What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-10 · 219 added, 113 removed, 339 unchanged (49% of the section changed)

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MD&A is provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the accompanying notes.

Recent Developments

Impact of the COVID-19 Pandemic

The COVID-19 pandemic continues to cause disruptions to the global economy and the hospitality industry, including in the United States, where more than 80% of our franchised hotels are located.

Since its onset, the COVID-19 pandemic has led governments and other authorities and businesses around the world at multiple times to impose or recommend measures intended to control its spread.

As a result, the COVID-19 pandemic and its consequences have reduced travel and demand for hotel rooms, which has adversely impacted, both financially and operationally and at varying degrees throughout the pandemic, the hospitality industry generally and the Company.

The development and distribution of effective vaccines and other containment efforts have been significant positive developments that we believe have contributed to improved operating metrics since the second quarter of 2021.

However, the extent to which the COVID-19 pandemic will impact the hospitality industry generally and our operations remains uncertain and will depend in part on future developments, including the severity and duration of resurgences or variants of the virus, the effectiveness of actions by government authorities and the public to continue to contain the pandemic, and the potential for adverse changes in consumer sentiment with respect to travel during the pandemic.

Since the time the impacts of COVID-19 on the Company's business were first experienced in March 2020, trends have improved steadily, with the first quarter 2022 domestic RevPAR experiencing an increase of approximately 35.9% and 10.4% relative to first quarter 2021 and first quarter 2019, respectively.

As of both March 31, 2022 and March 31, 2021, less than 1% of Company's domestic hotel system had temporarily suspended operations due to governmental restriction or a franchisee’s election.

Reduced travel as a result of COVID-19 adversely impacted the hospitality industry generally and the Company, however, the development and distribution of effective vaccines and other containment efforts have been significant positive developments that we believe have contributed to improved operating metrics since the second quarter of 2021.

The extent to which the COVID-19 pandemic will impact the hospitality industry generally and our operations remains uncertain and will depend in part on future developments, including the severity and duration of resurgences or variants of the virus, the effectiveness of actions by government authorities and the public to continue to contain the pandemic, and the potential for adverse changes in consumer sentiment with respect to travel during the pandemic.

Since the time the impacts of COVID-19 on the Company's business were first experienced in March 2020, trends have improved steadily, with the second quarter 2022 domestic RevPAR experiencing an increase of approximately 14.3% and 13.0% relative to second quarter 2021 and second quarter 2019, respectively.

As of both June 30, 2022 and June 30, 2021, less than 1% of Company's domestic hotel system had temporarily suspended operations due to governmental restriction or a franchisee’s election.

As the industry recovery continues, the Company believes it will continue to benefit from the faster rebound of leisure demand as a result of its higher share of leisure travel mix relative to competitors.

The Company's properties are also well distributed in drive-to markets, which the Company believes will lead in the demand recovery and foreseeable future for the industry.

believe these points are illustrated by the Company's RevPAR results for full year 2021 and first quarter 2022, which reflect growth relative to the comparable 2019 periods.

We believe these points are illustrated by the Company's RevPAR results for 2021 and 2022, which reflect growth relative to comparable 2019 periods.

While the ultimate impact and duration of COVID-19 is uncertain and will depend on future developments, which are difficult to predict, the Company believes that it will continue to benefit in the long-term from its primarily franchise-only business model, which has historically provided a relatively stable earnings stream and low capital expenditure requirements.

Further, as of March 31, 2022, the Company had approximately $1.1 billion in cash and additional borrowing capacity through its senior unsecured revolving credit facility.

Based on our business model and information known at this time, 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.

Further, as of June 30, 2022, the Company had approximately $1.2 billion in cash and additional borrowing capacity through its senior unsecured revolving credit facility.

While the Company believes that the long-term fundamentals of the business remain strong, it will continue to adjust business contingency plans as the COVID-19 pandemic evolves.

For additional information, refer to Risk Factors in Part II, and Part I, Item 1A of the 2021 Form 10-K.

We are primarily a hotel franchisor with franchise agreements and owned hotels representing 6,996 hotels open comprising 577,714 rooms and 903 hotels under construction, awaiting conversion or approved for development comprising 81,526 rooms as of March 31, 2022, located in 50 states, the District of Columbia and nearly 40 countries and territories outside the United States.

Agreement to acquire Radisson Hotels Americas

On June 12, 2022, the Company signed a definitive purchase agreement to acquire 100% of Radisson Hotels Americas for a purchase price of approximately $675 million.

The transaction would add approximately 67,000 rooms to the Company’s portfolio and is expected to close in August 2022.

We are primarily a hotel franchisor with franchise agreements and owned hotels representing 6,970 hotels open comprising 574,888 rooms and 908 hotels under construction, awaiting conversion or approved for development comprising 82,629 rooms as of June 30, 2022, located in 50 states, the District of Columbia and nearly 40 countries and territories outside the United States.

Our brand names include Comfort Inn®, Comfort Suites®, Quality®, Clarion®, Clarion Pointe™, Ascend Hotel Collection®, Sleep Inn®, Econo Lodge®, Rodeway Inn®, MainStay Suites®, Suburban Studios™, WoodSpring Suites®, Everhome Suites®, and Cambria® Hotels (collectively, the "Choice brands").

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growth in the number of hotel rooms owned and under franchise;

occupancy and room rates achieved

by the hotels in our system;

occupancy and room rates achieved by the hotels in our system;

the effective royalty rate achieved on our franchise agreements;

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To varying degrees, all of these factors have been and may continue to be disrupted by the COVID-19 pandemic.

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.

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, over the long-term, any continued growth of our franchise business should enable us to realize benefits from the operating leverage in place and improve operating results.

The effects of the COVID-19 pandemic on our first quarter 2022 results and anticipated trends are discussed above under the heading "Impact of the COVID-19 Pandemic" and below under the heading "Operations Review".

The effects of the COVID-19 pandemic on our second quarter 2022 results and anticipated trends are discussed above under the heading "Impact of the COVID-19 Pandemic" and below under the heading "Operations Review".

We are required by our franchise agreements to use the marketing and reservation system fees we collect for system-wide marketing and reservation system activities.

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Improving the performance of the hotels in our system, strategically growing the system through additional franchise sales, and improving franchise agreement pricing while maintaining a disciplined cost structure are the keys to profitable growth.

As disclosed above, prior to the second quarter of 2021, the Company's hotels experienced declines in occupancy and RevPAR resulting from the impacts of the COVID-19 pandemic.

Prior to the second quarter of 2021, the Company's hotels experienced declines in occupancy and RevPAR resulting from the impacts of the COVID-19 pandemic.

The declines impacted the profitability of the Company and the negative impact to the Company could return if a resurgence of the COVID-19 pandemic significantly impacts travel.

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On December 6, 2021, the Company's board of directors approved a 6% increase in the quarterly cash dividend and declared a quarterly cash dividend of $0.2375 per share of common stock, which was paid in January 2022.

On February 24, 2022 the Company's board of directors declared a quarterly cash dividend of $0.2375 per share of common stock, which was paid on April 15, 2022.

On February 24, 2022 and May 24, 2022, the Company's board of directors declared a quarterly cash dividend of $0.2375 per share of common stock.

In addition to our hotel franchising business, we have also developed or acquired six Cambria hotels.

We intend to continue to strategically develop hotels to increase the presence of our brands in the United States, drive greater guest satisfaction and

brand preference, and ultimately increase the number of franchise agreements awarded.

We intend to continue to strategically develop hotels to increase the presence of our brands in the United States, drive greater guest satisfaction and brand preference, and ultimately increase the number of franchise agreements awarded.

When developing hotels, we seek key markets with strong growth potential that will deliver strong operating performance and improve the recognition of our brands.

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Results of Operations:

Royalty fees, operating income, net income and diluted earnings per share ("EPS") represent key measurements of our financial performance.

Royalty fees, operating income, net income and diluted EPS represent key measurements of our financial performance.

These measurements are primarily driven by the operations of our hotel franchise system and therefore, our analysis of the Company's operations is primarily focused on the size, performance and potential growth of the hotel franchise system as well as our variable overhead costs.

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Due to the seasonal nature of the Company’s hotel franchising business and the multi-year investments required to support franchise operations, in addition to the Company's incremental spend to support franchisees and lower marketing and reservation system fees for certain periods most significantly impacted by the COVID-19 pandemic, quarterly and/or annual deficits may be generated.

During the three months ended March 31, 2022, marketing and reservation system revenues exceeded expenses by $13.0 million.

During the three months ended March 31, 2021, marketing and reservation system expenses exceeded revenues by $6.7 million.

During the six months ended June 30, 2022, marketing and reservation system revenues exceeded expenses by $48.5 million.

During the six months ended June 30, 2021, marketing and reservation system revenues exceeded expenses by $16.1 million.

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

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The Company's declaration of quarterly dividends and activity under the share repurchase program were temporarily suspended at the height of the COVID-19 pandemic, as detailed above within the Maximizing Financial Returns and Creating Value for Shareholders section.

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.

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, inclusive of the pending Radisson Hotels Americas acquisition.

Refer to MD&A heading Liquidity and Capital Resources for additional analysis.

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Calculation of Revenues excluding marketing and reservation system activities

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2022 2021 2022 2021

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Operations Review

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2022 and 2021

Summarized financial results for the three months ended March 31, 2022 and 2021 are as follows:

Comparison of Operating Results for the Three-Month Periods Ended June 30, 2022 and 2021

Summarized financial results for the three months ended June 30, 2022 and 2021 are as follows:

(in thousands) 2022 2021

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213,905 159,320

Gain on sale of asset 29 —

Gain on sale of business and assets, net 3,280 —

Operating income 157,349 119,024

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Interest income (1,628) (1,234)

Other (gains) losses 1,716 (1,205)

Equity in net (gain) loss of affiliates (244) 5,997

Other loss (gain) 5,559 (2,108)

Equity in net loss (gain) of affiliates 40 (1,179)

Total other income and expenses, net 15,223 7,170

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Results of Operations

The Company recorded income before income taxes of $87.7 million for the three-month period ended March 31, 2022, a $59.0 million increase from the same period of the prior year.

The increase in income before income taxes primarily reflects a $55.4 million increase in operating income and a $6.2 million increase in equity in net (gain) loss of affiliates, partially offset by a $2.9 million decrease in other (gains) losses for the three-month period ended March 31, 2021.

Operating income increased $55.4 million primarily due to a $24.7 million increase in royalty revenues, a $19.6 million increase in the net surplus generated from marketing and reservation system activities, a $3.8 million increase in other revenues, a $3.7 million increase in owned hotels revenues in excess of expense, and a $3.0 million increase in initial franchise and relicensing fees.

The Company recorded income before income taxes of $142.1 million for the three-month period ended June 30, 2022, a $30.2 million increase from the same period of the prior year.

The increase in income before income taxes primarily reflects a $38.3 million increase in operating income partially offset by a $7.7 million decrease in other loss (gain) and $1.2 million decrease in equity in net loss (gain) of affiliates from the three-month period ended June 30, 2021.

Operating income increased $38.3 million primarily due to a $15.2 million increase in royalty revenues, a $12.9 million increase in the net surplus generated from marketing and reservation system activities, a $9.7 million increase in procurement services, a $4.2 million increase in other revenues, a $3.3 million net gain on sale of business and assets recognized during the second quarter of 2022, a $2.8 million increase in owned hotels revenues in excess of expenses, partially offset by a $9.4 million increase in SG&A expenses.

The primary reasons for these fluctuations, including the impact of the COVID-19 pandemic, are described in more detail below.

Domestic royalty fees for the three months ended March 31, 2022 increased $24.0 million to $87.0 million from $63.0 million for the three months ended March 31, 2021, an increase of 38.0%.

Domestic royalty fees for the three months ended June 30, 2022 increased $13.9 million to $116.7 million from $102.8 million for the three months ended June 30, 2021, an increase of 13.5%.

The increase in domestic royalties reflects a 14.3% increase in domestic RevPAR.

System-wide RevPAR increased due to a 21.2% increase in average daily rates and a 570 basis point increase in occupancy.

The increase in domestic royalties is also due to a 3 basis point increase in the effective royalty rate from 5.02% for the three months ended March 31, 2021 to 5.05% for the three months ended March 31, 2022, partially offset by a 2.8% decrease in the number of domestic franchised hotel rooms in the comparative period.

System-wide RevPAR increased due to a 15.3% increase in average daily rates, partially offset by a 50 basis point decrease in occupancy.

The increase in domestic royalties is also due to a 3 basis point increase in the effective royalty rate from 5.01% for the three months ended June 30, 2021 to 5.04% for the three months ended June 30, 2022, partially offset by a 2.9% decrease in the number of domestic franchised hotel rooms in the comparative period.

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

Three Months Ended Three Months Ended Change

March 31, 2022 March 31, 2021

June 30, 2022 June 30, 2021

Rate Occupancy RevPAR Average

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Total $ 95.34 61.8 % $ 58.89 $ 82.72 62.3 % $ 51.54 15.3 % (50) bps 14.3 %

A summary of domestic hotels and rooms in our franchise system at March 31, 2022 and 2021 by brand is as follows:

March 31, 2022 March 31, 2021 Variance

A summary of domestic hotels and rooms in our franchise system at June 30, 2022 and 2021 by brand is as follows:

June 30, 2022 June 30, 2021 Variance

Hotels Rooms Hotels Rooms Hotels Rooms % %

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Total Domestic Franchises 5,870 455,441 5,955 469,081 (85) (13,640) (1.4) % (2.9) %

As of both March 31, 2022 and March 31, 2021, less than 1% of the Company's domestic hotel system had temporarily suspended operations due to governmental restriction or a franchisee’s election.

As of both June 30, 2022 and June 30, 2021, less than 1% of the Company's domestic hotel system had temporarily suspended operations due to governmental restriction or a franchisee’s election.

These temporarily suspended hotels are included in the summary table above of domestic hotels in our franchise system.

International royalty fees for the three months ended March 31, 2022 increased $0.8 million to $3.8 million compared to the three months ended March 31, 2021 as a result of improvements in RevPAR performance, despite reductions of the international franchise system size by 69 hotels (from 1,171 as of March 31, 2021 to 1,102 as of March 31, 2022) and 13,047 rooms (from 133,215 as of March 31, 2021 to 120,168 as of March 31, 2022).

As of March 31, 2022 and March 31, 2021, approximately 1% and 4%, respectively, of the Company's international branded hotels temporarily suspended operations due to governmental restriction or a franchisee’s election.

International royalty fees for the three months ended June 30, 2022 increased $1.3 million to $4.8 million compared to the three months ended June 30, 2021 as a result of improvements in RevPAR performance, despite reductions of the international franchise system size by 56 hotels (from 1,156 as of June 30, 2021 to 1,100 as of June 30, 2022) and 12,717 rooms (from 132,164 as of June 30, 2021 to 119,447 as of June 30, 2022).

As of June 30, 2022 and June 30, 2021, approximately 1% and 2%, respectively, of the Company's international branded hotels temporarily suspended operations due to governmental restriction or a franchisee’s election.

As a result of the acquisition of AMResorts®, the Company’s relationship with AMResorts® was terminated during the fourth quarter of 2021 and 17 domestic and 37 international open AMResorts®-branded hotels exited the Ascend Hotel Collection portfolio.

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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 2022, the Company awarded 93 domestic franchise agreements representing 11,377 rooms compared to 89 franchising agreements representing 11,780 rooms for the first quarter of 2021.

Domestic franchise agreements awarded for new construction hotels totaled 38 contracts representing 3,717 rooms during the three months ended March 31, 2022, compared to 15 contracts representing 1,282 rooms for the three months ended March 31, 2021.

Conversion hotel awarded franchise agreements totaled 55 representing 7,660 rooms for the three months ended March 31, 2022, compared to 74 agreements representing 10,498 rooms for the three months ended March 31, 2021.

The Company awarded 138 domestic relicensing contracts during the three months ended March 31, 2022, compared to 52 executed during the three months ended March 31, 2021.

The Company awarded 7 domestic renewal agreements during the three months ended March 31, 2022, compared to 12 awarded during the three months ended March 31, 2021.

During the second quarter of 2022, the Company awarded 122 domestic franchise agreements representing 10,787 rooms compared to 111 franchising agreements representing 8,888 rooms for the second quarter of 2021.

Domestic franchise agreements awarded for new construction hotels totaled 45 contracts representing 5,017 rooms during the three months ended June 30, 2022, compared to 41 contracts representing 4,011 rooms for the three months ended June 30, 2021.

Conversion hotel awarded franchise agreements totaled 77 representing 5,770 rooms for the three months ended June 30, 2022, compared to 70 agreements representing 4,877 rooms for the three months ended June 30, 2021.

The Company awarded 110 domestic relicensing contracts during the three months ended June 30, 2022, compared to 128 executed during the three months ended June 30, 2021.

The Company awarded 5 domestic renewal agreements during the three months ended June 30, 2022, compared to 8 awarded during the three months ended June 30, 2021.

Initial franchise and relicensing fees are generally collected at the time the franchise agreement is awarded.

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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 $3.0 million from $5.4 million to $8.4 million for the three months ended March 31, 2021 and March 31, 2022, respectively.

At March 31, 2022, the Company had 864 franchised hotels with 77,769 rooms under construction, awaiting conversion or approved for development in its domestic system as compared to 943 hotels and 77,292 rooms at March 31, 2021.

The number of new construction franchised hotels in the Company's domestic pipeline decreased from 709 at March 31, 2021 to 657 at March 31, 2022.

Initial franchise and relicensing fee revenue decreased $1.1 million from $7.3 million to $6.2 million for the three months ended June 30, 2021 and June 30, 2022, respectively.

At June 30, 2022, the Company had 864 franchised hotels with 77,970 rooms under construction, awaiting conversion or approved for development in its domestic system as compared to 884 hotels and 72,312 rooms at June 30, 2021.

The number of new construction franchised hotels in the Company's domestic pipeline decreased from 663 at June 30, 2021 to 647 at June 30, 2022.

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 decreased from 234 hotels at March 31, 2021 to 207 hotels at March 31, 2022.

The number of conversion franchised hotels in the Company's domestic pipeline decreased from 221 hotels at June 30, 2021 to 217 hotels at June 30, 2022.

Conversion hotels typically open three to six months after the execution of a franchise agreement.

The Company had an additional 39 franchised hotels with 3,757 rooms under construction, awaiting conversion or approved for development in its international system as of March 31, 2022, compared to 58 hotels and 7,158 rooms at March 31, 2021.

The Company had an additional 44 franchised hotels with 4,659 rooms under construction, awaiting conversion or approved for development in its international system as of June 30, 2022, compared to 60 hotels and 8,108 rooms at June 30, 2021.

Fluctuations in the Company’s pipeline are primarily due to the timing of hotel openings and the timing of signing new franchise agreements.

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Given the uncertainty as to the potential duration of the COVID-19 pandemic and its severity, there is additional uncertainty with respect to the opening of new construction hotels, which are reliant on, amongst other things, access to liquidity, availability of construction labor and materials, and local governmental approvals and entitlements, all of which may be constrained during the duration of the pandemic.

In addition, as noted above in Note 16 to our consolidated financial statements, in July 2022 the Company received notice from an ownership group of their intent to exit 111 WoodSpring properties from the Choice system in September 2022.

Procurement services:

Revenues increased $9.7 million from $12.1 million for three months ended June 30, 2021 to $21.8 million for the three months ended June 30, 2022.

These results reflect an increase in fees generated from travel-related partnerships and qualified vendors resulting from increased occupancy during 2022 at our franchised hotels, and fees generated from the Company's convention, which occurred in 2022 after a two-year hiatus as a result of the COVID-19 pandemic.

Owned Hotels:

The Company's revenues, net of expenses, from owned hotels increased $3.7 million from $0.2 million for the three months ended March 31, 2021 to $3.9 million for the three months ended March 31, 2022.

These results reflect improved operating performance at our owned hotels and the addition of an owned hotel during the fourth quarter of 2021.

The Company's revenues, net of expenses, from owned hotels increased $2.8 million from $3.7 million for the three months ended June 30, 2021 to $6.5 million for the three months ended June 30, 2022.

These results reflect improved operating performance at our owned hotels and the net addition of one owned hotel during the comparative period.

Other Revenues:

Other revenues increased $3.8 million from $4.4 million for the three months ended March 31, 2021 to $8.2 million for the three months ended March 31, 2022 driven by an increase in non-compliance fees and other franchising revenues.

Other revenues increased $4.2 million from $7.7 million for the three months ended June 30, 2021 to $11.9 million for the three months ended June 30, 2022 driven by an increase in termination fees collected and other franchising revenues.

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 $30.3 million for the both the three months ended March 31, 2022, and 2021.

SG&A expenses experienced a $3.2 million decrease in provision for credit losses in accounts receivable and a $3.1 million decrease in the Company's deferred compensation liabilities based on decreases in the underlying investments These decreases were offset by approximately equivalent cost increases for general corporate purposes and lifting of certain cost mitigation measures related to the COVID-19 pandemic, including compensation, benefits, and travel.

Gain on sale of assets :

In the first quarter of 2022, the Company recognized a $29 thousand gain related to excess proceeds received on the sale of a parcel of land meeting held for sale classification during the fourth quarter of 2021.

Other (Gains) Losses:

The Company recorded other net losses of $1.7 million for the three months ended March 31, 2022, compared to other net gains of $1.2 million for the three months ended March 31, 2021.

SG&A expenses were $43.9 million and $34.5 million for the three months ended June 30, 2022, and 2021, respectively.

SG&A expenses experienced an increase resulting from increases for general corporate purposes and lifting of certain cost mitigation measures related to the COVID-19 pandemic, including compensation, benefits, travel and conventions & meetings.

These were partially offset by a $6.8 million decrease in the Company's deferred compensation liabilities based on decreases in the underlying investments.

Gain on sale of business and assets, net :

During the second quarter of 2022, the Company recognized a $3.3 million gain primarily related to the sale of an owned hotel asset, in addition to the sale and conversion of an international direct franchising market to a master franchising market.

Other Loss (Gain):

The Company recorded other net losses of $5.6 million for the three months ended June 30, 2022, compared to other net gains of $2.1 million for the three months ended June 30, 2021.

The current period losses relate to decreases in the Company's deferred compensation assets based on decreases in the underlying investments and foreign currency transaction losses.

Equity in Net (Gain) Loss of Affiliates :

The Company recorded net gains of $0.2 million from its unconsolidated affiliates for the three months ended March 31, 2022, compared to net losses of $6.0 million for the three months ended March 31, 2021.

Equity in Net Loss (Gain) of Affiliates :

The Company recorded net loss of $40 thousand from its unconsolidated affiliates for the three months ended June 30, 2022, compared to net gain of $1.2 million for the three months ended June 30, 2021.

These investments in affiliates relate to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels in strategic markets.

The activity for the three months ended March 31, 2021 reflects an other-than-temporary impairment of an unconsolidated affiliate resulting in a loss of $4.8 million, and increased losses of operating affiliate hotels as impacted by the COVID-19 pandemic.

The activity for the three months ended June 30, 2021 is primarily attributable to the sale of the ownership interest of an affiliate resulting in a gain of $2.6 million in the second quarter of 2021.

Refer to Note 4 to our consolidated financial statements for additional information.

Income Tax Expense:

The effective income tax rates were 23.2% and 22.2% for the three months ended March 31, 2022 and 2021, respectively.

The effective income tax rate for the three months ended March 31, 2022 was higher than the U.S.

The effective income tax rates were 25.3% and 23.2% for the three months ended June 30, 2022 and 2021, respectively.

The effective income tax rate for the three months ended June 30, 2022 and 2021 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes, partially offset by excess tax benefits from share-based compensation.

The effective income tax rate for the three months ended March 31, 2021 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes and foreign operations, partially offset by excess tax benefits from share-based compensation.

Operations Review

Comparison of Operating Results for the Six-Month Periods Ended June 30, 2022 and 2021

Summarized financial results for the six months ended June 30, 2022 and 2021 are as follows:

(in thousands) 2022 2021

Royalty fees $ 212,188 $ 172,289

Initial franchise and relicensing fees 14,624 12,755

Procurement services 33,486 23,283

Marketing and reservation system 316,019 227,509

Owned hotels 29,228 13,347

Other 20,156 12,108

Total revenues 625,701 461,291

OPERATING EXPENSES

Selling, general and administrative 74,212 64,737

Depreciation and amortization 11,710 12,594

Marketing and reservation system 267,496 211,458

Owned hotels 18,846 9,480

Total operating expenses

372,264 298,269

Gain on sale of business and assets, net 3,309 —

Operating income 256,746 163,022

OTHER INCOME AND EXPENSES, NET

Interest expense 22,722 23,468

Interest income (2,908) (2,515)

Other loss (gain) 7,275 (3,313)

Equity in net loss (gain) of affiliates (204) 4,818

Total other income and expenses, net 26,885 22,458

Income before income taxes 229,861 140,564

Income tax expense 56,302 32,345

Net income $ 173,559 $ 108,219

Results of Operations

The Company recorded income before income taxes of $229.9 million for the six-month period ended June 30, 2022, a $89.3 million increase from the same period of the prior year.

The increase in income before income taxes reflects a $93.7 million increase in operating income, a $5.0 million increase in equity in net loss (gain) of affiliates, partially offset by a $10.6 million increase in other loss (gain).

Operating income increased $93.7 million primarily due to a $39.9 million increase in royalty revenues, a $32.5 million increase in the net surplus generated from marketing and reservation system activities, a $10.2 million increase in procurement services revenues, a $8.1 million increase in other revenues, a $6.5 million increase in owned hotels revenues in excess of expenses, and a $3.3 million increase from net gain on sale of business and assets, partially offset by a $9.5 million increase in SG&A expenses.

The primary reasons for these fluctuations are described in more detail below.

Domestic royalty fees for the six months ended June 30, 2022 increased $37.8 million to $203.6 million compared to the six months ended June 30, 2021.

The increase in royalties reflect a 22.5% increase in RevPAR.

System-wide RevPAR increased due to a 17.2% increase in average daily rates and a 250 basis point increase in occupancy.

The increase in domestic royalties is also due to a 2.9% decrease in the number of domestic franchised hotel rooms and a 4 basis point increase in the effective royalty rate from 5.01% for the six months ended June 30, 2021 to 5.05% for the six months ended June 30, 2022.

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

Six Months Ended Six Months Ended Change

June 30, 2022 June 30, 2021

Rate Occupancy RevPAR Average

Rate Occupancy RevPAR

Comfort $ 105.96 60.6 % $ 64.26 $ 89.83 57.2 % $ 51.36 18.0 % 340 bps 25.1 %

Sleep 93.49 59.4 % 55.52 80.68 56.0 % 45.20 15.9 % 340 bps 22.8 %

Quality 88.23 52.5 % 46.35 77.41 50.7 % 39.21 14.0 % 180 bps 18.2 %

Clarion 92.34 43.6 % 40.23 79.03 39.7 % 31.37 16.8 % 390 bps 28.2 %

Econo Lodge 69.59 48.8 % 33.94 63.54 48.2 % 30.61 9.5 % 60 bps 10.9 %

Rodeway 70.72 50.3 % 35.54 63.53 49.6 % 31.49 11.3 % 70 bps 12.9 %

WoodSpring 57.38 79.4 % 45.56 49.03 80.1 % 39.26 17.0 % (70) bps 16.0 %

MainStay 85.53 61.3 % 52.43 75.34 59.5 % 44.83 13.5 % 180 bps 17.0 %

Suburban 62.43 69.7 % 43.52 51.97 70.5 % 36.62 20.1 % (80) bps 18.8 %

Cambria Hotels 156.7 61.8 % 96.83 116.93 50.8 % 59.40 34.0 % 1,100 bps 63.0 %

Ascend Hotel Collection 144.53 54.3 % 78.50 123.91 50.1 % 62.04 16.6 % 420 bps 26.5 %

Total $ 90.32 57.3 % $ 51.73 $ 77.09 54.8 % $ 42.23 17.2 % 250 bps 22.5 %

International royalty fees for the six months ended June 30, 2022 increased $2.1 million to $8.6 million compared to the six months ended June 30, 2021 as a result of increases in RevPAR performance, despite reductions of the international franchise system decreasing by 56 hotels (from 1,156 as of June 30, 2021 to 1,100 as of June 30, 2022) and 12,717 rooms (from 132,164 as of June 30, 2021 to 119,447 as of June 30, 2022).

We expect the uncertainty surrounding the pandemic, including an increase in the prevalence in variants as well as the rate and pace of vaccinations around the world, to continue to impact the number of domestic and international hotels that temporarily suspend operations.

Initial Franchise and Relicensing Fees

Initial franchise fees are fees paid to the Company when a franchisee executes a franchise agreement;

During the six months ended June 30, 2022, the Company awarded 215 domestic franchise agreements representing 22,164 rooms compared to 200 franchise agreements representing 20,668 rooms for the six months ended June 30, 2021.

Domestic franchise agreements awarded for new construction hotels totaled 83 representing 8,734 rooms during the six months ended June 30, 2022 compared to 56 franchise agreements representing 5,293 rooms for the six months ended June 30, 2021.

Conversion hotel awarded franchise agreements totaled 132 representing 13,430 rooms for the six months ended June 30, 2022 compared to 144 franchise agreements representing 15,375 rooms for the six months ended June 30, 2021.

The Company awarded 248 domestic relicensing contracts during the six months ended June 30, 2022, compared to 180 executed during the six months ended June 30, 2021.

The Company awarded 12 domestic renewal agreements during both the six months ended June 30, 2022, compared to 20 executed during six months ended June 30, 2021.

Initial franchise and relicensing fees are generally collected at the time the franchise agreement is awarded.

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 $1.8 million from $12.8 million during the six months ended June 30, 2021 to $14.6 million during six months ended June 30, 2022.Given the uncertainty as to the potential duration of the COVID-19 pandemic and its severity, there is additional uncertainty with respect to the opening of new construction hotels, which are reliant on, amongst other things, access to liquidity, availability of construction labor and materials, and local governmental approvals and entitlements, all of which may be constrained during the duration of the pandemic.

Procurement Services:

Revenues increased $10.2 million from $23.3 million for the six months ended June 30, 2021 to $33.5 million for the six months ended June 30, 2022.

These results reflect a increase in fees generated from travel-related partnerships and qualified vendors resulting from increased occupancy during the first and second quarters of 2022 at our franchised hotels, and fees generated from the Company's convention, which occurred in 2022 after a two-year hiatus as a result of the COVID-19 pandemic.

Owned Hotels:

The Company's revenues, net of expenses, from owned hotels increased $6.5 million from $3.9 million for the six months ended June 30, 2021 to $10.4 million for the six months ended June 30, 2022.

These results reflect improved operating performance at our owned hotels and the net addition of one owned hotel during the comparative period.

Other Revenues:

Other revenues increased $8.1 million from $12.1 million for the six months ended June 30, 2021 to $20.2 million in the same period of the current year driven by an increase termination fees collected and other franchising revenues.

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 $74.2 million for the six months ended June 30, 2022, a increase of $9.5 million from the six months ended June 30, 2021.

These were partially offset by a $10.0 million decrease in the Company's deferred compensation liabilities based on decreases in the underlying investments.

Gain on sale of business and assets, net :

Other Loss (Gain) :

The Company recorded other net losses of $7.3 million for the six months ended June 30, 2022, compared to other net gains of $3.3 million, an decrease of $10.6 million for the six months ended June 30, 2021.

The losses relate to decreases in the Company's deferred compensation assets based on decreases in the underlying investments and foreign currency transaction gains.

Equity in Net Loss (Gain) of Affiliates :

The Company recorded net gain of $0.2 million from its unconsolidated affiliates for the six months ended June 30, 2022 compared to net losses of $4.8 million for the six months ended June 30, 2021.

These investments relate to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels in strategic markets.

The fluctuation is primarily attributable to the sales of ownership interests of and distributions from affiliates resulting in gains of $2.6 million in the second quarter of 2021, partially offset by the impairment of an affiliate resulting in a loss of $4.8 million in the first quarter of 2021.

Income Tax Expense:

The effective income tax rates were 24.5% and 23.0% for the six months ended June 30, 2022 and 2021, respectively.

The effective income tax rate for the six months ended June 30, 2022 and 2021 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes, partially offset by excess tax benefits from share-based compensation.

Liquidity and Capital Resources

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The Company's short-term and long-term liquidity requirements primarily arise from working capital needs, debt obligations, income tax payments, dividend payments, share repurchases, capital expenditures and investments in growth opportunities.

The Company's 2012 Senior Notes mature on July 1, 2022 with a principal maturity, net of unamortized deferred issuance costs, of $216.5 million.

The Company's 2012 Senior Notes matured on July 1, 2022.

The outstanding principal of $216.6 million was re-paid at maturity.

In April 2020, in light of uncertainty resulting from the COVID-19 pandemic, we suspended future, undeclared dividends and activity under the Company's share repurchase program.

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On February 24, 2022 the Company's board of directors declared a quarterly cash dividend of $0.2375 per share of common stock, which was paid on April 15, 2022.

On February 24, 2022 and May 24, 2022, the Company's board of directors declared a quarterly cash dividend of $0.2375 per share of common stock.

Our board of directors authorized a program which permits us to offer financing, investment, and guaranty support to qualified franchisees, and allows us to acquire or develop and resell hotels to incentivize franchise development of our brands in strategic markets.

We deploy capital pursuant to this program opportunistically to promote growth of our brands.

With respect to our hotel development and ownership, affiliate investments, and lending, the Company had approximately $473.7 million in support of the Cambria Hotels and Everhome Suites brands currently reflected on the balance sheet as of March 31, 2022, which it generally targets to recycle within a five year period, and expects our outstanding investment to not exceed $975 million at any point in time based on current board of directors' authorization.

With respect to our hotel development and ownership, affiliate investments, and lending, the Company had approximately $480.1 million in support of the Cambria Hotels and Everhome Suites brands currently reflected on the balance sheet as of June 30, 2022, which it generally targets to recycle within a five year period, and expects our outstanding investment to not exceed $975 million at any point in time based on current board of directors' authorization.

The deployment and annual pace of future financial support activities will depend upon market and other conditions.

The Company also strategically deploys capital in the form of franchise agreement acquisition payments across our brands to incentivize franchise development.

As of March 31, 2022, the Company had commitments to extend an additional $277.0 million for these purposes provided the conditions of the payment are met by its franchisees.

The Company's primary sources of liquidity as of March 31, 2022 consisted of $1.1 billion in cash and available borrowing capacity through its senior unsecured revolving credit facility.

As of March 31, 2022, the Company was in compliance with the financial covenants of its credit agreements and expects to remain in such compliance.

Based on our business model and information known at this time, the Company believes that cash, available borrowing capacity, and cash flows from operations will provide sufficient liquidity to meet the expected future operating, investing and financing needs of the business for at least the next 12 months.

As of June 30, 2022, the Company had commitments to extend an additional $269.4 million for these purposes provided the conditions of the payment are met by its franchisees.

The Company's primary sources of liquidity as of June 30, 2022 consisted of $1.2 billion in cash and available borrowing capacity through its senior unsecured revolving credit facility.

As of June 30, 2022, the Company was in compliance with the financial covenants of its credit agreements and expects to remain in such compliance.

Operating Activities

During the three months ended March 31, 2022 and 2021, net cash provided by operating activities totaled $63.9 million and $0.1 million, respectively.

During the six months ended June 30, 2022 and 2021, net cash provided by operating activities totaled $159.3 million and $102.4 million, respectively.

Operating cash flows increased $56.9 million primarily due to an increase in operating income, excluding certain non-cash charges, and timing of working capital items.

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If the franchisee exits our franchise system or is not operating their franchise in accordance with our quality or credit standards and is terminated, the franchisee must repay the unamortized incentive payment plus interest.

During the three months ended March 31, 2022 and 2021, the Company's net advances for these purposes totaled $12.4 million and $6.8 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company's net advances for these purposes totaled $27.0 million and $18.1 million, respectively.

The timing and amount of these cash flows are dependent on various factors including the implementation of various development and brand incentive programs, the level of franchise sales and the ability of our franchisees to complete construction or convert their hotels to one of the Company’s brands.

At March 31, 2022, the Company had commitments to extend an additional $277.0 million for these purposes provided the conditions of the payment are met by its franchisees.

At June 30, 2022, the Company had commitments to extend an additional $269.4 million for these purposes provided the conditions of the payment are met by its franchisees.

The Company’s franchise agreements require the payment of marketing and reservation system fees.

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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.

During the three months ended March 31, 2022, marketing and reservation system revenues exceeded expenses by $12.9 million.

During the three months ended March 31, 2021, marketing and reservation system expenses exceeded revenues by $6.7 million.

During the six months ended June 30, 2022 and 2021, marketing and reservation system revenues exceeded expenses by $48.5 million and $16.0 million, respectively.

Investing Activities

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We are currently engaged in these financial support activities to encourage acceleration of the growth of our Cambria Hotels and Everhome Suites brands, primarily in strategic markets and locations.

With respect to our hotel development and ownership, affiliate investments, and lending, the Company had approximately $473.7 million outstanding in support of the Cambria Hotels and Everhome Suites brands currently reflected on the balance sheet as of March 31, 2022, which it generally targets to recycle within a five year period, and expects our outstanding investment to not exceed $975 million at any point of time based on current board of directors' authorization.

With respect to our hotel development and ownership, affiliate investments, and lending, the Company had approximately $480.1 million outstanding in support of the Cambria Hotels and Everhome Suites brands currently reflected on the balance sheet as of June 30, 2022, which it generally targets to recycle within a five year period, and expects our outstanding investment to not exceed $975 million at any point of time based on current board of directors' authorization.

We expect to continue to deploy capital in these manners in support of our brands.

The deployment and annual pace of future financial support activities will depend upon market and other conditions, including among others, our franchise sales results, the environment for new construction hotel development and the hotel lending environment, and our assessment of the ongoing impacts of the COVID-19 pandemic.

Cash utilized for investing activities totaled $22.5 million and $9.7 million for the three months ended March 31, 2022 and 2021, respectively.

The increase in cash utilized for investing activities for the three months ended March 31, 2022 primarily reflects the following items:

During the three months ended March 31, 2022 and 2021, capital expenditures in property and equipment totaled $26.8 million and $9.4 million, respectively.

The increase in capital expenditures primarily reflects increased costs incurred to support the continued growth of the Cambria Hotels brand, including acquisition of a land parcel in the first quarter of 2022 to develop into a Cambria hotel.

During the three months ended March 31, 2022, the Company realized net proceeds of $8.5 million from the sale of one parcel of land.

Cash utilized for investing activities totaled $24.0 million and $33.0 million for the six months ended June 30, 2022 and 2021, respectively.

The change in cash utilized for investing activities for the six months ended June 30, 2022 primarily reflects the following items:

During the six months ended June 30, 2022 and 2021, capital expenditures in property and equipment totaled $49.9 million and $23.4 million, respectively.

The increase in capital expenditures primarily reflects increased costs incurred to support the continued growth of the Cambria Hotels and Everhome Suites brands, including acquisition of land parcels in the first and second quarters of 2022 for hotel development.

During the six months ended June 30, 2022, the Company realized net proceeds of $32.9 million from the sale of one Cambria hotel, one parcel of land, and a sale and conversion of an international direct franchising market to a master franchising market.

The Company maintains equity method investments in affiliates related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels in strategic markets.

During the three months ended March 31, 2022 and 2021, the Company invested $0.3 million and $1.0 million, respectively, to support these efforts.

During the three months ended March 31, 2022 and 2021, the Company received no distributions from these affiliates.

To the extent existing unconsolidated affiliates proceed to the hotel construction phase, the Company is committed to make additional capital contributions totaling $7.8 million to support these efforts.

During the six months ended June 30, 2022 and 2021, the Company invested $0.7 million and $1.1 million, respectively, and received no distributions from these affiliates.

To the extent existing affiliates proceed to the hotel construction phase, the Company is committed to make additional capital contributions totaling $7.5 million to support these efforts.

The Company has entered into various limited payment guaranties with regards to the Company’s investments in affiliates.

The maximum exposure of principal incidental to these limited payment guaranties is $5.7 million, plus unpaid expenses and accrued unpaid interest.

The Company believes the likelihood of having to perform under the aforementioned limited payment guaranties was remote as of March 31, 2022 and March 31, 2021.

The Company believes the likelihood of having to perform under the aforementioned limited payment guaranties was remote as of June 30, 2022 and June 30, 2021.

In the event of performance, the Company has recourse for one of the transactions in the form of a membership interest pledge as collateral for our guaranty.

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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, 2022, the Company advanced $1.2 million and received repayments totaling $0.1 million for these purposes.

For the three months ended March 31, 2021, the Company advanced and received repayments totaling zero and $0.1 million for these purposes, respectively.

At March 31, 2022, the Company had commitments to extend an additional $6.2 million for these purposes provided certain conditions are met by its franchisees.

During the six months ended June 30, 2022, the Company advanced $2.0 million and received repayments totaling $0.1 million for these purposes.

For the six months ended June 30, 2021, the Company advanced no amounts and received repayments totaling $0.1 million for these purposes, and acquired a senior note with collateral in an underlying operating hotel for $17.9 million.

At June 30, 2022, the Company had commitments to extend an additional $5.5 million for these purposes provided certain conditions are met by its franchisees.

Financing Activities

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The extended maturity date is August 20, 2026.

On May 18, 2022, the remainder $60 million of the $600 million total capacity was extended to August 20, 2026 in exchange for fees of $24 thousand.

There are no subsidiary guarantors under the Restated Credit Agreement.

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The Restated Credit Agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of the Company under the Restated Credit Agreement to be immediately due and payable.

At March 31, 2022, the Company maintained a total leverage ratio of 2.17x and was in compliance with all financial covenants under the Restated Credit Agreement.

The senior unsecured revolving credit facility was paid down in full during the third quarter of 2020 and remains undrawn as of December 31, 2021 and March 31, 2022.

At June 30, 2022, the Company maintained a total leverage ratio of 2.09x and was in compliance with all financial covenants under the Restated Credit Agreement.

The senior unsecured revolving credit facility was paid down in full during the third quarter of 2020 and remains undrawn as of December 31, 2021 and June 30, 2022.

We expect to draw on the facility for the pending Radisson Hotels Americas transaction.

Debt issuance costs incurred in connection with the Restated Credit Agreement are amortized on a straight-line basis, which is not materially different than the effective interest method, through maturity.

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If the Company redeems the 2019 Senior Notes on or after the 2019 Notes Par Call Date, the redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.

Additionally, at the option of the holders of the 2019 Senior Notes, the Company may be required to repurchase all or a portion of the 2019 Senior Notes of a holder upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.

Additionally, at the option of the holders of the

2019 Senior Notes, the Company may be required to repurchase all or a portion of the 2019 Senior Notes of a holder upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.

Senior Unsecured Notes Due 2022

On June 27, 2012, the Company issued unsecured senior notes with a principal amount of $400 million (the "2012 Senior Notes") at par, bearing a coupon of 5.75% with an effective rate of 6.00%.

The 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, commissions and other offering expenses, together with borrowings under the Company's senior unsecured senior credit facility, to pay a special cash dividend to stockholders totaling approximately $600.7 million paid on August 23, 2012.

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.

Additionally, at the option of the holders of the 2012 Senior Notes, the Company may be required to repurchase all or a portion of the 2012 Senior Notes of a holder upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.

On July 9, 2020, the Company commenced the tender offer (the "Tender Offer") to purchase up to $160.0 million aggregate principal amount of the Company’s 2012 Senior Notes subject to increase or decrease.

On July 9, 2020, the Company commenced the tender offer (the "Tender Offer") to purchase up to $160.0 million aggregate principal amount of the 2012 Senior Notes subject to increase or decrease.

The Tender Offer was subsequently upsized to $180.0 million aggregate principal amount of the 2012 Notes.

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In combination with the early pay off of the Term Loan, the Company recorded a loss on extinguishment of debt of $16.0 million in the third quarter of 2020.

The Company's 2012 Senior Notes mature on July 1, 2022 with a principal maturity, net of unamortized deferred issuance costs, of $216.5 million.

The 2012 Senior Notes matured on July 1, 2022.

The outstanding principal of $216.6 million was re-paid at maturity.

Economic Development Loans

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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, 2022, the Company had been fully advanced the amounts due pursuant to these agreements.

At June 30, 2022, the Company had been fully advanced the amounts due pursuant to these agreements.

These advances bear interest at a rate of 3% per annum.

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If the Company fails to meet an annual performance condition, the Company may be required to repay a portion or all of the advances including accrued interest by April 30 th following the measurement date.

Any outstanding advances at the expiration in 2023 of the Company's current ten year corporate headquarters lease in 2023 will be forgiven in full.

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.

Any outstanding advances at the expiration in 2023 of the Company's current ten-year corporate headquarters lease will be forgiven in full.

The advances will be included in debt in the Company's consolidated balance sheets until the Company determines that the future performance conditions will be met over the entire term of the agreement and the Company will not be required to repay the advances.

The Company accrues interest on the portion of the advances that it expects to repay.

The Company was in compliance with all applicable current performance conditions as of March 31, 2022.

The Company was in compliance with all applicable current performance conditions as of June 30, 2022.

In April 2020, in light of uncertainty resulting from the COVID-19 pandemic, we suspended future, undeclared dividends.

Given our strong liquidity and credit profile, in May 2021, the Company resumed the payment of quarterly dividends, subject to future declarations by our board of directors.

On February 24, 2022 the Company board of directors declared a cash dividend of $0.2375 per share of common stock, which was paid on April 15, 2022.

During the three months ended March 31, 2022, the Company paid $13.2 million in cash dividends.

On December 6, 2021, the Company's board of directors approved a 6% increase in the quarterly cash dividend and declared a quarterly cash dividend of $0.2375 per share of common stock.

On February 24, 2022 and May 24, 2022, the Company's board of directors declared a cash dividend of $0.2375 per share of common stock.

During the six months ended June 30, 2022, the Company paid $26.5 million in cash dividends.

We expect that cash dividends will continue to be paid in the future, subject to declaration by our board of directors, future business performance, economic conditions, changes in tax regulations and other matters.

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In May 2021, the Company's board of directors approved resumption of the share repurchase program.

During the three months ended March 31, 2022, the Company repurchased 68,486 shares of its common stock under the share repurchase program at a total cost of $9.9 million.

Through March 31, 2022, the Company repurchased 51.8 million shares of its common stock (including 33.0 million prior to the two-for-one stock split effected in October 2005) under the program at a total cost of $1.5 billion.

During the six months ended June 30, 2022, the Company repurchased 68,486 shares of its common stock under the share repurchase program at a total cost of $9.9 million.

Through June 30, 2022, the Company repurchased 51.8 million shares of its common stock (including 33.0 million prior to the two-for-one stock split effected in October 2005) under the program at a total cost of $1.5 billion.

Considering the effect of the two-for-one stock split, the Company has repurchased 84.8 million shares at an average price of $17.73 per share.

As of March 31, 2022, the Company had 3.3 million shares remaining under the current share repurchase authorization.

During the three months ended March 31, 2022, the Company redeemed 32,426 shares of common stock at a total cost of $4.8 million from employees to satisfy the option exercise price and statutory minimum tax-withholding requirements related to the exercising of stock options and vesting of PVRSUs and restricted stock grants.

As of June 30, 2022, the Company had 3.3 million shares remaining under the current share repurchase authorization.

During the six months ended June 30, 2022, the Company redeemed 34,848 shares of common stock at a total cost of $5.2 million from employees to satisfy the option exercise price and statutory minimum tax-withholding requirements related to the exercising of stock options and vesting of PVRSUs and restricted stock grants.

These redemptions were outside the share repurchase program.

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New Accounting Standards

Refer to the "Recently Adopted Accounting Standards" section of Note 1 for information related to our evaluation of new accounting standards in 2022.

Refer to Note 1 for information related to our evaluation of new accounting standards.

FORWARD-LOOKING STATEMENTS

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Several factors could cause our actual results, performance or achievements to differ materially from those expressed in or contemplated by the forward-looking statements.

Such risks include, but are not limited to, continuation or resurgence of the COVID-19 pandemic, including with respect to new strains or variants;

Such risks include, but are not limited to, the consummation of the acquisition of Radisson Hotels Americas, including the related incurrence of additional indebtedness;

the company’s ability to successfully integrate Radisson Hotels Americas’ employees and operations;

the ability to realize the anticipated benefits and synergies of the acquisition of Radisson Hotels Americas as rapidly or to the extent anticipated;

the continuation or resurgence of the COVID-19 pandemic, including with respect to new strains or variants;

the rate, pace and effectiveness of vaccination in the broader population;

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hotel closures or financial difficulties of our franchisees;

operating risks associated with our international operations, especially in areas currently most affected by COVID-19;

operating risks associated

with our international operations, especially in areas currently most affected by COVID-19;

the outcome of litigation;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis