Agreement.

Fixed Rate Collateralized Mortgage

On December 30, 2014, a court awarded the Company title to an office building as settlement for a portion of an outstanding loan receivable for which the building was pledged as collateral. In conjunction with the court award, the Company also assumed the $9.5 million mortgage on the property with a fixed interest rate of 7.26%. The mortgage which is collateralized by the office building requires monthly payments of principal and interest and matures in December 2020 with a balloon payment due of $6.9 million. At the time of acquisition, the Company determined that the fixed interest rate of 7.26% exceeded market interest rates and therefore the Company increased the carrying value of the debt by $1.2 million to record the debt at fair value. The fair value adjustment will be amortized over the remaining term of the mortgage utilizing the effective interest method.

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, 2018, the Company had been advanced approximately $3.7 million pursuant to these agreements and expects to receive the

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remaining $0.7 million over the next several years, subject to annual appropriations by the governmental entities. 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 of the Company's 10 year corporate headquarters lease in 2023 will be forgiven in full. The advances will be included in long-term 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 compliance with all current performance conditions as of March 31, 2018.

Construction Loan Commitment

In March 2018, the Company entered into a construction loan agreement for the rehabilitation and development of a former office building into a hotel through a consolidating joint venture with a commercial lender, which is secured by the building. The construction loan can be drawn up to $34.9 million. The Company has a carve-out guaranty and the unaffiliated joint venture partner has a completion guaranty in relation to the loan, in which both parties are required to meet certain financial covenants relating to liquidity and net worth. The rehabilitation of the building is considered a qualified asset in which requires a significant amount of time to prepare for its intended use. Therefore, any interest costs incurred during the development period of the building is considered an element of the historical cost of the qualifying asset. For the three months ended March 31, 2018, the Company has not drawn on the construction loan or recorded any capitalized interest costs. In addition, the Company committed to make additional capital contributions totaling $14.4 million for the development of the hotel to be operated under the Company's Cambria Hotel brand.

Transfer of Interest

On September 12, 2017, the Company entered into an agreement to transfer $24.2 million of a $49.1 million outstanding note receivable with a maturity date of November 30, 2019 to a third party. In the first quarter of 2018, an additional $0.2 million was transferred for a total of $24.4 million.The transaction did not qualify as a sale and therefore the outstanding notes receivable was not de-recognized on the balance sheet.  The one-time cash proceeds were recorded as unrestricted cash and the future obligation to transfer principal and interest received under the note has been recorded within Other Long-Term liabilities.  The Company retains responsibility for collecting and distributing cash received on the note and interest paid to the participant is reflected as interest expense in the Company’s consolidated statements of income. At March 31, 2018, Other Long-Term liabilities includes $24.4 million pursuant to this transaction.

Dividends

The Company currently maintains the payment of a quarterly dividend on its common shares outstanding of $0.215 per share; however, the declaration of future dividends is subject to the discretion of our board of directors. The Company's quarterly dividend rate declared during the three months ended March 31, 2018 remained unchanged from the previous quarterly declaration.

During the three months ended March 31, 2018, the Company paid cash dividends totaling $12.3 million. We expect to continue to pay dividends in the future, subject to the declaration of our board of directors as well as to future business performance, economic conditions, changes in income tax regulations and other factors including limitations in the Company's credit facility. Based on the present dividend rate and outstanding share count, we expect that aggregate annual regular dividends for 2018 would be approximately $48.8 million.

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Share Repurchases

The Company purchased 0.4 million shares of common stock at a total cost of $35.0 million under the share repurchase program during the three months ended March 31, 2018. Since the program's inception through March 31, 2018, we have repurchased 49.1 million shares (including 33.0 million prior to the two-for-one stock split effected in October 2005) of common stock at a total cost of $1.3 billion. Considering the effect of the two-for-one stock split, the Company has repurchased 82.1 million shares at an average price of $15.73 per share. As of March 31, 2018, the Company had approximately 3.6 million shares remaining under the current share repurchase authorization.

During the three months ended March 31, 2018, the Company redeemed 85,674 shares of common stock at a total cost of approximately $6.9 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 performance vested restricted stock units and restricted stock grants. These redemptions were outside the share repurchase program.

Off Balance Sheet Arrangements

On October 9, 2012, the Company entered into a limited payment guaranty with regards to a VIE's $18.0 million bank loan for the construction of a hotel franchised under one of the Company's brands in the United States. Under the terms of the limited guaranty, the Company has agreed to guarantee 25% of the outstanding principal balance for a maximum exposure of $4.5 million and accrued and unpaid interest, as well as any unpaid expenses incurred by the lender. The limited guaranty shall remain in effect until the maximum amount guaranteed by the Company is paid in full. In addition to the limited guaranty, the Company entered into an environmental indemnity agreement which indemnifies the lending institution from and against any damages relating to or arising out of possible environmental contamination issues with regards to the property.

On September 4, 2015, the Company entered into a limited payment guaranty with regards to a VIE's $13.3 million bank loan for the design, development and construction of a new hotel franchised under one of the Company's brands in the United States.  Under the terms of the limited guaranty, the Company has agreed to guarantee a maximum of $1.8 million of the VIE’s obligations under the loan. The limited guaranty shall remain in effect until (i) the VIE’s bank loan is paid in full to the lender; (ii) the maximum amount guaranteed by the Company is paid in full; or (iii) the Company, through its affiliate, ceases to be a member of the VIE. 

On June 2, 2016, one of the Company’s VIEs obtained a $61.0 million term loan for purposes of refinancing a $46.2 million construction loan. In connection with the refinancing, the Company entered into three limited guarantees. Under the terms of the limited guarantees, the Company has agreed to guarantee a maximum obligation of $3.3 million in the aggregate, in addition to a percentage of any operating expenses and capital expenditures not covered by operating revenues and unpaid expenses incurred. The limited guarantees will remain in effect until the loan is repaid in full or the VIE reaches a specified debt yield for two consecutive quarters under the loan covenants. The maturity date of the VIE's loan is June 2019.

The Company believes the likelihood of having to perform under the aforementioned limited payment guarantees was remote atMarch 31, 2018 and December 31, 2017.

Critical Accounting Policies

Our accounting policies comply with principles generally accepted in the United States. We have described below those policies that we believe are critical and require the use of complex judgment or significant estimates in their application. Additional discussion of these policies is included in Note 1 to our consolidated financial statements as of and for the year ended December 31, 2017 included in our Annual Report on Form 10-K.

Revenue Recognition

Revenues are primarily derived from franchise agreements with third-party hotel owners. Franchise fees include the following:

• Royalty fees. Royalty fees are earned in exchange for a license to brand intellectual property typically based on a percentage of gross room revenues. These fees are billed and collected monthly and revenues are recognized in the same period that the underlying gross room revenues are earned by the Company’s franchisees.

• Initial franchise and relicensing fees. Initial and relicensing fees are charged when (i) new hotels enter the franchise system; (ii) there is a change of ownership; or (iii) existing franchise agreements are extended. These revenues are recognized as revenue ratably as services are provided over the enforceable period of the franchise agreement. The enforceable period is the period from hotel opening to the first point the franchisee or the Company can terminate the

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franchise agreement without incurring a significant penalty. Deferred revenues from initial and relicensing fees will typically be 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 will be recognized to revenue in the period of termination.

• Other revenue. Other revenue is a combination of miscellaneous non-marketing and reservation system fees, inclusive of quality assurance non-compliance and franchisee training fees, and is recognized in the period the designated transaction or event has occurred.

• Marketing and reservation system revenues. The Company’s franchise agreements require the payment of marketing and reservation system fees. The Company is obligated to use these marketing and reservation system fees to provide marketing and reservation services such as advertising, providing a centralized reservation and property management system, providing reservation and revenue management services, and performing certain franchise services to support the operation of the overall franchise system. These services are comprised of multiple fees including the following:

▪ Fees based on a percentage of gross room revenues are recognized in the period the gross room revenue was earned, based on the underlying hotel’s sales or usage.

▪ Fees based on the occurrence of a designated transaction or event are recognized in the period the transaction or event occurred.

▪ System implementation fees charged to franchisees are deferred and recognized as revenue over the term of the franchise agreement.

▪ Marketing and reservation system activities also include revenues generated from the Company’s guest loyalty program. The revenue recognition of this program is discussed in Choice Privileges Loyalty Program below.

Marketing and reservation system expenses are those expenses incurred to facilitate the delivery of marketing and reservation system services, including direct expenses and an allocation of costs for certain administrative activities required to carry out marketing and reservation services. Marketing and reservation system expenses are recognized as services are incurred or goods are received, and as such may not equal marketing and reservation system revenues in a specific period but are expected to equal revenues earned from franchisees over time. The Company’s franchise agreements provide the Company the right to advance monies to the franchise system when the needs of the system surpass the balances currently available and recover such advances in future periods through additional fee assessments or reduced spending.

We make certain payments to customers as an incentive to enter in to new franchise agreements (“Franchise agreement acquisition cost”). We capitalize such payments as an intangible asset. These intangibles are amortized on a straight-line basis over the estimated benefit period of the arrangement as an offset to royalty fees and marketing and reservation system fees. Impairments from hotel terminations are recorded within the selling, general and administrative expenses and marketing and reservations expenses.

The Company generates procurement services revenues from qualified vendors. Procurement services revenues are generally based on marketing services provided by the Company on behalf of the qualified vendors to hotel owners and guests. The Company provides these services in exchange for either fixed consideration or a percentage of revenues earned by the qualified vendor pertaining to purchases by the Company’s franchisees or guests. Fixed consideration is allocated and recognized ratably to each period over the term of the agreement. Variable consideration is recognized in the period when sales to franchisees or guests from vendors are known or cash payment has been remitted. Qualified vendor revenues are recognized within Procurement services revenue.

The Company is party to SaaS arrangements. SaaS agreements typically include fixed consideration for installment and other initiation fees paid at contract onset, and variable consideration for recurring subscription revenue paid monthly. Fixed consideration is allocated and recognized ratably to each period over the term of the agreement. Variable consideration is determined at the conclusion of each period, and recognized in the current period.

Choice Privileges Loyalty program

Choice Privileges is the Company’s frequent guest loyalty program, which enables members to earn points based on their spending levels with the Company’s franchises. The points, which the Company accumulates and tracks on the members’ behalf, may be redeemed for free accommodations or other benefits (e.g., gift cards to participating retailers). The Company collects from franchisees a percentage of program members’ gross room revenue from completed stays to operate the program. At such time points are redeemed for free accommodations or other benefits, the Company reimburses franchisees or third parties based on a rate derived in accordance with the franchise or vendor agreement.

Loyalty point revenues are recognized at the point in time when the loyalty points are redeemed by members for benefits. No loyalty program revenues are recognized at the time the loyalty points are issued.

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The Company is an agent in coordinating delivery of the services between the loyalty program member and franchisee or third party, and as a result, revenues are recognized net of the cost of redemptions. The estimated fair value of future redemptions is reflected in current and non-current Liability for guest loyalty program in our consolidated balance sheet. The liability for guest loyalty program is developed based on an estimate of the eventual redemption rates and point values using various actuarial methods. These significant judgments determine the required point liability attributable to outstanding points, which is relieved as redemption costs are processed. The amount of the loyalty program fees in excess of the point liability, represents current and non-current Deferred revenue, which is recognized to revenue as points are redeemed including an estimate of future forfeitures (“breakage”). The anticipated redemption pattern of the points is the basis for current and non-current designation of each liability. Loyalty program point redemption revenues are recognized within marketing and reservation system revenue in the income statement.

The Company maintains various agreements with third-party partners, including the co-branding of the Choice Privileges credit card. Choice Privileges members can earn points through participation in the partner’s program. Partner agreements include multiple performance obligations. The primary performance obligations are brand intellectual property and material rights for free or discounted goods or services to hotel guests. Allocation of fixed and variable consideration to the performance obligations is based on standalone selling price as estimated based on market and income methods, which represent significant judgments. The amounts allocated to brand intellectual property are recognized on a gross basis over time using the output measure of time elapsed, primarily within Procurement services revenue. The amounts allocated to material rights for free or discounted goods or services to hotel guests are recognized to revenue as points are redeemed including an estimate of breakage, primarily within Marketing and reservation system revenue.

Mezzanine and Other Notes Receivables

The Company has provided financing to franchisees in support of the development of properties in strategic markets. The Company expects the owners to repay the loans in accordance with the loan agreements, or earlier as the hotels mature and capital markets permit. The Company estimates the collectability and records an allowance for loss on its mezzanine and other notes receivable when recording the receivables in the Company’s financial statements. These estimates are updated quarterly based on available information. The Company utilizes the level of security as its primary credit quality indicator (i.e., senior, subordinated or unsecured) when determining the appropriate allowances for uncollectible loans.

The Company considers a loan to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest payments and the contractual principal payments of a loan will be collected as scheduled in the loan agreement. The Company measures loan impairment based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral. For impaired loans, the Company establishes a specific impairment reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows or the estimated fair value of the collateral. The Company applies its loan impairment policy individually to all mezzanine and other notes receivable in the portfolio and does not aggregate loans for the purpose of applying such policy. For impaired loans, the Company recognizes interest income on a cash basis. If it is likely that a loan will not be collected based on financial or other business indicators it is the Company’s policy to charge off these loans to SG&A expenses in the accompanying consolidated statements of income in the quarter when it is deemed uncollectible. Recoveries of impaired loans are recorded as a reduction of SG&A expenses in the quarter received.

The Company assesses the collectability of its senior notes receivable by comparing the market value of the underlying assets to the carrying value of the outstanding notes. In addition, the Company evaluates the property’s operating performance, the borrower’s compliance with the terms of the loan and franchise agreements, and all related personal guarantees that have been provided by the borrower. For subordinated or unsecured receivables, the Company assesses the property’s operating performance, the subordinated equity available to the Company, the borrower’s compliance with the terms of the loan and franchise agreements, and the related personal guarantees that have been provided by the borrower.

The Company considers loans to be past due and in default when payments are not made when due. Although the Company considers loans to be in default if payments are not received on the due date, the Company does not suspend the accrual of interest until those payments are more than 30 days past due. The Company applies payments received for loans on non-accrual status first to interest and then principal. The Company does not resume interest accrual until all delinquent payments are received.

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New Accounting Standards

See Note 1, "Recently Adopted Accounting Standards" and "Recently Issued Accounting Standards," of the Notes to our Financial Statements for information related to our adoption of new accounting standards in 2018 and for information on our anticipated adoption of recently issued accounting standards.

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.  Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "should", "will," "forecast," "plan," "project," "assume" or similar words of futurity identify such 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, earnings and other financial and operational measures, Company debt levels, ability to repay outstanding indebtedness, payment of dividends, and future operations, 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 actual results, performance or achievements of the Company 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;  changes in law and regulation applicable to the lodging and franchising industries foreign currency fluctuations; operating risks common in the lodging and 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 SkyTouch division's products and services; our ability to grow our franchise system; exposures to risks relating to our hotel development and financing activities; fluctuations in the supply and demand for hotels rooms; our ability to realize anticipated benefits of acquired businesses; the level of acceptance of alternative growth strategies we may implement; cyber security and data breach risks; operating risks associated with international operations; the outcome of litigation; and our ability to effectively manage our indebtedness.  These and other risk factors are discussed in detail in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 31, 2018.  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 $23.1 million and $22.6 million at March 31, 2018 and December 31, 2017, 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, 2018, the Company had $140.0 million of variable interest rate debt instruments outstanding at an effective rate of 3.14%. A hypothetical change of 10% in the Company’s effective interest rate from March 31, 2018 levels would increase or decrease annual interest expense by $0.4 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.

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.

48

Our management, with the participation of our CEO and CFO have 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, 2018.

Changes in internal control over financial reporting

We implemented new internal controls to address all impacts of Topic 606 on our financial statements for its adoption on January 1, 2018 and going forward. These included the development of internal controls over new accounting policies and processes. There have been no other changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2018, that materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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.

49

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, 2017 filed on March 1, 2018. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2017, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. 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, 2018:

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),(2)	Maximum Number of Shares that may yet be Purchased Under  the Plans or Programs, End of Period
January 31, 2018	22,168	$	71.90	—	4,016,795
February 28, 2018	44,347	80.43		—	4,016,795
March 31, 2018	451,324	81.44		432,165	3,584,630
Total	517,839	$	80.94	432,165	3,584,630

 _______________________

(1) The Company’s share repurchase program was initially approved by the board of directors on June 25, 1998. The program has no fixed dollar amount or expiration date. Since the program's inception through March 31, 2018, the Company has repurchased 49.1 million shares (including 33.0 million prior to the two-for-one stock split effected in October 2005) of common stock at a total cost of $1.3 billion. Considering the effect of the two-for-one stock split, the Company has repurchased 82.1 million shares at an average price of $15.73 a share.

(2) During the three months ended March 31, 2018, the Company redeemed 85,674 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.

50

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

51

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.
4.01*	Fourth Supplemental Indenture, dated as of February 2, 2018, among Choice Hotels International, Inc., WoodSpring Hotels Franchise Services, LLC., and Wells Fargo Bank, National Association
4.02*	Guarantee Agreement Supplement, dated as of February 1, 2018, by WoodSpring Hotels Franchise Services, LLC.
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
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Label Linkbase Document
101.PRE*	XBRL Taxonomy Presentation Linkbase Document

_______________________

* 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.

52

SIGNATURE

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 10, 2018	By:	/s/ PATRICK S. PACIOUS
		Patrick S. Pacious
		President & Chief Executive Officer
	CHOICE HOTELS INTERNATIONAL, INC.
May 10, 2018	By:	/s/ DOMINIC E. DRAGISICH
		Dominic E. Dragisich
		Chief Financial Officer

53

EX-4.01

CHOICE HOTELS INTERNATIONAL, INC.

and

WOODSPRING HOTELS FRANCHISE SERVICES LLC

FOURTH SUPPLEMENTAL INDENTURE

Dated as of February 2, 2018

to

Indenture

Dated as of August 25, 2010

WELLS FARGO BANK, National Association

Trustee

FOURTH SUPPLEMENTAL INDENTURE

Fourth Supplemental Indenture (this “Fourth Supplemental Indenture”), dated as of February 2, 2018, between CHOICE HOTELS INTERNATIONAL, INC., a corporation organized under the laws of Delaware (the “Company”), the party listed on Schedule A hereto (the “Additional Guarantor”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).

WITNESSETH:

WHEREAS, the Company and the Trustee have heretofore executed and delivered the Indenture dated as of August 25, 2010 (the “Original Indenture,” and as supplemented by the Supplemental Indentures and the Third Supplemental Indenture (in each case, as defined below), the “Indenture”) to provide for the issuance from time to time of Notes (as defined in the Original Indenture) of the Company, to be issued in one or more Series;

WHEREAS, Sections 2.2 and 9.1 of the Original Indenture provide, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of establishing the designation, form, terms and conditions of Notes of any Series permitted by Sections 2.1 and 9.1 of the Original Indenture;

WHEREAS, the Company and the Trustee have heretofore executed and delivered the First Supplemental Indenture (the “First Supplemental Indenture”) dated as of August 25, 2010, to provide for the issuance of the Company’s 5.70% Senior Notes due 2020 (the “2020 Notes”), the Second Supplemental Indenture (the “Second Supplemental Indenture,” and collectively with the First Supplemental Indenture, the “Supplemental Indentures”) dated as of June 27, 2012, to provide for the issuance of the Company’s 5.750% Senior Notes due 2022 (the “2022 Notes” and, together with the 2020 Notes, the “Notes”) and the Third Supplemental Indenture (the “Third Supplemental Indenture”) dated as of August 4, 2017, to provide for the guarantee of the Notes by Choice Privileges Loyalty Services, LLC;

WHEREAS, Section 6.5 of each of the Supplemental Indentures provides that, if in accordance with the provisions of the Bank Credit Agreement a Subsidiary of the Company becomes a Bank Credit Agreement Guarantor, the Company will execute and deliver and cause such Subsidiary to execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary will unconditionally guarantee, on a joint and several basis with the other Guarantors thereto, the full and prompt payment of the principal of, premium, if any, and interest on the applicable Notes on an unsecured and unsubordinated basis and become a party to the applicable Supplemental Indenture as a Guarantor for all purposes of the Indenture;

WHEREAS, desiring to become a Guarantor under the Indenture as described above, the Additional Guarantor has duly authorized the execution and delivery of this Fourth Supplemental Indenture to provide for the issuance of its Guarantee and is executing and delivering this Fourth Supplemental Indenture;

WHEREAS, this Fourth Supplemental Indenture shall not result in a material modification of the Notes for purposes of compliance with the Foreign Account Tax Compliance Act; and

WHEREAS, the consent of Holders to the execution and delivery of this Fourth Supplemental Indenture is not required, and all other actions required to be taken under the Indenture with respect to this Fourth Supplemental Indenture have been taken.

NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITHNESSETH: in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

(a) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Indenture.

(b) The rules of interpretation set forth in the Indenture shall be applied hereto as if set forth in full herein.

ARTICLE II

GUARANTEE

Section 2.1 Guarantee. The Additional Guarantor agrees that by entering into this Fourth Supplemental Indenture, it hereby unconditionally guarantees, on a joint and several basis with the other Guarantors thereto, the full and prompt payment of the principal of, premium, if any, and interest on the 2020 Notes and the 2022 Notes on an unsecured and unsubordinated basis and becomes a party to each of the Supplemental Indentures as a Guarantor for all purposes of the Indenture.

ARTICLE III

MISCELLANEOUS

Section 3.1 Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Fourth Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder heretofore or hereafter authenticated and delivered shall be bound hereby.

Section 3.2 Concerning the Trustee. The recitals contained herein shall be taken as the statements of the Company and the Additional Guarantor, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Fourth Supplemental Indenture.

Section 3.3 Multiple Originals; Electronic Signatures. The parties may sign any number of copies of this Fourth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Fourth Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Fourth Supplemental Indenture as to the parties hereto and may be used in lieu of the original Fourth Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 3.4 Effect of Headings. The section headings herein are for convenience only and shall not affect the construction hereof.

Section 3.5 Successors and Assigns. All covenants and agreements in this Fourth Supplemental Indenture by the Additional Guarantor shall bind the Additional Guarantor’s successors and assigns, whether so expressed or not.

Section 3.6 Severability. If any one or more of the provisions contained in this Fourth Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired hereby.

Section 3.7 GOVERNING LAW. THIS FOURTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

IN WITNESS WHEREOF, the parties have caused this Fourth Supplemental Indenture to be duly executed by their respective officers thereunto duly authorized as of the date first above written.

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:	/s/ Tina D. Gonzalez
Name:		Tina D. Gonzalez
Title:		Vice President

IN WITNESS WHEREOF, the parties have caused this Fourth Supplemental Indenture to be duly executed by their respective officers thereunto duly authorized as of the date first above written.

CHOICE HOTELS INTERNATIONAL, INC.
By:	/s/ Scott Oaksmith
Name:		Scott Oaksmith
Title:		SVP, Finance & CAO

AS ADDITIONAL GUARANTOR

WOODSPRING HOTELS FRANCHISE SERVICES LLC By: CHOICE HOTELS INTERNATIONAL, INC.,         its Sole Member
By:	/s/ Scott Oaksmith
Name:		Scott Oaksmith
Title:		SVP, Finance & CAO

Schedule A

1. WoodSpring Hotels Franchise Services LLC

EX-4.02

GUARANTEE AGREEMENT SUPPLEMENT

THIS GUARANTEE AGREEMENT SUPPLEMENT, dated as of February 1, 2018, (this “Supplement”) is made by WOODSPRING HOTELS FRANCHISE SERVICES LLC, a Kansas limited liability company (the “New Subsidiary Guarantor”) in favor of DEUTSCHE BANK AG NEW YORK BRANCH, as Administrative Agent for the Lender Parties party to the Credit Agreement (as defined in the Guarantee Agreement referred to below).

1.    Reference is hereby made to the Guarantee Agreement dated as of July 21, 2015, made by certain Restricted Subsidiaries of Choice Hotels International, Inc. party thereto, as guarantors, in favor of the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”). This Supplement supplements the Guarantee Agreement, forms a part thereof and is subject to the terms thereof. Capitalized terms used and not defined herein shall have the meanings given thereto or referenced in the Credit Agreement or the Guaranty, as applicable.

2.    The New Subsidiary Guarantor hereby agrees to unconditionally guarantee to the Administrative Agent for the ratable benefit of itself and the other Lender Parties and their respective permitted successors, endorsees, transferees and assigns, the prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of all Obligations of the Borrower (exclusive of all Excluded Swap Obligations) to the same extent and upon the same terms and conditions as are contained in the Guarantee Agreement.

3.    The New Subsidiary Guarantor hereby agrees that by executing this Supplement it is a Guarantor (as defined in the Guaranty) under the Guaranty as if a signatory thereto on the Closing Date, and the New Subsidiary Guarantor shall comply with, and be subject to, all of the terms, covenants, conditions and agreements and hereby makes each representation and warranty, in each case set forth therein. The New Subsidiary Guarantor agrees that the “Guarantee Agreement”, “Guarantee” or “Guaranty” as used herein or in any other Loan Documents shall mean the Guaranty as supplemented hereby.

4.    The New Subsidiary Guarantor hereby acknowledges it has received a copy of the Credit Agreement and the Guaranty and that it has read and understands the terms thereof.

5.    Attached hereto as Annex A is a schedule setting forth all information of the type required to be provided pursuant to Section 3.08 to the Credit Agreement therein with respect to the New Subsidiary Guarantor.

6.    All notices and communications to the New Subsidiary Guarantor shall be given to the addresses and otherwise made in accordance with Section 9.01 of the Credit Agreement; provided that notices and communications to the New Subsidiary Guarantor shall be directed to the New Subsidiary Guarantor at the address of the Borrower set forth in Section 9.01 of the Credit Agreement.

7.    The New Subsidiary Guarantor hereby waives acceptance by the Administrative Agent and the other Lender Parties of the guaranty by the New Subsidiary Guarantor under the Guaranty upon the execution of this Supplement by the New Subsidiary Guarantor.

8.    This Supplement may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. This Supplement may be delivered by facsimile or other electronic transmission of the relevant signature pages hereof.

9.    This Supplement shall be governed by and construed and interpreted in accordance with the laws of the State of New York.

[Signature Page to Follow]

IN WITNESS WHEREOF, the undersigned hereby causes this Guarantee Agreement Supplement to be executed and delivered as of the date first above written.

WOODSPRING HOTELS FRANCHISE LLC, a Kansas limited liability company

By: Choice Hotels International, Inc., its sole member

By: ____/s/ Scott Oaksmith_________________________________

Name:    Scott Oaksmith

Title:    Senior Vice President, Finance and Chief Accounting Officer

Annex A

Supplemental Schedule 3.08 to Credit Agreement

Entity Name	Country (State) of Incorporation	Equity Interest	Restricted/Unrestricted
WoodSpring Hotels Franchise Services LLC	U.S. (KS)	100%	Restricted

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Patrick S. Pacious, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Choice Hotels International, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

(d) Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 10, 2018	/s/ PATRICK S. PACIOUS
	Patrick S. Pacious
	President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Dominic E. Dragisich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Choice Hotels International, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

(d) Disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 10, 2018	/s/ DOMINIC E. DRAGISICH
	Dominic E. Dragisich
	Chief Financial Officer

EX-32

Exhibit 32

WRITTEN STATEMENT

OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

The undersigned hereby certify that the Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 filed by Choice Hotels International, Inc. with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

May 10, 2018	/s/ PATRICK S. PACIOUS
	Patrick S. Pacious
	President & Chief Executive Officer
May 10, 2018	/s/ DOMINIC E. DRAGISICH
	Dominic E. Dragisich
	Chief Financial Officer

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2018 shares
Document and Entity Information [Abstract]
Entity Registrant Name	CHOICE HOTELS INTERNATIONAL INC /DE
Trading Symbol	chh
Entity Central Index Key	0001046311
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding	56,660,639

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
REVENUES
Royalty fees	$ 76,698	$ 68,294
Initial franchise and relicensing fees	6,214	5,806
Procurement services	9,938	7,363
Marketing and reservation system	107,001	98,853
Other	9,543	8,552
Total revenues	209,394	188,868
OPERATING EXPENSES
Selling, general and administrative	40,864	33,745
Depreciation and amortization	3,053	1,726
Marketing and reservation system	119,228	107,994
Total operating expenses	163,145	143,465
Operating income	46,249	45,403
OTHER INCOME AND EXPENSES, NET
Interest expense	11,309	11,205
Interest income	(1,609)	(1,264)
Other (gains) losses	120	(897)
Equity in net loss of affiliates	5,968	2,080
Total other income and expenses, net	15,788	11,124
Income before income taxes	30,461	34,279
Income taxes	5,375	10,010
Net income	$ 25,086	$ 24,269
Basic earnings per share (in dollars per share)	$ 0.44	$ 0.43
Diluted earnings per share (in dollars per share)	0.44	0.43
Cash dividends declared per share (in dollars per share)	$ 0.215	$ 0.215

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 25,086	$ 24,269
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215	215
Foreign currency translation adjustment	855	568
Other comprehensive income, net of tax	1,070	783
Comprehensive income	$ 26,156	$ 25,052

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 36,834	$ 235,336
Receivables (net of allowance for doubtful accounts of $14,608 and $12,221, respectively)	143,028	125,870
Income taxes receivable	664	0
Notes receivable, net of allowance	17,254	13,256
Other current assets	34,065	25,967
Total current assets	231,845	400,429
Property and equipment, at cost, net	98,403	83,374
Goodwill	174,538	80,757
Intangible assets, net	246,925	100,492
Notes receivable, net of allowances	78,286	80,136
Investments, employee benefit plans, at fair value	20,142	20,838
Investments in unconsolidated entities	128,157	134,226
Deferred income taxes	24,601	27,224
Other assets	49,120	67,715
Total assets	1,052,017	995,191
Current liabilities
Accounts payable	62,730	67,839
Accrued expenses and other current liabilities	58,953	84,315
Deferred revenue	62,247	52,142
Current portion of long-term debt	1,265	1,232
Liability for guest loyalty program	84,075	79,123
Total current liabilities	269,270	284,651
Long-term debt	795,745	725,292
Long-term deferred revenue	96,351	94,153
Deferred compensation and retirement plan obligations	24,513	25,566
Income taxes payable	29,041	29,041
Deferred income taxes	0	39
Liability for guest loyalty program	51,749	48,701
Other liabilities	45,265	46,349
Total liabilities	1,311,934	1,253,792
Commitments and Contingencies
SHAREHOLDERS' DEFICIT
Common stock, $0.01 par value, 160,000,000 shares authorized; 95,065,638 shares issued at March 31, 2018 and December 31, 2017 and 56,660,639 and 56,679,968 shares outstanding at March 31, 2018 and December 31, 2017, respectively	951	951
Additional paid-in-capital	195,651	182,448
Accumulated other comprehensive loss	(3,629)	(4,699)
Treasury stock (38,404,999 and 38,385,670 shares at March 31, 2018 and December 31, 2017, respectively), at cost	(1,093,066)	(1,064,573)
Retained earnings	640,176	627,272
Total shareholders’ deficit	(259,917)	(258,601)
Total liabilities and shareholders’ deficit	$ 1,052,017	$ 995,191

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Receivables, allowance for doubtful accounts	$ 14,608	$ 12,221
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	160,000,000	160,000,000
Common stock, shares issued (in shares)	95,065,638	95,065,638
Common stock, shares outstanding (in shares)	56,660,639	56,679,968
Treasury stock, shares (in shares)	38,404,999	38,385,670

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 25,086	$ 24,269
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,053	1,726
Depreciation and amortization – marketing and reservation system	5,071	5,290
Franchise agreement acquisition cost amortization	2,154	1,489
Provision for bad debts, net	3,389	941
Non-cash stock compensation and other charges	3,787	3,472
Non-cash interest and other (income) loss	974	(301)
Deferred income taxes	2,582	(4,529)
Equity in net losses from unconsolidated joint ventures, less distributions received	6,735	2,386
Franchise agreement acquisition cost, net of reimbursements	(11,925)	(4,483)
Change in working capital and other, net of acquisition	(36,354)	(6,046)
Net cash provided by operating activities	4,552	24,214
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(4,996)	(4,718)
Investment in intangible assets	(1,193)	(2,088)
Business acquisition, net of cash acquired	(231,317)	0
Contributions to equity method investments	(1,455)	(31,610)
Distributions from equity method investments	766	510
Purchases of investments, employee benefit plans	(1,669)	(1,424)
Proceeds from sales of investments, employee benefit plans	1,029	843
Issuance of mezzanine and other notes receivable	(2,500)	(9,863)
Collections of mezzanine and other notes receivable	150	522
Other items, net	0	(4)
Net cash used in investing activities	(241,185)	(47,832)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	70,000	22,800
Principal payments on long-term debt	(111)	(153)
Purchase of treasury stock	(41,869)	(7,271)
Dividends paid	(12,265)	(12,139)
Debt issuance costs	(914)	0
Proceeds from issuance of long term debt	212	0
Proceeds from exercise of stock options	23,052	4,963
Net cash provided by financing activities	38,105	8,200
Net change in cash and cash equivalents	(198,528)	(15,418)
Effect of foreign exchange rate changes on cash and cash equivalents	26	427
Cash and cash equivalents at beginning of period	235,336	202,463
Cash and cash equivalents at end of period	36,834	187,472
Cash payments during the period for:
Income taxes, net of refunds	5,034	1,454
Interest, net of capitalized interest	19,882	19,874
Non-cash investing and financing activities:
Dividends declared but not paid	12,117	12,195
Investment in property and equipment acquired in accounts payable	$ 374	$ 724

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Company Information and Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Company Information and Significant Accounting Policies

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 the "Company") have been prepared by the Company in accordance with United States of America generally accepted accounting principles (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). These unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, 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. The Company believes the disclosures made are adequate to make the information presented not misleading.

The consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2017 and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2018 (the "10-K"). Interim results are not necessarily indicative of the entire year results. All inter-company transactions and balances between Choice Hotels International, Inc. 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.

On February 1, 2018, the Company acquired 100% of the issued and outstanding equity interest of WoodSpring Hotels Franchise Services (“WoodSpring”). The transaction has been accounted for using the acquisition method of accounting and accordingly, assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date. The results of WoodSpring have been consolidated with the Company since February 1, 2018. See Note 16 for additional information.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are detailed in Note 1 “Summary of Significant Accounting Policies” in the Annual Report on Form 10-K for the year ended December 31, 2017. The significant accounting policies that changed during the quarter are set forth below.

Recently Adopted Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue From Contracts with Customers (Topic 606) and issued subsequent amendments to the initial guidance at various points of 2015 and 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20 (these ASUs collectively referred to as "Topic 606"). The Company adopted Topic 606 as of January 1, 2018 using the full retrospective method of adoption. The provisions of Topic 606 impacted the Company’s revenue recognition as follows:

• Initial and relicensing fees earned upon execution of a franchise agreement are recognized as revenue ratably as services are provided over the enforceable period of the franchise license arrangement. This represents a change from prior practice, whereby the Company typically recognized revenue for initial and relicensing fees in full in the period of agreement execution.

• Sales commissions, which are paid upon the execution of a franchise agreement, are recognized ratably over the period a hotel is expected to remain in the Company's franchise system rather than expensed as incurred.

• Franchise agreement acquisition costs are capitalized as intangible assets, as opposed to notes receivable. Amortization of franchise agreement acquisition costs are recognized as a reduction of revenue rather than as a component of depreciation and amortization.

• Revenue related to the Choice Privileges program, which is reported as a component of marketing and reservation system fees, is deferred as points are awarded and recognized upon point redemption, net of reward reimbursements paid to a third-party. Previously, revenue was recognized on a gross basis at the time the points were issued with a corresponding deferral of revenue equal to the expected future costs of the award. Deferred revenue was then recognized as actual points were redeemed and costs for those redemptions incurred.

• Topic 606 also impacted the Company’s accounting for surpluses and deficits generated from marketing and reservation system activities. The Companyhas historically, consistent with its existing agreements, not earned a profit or generated a loss from marketing and reservation activities, and as a result, the Company recorded excess marketing and reservation system revenues or expenses as assets or liabilities on the Company’s balance sheet prior to the adoption of Topic 606. However, as a result of the the adoption of Topic 606, the Company will no longer defer revenues and expenses or record assets and liabilities when system revenues exceed expenses in the current period or vice versa. The Company intends to manage these activities to break-even over time but anticipates that net income or loss may be generated quarterly due to the seasonal nature of the hotel industry and annually based on the level of investments needed for new initiatives that benefit our franchisees.

All amounts and disclosures set forth in this Form 10-Q reflect the necessary adjustments required for the adoption of Topic 606, including the reclassification of prior year balances to conform to current year presentation. See Note 2 for further details on the adoption of Topic 606 and impact to the Company's significant accounting policies. In accordance with Topic 606 requirements, the disclosure of the impact of adoption on the Company's prior period consolidated statements of income and balance sheet is presented below. The adoption of Topic 606 had no impact to cash from or used in operating, financing, or investing, but resulted in certain reclassifications within cash flows from operating activities, on the prior period consolidated statement of cash flows.

	Three Months Ended March 31, 2017
	As Previously Reported		Adoption of Topic 606			As Adjusted
Income Statement	(in thousands, except per share amounts)
Total revenues	$	197,898	$	(9,030	)	$	188,868
Total operating expenses	145,391		(1,926		)	143,465
Income before income taxes	41,383		(7,104		)	34,279
Income taxes	12,639		(2,629		)	10,010
Net income	28,744		(4,475		)	24,269
Diluted earnings per share	0.51		(0.08		)	0.43

	December 31, 2017
	As Previously Reported (1)(2)		Adoption of Topic 606			As Adjusted
Balance Sheet	(in thousands)
Receivables (net of allowance for doubtful accounts)	$	125,452	$	418		$	125,870
Current notes receivable, net of allowances	13,904		(648		)	13,256
Other current assets	28,241		(2,274		)	25,967
Intangible assets, net	14,672		85,820			100,492
Notes receivable, net of allowances	147,993		(67,857		)	80,136
Deferred income tax asset	13,335		13,889			27,224
Other assets	29,479		38,236			67,715
Accounts payable(1)	67,839		—			67,839
Accrued expenses and other current liabilities(1)	84,315		—			84,315
Current deferred revenue(2)	13,190		38,952			52,142
Current liability for guest loyalty program(2)	79,183		(60		)	79,123
Deferred revenue(2)	14,029		80,124			94,153
Liability for guest loyalty program(2)	48,738		(37		)	48,701
Other liabilities(2)	51,245		(4,896		)	46,349
Retained earnings	673,771		(46,499		)	627,272

⁽¹⁾ The Company performed reclassifications of certain payroll taxes from Accrued expenses and other current liabilities to Accounts payable totaling $4.3 million, and the entirety of Income taxes payable to Accrued expenses and other current liabilities totaling $2.8 million.

⁽²⁾ As a result of adoption of Topic 606 and in accordance with reporting requirements, the Company performed revisions to presentation within Total liabilities in the consolidated balance sheet to add non-current Deferred revenue and current and non-current Liability for guest loyalty program line items. Amounts originally captured in current Deferred revenue and Other liabilities have been reclassified to the new line items in the table above.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15") and in November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash ("ASU 2016-18"), which collectively provide additional guidance on nine specific cash flow issues. The Company adopted ASU 2016-15 and ASU 2016-18 on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16").  ASU 2016-16 provides guidance on recognition of current income tax consequences for inter-company asset transfers (other than inventory) at the time of transfer.  The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and adds guidance for partial sales of nonfinancial assets. The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize most leases on their balance sheet by recording a liability for its lease obligation and an asset for its right to use the underlying asset as of the lease commencement date. The standard requires entities to determine whether an arrangement contains a lease or a service agreement as the accounting treatment is significantly different between the two arrangements. The standard also requires the lessee to evaluate whether a lease is a financing lease or an operating lease as the accounting and presentation guidance between the two are different. ASU 2016-02 also modifies the classification criteria and accounting for sales-type and direct financing leases for lessors. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company intends to adopt the standard on January 1, 2019 and apply the package of practical expedients available upon adoption. The Company is currently assessing the potential impact that ASU 2016-02 will have on its financial statements and disclosures.

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Revenue

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Revenue Recognition

Revenues are primarily derived from franchise agreements with third-party hotel owners. The majority of the Company’s performance obligations are a series of distinct services, as described in more detail below, for which the Company receives variable consideration through franchise fees. The Company enters into franchise agreements to provide franchisees with a limited non-exclusive license to utilize the Company’s registered brand trade names and trademarks, marketing and reservation services, and other miscellaneous franchise services. These agreements typically have an initial term from five to thirty years, with provisions permitting franchisees or the Company to terminate the franchise agreement upon designated anniversaries of the hotel opening before the end of the initial term. An up-front initial or relicensing fee is assessed to third-party hotel owners to affiliate with our brands, which is typically paid prior to agreement execution and is non-refundable. After hotel opening, fees are generated based on a percentage of gross room revenues or as designated transactions and events occur (such as when a reservation is delivered to the hotel through a specified channel) and are due to the Company in the following month.

The franchise agreements are comprised of multiple performance obligations, which may require significant judgment in identifying. The primary performance obligations are as follows:

• License of brand intellectual property and related services (“brand intellectual property”): Grants the right to access the Company’s intellectual property associated with brand trade names, trademarks, reservation systems, property management systems and related services.

• Material rights for free or discounted goods or services to hotel guests: Primarily consists of the points issued under the Company’s guest loyalty program, Choice Privileges.

• Point in time sale of goods: The Company administers the delivery of chip-enabled credit card readers to its franchisees to aid in compliance with industry standards in exchange for a fee. Revenue is recognized at the point in time shipment is made to the franchisee within Other revenue. The Company determined the standalone selling price is equal to the amount invoiced to the franchisee.

Brand intellectual property

Fees generated from the brand intellectual property are recognized to revenue over time as hotel owners pay for access to these services for the duration of the franchise agreement. Franchise fees are typically based on the sales or usage of the underlying hotel, with the exception of fixed up-front fees that usually represent an insignificant portion of the transaction price. The variable consideration is recognizable after the completion of a hotel stay. As a result, variable transaction price is determined for the period when the underlying gross room revenues and transactions or events which generate fees are known.

Franchise fees include the following:

• Royalty fees. Royalty fees are earned in exchange for a license to brand intellectual property typically based on a percentage of gross room revenues. These fees are billed and collected monthly and revenues are recognized in the same period that the underlying gross room revenues are earned by the Company’s franchisees.

• Initial franchise and relicensing fees. Initial and relicensing fees are charged when (i) new hotels enter the franchise system; (ii) there is a change of ownership; or (iii) existing franchise agreements are extended. These revenues are recognized as revenue ratably as services are provided over the enforceable period of the franchise agreement. The enforceable period is the period from hotel opening to the first point the franchisee or the Company can terminate the franchise agreement without incurring a significant penalty. Deferred revenues from initial and relicensing fees will typically be 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 will be recognized to revenue in the period of termination.

• Other revenue. Other revenue is a combination of miscellaneous non-marketing and reservation system fees, inclusive of quality assurance non-compliance and franchisee training fees, and is recognized in the period the designated transaction or event has occurred.

The Company’s franchise agreements require the payment of marketing and reservation system fees. The Company is obligated to use these marketing and reservation system fees to provide marketing and reservation services such as advertising, providing a centralized reservation and property management system, providing reservation and revenue management services, and performing certain franchise services to support the operation of the overall franchise system. These services are comprised of multiple fees including the following:

• Fees based on a percentage of gross room revenues are recognized in the period the gross room revenue was earned, based on the underlying hotel’s sales or usage.

• Fees based on the occurrence of a designated transaction or event are recognized in the period the transaction or event occurred.

• System implementation fees charged to franchisees are deferred and recognized as revenue over the enforceable period of the franchise agreement.

• Marketing and reservation system activities also include revenues generated from the Company’s guest loyalty program. The revenue recognition of this program is discussed in Material rights for free or discounted good or services to hotel guests below.

Marketing and reservation system expenses are those expenses incurred to facilitate the delivery of marketing and reservation system services, including direct expenses and an allocation of costs for certain administrative activities required to carry out marketing and reservation services. Marketing and reservation system expenses are recognized as services are incurred or goods are received, and as such may not equal marketing and reservation system revenues in a specific period but are expected to equal revenues earned from franchisees over time. The Company’s franchise agreements provide the Company the right to advance monies to the franchise system when the needs of the system surpass the balances currently available and recover such advances in future periods through additional fee assessments or reduced spending.

Material rights for free or discounted good or services to hotel guests

Choice Privileges is the Company’s frequent guest loyalty program, which enables members to earn points based on their spending levels with the Company’s franchisees. The points, which the Company accumulates and tracks on the members’ behalf, may be redeemed for free accommodations or other benefits (e.g., gift cards to participating retailers). The Company collects from franchisees a percentage of program members’ gross room revenue from completed stays to operate the program. At such time points are redeemed for free accommodations or other benefits, the Company reimburses franchisees or third parties based on a rate derived in accordance with the franchise or vendor agreement.

Loyalty points represent a performance obligation attributable to usage of the points, and thus revenues are recognized at the point in time when the loyalty points are redeemed by members for benefits. The transaction price is variable and determined in the period when the loyalty points are earned and the underlying gross room revenues are known. No loyalty program revenues are recognized at the time the loyalty points are issued.

The Company is an agent in coordinating delivery of the services between the loyalty program member and franchisee or third party, and as a result, revenues are recognized net of the cost of redemptions. The estimated fair value of future redemptions is reflected in current and non-current Liability for guest loyalty program in our consolidated balance sheets. The liability for guest loyalty program is developed based on an estimate of the eventual redemption rates and point values using various actuarial methods. These significant judgments determine the required point liability attributable to outstanding points, which is relieved as redemption costs are processed. The amount of the loyalty program fees in excess of the point liability represents current and non-current Deferred revenue, which is recognized to revenue as points are redeemed including an estimate of future forfeitures (“breakage”). The anticipated redemption pattern of the points is the basis for current and non-current designation of each liability. As of March 31, 2018, the current and non-current deferred revenue balances are $27.4 million and $16.9 million, respectively. Loyalty program point redemption revenues are recognized within marketing and reservation system revenue in the consolidated statements of income.

The Company also earns revenues on contracts incidental to the support of operations for franchised hotels, including purchasing operations.

Partnerships

The Company maintains various agreements with third-party partners, including the co-branding of the Choice Privileges credit card. The agreements typically provide for use of the Company’s marks, limited access to the Company’s distribution channels, and sale of Choice Privileges points, in exchange for fees primarily comprising variable consideration paid each month. Choice Privileges members can earn points through participation in the partner’s program.

Partnership agreements include multiple performance obligations. The primary performance obligations are brand intellectual property and material rights for free or discounted goods or services to hotel guests. Allocation of fixed and variable consideration to the performance obligations is based on standalone selling price as estimated based on market and income methods, which represent significant judgments. The amounts allocated to brand intellectual property are recognized on a gross basis over time using the output measure of time elapsed, primarily within Procurement services revenue. The amounts allocated to material rights for free or discounted goods or services to hotel guests are recognized to revenue as points are redeemed including an estimate of breakage, primarily within Marketing and reservation system revenue.

Qualified Vendors

The Company generates procurement services revenues from qualified vendors. Procurement services revenues are generally based on marketing services provided by the Company on behalf of the qualified vendors to hotel owners and guests. The Company provides these services in exchange for either fixed consideration or a percentage of revenues earned by the qualified vendor pertaining to purchases by the Company’s franchisees or guests. Fixed consideration is paid in installments based on a contractual schedule, with an initial payment typically due at contract execution. Variable consideration is typically paid quarterly after sales to franchisees or guests have occurred.

Qualified vendor agreements comprise a single performance obligation, which is satisfied over time based on the access afforded and services provided to the qualified vendor for the stated duration of the agreement. Fixed consideration is allocated and recognized ratably to each period over the term of the agreement. Variable consideration is determined and recognized in the period when sales to franchisees or guests from vendors are known or cash payment has been remitted. Qualified vendor revenues are recognized within Procurement services revenue.

Other

The Company is party to other non-franchising agreements that generate revenue within Other revenue in the income statement which are primarily Software as a Service (“SaaS”) arrangements. SaaS agreements typically include fixed consideration for installment and other initiation fees paid at contract onset, and variable consideration for recurring subscription revenue paid monthly. SaaS agreements comprise a single performance obligation, which is satisfied over time based on the access to the software for the stated duration of the agreement. Fixed consideration is allocated and recognized ratably to each period over the term of the agreement. Variable consideration is determined at the conclusion of each period, and allocated to and recognized in the current period.

Contract Liabilities

Contract liabilities relate to (i) advance consideration received, such as initial franchise and relicensing 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 points are issued under the Choice Privileges loyalty program but for which revenue is not yet recognized since the related points have not been redeemed. Initial and relicensing fees paid on WoodSpring franchise agreements executed after February 1, 2018 are included in the "Increases to the contract liability balance due to cash received" caption in the table below. No WoodSpring amounts are included in the Revenue recognized in the period" caption, as WoodSpring balances were not included in the contract liability balance as of December 31, 2017. See Note 16 for additional information.

Significant changes in the contract liabilities balances during the period December 31, 2017 to March 31, 2018 are as follows:

	(in thousands)
Balance as of December 31, 2017	$	132,339
Increases to the contract liability balance due to cash received	17,947
Revenue recognized in the period	(12,726		)
Balance as of March 31, 2018	$	137,560

Remaining Performance Obligations

The aggregate amount of transaction price allocated to unsatisfied or partially unsatisfied performance obligations is $137.6 million as of March 31, 2018. This amount represents fixed transaction price that will be recognized as revenue in future periods, which is primarily captured in the balance sheet as current and non-current deferred revenue.

Based on practical expedient elections permitted by 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 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. Additionally, as part of transition to Topic 606, the Company elected to not disclose the amount of the transaction price allocated to the remaining performance obligations as of December 31, 2017 or provide an explanation of when revenue is expected to be recognized.

Capitalized Franchise Agreement Costs

Sales commissions earned by Company personnel upon execution of a franchise agreement (“franchise sales commissions”) meet the requirement to be capitalized as an incremental cost of obtaining a contract with a customer. Capitalized franchise sales commission are amortized on a straight-line basis over the estimated benefit period of the arrangement, unless the franchise agreement is terminated and the hotel exits the system whereby remaining capitalized amounts will be expensed in the period of termination. The estimated benefit period is equal to or greater than the period of enforceable rights on the franchise agreement. Capitalized franchise sales commissions are $45.1 million within Other assets as of March 31, 2018. Amortization expense and impairment loss in the period was $1.9 million and is reflected within selling, general and administrative expenses.

The Company makes certain payments to customers as an incentive to enter in to new franchise agreements (“Franchise agreement acquisition cost”). These payments are recognized as an adjustment to transaction price and capitalized as an intangible asset. Franchise agreement acquisition cost intangibles are amortized on a straight-line basis over the estimated benefit period of the arrangement as an offset to royalty fees and marketing and reservation system fees. Impairments from hotel terminations are recorded within the selling, general and administrative expenses and marketing and reservations expenses.

Sales Taxes

The Company presents taxes collected from customers and remitted to governmental authorities on a net basis and therefore they are excluded from revenues in the consolidated financial statements.

Disaggregation of Revenue

The following table presents our revenues by over time and point in time recognition:

	Three Months Ended						Three Months Ended
	March 31, 2018						March 31, 2017
	Over time		Point in time		Total		Over time		Point in time		Total
Revenues:	(in thousands)						(in thousands)
Royalty fees	$	76,698	$	—	$	76,698	$	68,294	$	—	$	68,294
Initial franchise and relicensing fees	6,214		—		6,214		5,806		—		5,806
Procurement services	9,565		373		9,938		7,133		230		7,363
Marketing and reservation system	101,128		5,873		107,001		92,852		6,001		98,853
Other	8,520		672		9,192		6,737		1,478		8,215
Total Topic 606 revenues	$	202,125	$	6,918	209,043		$	180,822	$	7,709	188,531
Non-Topic 606 revenues					351						337
					$	209,394					$	188,868

Non-Topic 606 revenues represent revenue from operations of office buildings and parking lots and are presented in Other revenues in the consolidated income statement.

As presented in Note 13, the Corporate & Other amounts represent $3.8 million and $2.6 million of total revenues for the three months ended March 31, 2018 and 2017, respectively, and are included in the Over time column of Other revenues and Non-Topic 606 revenues row. The remaining revenues relate to the hotel franchising segment.

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Other Current Assets

3 Months Ended

Mar. 31, 2018

Assets, Current [Abstract]

Other Current Assets

Other Current Assets

Other current assets consist of the following:

	March 31, 2018		December 31, 2017
	(in thousands)
Prepaid expenses	$	16,998	$	14,205
Other current assets	7,096		4,762
Land held for sale	9,971		7,000
Total	$	34,065	$	25,967

Land held for sale represents the Company's purchase of real estate as part of its program to incent franchise development in strategic markets for the Company's Cambria Hotels brand. During the three months ended March 31, 2018, the Company reclassified one parcel of land with a total book value of $3.0 million to Land held for sale. As of March 31, 2018, the Company has a total of $10.0 million of Land held for sale, as it is expected that these sites will be sold within the next twelve months.

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Notes Receivable and Allowance for Losses

3 Months Ended

Mar. 31, 2018

Accounts and Notes Receivable, Net [Abstract]

Notes Receivable and Allowance for Losses

Notes Receivable and Allowance for Losses

The following table shows the composition of the Company's notes receivable balances:

	March 31, 2018		December 31, 2017
Credit Quality Indicator	(in thousands)
Senior	$	73,643	$	73,700
Subordinated	20,975		18,647
Unsecured	3,059		3,182
Total notes receivable	97,677		95,529
Allowance for losses on non-impaired loans	1,647		1,647
Allowance for losses on receivables specifically evaluated for impairment	490		490
Total loan reserves	2,137		2,137
Net carrying value	$	95,540	$	93,392
Current portion, net	$	17,254	$	13,256
Long-term portion, net	78,286		80,136
Total	$	95,540	$	93,392

The Company utilizes the level of security it has in the mezzanine and other notes receivable as its primary credit quality indicator (i.e., senior, subordinated or unsecured) when determining the appropriate allowances for uncollectible loans. The Company considers loans to be past due and in default when payments are not made when due. Although the Company considers loans to be in default if payments are not received on the due date, the Company does not suspend the accrual of interest until those payments are more than 30 days past due. The Company applies payments received for loans on non-accrual status first to interest and then principal. The Company does not resume interest accrual until all delinquent payments are received. For impaired loans, the Company recognizes interest income on a cash basis.

The Company determined that approximately $1.8 million of its subordinated mezzanine and other notes receivable were impaired at both March 31, 2018 and December 31, 2017, and recorded allowance for credit losses on these impaired loans totaling $1.6 million at both March 31, 2018 and December 31, 2017. The average mezzanine and other notes receivable on non-accrual status was approximately $1.8 million and $1.9 million for the three months ended March 31, 2018 and 2017, respectively. The Company recognizes interest income for impaired loans on a cash basis. Approximately $44 thousand of interest income on impaired loans was recognized during the three months ended March 31, 2017. No interest income on impaired loans was recognized during the three months ended March 31, 2018. The Company provided loan reserves on non-impaired loans totaling $0.5 million at March 31, 2018 and December 31, 2017. There were no changes in total loan reserves between December 31, 2017 and March 31, 2018.

Past due balances of mezzanine and other notes receivable by credit quality indicators are as follows:

	30-89 days Past Due		> 90 days Past Due		Total Past Due		Current		Total  Notes Receivable
	(in thousands)
As of March 31, 2018
Senior	$	—	$	—	$	—	$	73,643	$	73,643
Subordinated	—		—		—		20,975		20,975
Unsecured	—		—		—		3,059		3,059
	$	—	$	—	$	—	$	97,677	$	97,677
As of December 31, 2017
Senior	$	—	$	—	$	—	$	73,700	$	73,700
Subordinated	—		—		—		18,647		18,647
Unsecured	—		—		—		3,182		3,182
	$	—	$	—	$	—	$	95,529	$	95,529

Variable Interest through Notes Issued

The Company has issued mezzanine and other notes receivables to certain entities that have created variable interests in these borrowers totaling $37.9 million and $35.2 million as of March 31, 2018 and December 31, 2017, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities. Each of these loans have stated fixed and/or variable interest amounts. The Company has identified loans totaling approximately $4.6 million and $2.1 million, respectively, with stated interest rates that are less than market rate, representing a total discount of $0.3 million and $0.1 million, respectively, as of March 31, 2018 and December 31, 2017. These discounts are reflected as a reduction of the outstanding loan amounts and are amortized over the life of the related loan.

Transfer of interest

On September 12, 2017, the Company entered into an agreement to transfer $24.2 million of a $49.1 million outstanding note receivable with a maturity date of November 30, 2019 to a third party. In the first quarter of 2018, an additional $0.2 million was transferred for a total of $24.4 million. The transaction did not qualify as a sale and therefore the outstanding note receivable was not de-recognized on the balance sheet.  The one-time cash proceeds were recorded as unrestricted cash and the future obligation to transfer principal and interest received under the note has been recorded within Other Long-Term liabilities.  The Company retains responsibility for collecting and distributing cash received on the note and interest paid to the participant is reflected as interest expense in the Company’s consolidated statements of income. At March 31, 2018 and December 31, 2017, Other Long-Term liabilities includes $24.4 million and $24.2 million, respectively, pursuant to this transaction.

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Investments in Unconsolidated Entities

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Investments in Unconsolidated Entities

Investments in Unconsolidated Entities

The Company maintains a portfolio of investments owned through noncontrolling interest in equity method investments with one or more partners. Investments in unconsolidated entities include investments in joint ventures totaling $124.0 million and $130.2 million at March 31, 2018 and December 31, 2017, respectively, that the Company determined to be variable interest entities ("VIEs"). These investments relate to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria hotels in strategic markets. Based on an analysis of who has the power to direct the activities that most significantly impact these entities performance and who has an obligation to absorb losses of these entities or a right to receive benefits from these entities that could potentially be significant to the entity, the Company determined that it is not the primary beneficiary of any of its VIEs. The Company based its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and the relevant development, operating management and financial agreements. Although the Company is not the primary beneficiary of these VIEs, it does exercise significant influence through its equity ownership and as a result the Company's investment in these entities is accounted for under the equity method. For the three months ended March 31, 2018 and 2017, the Company recognized losses totaling $6.4 million and $2.5 million, respectively, from these investments. The Company's maximum exposure to losses related to its investments in VIEs is limited to its equity investments as well as certain guarantees described in Note 14 "Commitments and Contingencies" of these financial statements.

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Debt

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Debt

Debt

Debt consists of the following:

	March 31, 2018		December 31, 2017
	(in thousands)
$400 million senior unsecured notes with an effective interest rate of 6.0% less deferred issuance costs of $3.8 million and $3.9 million at March 31, 2018 and December 31, 2017, respectively	$	396,249	$	396,057
$250 million senior unsecured notes with an effective interest rate of 6.19% less a discount and deferred issuance costs of $0.7 million and $0.8 million at March 31, 2018 and December 31, 2017, respectively	249,259		249,182
$450 million senior unsecured credit facility with an effective interest rate of 3.14% and 2.84%, less deferred issuance costs of $1.9 million and $2.1 million at March 31, 2018 and December 31, 2017, respectively	138,080		67,936
Fixed rate collateralized mortgage with an effective interest rate of 4.57%, plus a fair value adjustment of $0.5 million and $0.6 million at March 31, 2018 and December 31, 2017, respectively	8,692		8,853
Economic development loans with an effective interest rate of 3.0% at March 31, 2018 and December 31, 2017, respectively	3,712		3,712
Other notes payable	1,018		784
Total debt	$	797,010	$	726,524
Less current portion	1,265		1,232
Total long-term debt	$	795,745	$	725,292

For additional information regarding the senior unsecured credit facility and other debt, see the "Debt" caption under the "Liquidity and Capital Resources" section in Management's Discussion and Analysis of Financial Condition and Results of Operations.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The following represents the changes in accumulated other comprehensive loss, net of tax, by component for the three months ended March 31, 2018:

	Loss on Cash Flow Hedge			Foreign Currency Items			Total
	(in thousands)
Beginning balance, December 31, 2017	$	(2,298	)	$	(2,401	)	$	(4,699	)
Other comprehensive income before reclassification	—			855			855
Amounts reclassified from accumulated other comprehensive loss	215			—			215
Net current period other comprehensive income	215			855			1,070
Ending balance, March 31, 2018	$	(2,083	)	$	(1,546	)	$	(3,629	)

The amounts reclassified from accumulated other comprehensive loss during the three months ended March 31, 2018 were reclassified to the following line items in the Company's Consolidated Statements of Income.

Component	Amount Reclassified from Accumulated Other Comprehensive Loss		Affected Line Item in the Consolidated Statement of Income
	Three Months Ended March 31, 2018
	(in thousands)
Loss on cash flow hedge
Interest rate contract	$	215	Interest expense
	—		Tax (expense) benefit
	$	215	Net of tax

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Fair Value Measurements

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

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.

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 Company's 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 and those recorded in cash and cash equivalents.

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 whose fair value was determined using Level 3 inputs.

The Company's policy is to recognize transfers in and transfers out of the three levels of the fair value hierarchy as of the end of each quarterly reporting period. There were no transfers between Level 1, 2 and 3 assets during the three months ended March 31, 2018.

As of March 31, 2018 and December 31, 2017, the Company had the following assets measured at fair value on a recurring basis:

	Fair Value Measurements at Reporting Date Using
	Total		Level 1		Level 2		Level 3
Assets	(in thousands)
As of March 31, 2018
Mutual funds(1)	$	21,388	$	21,388	$	—	$	—
Money market funds(1)	1,703		—		1,703		—
	$	23,091	$	21,388	$	1,703	$	—
As of December 31, 2017
Money market funds, included in cash and cash equivalents	$	50,419	$	—	$	50,419	$	—
Mutual funds(1)	20,869		20,869		—		—
Money market funds(1)	1,702		—		1,702		—
	$	72,990	$	20,869	$	52,121	$	—

________________________ 

(1) Included in Investments, employee benefit plans at fair value and other current assets on the consolidated balance sheets.

Other Financial Instruments

The Company believes that the fair value 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 Company's Credit Facility adjust frequently based on current market rates; accordingly its carrying amount approximates fair value.

The Company estimates the fair value of notes receivable, which approximate their carrying value, utilizing an analysis of future cash flows and credit worthiness for similar types of arrangements. Based upon the availability of market data, the notes receivable have been classified as Level 3 inputs. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. For further information on the notes receivables, see Note 4.

The money market funds previously included in cash and cash equivalents were used to fund the WoodSpring acquisition as of March 31, 2018. See Note 16 for further information on the acquisition. The fair values of the Company's $250 million and $400 million senior notes are classified as Level 2 as the significant inputs are observable in an active market. At March 31, 2018 and December 31, 2017, the $250 million senior notes had an approximate fair value of $261.8 million and $269.2 million, respectively. At March 31, 2018 and December 31, 2017, the $400 million senior notes had an approximate fair value of $424.9 million and $440.1 million, respectively.

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 and may not be a prudent management decision.

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Income Taxes

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective income tax rates were 17.6% and 29.2% for the three months ended March 31, 2018 and 2017, respectively. The effective income tax rate for the three months ended March 31, 2018 was lower than the U.S. federal income tax rate of 21% due to the impact of foreign operations and $1.6 million of excess tax benefits from share-based compensation, partially offset by state income taxes. The effective income tax rate for the three months ended March 31, 2017 was lower than the U.S. federal income tax rate of 35% due to the impact of foreign operations and $1.2 million of excess tax benefits from share-based compensation, partially offset by state income taxes.

The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax rate from 35.0% to 21.0%, requires companies to pay a one-time transition tax on earnings of foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign-sourced earnings. The Company applied the guidance in Staff Accounting Bulletin 118 when accounting for the enactment-date effects of the Act. As of March 31, 2018, the Company made a reasonable estimate of the tax effects of the Act and will continue to refine its calculations as additional analysis is completed. Estimates may also be affected as additional clarification and understanding of the tax law is provided. These changes could be material to income tax expense.

The Act subjects a U.S. shareholder to a minimum tax on “global intangible low-taxed income” ("GILTI") earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred. The Company has elected to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred and expects to incur tax for the year ended December 31, 2018.

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Share-Based Compensation and Capital Stock

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation and Capital Stock

Share-Based Compensation and Capital Stock

The components of the Company’s pretax share-based compensation expense and associated income tax benefits are as follows for the three months ended March 31, 2018 and 2017:

	Three Months Ended
	March 31,
(in millions)	2018		2017
Stock options	$	0.7	$	1.1
Restricted stock	1.7		1.7
Performance vested restricted stock units	1.1		1.0
Total	$	3.5	$	3.8
Income tax benefits	$	0.8	$	1.4

A summary of stock-based award activity as of March 31, 2018 and changes during the three months ended 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, 2018	1,976,326		$	50.80		348,876		$	57.05	294,204		$	56.95
Granted	109,045		81.55			72,671		81.55		93,809		81.55
Exercised/Vested	(414,116	)	55.66			(70,450	)	54.94		(25,232	)	63.47
Expired	(2,018	)	63.47			—		—		—		—
Forfeited	(10,095	)	54.08			(13,509	)	51.67		(6,833	)	60.42
Outstanding at March 31, 2018	1,659,142		$	51.57	4.0 years	337,588		$	62.98	355,948		$	62.90
Options exercisable at March 31, 2018	1,169,868		$	47.44	3.5 years

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 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2018 Grants
Risk-free interest rate	2.58		%
Expected volatility	21.17		%
Expected life of stock option	4.6 years
Dividend yield	1.05		%
Requisite service period	4 years
Contractual life	7 years
Weighted average fair value of options granted (per option)	$	16.27

Restricted stock awards generally vest ratably over the service period beginning with the first anniversary of the grant date. Vesting service period of shares granted during the three months ended March 31, 2018 range from 36 - 48 months.

The Company has granted performance vested restricted stock units ("PVRSU") to certain employees. The vesting of these stock awards is contingent upon the Company achieving performance targets over a 36 month performance period and the employees' continued employment. The performance conditions affect the number of shares that will ultimately vest and can range between 0% and 200% of the shares granted.

Share Repurchases and Redemptions

The Company purchased 432,165 shares of common stock under the share repurchase program at a total cost of $35.0 million during the three months ended March 31, 2018.

During the three months ended March 31, 2018, the Company redeemed 85,674 shares of common stock at a total cost of approximately $6.9 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 performance vested restricted stock units and restricted stock grants. These redemptions were outside the share repurchase program.

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Earnings Per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The computation of basic and diluted earnings per common share is as follows:    

	Three Months Ended
	March 31,
(In thousands, except per share amounts)	2018			2017
Computation of Basic Earnings Per Share:
Numerator:
Net income	$	25,086		$	24,269
Income allocated to participating securities	(155		)	(174		)
Net income available to common shareholders	$	24,931		$	24,095
Denominator:
Weighted average common shares outstanding – basic	56,464			55,941
Basic earnings per share	$	0.44		$	0.43
Computation of Diluted Earnings Per Share:
Numerator:
Net income	$	25,086		$	24,269
Income allocated to participating securities	(154		)	(174		)
Net income available to common shareholders	$	24,932		$	24,095
Denominator:
Weighted average common shares outstanding – basic	56,464			55,941
Diluted effect of stock options and PVRSUs	647			345
Weighted average common shares outstanding – diluted	57,111			56,286
Diluted earnings per share	$	0.44		$	0.43

The Company's unvested restricted shares contain rights to receive non-forfeitable dividends, and thus are participating securities requiring the two-class method of computing earnings per share ("EPS"). The calculation of EPS for common stock shown above excludes the income attributable to the unvested restricted share awards from the numerator and excludes the dilutive impact of those awards from the denominator.

At March 31, 2018 and 2017, the Company had 1.7 million and 2.2 million outstanding stock options, respectively. Stock options are included in the diluted earnings per share calculation using the treasury stock method and average market prices during the period, unless the stock options would be anti-dilutive. For the three months ended March 31, 2018, 0.1 million anti-dilutive stock options were excluded from the diluted earnings per share calculation. For the three months ended March 31, 2017, the Company excluded 0.6 million of anti-dilutive stock options from the diluted earnings per share calculation.

PVRSUs are also included in the diluted earnings per share calculation when the performance conditions have been met at the reporting date. However, at March 31, 2018 and 2017, PVRSUs totaling 338,204 and 354,167, respectively, were excluded from the computation since the performance conditions had not been met.

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Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Statements

Condensed Consolidating Financial Statements

The Company’s Senior Notes due 2020 and 2022 are guaranteed jointly, severally, fully and unconditionally, subject to certain customary limitations, by certain of the Company’s domestic subsidiaries. There are no legal or regulatory restrictions on the payment of dividends to Choice Hotels International, Inc. from subsidiaries that do not guarantee the Senior Notes. As a result of the guarantee arrangements, the following condensed consolidating financial statements are presented. Investments in subsidiaries are accounted for under the equity method of accounting. The financial results for the 2017 periods have been updated to reflect the Company's adoption of Topic 606 as discussed in Note 1.

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

For theThree Months Ended March 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES
Royalty fees	$	71,615		$	36,209	$	8,470		$	(39,596	)	$	76,698
Initial franchise and relicensing fees	6,052			—		162			—			6,214
Procurement services	9,679			124		278			(143		)	9,938
Marketing and reservation system	88,395			106,426		3,746			(91,566		)	107,001
Other	6,002			—		3,633			(92		)	9,543
Total revenues	181,743			142,759		16,289			(131,397		)	209,394
OPERATING EXPENSES
Selling, general and administrative	41,357			32,614		6,790			(39,897		)	40,864
Marketing and reservation system	109,247			95,855		5,626			(91,500		)	119,228
Depreciation and amortization	1,649			549		855			—			3,053
Total operating expenses	152,253			129,018		13,271			(131,397		)	163,145
Operating income	29,490			13,741		3,018			—			46,249
OTHER INCOME AND EXPENSES, NET
Interest expense	10,991			—		318			—			11,309
Equity in earnings of consolidated subsidiaries	(10,766		)	1,071		—			9,695			—
Other items, net	(497		)	5,616		(640		)	—			4,479
Total other income and expenses, net	(272		)	6,687		(322		)	9,695			15,788
Income before income taxes	29,762			7,054		3,340			(9,695		)	30,461
Income taxes	4,676			727		(28		)	—			5,375
Net income	$	25,086		$	6,327	$	3,368		$	(9,695	)	$	25,086

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2017

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES
Royalty fees	$	63,596		$	30,735	$	10,514		$	(36,551	)	$	68,294
Initial franchise and relicensing fees	5,611			—		195			—			5,806
Procurement services	7,301			—		62			—			7,363
Marketing and reservation system	87,700			93,724		3,473			(86,044		)	98,853
Other	6,287			40		2,412			(187		)	8,552
Total revenues	170,495			124,499		16,656			(122,782		)	188,868
OPERATING EXPENSES
Selling, general and administrative	37,448			27,271		5,787			(36,761		)	33,745
Marketing and reservation system	102,681			87,642		3,692			(86,021		)	107,994
Depreciation and amortization	384			511		831			—			1,726
Total operating expenses	140,513			115,424		10,310			(122,782		)	143,465
Operating income	29,982			9,075		6,346			—			45,403
OTHER INCOME AND EXPENSES, NET
Interest expense	11,063			—		142			—			11,205
Equity in earnings of consolidated subsidiaries	(13,192		)	455		—			12,737			—
Other items, net	(364		)	928		(645		)	—			(81		)
Total other income and expenses, net	(2,493		)	1,383		(503		)	12,737			11,124
Income before income taxes	32,475			7,692		6,849			(12,737		)	34,279
Income taxes	8,206			2,026		(222		)	—			10,010
Net income	$	24,269		$	5,666	$	7,071		$	(12,737	)	$	24,269

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedMarch 31, 2018

(Unaudited, in thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	25,086	$	6,327	$	3,368	$	(9,695	)	$	25,086
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	855		—		855		(855		)	855
Other comprehensive income, net of tax	1,070		—		855		(855		)	1,070
Comprehensive income	$	26,156	$	6,327	$	4,223	$	(10,550	)	$	26,156

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedMarch 31, 2017

(Unaudited, in thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	24,269	$	5,666	$	7,071	$	(12,737	)	$	24,269
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	568		—		568		(568		)	568
Other comprehensive income, net of tax	783		—		568		(568		)	783
Comprehensive income	$	25,052	$	5,666	$	7,639	$	(13,305	)	$	25,052

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

As of March 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	11,415		$	52	$	25,367	$	—		$	36,834
Receivables	126,154			5,555		11,725		(406		)	143,028
Other current assets	16,611			64,530		13,231		(42,389		)	51,983
Total current assets	154,180			70,137		50,323		(42,795		)	231,845
Property and equipment, at cost, net	46,996			16,888		34,519		—			98,403
Goodwill	159,196			—		15,342		—			174,538
Intangible assets, net	141,483			93,646		11,796		—			246,925
Notes receivable, net of allowances	20,346			—		57,940		—			78,286
Investments, employee benefit plans, at fair value	—			20,142		—		—			20,142
Investments in affiliates	283,439			47,882		—		(331,321		)	—
Advances to affiliates	10,704			109,042		11		(119,757		)	—
Deferred income taxes	16,982			10,050		170		(2,601		)	24,601
Other assets	417			154,978		21,882		—			177,277
Total assets	$	833,743		$	522,765	$	191,983	$	(496,474	)	$	1,052,017
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	16,489		$	42,869	$	3,778	$	(406	)	$	62,730
Accrued expenses and other current liabilities	60,724			27,752		12,866		(42,389		)	58,953
Deferred revenue	31,101			28,515		2,631		—			62,247
Current portion of long-term debt	—			—		1,265		—			1,265
Liability for guest loyalty program	—			83,843		232		—			84,075
Total current liabilities	108,314			182,979		20,772		(42,795		)	269,270
Long-term debt	783,588			3,712		8,445		—			795,745
Long-term deferred revenue	72,259			22,436		1,656		—			96,351
Deferred compensation & retirement plan obligations	—			24,499		14		—			24,513
Advances from affiliates	115,267			1,371		3,119		(119,757		)	—
Income tax payable	—			—		29,041		—			29,041
Other liabilities	14,232			64,859		20,524		(2,601		)	97,014
Total liabilities	1,093,660			299,856		83,571		(165,153		)	1,311,934
Total shareholders’ (deficit) equity	(259,917		)	222,909		108,412		(331,321		)	(259,917		)
Total liabilities and shareholders’ deficit	$	833,743		$	522,765	$	191,983	$	(496,474	)	$	1,052,017

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

As of December 31, 2017

(in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	12,671		$	38	$	222,627	$	—		$	235,336
Receivables	107,470			6,120		12,480		(200		)	125,870
Other current assets	12,507			60,569		9,930		(43,783		)	39,223
Total current assets	132,648			66,727		245,037		(43,983		)	400,429
Property and equipment, at cost, net	47,736			18,114		17,524		—			83,374
Goodwill	65,813			—		14,944		—			80,757
Intangible assets, net	5,122			83,441		11,929		—			100,492
Notes receivable, net of allowances	22,193			—		57,943		—			80,136
Investments, employee benefit plans, at fair value	—			20,838		—		—			20,838
Investments in affiliates	475,434			47,172		—		(522,606		)	—
Advances to affiliates	10,517			120,466		—		(130,983		)	—
Deferred income taxes	20,548			9,335		169		(2,828		)	27,224
Other assets	189			160,045		41,707		—			201,941
Total assets	$	780,200		$	526,138	$	389,253	$	(700,400	)	$	995,191
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	15,326		$	48,213	$	4,500	$	(200	)	$	67,839
Accrued expenses and other current liabilities	73,225			41,814		13,059		(43,783		)	84,315
Deferred revenue	24,984			25,301		1,857		—			52,142
Current portion of long-term debt	—			—		1,232		—			1,232
Liability for guest loyalty program	—			78,899		224		—			79,123
Total current liabilities	113,535			194,227		20,872		(43,983		)	284,651
Long-term debt	713,175			3,712		8,405		—			725,292
Long-term deferred revenue	71,100			20,513		2,540		—			94,153
Deferred compensation & retirement plan obligations	—			25,552		14		—			25,566
Advances from affiliates	126,691			1,294		2,998		(130,983		)	—
Income taxes payable	—			—		29,041		—			29,041
Other liabilities	14,300			62,845		20,772		(2,828		)	95,089
Total liabilities	1,038,801			308,143		84,642		(177,794		)	1,253,792
Total shareholders’ (deficit) equity	(258,601		)	217,995		304,611		(522,606		)	(258,601		)
Total liabilities and shareholders’ deficit	$	780,200		$	526,138	$	389,253	$	(700,400	)	$	995,191

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

For the Three Months EndedMarch 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	197,590		$	4,159		$	5,087		$	(202,284	)	$	4,552
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(2,904		)	(837		)	(1,255		)	—			(4,996		)
Investment in intangible assets	(1,193		)	—			—			—			(1,193		)
Business acquisition, net of cash acquired	(231,317		)	—			—			—			(231,317		)
Contributions to equity method investments	—			(1,432		)	(23		)	—			(1,455		)
Distributions from equity method investments	—			564			202			—			766
Issuance of mezzanine and other notes receivable	(2,500		)	—			—			—			(2,500		)
Collections of mezzanine and other notes receivable	150			—			—			—			150
Purchases of investments, employee benefit plans	—			(1,669		)	—			—			(1,669		)
Proceeds from sales of investments, employee benefit plans	—			1,029			—			—			1,029
Advances to and investments in affiliates	—			(2,450		)	—			2,450			—
Divestment in affiliates	—			650			—			(650		)	—
Net cash used in investing activities	(237,764		)	(4,145		)	(1,076		)	1,800			(241,185		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	70,000			—			—			—			70,000
Principal payments on long-term debt	—			—			(111		)	—			(111		)
Proceeds from the issuance of long-term debt	—			—			212			—			212
Purchase of treasury stock	(41,869		)	—			—			—			(41,869		)
Debt issuance costs	—			—			(914		)	—			(914		)
Proceeds from exercise of stock options	23,052			—			—			—			23,052
Proceeds from contributions from affiliates	—			—			2,450			(2,450		)	—
Distributions to affiliates	—			—			(650		)	650			—
Dividends paid	(12,265		)	—			(202,284		)	202,284			(12,265		)
Net cash provided by (used in) financing activities	38,918			—			(201,297		)	200,484			38,105
Net change in cash and cash equivalents	(1,256		)	14			(197,286		)	—			(198,528		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			26			—			26
Cash and cash equivalents at beginning of period	12,671			38			222,627			—			235,336
Cash and cash equivalents at end of period	$	11,415		$	52		$	25,367		$	—		$	36,834

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

For the Three Months EndedMarch 31, 2017

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided (used) by operating activities	$	(13,926	)	$	33,440		$	4,700		$	—		$	24,214
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(3,832		)	(710		)	(176		)	—			(4,718		)
Investment in intangible assets	(1,369		)	(719		)	—			—			(2,088		)
Contributions to equity method investments	—			(31,592		)	(18		)	—			(31,610		)
Distributions from equity method investments	—			—			510			—			510
Issuance of mezzanine and other notes receivable	(330		)	—			(9,533		)	—			(9,863		)
Collections of mezzanine and other notes receivable	522			—			—			—			522
Purchases of investments, employee benefit plans	—			(1,424		)	—			—			(1,424		)
Proceeds from sales of investments, employee benefit plans	—			843			—			—			843
Advances to and investments in affiliates	—			(484		)	—			484			—
Divestment in affiliates	—			510			—			(510		)	—
Other items, net	—			—			(4		)	—			(4		)
Net cash used in investing activities	(5,009		)	(33,576		)	(9,221		)	(26		)	(47,832		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	22,800			—			—			—			22,800
Principal payments on long-term debt	—			—			(153		)	—			(153		)
Purchase of treasury stock	(7,271		)	—			—			—			(7,271		)
Proceeds from exercise of stock options	4,963			—			—			—			4,963
Proceeds from contributions from affiliates	—			—			484			(484		)	—
Distributions to affiliates	—			—			(510		)	510			—
Dividends paid	(12,139		)	—			—			—			(12,139		)
Net cash provided by (used in) financing activities	8,353			—			(179		)	26			8,200
Net change in cash and cash equivalents	(10,582		)	(136		)	(4,700		)	—			(15,418		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			427			—			427
Cash and cash equivalents at beginning of period	14,696			159			187,608			—			202,463
Cash and cash equivalents at end of period	$	4,114		$	23		$	183,335		$	—		$	187,472

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Reportable Segment Information

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Reportable Segment Information

Reportable Segment Information

Hotel Franchising: Hotel franchising includes the Company's hotel franchising operations consisting of its twelve brands. The twelve brands are aggregated within this segment considering their similar economic characteristics, types of customers, distribution channels and regulatory business environments. Revenues from the hotel franchising business include royalty fees, initial franchise and relicensing fees, marketing and reservation system fees, procurement services revenue and other franchising related revenue. The Company is obligated under its hotel franchise agreements to provide marketing and reservation services appropriate for the operation of its systems. These services do not represent separate reportable segments as their operations are directly related to the Company's hotel franchising business. The revenues received from franchisees that are used to pay for part of the Company's ongoing operations are included in hotel franchising revenues and are offset by the related expenses paid for marketing and reservation activities to calculate hotel franchising operating income.

The financial results for the three months ended March 31, 2017 have been updated to reflect the Company's adoption of Topic 606 as discussed in Note 1. In addition, the financial results related to SkyTouch are now reported as a component of Corporate & Other.

The Company evaluates its hotel franchising segment based primarily on the results of the segment without allocating corporate expenses, income taxes or indirect general and administrative expenses, which are included in the Corporate & Other column. Corporate & Other revenues include rental income related to an office building owned by the Company, as well as revenues related to the Company's vacation rental initiatives and its SkyTouch operations related to providing cloud-based technology products to hoteliers not under franchise agreements with the Company. Equity in earnings or losses from hotel franchising related joint ventures is allocated to the Company's hotel franchising segment. The Company does not allocate interest expense, interest income, other gains and losses or income taxes to its hotel franchising segment.

The following table presents the financial information for the Company's hotel franchising segment:

	Three Months Ended March 31, 2018							Three Months Ended March 31, 2017
(In thousands)	Hotel Franchising		Corporate & Other			Consolidated		Hotel Franchising		Corporate & Other			Consolidated
Revenues	$	205,622	$	3,772		$	209,394	$	186,313	$	2,555		$	188,868
Operating income (loss)	$	59,358	$	(13,109	)	$	46,249	$	58,256	$	(12,853	)	$	45,403
Income (loss) before income taxes	$	53,389	$	(22,928	)	$	30,461	$	56,176	$	(21,897	)	$	34,279

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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

On October 9, 2012, the Company entered into a limited payment guaranty with regards to a VIE's $18.0 million bank loan for the construction of a hotel franchised under one of the Company's brands in the United States. Under the terms of the limited guaranty, the Company agreed to guarantee 25% of the outstanding principal balance for a maximum exposure of $4.5 million and accrued unpaid interest, as well as any unpaid expenses incurred by the lender. The limited guaranty shall remain in effect until the maximum amount guaranteed by the Company is paid in full. In addition to the limited guaranty, the Company entered into an environmental indemnity agreement, which indemnifies the lending institution from and against any damages relating to or arising out of possible environmental contamination issues with regards to the property.

On September 4, 2015, the Company entered into a limited payment guaranty with regards to a VIE's $13.3 million bank loan for the design, development, and construction of a new hotel franchised under one of the Company's brands in the United States.  Under the terms of the limited guaranty, the Company has agreed to guarantee a maximum of $1.8 million of the VIE’s obligations under the loan. The limited guaranty shall remain in effect until the earlier of (i) the VIE’s bank loan is paid in full to the lender; (ii) the maximum amount guaranteed by the Company is paid in full; or (iii) the Company, through its affiliate, ceases to be a member of the VIE. 

On June 2, 2016, one of the Company’s VIEs obtained a $61.0 million term loan for purposes of refinancing a $46.2 million construction loan. In connection with the refinancing, the Company entered into three limited guarantees. Under the terms of the limited guarantees, the Company agreed to guarantee a maximum obligation of $3.3 million in the aggregate, in addition to a percentage of any operating expenses and capital expenditures not covered by operating revenues and unpaid expenses incurred. The limited guarantees will remain in effect until the loan is repaid in full or the VIE reaches a specified debt yield for two consecutive quarters under the loan covenants. The maturity date of the VIE's loan is June 2019.

The Company believes the likelihood of having to perform under the aforementioned limited payment guarantees was remote atMarch 31, 2018 and December 31, 2017.

On September 12, 2017, the Company transferred a portion of an outstanding note receivable to a third party for $24.2 million.  In the first quarter of 2018, an additional $0.2 million was transferred for a total of $24.4 million. Under the agreement, the counter party may require the Company to purchase the outstanding interest in the note if the Company declares a default against the borrower and enters into foreclosure proceedings.  The Company believes the likelihood of foreclosure on the note is remote as of March 31, 2018.

Commitments

The Company has the following commitments outstanding at March 31, 2018:

• The Company provides financing in the form of franchise agreement acquisition costs to franchisees for property improvements, hotel development efforts and other purposes. At March 31, 2018, the Company had commitments to extend an additional $215.1 million for these purposes provided certain conditions are met by its franchisees.

• The Company committed to make additional capital contributions totaling $13.5 million to existing joint ventures related to the construction of various hotels to be operated under the Company's Cambria Hotels brand.

• In October 2017, the Company committed to provide financing to a development company to construct a Cambria hotel. The Company has committed to provide an aggregate of $3.8 million, if certain conditions are met. As of March 31, 2018, no funds have been disbursed.

• In March 2018, the Company entered into a construction loan agreement for the rehabilitation and development of a former office building into a hotel through a consolidated joint venture with a commercial lender, which is secured by the building. The construction loan can be drawn up to $34.9 million. The Company has a carve-out guaranty and the unaffiliated joint venture partner has a completion guaranty in relation to the loan, in which both parties are required to meet certain financial covenants relating to liquidity and net worth. The rehabilitation of the building is considered a qualified asset in which requires a significant amount of time to prepare for its intended use. Therefore, any interest costs incurred during the development period of the building is considered an element of the historical cost of the qualifying asset. For the three months ended March 31, 2018, the Company has not drawn on the construction loan or recorded any capitalized interest costs. The Company committed to make additional capital contributions totaling $14.4 million for the development of the hotel to be operated under the Company's Cambria Hotels brand.

• The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation system fees. These fees are described in Note 2 Revenue. 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 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.

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Transactions with Unconsolidated Joint Ventures

3 Months Ended

Mar. 31, 2018

Equity Method Investments and Joint Ventures [Abstract]

Transactions with Unconsolidated Joint Ventures

Transactions with Unconsolidated Joint Ventures

The Company has a management fee arrangement for marketing services with a joint venture partner. For both the three months ended March 31, 2018 and 2017, fees earned and payroll costs reimbursed under this arrangement totaled $0.3 million.

The Company has entered into franchise agreements with certain of the unconsolidated joint ventures discussed in Note 5. Pursuant to these franchise agreements, for the three months ended March 31, 2018 and 2017, the Company recorded royalty and marking reservation system fees of approximately $4.6 million and $3.9 million, respectively. The Company recorded $1.1 million and $1.3 million as a receivable due from these joint ventures as of March 31, 2018 and December 31, 2017, respectively. In addition, the Company paid commissions of $44 thousand and $22 thousand for the three months ended March 31, 2018 and 2017 to an on-line travel agent for which the Company is a joint venture member.

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Acquisition

3 Months Ended

Mar. 31, 2018

Business Combinations [Abstract]

Acquisition

Acquisition

On February 1, 2018, the Company acquired 100% of the issued and outstanding equity interest of WoodSpring. At the time of the acquisition, WoodSpring franchised 239 economy extended stay hotels across 35 U.S. states. The total consideration was $231.6 million, which consisted of cash paid, net of cash acquired, of $231.3 million as well as liabilities assumed of $0.4 million and a preliminary working capital adjustment of $0.1 million. The transaction has been accounted for using the acquisition method of accounting and accordingly, assets acquired, and liabilities assumed were recorded at their fair values as of the acquisition date. The results of WoodSpring have been consolidated with the Company since February 1, 2018 and are included in the Company’s hotel franchising segment.

The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets and liabilities assumed as of February 1, 2018. The Company continues to gather information concerning the valuation of assets acquired and liabilities assumed and is in the process of reviewing the preliminary assessment with its valuation specialists and as a result the allocation is not final. The preliminary fair value of the assets and liabilities is as follows:

	(in thousands)
Cash	$	250
Accounts receivables	1,258
Prepaid	23
Contract assets	115,000
Tradename	22,000
Goodwill	93,384
Accounts payable	(348		)
Total Consideration	$	231,567

The purchase price, subject to customary adjustments, was based on the projected business growth and cash flows over the next several years and indicated a value that was in excess of the current net book value of the business, resulting in the recognition of various identifiable intangible assets and goodwill as follows:

	(in thousands)		Useful Life
Franchise agreements acquired	$	115,000	12-20 years
WoodSpring tradename	22,000		Indefinite
Goodwill	93,384		Indefinite
Total	$	230,384

The excess value recorded in goodwill is expected to be recovered through growth within the existing customer base, improvements in hotel RevPAR and new agreements signed with new franchisees and developers. The full amount of goodwill is deductible for tax purposes. The Company's pro forma results of operations for this acquisition have not been presented here because the effect of this acquisition was not material to the Company's consolidated results of operations.

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Subsequent Events

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On April 19, 2018, the Company's Board of Directors declared a cash dividend on the Company's common stock of $0.215 per share. The dividend is payable on July 17, 2018, to stockholders of record on July 2, 2018.

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Company Information and Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Accounting

The accompanying unaudited consolidated financial statements of Choice Hotels International, Inc. and its subsidiaries (together the "Company") have been prepared by the Company in accordance with United States of America generally accepted accounting principles (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). These unaudited consolidated financial statements include all adjustments that are necessary, in the opinion of management, 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. The Company believes the disclosures made are adequate to make the information presented not misleading.

The consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2017 and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 1, 2018 (the "10-K"). Interim results are not necessarily indicative of the entire year results. All inter-company transactions and balances between Choice Hotels International, Inc. 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.

Recently Adopted Accounting Guidance and Future Adoption of Recently Announced Accounting Guidance

Recently Adopted Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue From Contracts with Customers (Topic 606) and issued subsequent amendments to the initial guidance at various points of 2015 and 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20 (these ASUs collectively referred to as "Topic 606"). The Company adopted Topic 606 as of January 1, 2018 using the full retrospective method of adoption. The provisions of Topic 606 impacted the Company’s revenue recognition as follows:

• Initial and relicensing fees earned upon execution of a franchise agreement are recognized as revenue ratably as services are provided over the enforceable period of the franchise license arrangement. This represents a change from prior practice, whereby the Company typically recognized revenue for initial and relicensing fees in full in the period of agreement execution.

• Sales commissions, which are paid upon the execution of a franchise agreement, are recognized ratably over the period a hotel is expected to remain in the Company's franchise system rather than expensed as incurred.

• Franchise agreement acquisition costs are capitalized as intangible assets, as opposed to notes receivable. Amortization of franchise agreement acquisition costs are recognized as a reduction of revenue rather than as a component of depreciation and amortization.

• Revenue related to the Choice Privileges program, which is reported as a component of marketing and reservation system fees, is deferred as points are awarded and recognized upon point redemption, net of reward reimbursements paid to a third-party. Previously, revenue was recognized on a gross basis at the time the points were issued with a corresponding deferral of revenue equal to the expected future costs of the award. Deferred revenue was then recognized as actual points were redeemed and costs for those redemptions incurred.

• Topic 606 also impacted the Company’s accounting for surpluses and deficits generated from marketing and reservation system activities. The Companyhas historically, consistent with its existing agreements, not earned a profit or generated a loss from marketing and reservation activities, and as a result, the Company recorded excess marketing and reservation system revenues or expenses as assets or liabilities on the Company’s balance sheet prior to the adoption of Topic 606. However, as a result of the the adoption of Topic 606, the Company will no longer defer revenues and expenses or record assets and liabilities when system revenues exceed expenses in the current period or vice versa. The Company intends to manage these activities to break-even over time but anticipates that net income or loss may be generated quarterly due to the seasonal nature of the hotel industry and annually based on the level of investments needed for new initiatives that benefit our franchisees.

All amounts and disclosures set forth in this Form 10-Q reflect the necessary adjustments required for the adoption of Topic 606, including the reclassification of prior year balances to conform to current year presentation. See Note 2 for further details on the adoption of Topic 606 and impact to the Company's significant accounting policies. In accordance with Topic 606 requirements, the disclosure of the impact of adoption on the Company's prior period consolidated statements of income and balance sheet is presented below. The adoption of Topic 606 had no impact to cash from or used in operating, financing, or investing, but resulted in certain reclassifications within cash flows from operating activities, on the prior period consolidated statement of cash flows.

	Three Months Ended March 31, 2017
	As Previously Reported		Adoption of Topic 606			As Adjusted
Income Statement	(in thousands, except per share amounts)
Total revenues	$	197,898	$	(9,030	)	$	188,868
Total operating expenses	145,391		(1,926		)	143,465
Income before income taxes	41,383		(7,104		)	34,279
Income taxes	12,639		(2,629		)	10,010
Net income	28,744		(4,475		)	24,269
Diluted earnings per share	0.51		(0.08		)	0.43

	December 31, 2017
	As Previously Reported (1)(2)		Adoption of Topic 606			As Adjusted
Balance Sheet	(in thousands)
Receivables (net of allowance for doubtful accounts)	$	125,452	$	418		$	125,870
Current notes receivable, net of allowances	13,904		(648		)	13,256
Other current assets	28,241		(2,274		)	25,967
Intangible assets, net	14,672		85,820			100,492
Notes receivable, net of allowances	147,993		(67,857		)	80,136
Deferred income tax asset	13,335		13,889			27,224
Other assets	29,479		38,236			67,715
Accounts payable(1)	67,839		—			67,839
Accrued expenses and other current liabilities(1)	84,315		—			84,315
Current deferred revenue(2)	13,190		38,952			52,142
Current liability for guest loyalty program(2)	79,183		(60		)	79,123
Deferred revenue(2)	14,029		80,124			94,153
Liability for guest loyalty program(2)	48,738		(37		)	48,701
Other liabilities(2)	51,245		(4,896		)	46,349
Retained earnings	673,771		(46,499		)	627,272

⁽¹⁾ The Company performed reclassifications of certain payroll taxes from Accrued expenses and other current liabilities to Accounts payable totaling $4.3 million, and the entirety of Income taxes payable to Accrued expenses and other current liabilities totaling $2.8 million.

⁽²⁾ As a result of adoption of Topic 606 and in accordance with reporting requirements, the Company performed revisions to presentation within Total liabilities in the consolidated balance sheet to add non-current Deferred revenue and current and non-current Liability for guest loyalty program line items. Amounts originally captured in current Deferred revenue and Other liabilities have been reclassified to the new line items in the table above.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15") and in November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash ("ASU 2016-18"), which collectively provide additional guidance on nine specific cash flow issues. The Company adopted ASU 2016-15 and ASU 2016-18 on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16").  ASU 2016-16 provides guidance on recognition of current income tax consequences for inter-company asset transfers (other than inventory) at the time of transfer.  The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and adds guidance for partial sales of nonfinancial assets. The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The Company adopted this ASU on January 1, 2018, and it did not have an impact on the Company's consolidated financial statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires lessees to recognize most leases on their balance sheet by recording a liability for its lease obligation and an asset for its right to use the underlying asset as of the lease commencement date. The standard requires entities to determine whether an arrangement contains a lease or a service agreement as the accounting treatment is significantly different between the two arrangements. The standard also requires the lessee to evaluate whether a lease is a financing lease or an operating lease as the accounting and presentation guidance between the two are different. ASU 2016-02 also modifies the classification criteria and accounting for sales-type and direct financing leases for lessors. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company intends to adopt the standard on January 1, 2019 and apply the package of practical expedients available upon adoption. The Company is currently assessing the potential impact that ASU 2016-02 will have on its financial statements and disclosures.

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Company Information and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

	Three Months Ended March 31, 2017
	As Previously Reported		Adoption of Topic 606			As Adjusted
Income Statement	(in thousands, except per share amounts)
Total revenues	$	197,898	$	(9,030	)	$	188,868
Total operating expenses	145,391		(1,926		)	143,465
Income before income taxes	41,383		(7,104		)	34,279
Income taxes	12,639		(2,629		)	10,010
Net income	28,744		(4,475		)	24,269
Diluted earnings per share	0.51		(0.08		)	0.43

	December 31, 2017
	As Previously Reported (1)(2)		Adoption of Topic 606			As Adjusted
Balance Sheet	(in thousands)
Receivables (net of allowance for doubtful accounts)	$	125,452	$	418		$	125,870
Current notes receivable, net of allowances	13,904		(648		)	13,256
Other current assets	28,241		(2,274		)	25,967
Intangible assets, net	14,672		85,820			100,492
Notes receivable, net of allowances	147,993		(67,857		)	80,136
Deferred income tax asset	13,335		13,889			27,224
Other assets	29,479		38,236			67,715
Accounts payable(1)	67,839		—			67,839
Accrued expenses and other current liabilities(1)	84,315		—			84,315
Current deferred revenue(2)	13,190		38,952			52,142
Current liability for guest loyalty program(2)	79,183		(60		)	79,123
Deferred revenue(2)	14,029		80,124			94,153
Liability for guest loyalty program(2)	48,738		(37		)	48,701
Other liabilities(2)	51,245		(4,896		)	46,349
Retained earnings	673,771		(46,499		)	627,272

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Revenue (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Contract with Customer, Liability

Significant changes in the contract liabilities balances during the period December 31, 2017 to March 31, 2018 are as follows:

	(in thousands)
Balance as of December 31, 2017	$	132,339
Increases to the contract liability balance due to cash received	17,947
Revenue recognized in the period	(12,726		)
Balance as of March 31, 2018	$	137,560

Disaggregation of Revenue

The following table presents our revenues by over time and point in time recognition:

	Three Months Ended						Three Months Ended
	March 31, 2018						March 31, 2017
	Over time		Point in time		Total		Over time		Point in time		Total
Revenues:	(in thousands)						(in thousands)
Royalty fees	$	76,698	$	—	$	76,698	$	68,294	$	—	$	68,294
Initial franchise and relicensing fees	6,214		—		6,214		5,806		—		5,806
Procurement services	9,565		373		9,938		7,133		230		7,363
Marketing and reservation system	101,128		5,873		107,001		92,852		6,001		98,853
Other	8,520		672		9,192		6,737		1,478		8,215
Total Topic 606 revenues	$	202,125	$	6,918	209,043		$	180,822	$	7,709	188,531
Non-Topic 606 revenues					351						337
					$	209,394					$	188,868

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Other Current Assets (Tables)

3 Months Ended

Mar. 31, 2018

Assets, Current [Abstract]

Schedule Of Other Current Assets

Other current assets consist of the following:

	March 31, 2018		December 31, 2017
	(in thousands)
Prepaid expenses	$	16,998	$	14,205
Other current assets	7,096		4,762
Land held for sale	9,971		7,000
Total	$	34,065	$	25,967

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Notes Receivable and Allowance for Losses (Tables)

3 Months Ended

Mar. 31, 2018

Notes Receivable and Allowance for Losses [Line Items]

Schedule Of Notes Receivable

The following table shows the composition of the Company's notes receivable balances:

	March 31, 2018		December 31, 2017
Credit Quality Indicator	(in thousands)
Senior	$	73,643	$	73,700
Subordinated	20,975		18,647
Unsecured	3,059		3,182
Total notes receivable	97,677		95,529
Allowance for losses on non-impaired loans	1,647		1,647
Allowance for losses on receivables specifically evaluated for impairment	490		490
Total loan reserves	2,137		2,137
Net carrying value	$	95,540	$	93,392
Current portion, net	$	17,254	$	13,256
Long-term portion, net	78,286		80,136
Total	$	95,540	$	93,392

Mezzanine & Other Notes Receivable

Notes Receivable and Allowance for Losses [Line Items]

Past Due Balances Of Notes Receivable

Past due balances of mezzanine and other notes receivable by credit quality indicators are as follows:

	30-89 days Past Due		> 90 days Past Due		Total Past Due		Current		Total  Notes Receivable
	(in thousands)
As of March 31, 2018
Senior	$	—	$	—	$	—	$	73,643	$	73,643
Subordinated	—		—		—		20,975		20,975
Unsecured	—		—		—		3,059		3,059
	$	—	$	—	$	—	$	97,677	$	97,677
As of December 31, 2017
Senior	$	—	$	—	$	—	$	73,700	$	73,700
Subordinated	—		—		—		18,647		18,647
Unsecured	—		—		—		3,182		3,182
	$	—	$	—	$	—	$	95,529	$	95,529

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Debt (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule Of Components Of Debt

Debt consists of the following:

	March 31, 2018		December 31, 2017
	(in thousands)
$400 million senior unsecured notes with an effective interest rate of 6.0% less deferred issuance costs of $3.8 million and $3.9 million at March 31, 2018 and December 31, 2017, respectively	$	396,249	$	396,057
$250 million senior unsecured notes with an effective interest rate of 6.19% less a discount and deferred issuance costs of $0.7 million and $0.8 million at March 31, 2018 and December 31, 2017, respectively	249,259		249,182
$450 million senior unsecured credit facility with an effective interest rate of 3.14% and 2.84%, less deferred issuance costs of $1.9 million and $2.1 million at March 31, 2018 and December 31, 2017, respectively	138,080		67,936
Fixed rate collateralized mortgage with an effective interest rate of 4.57%, plus a fair value adjustment of $0.5 million and $0.6 million at March 31, 2018 and December 31, 2017, respectively	8,692		8,853
Economic development loans with an effective interest rate of 3.0% at March 31, 2018 and December 31, 2017, respectively	3,712		3,712
Other notes payable	1,018		784
Total debt	$	797,010	$	726,524
Less current portion	1,265		1,232
Total long-term debt	$	795,745	$	725,292

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2018

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Loss

The following represents the changes in accumulated other comprehensive loss, net of tax, by component for the three months ended March 31, 2018:

	Loss on Cash Flow Hedge			Foreign Currency Items			Total
	(in thousands)
Beginning balance, December 31, 2017	$	(2,298	)	$	(2,401	)	$	(4,699	)
Other comprehensive income before reclassification	—			855			855
Amounts reclassified from accumulated other comprehensive loss	215			—			215
Net current period other comprehensive income	215			855			1,070
Ending balance, March 31, 2018	$	(2,083	)	$	(1,546	)	$	(3,629	)

Reclassifications From Accumulated Other Comprehensive Income (Loss)

The amounts reclassified from accumulated other comprehensive loss during the three months ended March 31, 2018 were reclassified to the following line items in the Company's Consolidated Statements of Income.

Component	Amount Reclassified from Accumulated Other Comprehensive Loss		Affected Line Item in the Consolidated Statement of Income
	Three Months Ended March 31, 2018
	(in thousands)
Loss on cash flow hedge
Interest rate contract	$	215	Interest expense
	—		Tax (expense) benefit
	$	215	Net of tax

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Schedule Of Fair Value Of Assets

As of March 31, 2018 and December 31, 2017, the Company had the following assets measured at fair value on a recurring basis:

	Fair Value Measurements at Reporting Date Using
	Total		Level 1		Level 2		Level 3
Assets	(in thousands)
As of March 31, 2018
Mutual funds(1)	$	21,388	$	21,388	$	—	$	—
Money market funds(1)	1,703		—		1,703		—
	$	23,091	$	21,388	$	1,703	$	—
As of December 31, 2017
Money market funds, included in cash and cash equivalents	$	50,419	$	—	$	50,419	$	—
Mutual funds(1)	20,869		20,869		—		—
Money market funds(1)	1,702		—		1,702		—
	$	72,990	$	20,869	$	52,121	$	—

________________________ 

(1) Included in Investments, employee benefit plans at fair value and other current assets on the consolidated balance sheets.

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Share-Based Compensation and Capital Stock (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Pre-Tax Stock-Based Compensation Expenses And Associated Income Tax Benefits

The components of the Company’s pretax share-based compensation expense and associated income tax benefits are as follows for the three months ended March 31, 2018 and 2017:

	Three Months Ended
	March 31,
(in millions)	2018		2017
Stock options	$	0.7	$	1.1
Restricted stock	1.7		1.7
Performance vested restricted stock units	1.1		1.0
Total	$	3.5	$	3.8
Income tax benefits	$	0.8	$	1.4

Summary Of Change In Stock-Based Award Activity

A summary of stock-based award activity as of March 31, 2018 and changes during the three months ended 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, 2018	1,976,326		$	50.80		348,876		$	57.05	294,204		$	56.95
Granted	109,045		81.55			72,671		81.55		93,809		81.55
Exercised/Vested	(414,116	)	55.66			(70,450	)	54.94		(25,232	)	63.47
Expired	(2,018	)	63.47			—		—		—		—
Forfeited	(10,095	)	54.08			(13,509	)	51.67		(6,833	)	60.42
Outstanding at March 31, 2018	1,659,142		$	51.57	4.0 years	337,588		$	62.98	355,948		$	62.90
Options exercisable at March 31, 2018	1,169,868		$	47.44	3.5 years

Weighted Average Assumptions Of Black-Scholes Option-Pricing Model

The fair value of the options granted was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2018 Grants
Risk-free interest rate	2.58		%
Expected volatility	21.17		%
Expected life of stock option	4.6 years
Dividend yield	1.05		%
Requisite service period	4 years
Contractual life	7 years
Weighted average fair value of options granted (per option)	$	16.27

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Computation Of Basic And Diluted Earnings Per Common Share

The computation of basic and diluted earnings per common share is as follows:    

	Three Months Ended
	March 31,
(In thousands, except per share amounts)	2018			2017
Computation of Basic Earnings Per Share:
Numerator:
Net income	$	25,086		$	24,269
Income allocated to participating securities	(155		)	(174		)
Net income available to common shareholders	$	24,931		$	24,095
Denominator:
Weighted average common shares outstanding – basic	56,464			55,941
Basic earnings per share	$	0.44		$	0.43
Computation of Diluted Earnings Per Share:
Numerator:
Net income	$	25,086		$	24,269
Income allocated to participating securities	(154		)	(174		)
Net income available to common shareholders	$	24,932		$	24,095
Denominator:
Weighted average common shares outstanding – basic	56,464			55,941
Diluted effect of stock options and PVRSUs	647			345
Weighted average common shares outstanding – diluted	57,111			56,286
Diluted earnings per share	$	0.44		$	0.43

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Condensed Consolidating Financial Statements (Tables)

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Statement Of Income

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

For theThree Months Ended March 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES
Royalty fees	$	71,615		$	36,209	$	8,470		$	(39,596	)	$	76,698
Initial franchise and relicensing fees	6,052			—		162			—			6,214
Procurement services	9,679			124		278			(143		)	9,938
Marketing and reservation system	88,395			106,426		3,746			(91,566		)	107,001
Other	6,002			—		3,633			(92		)	9,543
Total revenues	181,743			142,759		16,289			(131,397		)	209,394
OPERATING EXPENSES
Selling, general and administrative	41,357			32,614		6,790			(39,897		)	40,864
Marketing and reservation system	109,247			95,855		5,626			(91,500		)	119,228
Depreciation and amortization	1,649			549		855			—			3,053
Total operating expenses	152,253			129,018		13,271			(131,397		)	163,145
Operating income	29,490			13,741		3,018			—			46,249
OTHER INCOME AND EXPENSES, NET
Interest expense	10,991			—		318			—			11,309
Equity in earnings of consolidated subsidiaries	(10,766		)	1,071		—			9,695			—
Other items, net	(497		)	5,616		(640		)	—			4,479
Total other income and expenses, net	(272		)	6,687		(322		)	9,695			15,788
Income before income taxes	29,762			7,054		3,340			(9,695		)	30,461
Income taxes	4,676			727		(28		)	—			5,375
Net income	$	25,086		$	6,327	$	3,368		$	(9,695	)	$	25,086

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

For the Three Months Ended March 31, 2017

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
REVENUES
Royalty fees	$	63,596		$	30,735	$	10,514		$	(36,551	)	$	68,294
Initial franchise and relicensing fees	5,611			—		195			—			5,806
Procurement services	7,301			—		62			—			7,363
Marketing and reservation system	87,700			93,724		3,473			(86,044		)	98,853
Other	6,287			40		2,412			(187		)	8,552
Total revenues	170,495			124,499		16,656			(122,782		)	188,868
OPERATING EXPENSES
Selling, general and administrative	37,448			27,271		5,787			(36,761		)	33,745
Marketing and reservation system	102,681			87,642		3,692			(86,021		)	107,994
Depreciation and amortization	384			511		831			—			1,726
Total operating expenses	140,513			115,424		10,310			(122,782		)	143,465
Operating income	29,982			9,075		6,346			—			45,403
OTHER INCOME AND EXPENSES, NET
Interest expense	11,063			—		142			—			11,205
Equity in earnings of consolidated subsidiaries	(13,192		)	455		—			12,737			—
Other items, net	(364		)	928		(645		)	—			(81		)
Total other income and expenses, net	(2,493		)	1,383		(503		)	12,737			11,124
Income before income taxes	32,475			7,692		6,849			(12,737		)	34,279
Income taxes	8,206			2,026		(222		)	—			10,010
Net income	$	24,269		$	5,666	$	7,071		$	(12,737	)	$	24,269

Condensed Consolidating Statement of Comprehensive Income

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedMarch 31, 2018

(Unaudited, in thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	25,086	$	6,327	$	3,368	$	(9,695	)	$	25,086
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	855		—		855		(855		)	855
Other comprehensive income, net of tax	1,070		—		855		(855		)	1,070
Comprehensive income	$	26,156	$	6,327	$	4,223	$	(10,550	)	$	26,156

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

For the Three Months EndedMarch 31, 2017

(Unaudited, in thousands)

	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Net income	$	24,269	$	5,666	$	7,071	$	(12,737	)	$	24,269
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215		—		—		—			215
Foreign currency translation adjustment	568		—		568		(568		)	568
Other comprehensive income, net of tax	783		—		568		(568		)	783
Comprehensive income	$	25,052	$	5,666	$	7,639	$	(13,305	)	$	25,052

Condensed Consolidating Balance Sheet

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

As of March 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	11,415		$	52	$	25,367	$	—		$	36,834
Receivables	126,154			5,555		11,725		(406		)	143,028
Other current assets	16,611			64,530		13,231		(42,389		)	51,983
Total current assets	154,180			70,137		50,323		(42,795		)	231,845
Property and equipment, at cost, net	46,996			16,888		34,519		—			98,403
Goodwill	159,196			—		15,342		—			174,538
Intangible assets, net	141,483			93,646		11,796		—			246,925
Notes receivable, net of allowances	20,346			—		57,940		—			78,286
Investments, employee benefit plans, at fair value	—			20,142		—		—			20,142
Investments in affiliates	283,439			47,882		—		(331,321		)	—
Advances to affiliates	10,704			109,042		11		(119,757		)	—
Deferred income taxes	16,982			10,050		170		(2,601		)	24,601
Other assets	417			154,978		21,882		—			177,277
Total assets	$	833,743		$	522,765	$	191,983	$	(496,474	)	$	1,052,017
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	16,489		$	42,869	$	3,778	$	(406	)	$	62,730
Accrued expenses and other current liabilities	60,724			27,752		12,866		(42,389		)	58,953
Deferred revenue	31,101			28,515		2,631		—			62,247
Current portion of long-term debt	—			—		1,265		—			1,265
Liability for guest loyalty program	—			83,843		232		—			84,075
Total current liabilities	108,314			182,979		20,772		(42,795		)	269,270
Long-term debt	783,588			3,712		8,445		—			795,745
Long-term deferred revenue	72,259			22,436		1,656		—			96,351
Deferred compensation & retirement plan obligations	—			24,499		14		—			24,513
Advances from affiliates	115,267			1,371		3,119		(119,757		)	—
Income tax payable	—			—		29,041		—			29,041
Other liabilities	14,232			64,859		20,524		(2,601		)	97,014
Total liabilities	1,093,660			299,856		83,571		(165,153		)	1,311,934
Total shareholders’ (deficit) equity	(259,917		)	222,909		108,412		(331,321		)	(259,917		)
Total liabilities and shareholders’ deficit	$	833,743		$	522,765	$	191,983	$	(496,474	)	$	1,052,017

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

As of December 31, 2017

(in thousands)

	Parent			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	12,671		$	38	$	222,627	$	—		$	235,336
Receivables	107,470			6,120		12,480		(200		)	125,870
Other current assets	12,507			60,569		9,930		(43,783		)	39,223
Total current assets	132,648			66,727		245,037		(43,983		)	400,429
Property and equipment, at cost, net	47,736			18,114		17,524		—			83,374
Goodwill	65,813			—		14,944		—			80,757
Intangible assets, net	5,122			83,441		11,929		—			100,492
Notes receivable, net of allowances	22,193			—		57,943		—			80,136
Investments, employee benefit plans, at fair value	—			20,838		—		—			20,838
Investments in affiliates	475,434			47,172		—		(522,606		)	—
Advances to affiliates	10,517			120,466		—		(130,983		)	—
Deferred income taxes	20,548			9,335		169		(2,828		)	27,224
Other assets	189			160,045		41,707		—			201,941
Total assets	$	780,200		$	526,138	$	389,253	$	(700,400	)	$	995,191
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Accounts payable	$	15,326		$	48,213	$	4,500	$	(200	)	$	67,839
Accrued expenses and other current liabilities	73,225			41,814		13,059		(43,783		)	84,315
Deferred revenue	24,984			25,301		1,857		—			52,142
Current portion of long-term debt	—			—		1,232		—			1,232
Liability for guest loyalty program	—			78,899		224		—			79,123
Total current liabilities	113,535			194,227		20,872		(43,983		)	284,651
Long-term debt	713,175			3,712		8,405		—			725,292
Long-term deferred revenue	71,100			20,513		2,540		—			94,153
Deferred compensation & retirement plan obligations	—			25,552		14		—			25,566
Advances from affiliates	126,691			1,294		2,998		(130,983		)	—
Income taxes payable	—			—		29,041		—			29,041
Other liabilities	14,300			62,845		20,772		(2,828		)	95,089
Total liabilities	1,038,801			308,143		84,642		(177,794		)	1,253,792
Total shareholders’ (deficit) equity	(258,601		)	217,995		304,611		(522,606		)	(258,601		)
Total liabilities and shareholders’ deficit	$	780,200		$	526,138	$	389,253	$	(700,400	)	$	995,191

Condensed Consolidating Statement Of Cash Flows

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

For the Three Months EndedMarch 31, 2018

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by operating activities	$	197,590		$	4,159		$	5,087		$	(202,284	)	$	4,552
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(2,904		)	(837		)	(1,255		)	—			(4,996		)
Investment in intangible assets	(1,193		)	—			—			—			(1,193		)
Business acquisition, net of cash acquired	(231,317		)	—			—			—			(231,317		)
Contributions to equity method investments	—			(1,432		)	(23		)	—			(1,455		)
Distributions from equity method investments	—			564			202			—			766
Issuance of mezzanine and other notes receivable	(2,500		)	—			—			—			(2,500		)
Collections of mezzanine and other notes receivable	150			—			—			—			150
Purchases of investments, employee benefit plans	—			(1,669		)	—			—			(1,669		)
Proceeds from sales of investments, employee benefit plans	—			1,029			—			—			1,029
Advances to and investments in affiliates	—			(2,450		)	—			2,450			—
Divestment in affiliates	—			650			—			(650		)	—
Net cash used in investing activities	(237,764		)	(4,145		)	(1,076		)	1,800			(241,185		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	70,000			—			—			—			70,000
Principal payments on long-term debt	—			—			(111		)	—			(111		)
Proceeds from the issuance of long-term debt	—			—			212			—			212
Purchase of treasury stock	(41,869		)	—			—			—			(41,869		)
Debt issuance costs	—			—			(914		)	—			(914		)
Proceeds from exercise of stock options	23,052			—			—			—			23,052
Proceeds from contributions from affiliates	—			—			2,450			(2,450		)	—
Distributions to affiliates	—			—			(650		)	650			—
Dividends paid	(12,265		)	—			(202,284		)	202,284			(12,265		)
Net cash provided by (used in) financing activities	38,918			—			(201,297		)	200,484			38,105
Net change in cash and cash equivalents	(1,256		)	14			(197,286		)	—			(198,528		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			26			—			26
Cash and cash equivalents at beginning of period	12,671			38			222,627			—			235,336
Cash and cash equivalents at end of period	$	11,415		$	52		$	25,367		$	—		$	36,834

Choice Hotels International, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

For the Three Months EndedMarch 31, 2017

(Unaudited, in thousands)

	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided (used) by operating activities	$	(13,926	)	$	33,440		$	4,700		$	—		$	24,214
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(3,832		)	(710		)	(176		)	—			(4,718		)
Investment in intangible assets	(1,369		)	(719		)	—			—			(2,088		)
Contributions to equity method investments	—			(31,592		)	(18		)	—			(31,610		)
Distributions from equity method investments	—			—			510			—			510
Issuance of mezzanine and other notes receivable	(330		)	—			(9,533		)	—			(9,863		)
Collections of mezzanine and other notes receivable	522			—			—			—			522
Purchases of investments, employee benefit plans	—			(1,424		)	—			—			(1,424		)
Proceeds from sales of investments, employee benefit plans	—			843			—			—			843
Advances to and investments in affiliates	—			(484		)	—			484			—
Divestment in affiliates	—			510			—			(510		)	—
Other items, net	—			—			(4		)	—			(4		)
Net cash used in investing activities	(5,009		)	(33,576		)	(9,221		)	(26		)	(47,832		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	22,800			—			—			—			22,800
Principal payments on long-term debt	—			—			(153		)	—			(153		)
Purchase of treasury stock	(7,271		)	—			—			—			(7,271		)
Proceeds from exercise of stock options	4,963			—			—			—			4,963
Proceeds from contributions from affiliates	—			—			484			(484		)	—
Distributions to affiliates	—			—			(510		)	510			—
Dividends paid	(12,139		)	—			—			—			(12,139		)
Net cash provided by (used in) financing activities	8,353			—			(179		)	26			8,200
Net change in cash and cash equivalents	(10,582		)	(136		)	(4,700		)	—			(15,418		)
Effect of foreign exchange rate changes on cash and cash equivalents	—			—			427			—			427
Cash and cash equivalents at beginning of period	14,696			159			187,608			—			202,463
Cash and cash equivalents at end of period	$	4,114		$	23		$	183,335		$	—		$	187,472

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Reportable Segment Information (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Schedule Of Financial Information For Company's Franchising Segment

The following table presents the financial information for the Company's hotel franchising segment:

	Three Months Ended March 31, 2018							Three Months Ended March 31, 2017
(In thousands)	Hotel Franchising		Corporate & Other			Consolidated		Hotel Franchising		Corporate & Other			Consolidated
Revenues	$	205,622	$	3,772		$	209,394	$	186,313	$	2,555		$	188,868
Operating income (loss)	$	59,358	$	(13,109	)	$	46,249	$	58,256	$	(12,853	)	$	45,403
Income (loss) before income taxes	$	53,389	$	(22,928	)	$	30,461	$	56,176	$	(21,897	)	$	34,279

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Acquisition (Tables)

3 Months Ended

Mar. 31, 2018

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition

The preliminary fair value of the assets and liabilities is as follows:

	(in thousands)
Cash	$	250
Accounts receivables	1,258
Prepaid	23
Contract assets	115,000
Tradename	22,000
Goodwill	93,384
Accounts payable	(348		)
Total Consideration	$	231,567

Intangible Assets Acquired as Part of Business Combination

The purchase price, subject to customary adjustments, was based on the projected business growth and cash flows over the next several years and indicated a value that was in excess of the current net book value of the business, resulting in the recognition of various identifiable intangible assets and goodwill as follows:

	(in thousands)		Useful Life
Franchise agreements acquired	$	115,000	12-20 years
WoodSpring tradename	22,000		Indefinite
Goodwill	93,384		Indefinite
Total	$	230,384

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Company Information and Significant Accounting Policies - Income Statement (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Feb. 01, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	$ 209,394	$ 188,868
Operating expenses	163,145	143,465
Income before income taxes	30,461	34,279
Income taxes	5,375	10,010
Net income	$ 25,086	$ 24,269
Diluted earnings per share (in dollars per share)		$ 0.43
As Previously Reported
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues		$ 197,898
Operating expenses		145,391
Income before income taxes		41,383
Income taxes		12,639
Net income		$ 28,744
Diluted earnings per share (in dollars per share)		$ 0.51
Accounting Standards Update 2014-09 | Adoption of Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues		$ (9,030)
Operating expenses		(1,926)
Income before income taxes		(7,104)
Income taxes		(2,629)
Net income		$ (4,475)
Diluted earnings per share (in dollars per share)		$ (0.08)
WoodSpring
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Business acquisition, percentage of voting interests acquired			100.00%

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Company Information and Significant Accounting Policies - Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Receivables (net of allowance for doubtful accounts)	$ 143,028	$ 125,870
Notes receivable, net of allowance	17,254	13,256
Other current assets	34,065	25,967
Intangible assets, net	246,925	100,492
Notes receivable, net of allowances	78,286	80,136
Deferred income taxes	24,601	27,224
Other assets	49,120	67,715
Accounts payable	62,730	67,839
Accrued expenses and other current liabilities	58,953	84,315
Deferred revenue	62,247	52,142
Liability for guest loyalty program	84,075	79,123
Long-term deferred revenue	96,351	94,153
Liability for guest loyalty program	51,749	48,701
Other liabilities	45,265	46,349
Retained earnings	640,176	627,272
Income taxes payable	$ 29,041	29,041
As Previously Reported
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Receivables (net of allowance for doubtful accounts)		125,452
Notes receivable, net of allowance		13,904
Other current assets		28,241
Intangible assets, net		14,672
Notes receivable, net of allowances		147,993
Deferred income taxes		13,335
Other assets		29,479
Accounts payable		67,839
Accrued expenses and other current liabilities		84,315
Deferred revenue		13,190
Liability for guest loyalty program		79,183
Long-term deferred revenue		14,029
Liability for guest loyalty program		48,738
Other liabilities		51,245
Retained earnings		673,771
Accounting Standards Update 2014-09 | Adoption of Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Receivables (net of allowance for doubtful accounts)		418
Notes receivable, net of allowance		(648)
Other current assets		(2,274)
Intangible assets, net		85,820
Notes receivable, net of allowances		(67,857)
Deferred income taxes		13,889
Other assets		38,236
Accounts payable		0
Accrued expenses and other current liabilities		0
Deferred revenue		38,952
Liability for guest loyalty program		(60)
Long-term deferred revenue		80,124
Liability for guest loyalty program		(37)
Other liabilities		(4,896)
Retained earnings		(46,499)
Financial Reporting Reclassification
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accounts payable		4,300
Income taxes payable		$ 2,800

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Revenue Textual (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Deferred revenue	$ 62,247		$ 52,142
Long-term deferred revenue	96,351		$ 94,153
Revenue, remaining performance obligation	137,600
Revenues	$ 209,394	$ 188,868
Minimum
Disaggregation of Revenue [Line Items]
Franchise agreement initial term in years	5 years
Franchise fee in years	5 years
Maximum
Disaggregation of Revenue [Line Items]
Franchise agreement initial term in years	30 years
Franchise fee in years	10 years
Other Assets
Disaggregation of Revenue [Line Items]
Capitalized Franchise Sales Commissions	$ 45,100
Selling, General and Administrative Expenses
Disaggregation of Revenue [Line Items]
Amortization Expense And Impairment Loss	1,900
Corporate & Other
Disaggregation of Revenue [Line Items]
Revenues	3,772	$ 2,555
Loyalty Programs
Disaggregation of Revenue [Line Items]
Deferred revenue	27,400
Long-term deferred revenue	$ 16,900

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Revenue Contract Liability (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Changes in Contract Liability [Roll Forward]
Contract with customer, liability, beginning	$ 132,339
Increases to the contract liability balance due to cash received	17,947
Revenue recognized in the period	(12,726)
Contract with customer, liability, ending	$ 137,560

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Revenue Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Royalty fees	$ 76,698	$ 68,294
Initial franchise and relicensing fees	6,214	5,806
Procurement services	9,938	7,363
Marketing And Reservation Revenue	107,001	98,853
Other	9,543	8,552
Revenues	209,394	188,868
Effect of Topic 606 Revenues
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Royalty fees	76,698	68,294
Initial franchise and relicensing fees	6,214	5,806
Procurement services	9,938	7,363
Marketing And Reservation Revenue	107,001	98,853
Other	9,192	8,215
Revenues	209,043	188,531
Effect of Non-Topic 606 Revenues
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenues	351	337
Over time | Effect of Topic 606 Revenues
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Royalty fees	76,698	68,294
Initial franchise and relicensing fees	6,214	5,806
Procurement services	9,565	7,133
Marketing And Reservation Revenue	101,128	92,852
Other	8,520	6,737
Revenues	202,125	180,822
Point in time | Effect of Topic 606 Revenues
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Royalty fees	0	0
Initial franchise and relicensing fees	0	0
Procurement services	373	230
Marketing And Reservation Revenue	5,873	6,001
Other	672	1,478
Revenues	$ 6,918	$ 7,709

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Other Current Assets Schedule of Other Current Assets (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) parcelofland	Dec. 31, 2017 USD ($)
Assets, Current [Abstract]
Prepaid expenses	$ 16,998	$ 14,205
Other current assets	7,096	4,762
Land held for sale	9,971	7,000
Total	$ 34,065	$ 25,967
Parcels of land reclassified to held for sale | parcelofland	1
Transfered to land held for sale	$ 3,000

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Notes Receivable and Allowance for Losses Schedule Of Notes Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Notes Receivable and Allowance for Losses [Line Items]
Notes receivable	$ 97,677	$ 95,529
Allowance for losses on non-impaired loans	1,647	1,647
Allowance for losses on receivables specifically evaluated for impairment	490	490
Total loan reserves	2,137	2,137
Net carrying value	95,540	93,392
Current portion, net	17,254	13,256
Long-term portion, net	78,286	80,136
Senior
Notes Receivable and Allowance for Losses [Line Items]
Notes receivable	73,643	73,700
Subordinated
Notes Receivable and Allowance for Losses [Line Items]
Notes receivable	20,975	18,647
Unsecured
Notes Receivable and Allowance for Losses [Line Items]
Notes receivable	$ 3,059	$ 3,182

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Notes Receivable and Allowance for Losses Narrative (Details) - USD ($)		3 Months Ended	12 Months Ended
	Sep. 12, 2017	Mar. 31, 2018	Dec. 31, 2017
Notes Receivable and Allowance for Losses [Line Items]
Loan reserves		$ 2,137,000	$ 2,137,000
Transfer of notes receivable to third party	$ 24,200,000	200,000
Notes receivable outstanding		95,540,000	93,392,000
Mezzanine & Other Notes Receivable | Impaired Loans
Notes Receivable and Allowance for Losses [Line Items]
Impaired receivables, recorded investment		1,800,000	1,800,000
Impaired receivables, related allowance		1,600,000	1,600,000
Average notes receivable, nonaccrual status		1,800,000	1,900,000
Interest income, impaired loans		0	44,000
Mezzanine & Other Notes Receivable | Non-impaired Loans
Notes Receivable and Allowance for Losses [Line Items]
Loan reserves		500,000	500,000
Notes Receivable
Notes Receivable and Allowance for Losses [Line Items]
Notes receivable outstanding	$ 49,100,000	24,400,000
Variable Interest Entity, Not Primary Beneficiary | Mezzanine & Other Notes Receivable
Notes Receivable and Allowance for Losses [Line Items]
Loans and financing receivable		37,900,000	35,200,000
Interest Rate Below Market Reduction | Variable Interest Entity, Not Primary Beneficiary | Mezzanine & Other Notes Receivable
Notes Receivable and Allowance for Losses [Line Items]
Loans and financing receivable		4,600,000	2,100,000
Receivable with Imputed Interest, discount		300,000	100,000
Other Long-term Liabilities
Notes Receivable and Allowance for Losses [Line Items]
Transfer of notes receivable to third party		$ 24,400,000	$ 24,200,000

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Notes Receivable and Allowance for Losses Past Due Balances Of Mezzanine And Other Notes Receivable (Details) - Mezzanine & Other Notes Receivable - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	$ 0	$ 0
Current	97,677	95,529
Total Notes Receivable	97,677	95,529
Senior
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Current	73,643	73,700
Total Notes Receivable	73,643	73,700
Subordinated
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Current	20,975	18,647
Total Notes Receivable	20,975	18,647
Unsecured
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Current	3,059	3,182
Total Notes Receivable	3,059	3,182
Financing Receivables, 30 to 89 Days Past Due
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Financing Receivables, 30 to 89 Days Past Due | Senior
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Financing Receivables, 30 to 89 Days Past Due | Subordinated
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Financing Receivables, 30 to 89 Days Past Due | Unsecured
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Financing Receivables, Equal to Greater than 90 Days Past Due
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Financing Receivables, Equal to Greater than 90 Days Past Due | Senior
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Financing Receivables, Equal to Greater than 90 Days Past Due | Subordinated
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	0	0
Financing Receivables, Equal to Greater than 90 Days Past Due | Unsecured
Notes Receivable and Allowance for Losses [Line Items]
Total Past Due	$ 0	$ 0

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Investments in Unconsolidated Entities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Investments in joint ventures included in unconsolidated entities	$ 124.0		$ 130.2
Net (income) loss attributable to variable interest entities	$ 6.4	$ 2.5

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Debt Schedule Of Components Of Debt (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Debt [Line Items]
Total debt	$ 797,010,000		$ 726,524,000
Less current portion	1,265,000		1,232,000
Total long-term debt	795,745,000		725,292,000
Senior | $400 Million Senior Notes
Debt [Line Items]
Total debt	396,249,000		396,057,000
Debt instrument face amount	$ 400,000,000		$ 400,000,000
Debt instrument effective interest rate (percentage)	6.00%		6.00%
Deferred issuance costs	$ 3,800,000		$ 3,900,000
Senior | $250 Million Senior Notes
Debt [Line Items]
Total debt	249,259,000		249,182,000
Debt instrument face amount	$ 250,000,000		$ 250,000,000
Debt instrument effective interest rate (percentage)	6.19%		6.19%
Discount and deferred issuance costs	$ 700,000		$ 800,000
Senior Revolving Credit Facility | $450 Million Unsecured Revolving Credit Facility
Debt [Line Items]
Total debt	138,080,000		67,936,000
Debt instrument face amount	$ 450,000,000		$ 450,000,000
Debt instrument effective interest rate (percentage)	3.14%		2.84%
Deferred issuance costs	$ 1,900,000		$ 2,100,000
Collateralized Mortgage
Debt [Line Items]
Total debt	$ 8,692,000		$ 8,853,000
Debt instrument effective interest rate (percentage)	4.57%		4.57%
Fair value adjustment	$ 500,000	$ 600,000
Economic Development Loans
Debt [Line Items]
Total debt	$ 3,712,000		$ 3,712,000
Debt instrument effective interest rate (percentage)	3.00%		3.00%
Other Notes Payable
Debt [Line Items]
Total debt	$ 1,018,000		$ 784,000

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Accumulated Other Comprehensive Loss - Changes in Accumulated Other Comprehensive Loss, Net of Tax (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	$ (258,601)
Other comprehensive income before reclassification	855
Amounts reclassified from accumulated other comprehensive loss	215
Net current period other comprehensive income	1,070
Ending balance	(259,917)
Loss on Cash Flow Hedge
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	(2,298)
Other comprehensive income before reclassification	0
Amounts reclassified from accumulated other comprehensive loss	215
Net current period other comprehensive income	215
Ending balance	(2,083)
Foreign Currency Items
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	(2,401)
Other comprehensive income before reclassification	855
Amounts reclassified from accumulated other comprehensive loss	0
Net current period other comprehensive income	855
Ending balance	(1,546)
AOCI Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance	(4,699)
Ending balance	$ (3,629)

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Accumulated Other Comprehensive Loss - Amounts Reclassified from Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Tax (expense) benefit	$ (5,375)	$ (10,010)
Reclassification out of Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net of tax	215
Interest rate contract | Loss on Cash Flow Hedge | Reclassification out of Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income (Loss) [Line Items]
Interest expense	215
Tax (expense) benefit	$ 0

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Fair Value Measurements Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Level 1
Fair Value Measurements [Line Items]
Defined benefit plan, transfers between measurement levels	$ 0
Level 2
Fair Value Measurements [Line Items]
Defined benefit plan, transfers between measurement levels	0
Level 3
Fair Value Measurements [Line Items]
Defined benefit plan, transfers between measurement levels	0
Senior | $250 Million Senior Notes
Fair Value Measurements [Line Items]
Debt instrument face amount	250,000,000	$ 250,000,000
Senior | $250 Million Senior Notes | Level 2
Fair Value Measurements [Line Items]
Debt instrument fair value	261,800,000	269,200,000
Senior | $400 Million Senior Notes
Fair Value Measurements [Line Items]
Debt instrument face amount	400,000,000	400,000,000
Senior | $400 Million Senior Notes | Level 2
Fair Value Measurements [Line Items]
Debt instrument fair value	$ 424,900,000	$ 440,100,000

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Fair Value Measurements Schedule Of Fair Value Of Assets (Details) - Fair value, measurements, recurring - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Fair Value Measurements [Line Items]
Assets measured at fair value	$ 23,091	$ 72,990
Money market funds | Cash and cash equivalents
Fair Value Measurements [Line Items]
Money market funds, included in cash and cash equivalents		50,419
Money market funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	1,703	1,702
Mutual Funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	21,388	20,869
Level 1
Fair Value Measurements [Line Items]
Assets measured at fair value	21,388	20,869
Level 1 | Money market funds | Cash and cash equivalents
Fair Value Measurements [Line Items]
Money market funds, included in cash and cash equivalents		0
Level 1 | Money market funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	0	0
Level 1 | Mutual Funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	21,388	20,869
Level 2
Fair Value Measurements [Line Items]
Assets measured at fair value	1,703	52,121
Level 2 | Money market funds | Cash and cash equivalents
Fair Value Measurements [Line Items]
Money market funds, included in cash and cash equivalents		50,419
Level 2 | Money market funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	1,703	1,702
Level 2 | Mutual Funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	0	0
Level 3
Fair Value Measurements [Line Items]
Assets measured at fair value	0	0
Level 3 | Money market funds | Cash and cash equivalents
Fair Value Measurements [Line Items]
Money market funds, included in cash and cash equivalents		0
Level 3 | Money market funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	0	0
Level 3 | Mutual Funds | Investments, employee benefit plans, at fair value
Fair Value Measurements [Line Items]
Mutual funds and money market funds, fair value	$ 0	$ 0

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Income Taxes Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Effective income tax rate (percent)	17.60%	29.20%
Share-based compensation cost, amount	$ 1.6	$ 1.2

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Share-Based Compensation and Capital Stock Pre-Tax Stock-Based Compensation Expenses And Associated Income Tax Benefits (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-Based Compensation and Capital Stock [Line Items]
Share-based compensation expense	$ 3.5	$ 3.8
Income tax benefits	0.8	1.4
Stock options
Share-Based Compensation and Capital Stock [Line Items]
Share-based compensation expense	0.7	1.1
Restricted stock
Share-Based Compensation and Capital Stock [Line Items]
Share-based compensation expense	1.7	1.7
Performance Vested Restricted Stock Units
Share-Based Compensation and Capital Stock [Line Items]
Share-based compensation expense	$ 1.1	$ 1.0

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Share-Based Compensation and Capital Stock Summary of Change in Stock-Based Award Activity (Details)	3 Months Ended
	Mar. 31, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, beginning balance (in shares) | shares	1,976,326
Granted (in shares) | shares	109,045
Exercised (in shares) | shares	(414,116)
Expired (in shares) | shares	(2,018)
Forfeited (in shares) | shares	(10,095)
Outstanding, ending balance (in shares) | shares	1,659,142
Options exercisable, ending balance (in shares) | shares	1,169,868
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Beginning balance - weighted average exercise price (in dollars per share) | $ / shares	$ 50.80
Granted - Weighted average exercise price (in dollars per share) | $ / shares	81.55
Exercised - Weighted average exercise price (in dollars per share) | $ / shares	55.66
Expired - Weighted average exercise price (in dollars per share) | $ / shares	63.47
Forfeited - Weighted average exercise price (in dollars per share) | $ / shares	54.08
Ending balance - weighted average exercise price (in dollars per share) | $ / shares	51.57
Options Exercisable, ending balance - Weighted average exercise price (in dollars per share) | $ / shares	$ 47.44
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Term [Roll Forward]
Weighted Average Remaining Contractual Term - Outstanding, ending balance	4 years
Weighted Average Remaining Contractual Term - Options Exercisable, ending balance	3 years 6 months
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Outstanding, beginning balance (in shares) | shares	348,876
Restricted share grants (in shares) | shares	72,671
Vested (in shares) | shares	(70,450)
Forfeited (in shares) | shares	(13,509)
Outstanding, ending balance (in shares) | shares	337,588
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning balance - weighted average grant date fair value (in dollars per share) | $ / shares	$ 57.05
Granted - Weighted average grant date fair value (in dollars per share) | $ / shares	81.55
Vested - Weighted average grant date fair value (in dollars per share) | $ / shares	54.94
Forfeited - Weighted average grant date fair value (in dollars per share) | $ / shares	51.67
Ending balance - weighted average grant date fair value (in dollars per share) | $ / shares	$ 62.98
Performance Vested Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
Outstanding, beginning balance (in shares) | shares	294,204
Restricted share grants (in shares) | shares	93,809
Vested (in shares) | shares	(25,232)
Forfeited (in shares) | shares	(6,833)
Outstanding, ending balance (in shares) | shares	355,948
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning balance - weighted average grant date fair value (in dollars per share) | $ / shares	$ 56.95
Granted - Weighted average grant date fair value (in dollars per share) | $ / shares	81.55
Vested - Weighted average grant date fair value (in dollars per share) | $ / shares	63.47
Forfeited - Weighted average grant date fair value (in dollars per share) | $ / shares	60.42
Ending balance - weighted average grant date fair value (in dollars per share) | $ / shares	$ 62.90

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Share-Based Compensation and Capital Stock Weighted Average Assumptions Of Black-Scholes Option-Pricing Model (Details) - Stock options	3 Months Ended
	Mar. 31, 2018 $ / shares
Share-Based Compensation and Capital Stock [Line Items]
Risk-free interest rate (percent)	2.58%
Expected volatility (percent)	21.17%
Expected life of stock option	4 years 7 months 6 days
Dividend yield (percent)	1.05%
Requisite service period	4 years
Contractual life	7 years
Weighted average fair value of options granted (in dollars per share)	$ 16.27

XML

Share-Based Compensation and Capital Stock Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($) shares
Share-Based Compensation and Capital Stock [Line Items]
Shares repurchased (in shares) | shares	432,165
Cost of shares repurchased | $	$ 35.0
Shares redeemed for tax withholding for share based compensation (in shares) | shares	85,674
Payments related to tax withholding for share-based compensation | $	$ 6.9
Performance Vested Restricted Stock Units
Share-Based Compensation and Capital Stock [Line Items]
Performance period, duration	36 months
Performance Vested Restricted Stock Units | Minimum
Share-Based Compensation and Capital Stock [Line Items]
Vesting service period of shares granted	36 months
Performance period, percent	0.00%
Performance Vested Restricted Stock Units | Maximum
Share-Based Compensation and Capital Stock [Line Items]
Performance period, percent	200.00%
Stock options
Share-Based Compensation and Capital Stock [Line Items]
Vesting service period of shares granted	4 years
Restricted stock | Minimum
Share-Based Compensation and Capital Stock [Line Items]
Vesting service period of shares granted	36 months
Restricted stock | Maximum
Share-Based Compensation and Capital Stock [Line Items]
Vesting service period of shares granted	48 months

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Earnings Per Share Computation Of Basic And Diluted Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Numerator:
Net income	$ 25,086	$ 24,269
Income allocated to participating securities	(155)	(174)
Net income available to common shareholders	$ 24,931	$ 24,095
Denominator:
Weighted average common shares outstanding – basic (in shares)	56,464	55,941
Basic earnings per share (in dollars per share)	$ 0.44	$ 0.43
Numerator:
Income allocated to participating securities	$ (154)	$ (174)
Net income available to common shareholders	$ 24,932	$ 24,095
Denominator:
Weighted average common shares outstanding – basic (in shares)	56,464	55,941
Diluted effect of stock options and PVRSUs (in shares)	647	345
Weighted average common shares outstanding – diluted (in shares)	57,111	56,286
Diluted earnings per share (in dollars per share)	$ 0.44	$ 0.43

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Earnings Per Share Narrative (Details) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding stock options (in shares)	1,659,142	2,200,000	1,976,326
Antidilutive securities excluded from EPS computation (in shares)	0	400,000
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from EPS computation (in shares)	109,045	600,000
Performance Vested Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
PVRSUs excluded from EPS calculation due to performance conditions not met (in shares)	338,204	354,167

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Condensed Consolidating Statement Of Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
REVENUES
Royalty fees	$ 76,698	$ 68,294
Initial franchise and relicensing fees	6,214	5,806
Procurement services	9,938	7,363
Marketing and reservation system	107,001	98,853
Other	9,543	8,552
Total revenues	209,394	188,868
OPERATING EXPENSES
Selling, general and administrative	40,864	33,745
Marketing and reservation system	119,228	107,994
Depreciation and amortization	3,053	1,726
Total operating expenses	163,145	143,465
Operating income	46,249	45,403
OTHER INCOME AND EXPENSES, NET
Interest expense	11,309	11,205
Equity in earnings of consolidated subsidiaries	0	0
Other items, net	4,479	(81)
Total other income and expenses, net	15,788	11,124
Income before income taxes	30,461	34,279
Income taxes	5,375	10,010
Net income	25,086	24,269
Eliminations
REVENUES
Royalty fees	(39,596)	(36,551)
Initial franchise and relicensing fees	0	0
Procurement services	(143)	0
Marketing and reservation system	(91,566)	(86,044)
Other	(92)	(187)
Total revenues	(131,397)	(122,782)
OPERATING EXPENSES
Selling, general and administrative	(39,897)	(36,761)
Marketing and reservation system	(91,500)	(86,021)
Depreciation and amortization	0	0
Total operating expenses	(131,397)	(122,782)
Operating income	0	0
OTHER INCOME AND EXPENSES, NET
Interest expense	0	0
Equity in earnings of consolidated subsidiaries	9,695	12,737
Other items, net	0	0
Total other income and expenses, net	9,695	12,737
Income before income taxes	(9,695)	(12,737)
Income taxes	0	0
Net income	(9,695)	(12,737)
Parent
REVENUES
Royalty fees	71,615	63,596
Initial franchise and relicensing fees	6,052	5,611
Procurement services	9,679	7,301
Marketing and reservation system	88,395	87,700
Other	6,002	6,287
Total revenues	181,743	170,495
OPERATING EXPENSES
Selling, general and administrative	41,357	37,448
Marketing and reservation system	109,247	102,681
Depreciation and amortization	1,649	384
Total operating expenses	152,253	140,513
Operating income	29,490	29,982
OTHER INCOME AND EXPENSES, NET
Interest expense	10,991	11,063
Equity in earnings of consolidated subsidiaries	(10,766)	(13,192)
Other items, net	(497)	(364)
Total other income and expenses, net	(272)	(2,493)
Income before income taxes	29,762	32,475
Income taxes	4,676	8,206
Net income	25,086	24,269
Guarantor Subsidiaries
REVENUES
Royalty fees	36,209	30,735
Initial franchise and relicensing fees	0	0
Procurement services	124	0
Marketing and reservation system	106,426	93,724
Other	0	40
Total revenues	142,759	124,499
OPERATING EXPENSES
Selling, general and administrative	32,614	27,271
Marketing and reservation system	95,855	87,642
Depreciation and amortization	549	511
Total operating expenses	129,018	115,424
Operating income	13,741	9,075
OTHER INCOME AND EXPENSES, NET
Interest expense	0	0
Equity in earnings of consolidated subsidiaries	1,071	455
Other items, net	5,616	928
Total other income and expenses, net	6,687	1,383
Income before income taxes	7,054	7,692
Income taxes	727	2,026
Net income	6,327	5,666
Non-Guarantor Subsidiaries
REVENUES
Royalty fees	8,470	10,514
Initial franchise and relicensing fees	162	195
Procurement services	278	62
Marketing and reservation system	3,746	3,473
Other	3,633	2,412
Total revenues	16,289	16,656
OPERATING EXPENSES
Selling, general and administrative	6,790	5,787
Marketing and reservation system	5,626	3,692
Depreciation and amortization	855	831
Total operating expenses	13,271	10,310
Operating income	3,018	6,346
OTHER INCOME AND EXPENSES, NET
Interest expense	318	142
Equity in earnings of consolidated subsidiaries	0	0
Other items, net	(640)	(645)
Total other income and expenses, net	(322)	(503)
Income before income taxes	3,340	6,849
Income taxes	(28)	(222)
Net income	$ 3,368	$ 7,071

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Condensed Consolidating Statement Of Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Statement of Income Captions [Line Items]
Net income	$ 25,086	$ 24,269
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215	215
Foreign currency translation adjustment	855	568
Other comprehensive income, net of tax	1,070	783
Comprehensive income	26,156	25,052
Parent
Condensed Statement of Income Captions [Line Items]
Net income	25,086	24,269
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	215	215
Foreign currency translation adjustment	855	568
Other comprehensive income, net of tax	1,070	783
Comprehensive income	26,156	25,052
Guarantor Subsidiaries
Condensed Statement of Income Captions [Line Items]
Net income	6,327	5,666
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	0	0
Foreign currency translation adjustment	0	0
Other comprehensive income, net of tax	0	0
Comprehensive income	6,327	5,666
Non-Guarantor Subsidiaries
Condensed Statement of Income Captions [Line Items]
Net income	3,368	7,071
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	0	0
Foreign currency translation adjustment	855	568
Other comprehensive income, net of tax	855	568
Comprehensive income	4,223	7,639
Eliminations
Condensed Statement of Income Captions [Line Items]
Net income	(9,695)	(12,737)
Other comprehensive income, net of tax:
Amortization of loss on cash flow hedge	0	0
Foreign currency translation adjustment	(855)	(568)
Other comprehensive income, net of tax	(855)	(568)
Comprehensive income	$ (10,550)	$ (13,305)

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Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
ASSETS
Cash and cash equivalents	$ 36,834	$ 235,336	$ 187,472	$ 202,463
Receivables	143,028	125,870
Other current assets	51,983	39,223
Total current assets	231,845	400,429
Property and equipment, at cost, net	98,403	83,374
Goodwill	174,538	80,757
Intangible assets, net	246,925	100,492
Notes receivable, net of allowances	78,286	80,136
Investments, employee benefit plans, at fair value	20,142	20,838
Investments in affiliates	0	0
Advances to affiliates	0	0
Deferred income taxes	24,601	27,224
Other assets	177,277	201,941
Total assets	1,052,017	995,191
Current liabilities
Accounts payable	62,730	67,839
Accrued expenses and other current liabilities	58,953	84,315
Deferred revenue	62,247	52,142
Current portion of long-term debt	1,265	1,232
Liability for guest loyalty program	84,075	79,123
Total current liabilities	269,270	284,651
Long-term debt	795,745	725,292
Long-term deferred revenue	96,351	94,153
Deferred compensation and retirement plan obligations	24,513	25,566
Advances from affiliates	0	0
Income taxes payable	29,041	29,041
Other liabilities	97,014	95,089
Total liabilities	1,311,934	1,253,792
Total shareholders’ (deficit) equity	(259,917)	(258,601)
Total liabilities and shareholders’ deficit	1,052,017	995,191
Parent
ASSETS
Cash and cash equivalents	11,415	12,671	4,114	14,696
Receivables	126,154	107,470
Other current assets	16,611	12,507
Total current assets	154,180	132,648
Property and equipment, at cost, net	46,996	47,736
Goodwill	159,196	65,813
Intangible assets, net	141,483	5,122
Notes receivable, net of allowances	20,346	22,193
Investments, employee benefit plans, at fair value	0	0
Investments in affiliates	283,439	475,434
Advances to affiliates	10,704	10,517
Deferred income taxes	16,982	20,548
Other assets	417	189
Total assets	833,743	780,200
Current liabilities
Accounts payable	16,489	15,326
Accrued expenses and other current liabilities	60,724	73,225
Deferred revenue	31,101	24,984
Current portion of long-term debt	0	0
Liability for guest loyalty program	0	0
Total current liabilities	108,314	113,535
Long-term debt	783,588	713,175
Long-term deferred revenue	72,259	71,100
Deferred compensation and retirement plan obligations	0	0
Advances from affiliates	115,267	126,691
Income taxes payable	0	0
Other liabilities	14,232	14,300
Total liabilities	1,093,660	1,038,801
Total shareholders’ (deficit) equity	(259,917)	(258,601)
Total liabilities and shareholders’ deficit	833,743	780,200
Guarantor Subsidiaries
ASSETS
Cash and cash equivalents	52	38	23	159
Receivables	5,555	6,120
Other current assets	64,530	60,569
Total current assets	70,137	66,727
Property and equipment, at cost, net	16,888	18,114
Goodwill	0	0
Intangible assets, net	93,646	83,441
Notes receivable, net of allowances	0	0
Investments, employee benefit plans, at fair value	20,142	20,838
Investments in affiliates	47,882	47,172
Advances to affiliates	109,042	120,466
Deferred income taxes	10,050	9,335
Other assets	154,978	160,045
Total assets	522,765	526,138
Current liabilities
Accounts payable	42,869	48,213
Accrued expenses and other current liabilities	27,752	41,814
Deferred revenue	28,515	25,301
Current portion of long-term debt	0	0
Liability for guest loyalty program	83,843	78,899
Total current liabilities	182,979	194,227
Long-term debt	3,712	3,712
Long-term deferred revenue	22,436	20,513
Deferred compensation and retirement plan obligations	24,499	25,552
Advances from affiliates	1,371	1,294
Income taxes payable	0	0
Other liabilities	64,859	62,845
Total liabilities	299,856	308,143
Total shareholders’ (deficit) equity	222,909	217,995
Total liabilities and shareholders’ deficit	522,765	526,138
Non-Guarantor Subsidiaries
ASSETS
Cash and cash equivalents	25,367	222,627	183,335	187,608
Receivables	11,725	12,480
Other current assets	13,231	9,930
Total current assets	50,323	245,037
Property and equipment, at cost, net	34,519	17,524
Goodwill	15,342	14,944
Intangible assets, net	11,796	11,929
Notes receivable, net of allowances	57,940	57,943
Investments, employee benefit plans, at fair value	0	0
Investments in affiliates	0	0
Advances to affiliates	11	0
Deferred income taxes	170	169
Other assets	21,882	41,707
Total assets	191,983	389,253
Current liabilities
Accounts payable	3,778	4,500
Accrued expenses and other current liabilities	12,866	13,059
Deferred revenue	2,631	1,857
Current portion of long-term debt	1,265	1,232
Liability for guest loyalty program	232	224
Total current liabilities	20,772	20,872
Long-term debt	8,445	8,405
Long-term deferred revenue	1,656	2,540
Deferred compensation and retirement plan obligations	14	14
Advances from affiliates	3,119	2,998
Income taxes payable	29,041	29,041
Other liabilities	20,524	20,772
Total liabilities	83,571	84,642
Total shareholders’ (deficit) equity	108,412	304,611
Total liabilities and shareholders’ deficit	191,983	389,253
Eliminations
ASSETS
Cash and cash equivalents	0	0	$ 0	$ 0
Receivables	(406)	(200)
Other current assets	(42,389)	(43,783)
Total current assets	(42,795)	(43,983)
Property and equipment, at cost, net	0	0
Goodwill	0	0
Intangible assets, net	0	0
Notes receivable, net of allowances	0	0
Investments, employee benefit plans, at fair value	0	0
Investments in affiliates	(331,321)	(522,606)
Advances to affiliates	(119,757)	(130,983)
Deferred income taxes	(2,601)	(2,828)
Other assets	0	0
Total assets	(496,474)	(700,400)
Current liabilities
Accounts payable	(406)	(200)
Accrued expenses and other current liabilities	(42,389)	(43,783)
Deferred revenue	0	0
Current portion of long-term debt	0	0
Liability for guest loyalty program	0	0
Total current liabilities	(42,795)	(43,983)
Long-term debt	0	0
Long-term deferred revenue	0	0
Deferred compensation and retirement plan obligations	0	0
Advances from affiliates	(119,757)	(130,983)
Income taxes payable	0	0
Other liabilities	(2,601)	(2,828)
Total liabilities	(165,153)	(177,794)
Total shareholders’ (deficit) equity	(331,321)	(522,606)
Total liabilities and shareholders’ deficit	$ (496,474)	$ (700,400)

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Condensed Consolidating Statement Of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Consolidating Financial Statements [Line Items]
Net cash provided by operating activities	$ 4,552	$ 24,214
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(4,996)	(4,718)
Investment in intangible assets	(1,193)	(2,088)
Business acquisition, net of cash acquired	(231,317)	0
Contributions to equity method investments	(1,455)	(31,610)
Distributions from equity method investments	766	510
Issuance of mezzanine and other notes receivable	(2,500)	(9,863)
Collections of mezzanine and other notes receivable	150	522
Purchases of investments, employee benefit plans	1,669	1,424
Proceeds from sales of investments, employee benefit plans	1,029	843
Advances to and investments in affiliates	0	0
Divestment in affiliates	0	0
Other items, net	0	(4)
Net cash used in investing activities	(241,185)	(47,832)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	70,000	22,800
Principal payments on long-term debt	(111)	(153)
Proceeds from issuance of long term debt	212	0
Purchase of treasury stock	(41,869)	(7,271)
Debt issuance costs	(914)	0
Proceeds from exercise of stock options	23,052	4,963
Proceeds from contributions from affiliates	0	0
Distributions to affiliates	0	0
Dividends paid	(12,265)	(12,139)
Net cash provided by financing activities	38,105	8,200
Net change in cash and cash equivalents	(198,528)	(15,418)
Effect of foreign exchange rate changes on cash and cash equivalents	26	427
Cash and cash equivalents at beginning of period	235,336	202,463
Cash and cash equivalents at end of period	36,834	187,472
Parent
Condensed Consolidating Financial Statements [Line Items]
Net cash provided by operating activities	197,590	(13,926)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(2,904)	(3,832)
Investment in intangible assets	(1,193)	(1,369)
Business acquisition, net of cash acquired	(231,317)
Contributions to equity method investments	0	0
Distributions from equity method investments	0	0
Issuance of mezzanine and other notes receivable	(2,500)	(330)
Collections of mezzanine and other notes receivable	150	522
Purchases of investments, employee benefit plans	0	0
Proceeds from sales of investments, employee benefit plans	0	0
Advances to and investments in affiliates	0	0
Divestment in affiliates	0	0
Other items, net		0
Net cash used in investing activities	(237,764)	(5,009)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	70,000	22,800
Principal payments on long-term debt	0	0
Proceeds from issuance of long term debt	0
Purchase of treasury stock	(41,869)	(7,271)
Debt issuance costs	0
Proceeds from exercise of stock options	23,052	4,963
Proceeds from contributions from affiliates	0	0
Distributions to affiliates	0	0
Dividends paid	(12,265)	(12,139)
Net cash provided by financing activities	38,918	8,353
Net change in cash and cash equivalents	(1,256)	(10,582)
Effect of foreign exchange rate changes on cash and cash equivalents	0	0
Cash and cash equivalents at beginning of period	12,671	14,696
Cash and cash equivalents at end of period	11,415	4,114
Guarantor Subsidiaries
Condensed Consolidating Financial Statements [Line Items]
Net cash provided by operating activities	4,159	33,440
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(837)	(710)
Investment in intangible assets	0	(719)
Business acquisition, net of cash acquired	0
Contributions to equity method investments	(1,432)	(31,592)
Distributions from equity method investments	564	0
Issuance of mezzanine and other notes receivable	0	0
Collections of mezzanine and other notes receivable	0	0
Purchases of investments, employee benefit plans	1,669	1,424
Proceeds from sales of investments, employee benefit plans	1,029	843
Advances to and investments in affiliates	(2,450)	(484)
Divestment in affiliates	650	510
Other items, net		0
Net cash used in investing activities	(4,145)	(33,576)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	0	0
Principal payments on long-term debt	0	0
Proceeds from issuance of long term debt	0
Purchase of treasury stock	0	0
Debt issuance costs	0
Proceeds from exercise of stock options	0	0
Proceeds from contributions from affiliates	0	0
Distributions to affiliates	0	0
Dividends paid	0	0
Net cash provided by financing activities	0	0
Net change in cash and cash equivalents	14	(136)
Effect of foreign exchange rate changes on cash and cash equivalents	0	0
Cash and cash equivalents at beginning of period	38	159
Cash and cash equivalents at end of period	52	23
Non-Guarantor Subsidiaries
Condensed Consolidating Financial Statements [Line Items]
Net cash provided by operating activities	5,087	4,700
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(1,255)	(176)
Investment in intangible assets	0	0
Business acquisition, net of cash acquired	0
Contributions to equity method investments	(23)	(18)
Distributions from equity method investments	202	510
Issuance of mezzanine and other notes receivable	0	(9,533)
Collections of mezzanine and other notes receivable	0	0
Purchases of investments, employee benefit plans	0	0
Proceeds from sales of investments, employee benefit plans	0	0
Advances to and investments in affiliates	0	0
Divestment in affiliates	0	0
Other items, net		(4)
Net cash used in investing activities	(1,076)	(9,221)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	0	0
Principal payments on long-term debt	(111)	(153)
Proceeds from issuance of long term debt	212
Purchase of treasury stock	0	0
Debt issuance costs	(914)
Proceeds from exercise of stock options	0	0
Proceeds from contributions from affiliates	2,450	484
Distributions to affiliates	(650)	(510)
Dividends paid	(202,284)	0
Net cash provided by financing activities	(201,297)	(179)
Net change in cash and cash equivalents	(197,286)	(4,700)
Effect of foreign exchange rate changes on cash and cash equivalents	26	427
Cash and cash equivalents at beginning of period	222,627	187,608
Cash and cash equivalents at end of period	25,367	183,335
Eliminations
Condensed Consolidating Financial Statements [Line Items]
Net cash provided by operating activities	(202,284)	0
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	0	0
Investment in intangible assets	0	0
Business acquisition, net of cash acquired	0
Contributions to equity method investments	0	0
Distributions from equity method investments	0	0
Issuance of mezzanine and other notes receivable	0	0
Collections of mezzanine and other notes receivable	0	0
Purchases of investments, employee benefit plans	0	0
Proceeds from sales of investments, employee benefit plans	0	0
Advances to and investments in affiliates	2,450	484
Divestment in affiliates	(650)	(510)
Other items, net		0
Net cash used in investing activities	1,800	(26)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities	0	0
Principal payments on long-term debt	0	0
Proceeds from issuance of long term debt	0
Purchase of treasury stock	0	0
Debt issuance costs	0
Proceeds from exercise of stock options	0	0
Proceeds from contributions from affiliates	(2,450)	(484)
Distributions to affiliates	650	510
Dividends paid	202,284	0
Net cash provided by financing activities	200,484	26
Net change in cash and cash equivalents	0	0
Effect of foreign exchange rate changes on cash and cash equivalents	0	0
Cash and cash equivalents at beginning of period	0	0
Cash and cash equivalents at end of period	$ 0	$ 0

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Reportable Segment Information Narrative (Details)	Mar. 31, 2018 brand
Segment Reporting [Abstract]
Number of brands	12

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Reportable Segment Information Schedule Of Financial Information For Company's Franchising Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Reportable Segment Information [Line Items]
Revenues	$ 209,394	$ 188,868
Operating income (loss)	46,249	45,403
Income (loss) before income taxes	30,461	34,279
Corporate & Other
Reportable Segment Information [Line Items]
Revenues	3,772	2,555
Operating income (loss)	(13,109)	(12,853)
Income (loss) before income taxes	(22,928)	(21,897)
Hotel Franchising | Operating Segments
Reportable Segment Information [Line Items]
Revenues	205,622	186,313
Operating income (loss)	59,358	58,256
Income (loss) before income taxes	$ 53,389	$ 56,176

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Commitments and Contingencies (Details)			1 Months Ended	3 Months Ended
	Sep. 12, 2017 USD ($)	Jun. 02, 2016 USD ($) Guarantee Entitiy	Mar. 31, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Nov. 30, 2015 USD ($)	Sep. 04, 2015 USD ($)	Oct. 09, 2012 USD ($)
Commitments and Contingencies [Line Items]
Bank loan issued to VIE, partially guaranteed by parent		$ 46,200,000					$ 13,300,000	$ 18,000,000.0
Bank loan issued to VIE, percentage guaranteed by parent (percent)								25.00%
Parent's guarantor obligation, maximum exposure		$ 3,250,000					$ 1,800,000	$ 4,500,000.0
Number of variable interest entities obtaining debt | Entitiy		1
Number of guarantees | Guarantee		3
Transfer of notes receivable to third party	$ 24,200,000			$ 200,000
Notes receivable outstanding			$ 95,540,000	95,540,000	$ 93,392,000
Other commitment						$ 3,800,000
Construction loan			34,900,000	34,900,000
Additional capital contribution, commitment			14,400,000
Forgivable Notes Receivable
Commitments and Contingencies [Line Items]
Other commitment			215,100,000	215,100,000
Capital contributions to joint ventures
Commitments and Contingencies [Line Items]
Other commitment			13,500,000	13,500,000
Medium-term Notes | Variable Interest Entity, Not Primary Beneficiary
Commitments and Contingencies [Line Items]
Term loan obtained for refinancing for construction loan		$ 61,000,000
Notes Receivable
Commitments and Contingencies [Line Items]
Notes receivable outstanding	$ 49,100,000		$ 24,400,000	$ 24,400,000

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Transactions with Unconsolidated Joint Ventures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Related Party Transaction [Line Items]
Receivables	$ 143,028		$ 125,870
Joint Venture Partner
Related Party Transaction [Line Items]
Fees earned and payroll costs reimbursed from marketing services arrangement	300
Member of Unconsolidated Joint Venture
Related Party Transaction [Line Items]
Royalty and marketing and reservation system fees	4,600	$ 3,900
Receivables	1,100		$ 1,300
Commissions paid to travel agent	$ 44	$ 22

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Acquisition (Details) - WoodSpring $ in Millions	Feb. 01, 2018 USD ($) state hotel
Business Acquisition [Line Items]
Business acquisition, percentage of voting interests acquired	100.00%
Number of hotels acquired | hotel	239
Number of states in which acquired business operates | state	35
Business combination, consideration transferred, gross	$ 231.6
Business combination, consideration transferred, net	231.3
Business combination, consideration transferred, liabilities incurred	0.4
Business combination, working capital adjustment	$ 0.1

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Acquisition Preliminary (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Feb. 01, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill	$ 174,538		$ 80,757
WoodSpring
Business Acquisition [Line Items]
Cash		$ 250
Accounts receivables		1,258
Prepaid		23
Contract assets		115,000
Tradename		22,000
Goodwill		93,384
Accounts payable		(348)
Total Consideration		$ 231,567

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Acquisition Intangible Assets (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 01, 2018	Mar. 31, 2018	Dec. 31, 2017
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill		$ 174,538	$ 80,757
WoodSpring
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 93,384
Total	230,384
WoodSpring | Franchise Rights
Acquired Finite-Lived Intangible Assets [Line Items]
Franchise agreements acquired	115,000
Trade Names | WoodSpring
Acquired Finite-Lived Intangible Assets [Line Items]
WoodSpring tradename	$ 22,000
Minimum | Franchise Rights
Acquired Finite-Lived Intangible Assets [Line Items]
Franchise agreements acquired (useful life)		12 years
Maximum | Franchise Rights
Acquired Finite-Lived Intangible Assets [Line Items]
Franchise agreements acquired (useful life)		20 years

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Subsequent Events (Details) - $ / shares		3 Months Ended
	Apr. 19, 2018	Mar. 31, 2018	Mar. 31, 2017
Subsequent Event [Line Items]
Cash dividends declared per share (in dollars per share)		$ 0.215	$ 0.215
Subsequent Event
Subsequent Event [Line Items]
Cash dividends declared per share (in dollars per share)	$ 0.215