Wyndham Worldwide (WYN)

the impact of $12 million in cost savings from overhead reductions, partially offset by $4 million of additional costs relating to organizational realignment initiatives.

 

Net revenues generated from rental transactions and related services decreased $30 million (19%) during the first quarter of 2009 compared with the first quarter of 2008. Excluding the unfavorable impact of foreign exchange movements, net revenues generated from rental transactions and related services decreased $5 million (3%) during the first quarter of 2009 driven by a 3% decrease in the average net price per rental primarily resulting from a change in the mix of various rental offerings and lower pricing at our Landal European vacation rental business, which benefited from premium holiday pricing for Easter in the first quarter of 2008. Rental transaction volume was flat primarily driven by increased volume at (i) our U.K. cottage business due to successful marketing and promotional offers as well as increased functionality of its new web platform and (ii) our Landal business, which benefited from enhanced marketing programs despite the unfavorable impact on arrivals from the Easter holiday falling in the second quarter of 2009 as compared to the first quarter of 2008. Such favorability was offset by lower rental volume at our Novasol European vacation rentals business, which we believe was a result of customers altering their vacation decisions primarily due to the downturn in European economies.

 

Annual dues and exchange revenues decreased $10 million (7%) during the first quarter of 2009 compared with the first quarter of 2008. Excluding the unfavorable impact of foreign exchange movements, annual dues and exchange revenues declined $1 million driven by a 5% decline in revenue generated per member, partially offset by a 4% increase in the average number of members primarily due to the enrollment of approximately 135,000 members at the beginning of 2009 resulting from our Disney Vacation Club affiliation. The decrease in revenue per member was due to lower exchange transactions, partially offset by the impact of favorable exchange transaction pricing. We believe that the lower revenue per member reflects: (i) recent heightened economic uncertainty and (ii) recent trends among timeshare vacation ownership developers to enroll members in private label clubs, whereby the members have the option to exchange within the club or through RCI channels. Such trends have a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. A decrease in ancillary revenues of $14 million was driven by (i) $6 million from various sources, which include fees from additional services provided to transacting members, club servicing revenues, fees from our credit card loyalty program and fees generated from programs with affiliated resorts, (ii) $5 million in travel revenue primarily due to our termination of a low margin travel service contract and (iii) $3 million due to the unfavorable translation effects of foreign exchange movements.

 

In addition, EBITDA was positively impacted by a decrease in expenses of $37 million (15%) primarily driven by (i) the favorable impact of foreign currency translation on expenses of $25 million, (ii) $12 million in cost savings primarily from overhead reductions, (iii) $2 million of lower volume-related expenses and (iv) $1 million of lower employee incentive program expenses compared to the first quarter of 2008. Such decreases were partially offset by $4 million of additional costs relating to organizational realignment initiatives (see Restructuring Plan for more details).

 

 

Our strategic realignment in our vacation exchange and rentals business streamlined exchange operations primarily across its international businesses by reducing management layers to improve regional accountability. Such plan resulted in $4 million in restructuring costs during the first quarter of 2009. We expect additional costs during the second quarter of 2009 of approximately $1 million to $4 million in cash payments for severance and related benefits.

 

exchange within the club or through RCI channels. Such trends have a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. An increase in ancillary revenues of $7 million was driven by (i) the $5 million Asia Pacific adjustment, as discussed above, and (ii) $4 million from various sources, which include fees from additional services provided to transacting members, club servicing revenues, fees from our credit card loyalty program and fees generated from programs with affiliated resorts, partially offset by $2 million due to the unfavorable translation effects of foreign exchange movements.

 

EBITDA further reflects an increase in expenses of $86 million (9%) primarily driven by (i) charges of $24 million due to currency conversion losses related to the transfer of cash from our Venezuelan operations, (ii) non-cash impairment charges of $21 million due to trademark and fixed asset write downs resulting from a strategic change in direction and reduced future investments in a vacation rentals business, (iii) $18 million of increased resort services expenses as a result of the conversion of two of our Landal parks from franchised to managed, as discussed above, (iv) the unfavorable impact of foreign currency translation on expenses of $18 million, (v) a non-cash impairment charge of $15 million due to the write-off of our investment in a non-performing joint venture, (vi) $9 million of costs relating to organizational realignment initiatives (see Restructuring Plan for more details), (vii) a $4 million increase in volume-related expenses, which was substantially comprised of incremental costs to support growth in rental transaction volume at our Landal business, as discussed above, higher rental inventory fulfillment costs and increased staffing costs to support member growth, (viii) $4 million of higher employee incentive program expenses compared to 2007 and (ix) $2 million of consulting costs on researching the improvement of web-based search and booking functionalities. Such increases were partially offset by (i) $16 million of favorable hedging on foreign exchange contracts, (ii) $16 million in cost savings from overhead reductions, (iii) the absence of $7 million of severance-related expenses recorded during 2007 and (iv) $3 million of lower marketing expenses primarily due to timing.

 

 

Net revenues and EBITDA increased $99 million (9%) and $28 million (11%), respectively, during 2007 compared with 2006. The increase in net revenues primarily reflects an $83 million increase in net revenues from rental transactions, a $24 million increase in annual dues and exchange revenues, partially offset by an $8 million decrease in ancillary revenues. The increase in EBITDA also includes an increase in expenses, partially offset by the absence of a $21 million charge recorded in second quarter 2006 related to local taxes payable to certain foreign jurisdictions. Net revenue and expense increases include $49 million and $39 million, respectively, of currency translation from a weaker U.S. dollar compared to other foreign currencies.

 

Net revenues generated from rental transactions and related services increased $83 million (17%) during 2007 driven by (i) a 2% increase in rental transaction volume, (ii) a 10% increase in the average net price per rental (or 3%, excluding the favorable impact of foreign exchange movements) and (iii) the conversion of two of our Landal parks from franchised to managed, which contributed an incremental $16 million to revenues or 4% to average net price per rental. Excluding the favorable impact of foreign exchange movements and the conversion of two of our Landal parks from franchised to managed, the 3% increase in average net price per rental was primarily a result of mix shift of rental activity to higher premium destinations. The growth in rental transaction volume was driven by increased rentals at our Landal and Novasol European vacation rental businesses, which primarily resulted from (i) enhanced marketing programs initiated to support an expansion strategy to provide consumers with broader inventories and more destinations and (ii) improved local economies. The growth in rental transactions was also the result of increased rentals in Latin America due to increased marketing efforts and broader distribution channels. Such growth was partially offset by a decline in RCI member rentals in Europe, decreased cottage rentals in the domestic United Kingdom cottage market primarily due to severe weather conditions during 2007 and a decline in cottage and apartment rentals at French destinations. The increase in net revenues from rental transactions includes the translation effects of foreign exchange movements, which favorably impacted net rental revenues by $38 million.

 

Annual dues and exchange revenues increased $24 million (5%) during 2007 as compared with 2006 primarily due to a 5% increase in the average number of members. Annual dues and exchange revenue per member was relatively flat during 2007 as compared to 2006 as a result of favorable transaction pricing, which was offset by a decline in exchange transactions per average member. The timing of intervals and points deposits and the mix of intervals and points to be utilized during 2007 compared with 2006 contributed to the decline in exchange transactions per average member. In addition, we believe that trends among timeshare vacation ownership developers are (i) to sell multiyear products, whereby the members have access to the product every second or third year and (ii) to enroll members in private label clubs, whereby the members have the option to exchange within the club or through other RCI channels. Such trends have a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. Ancillary revenues decreased due to the absence of $6 million of consulting revenues in our Asia Pacific region recorded during 2006 but not repeated during 2007 and a $5 million adjustment recorded during the second quarter of 2007 relating to previously recorded consulting revenues in our Asia Pacific region. Such decreases were partially offset by $3 million of increased revenues during 2007 from various sources, which include fees from additional services provided to transacting members, club servicing revenues, fees from our credit card loyalty program and fees generated from programs with affiliates. The increase in annual dues and exchange revenues and ancillary revenues includes the translation effects of foreign exchange movements, which favorably impacted revenues by $11 million.

 

EBITDA further reflects an increase in expenses of $71 million (8%) primarily driven by (i) the unfavorable impact of foreign currency translation on expenses of $39 million, (ii) a $37 million increase in volume-related expenses, which was substantially comprised of incremental costs to support growth in rental transaction volume, as discussed above, increased staffing costs to support member growth and increased call volumes as well as incremental investments in our information technology infrastructure, (iii) $15 million of increased resort services expenses as a result of converting two of our Landal parks from franchised to managed, as discussed above, (iv) $5 million of incremental employee incentive program expenses during 2007 and (v) $4 million of incremental severance related expenses recorded during 2007. These increases were partially offset by (i) the absence of a $21 million charge recorded during the second quarter of 2006 related to local taxes payable to certain foreign jurisdictions, (ii) the absence of $3 million of costs related to our separation from Cendant recorded during 2006 and (iii) the absence of $2 million of costs incurred during 2006 to close offices and consolidate certain call center operations.

 

 

As a provider of vacation exchange services, the Company enters into affiliation agreements with developers of vacation ownership properties to allow owners of intervals to trade their intervals for certain other intervals within the Company’s vacation exchange business and, for some members, for other leisure-related products and services. Additionally, as a marketer of vacation rental properties, generally the Company enters into contracts for exclusive periods of time with property owners to market the rental of such properties to rental customers. The Company’s vacation exchange business derives a majority of its revenues from annual membership dues and exchange fees from members trading their intervals. Annual dues revenue represents the annual membership fees from members who participate in the Company’s vacation exchange business and, for additional fees, have the right to exchange their intervals for certain other intervals within the Company’s vacation exchange business and for certain members, for other leisure-related products and services. The Company records revenue from annual membership dues as deferred income on the Consolidated Balance Sheets and recognizes it on a straight-line basis over the membership period during which delivery of publications, if applicable, and other services are provided to the members. Exchange fees are generated when members exchange their intervals for equivalent values of rights and services, which may include intervals at other properties within the Company’s vacation exchange business or other leisure-related products and services. Exchange fees are recognized as revenue, net of expected cancellations, when the exchange requests have been confirmed to the member. The Company’s vacation rentals business primarily derives its revenues from fees, which generally average between 20% and 45% of the gross booking fees for non-proprietary inventory, as compared to properties that it owns or operates under long-term capital leases where it receives 100% of the revenue. The majority of the time, the Company acts on behalf of the owners of the rental properties to generate the Company’s fees. The Company provides reservation services to the independent property owners and receives the agreed-upon fee for the service provided. The Company remits the gross rental fee received from the renter to the independent property owner, net of the Company’s agreed-upon fee. Revenue from such fees is recognized in the period that the rental reservation is made, net of expected cancellations. Upon confirmation of the rental reservation, the rental customer and property owner generally have a direct relationship for additional services to be performed. Cancellations for 2008, 2007 and 2006 each totaled less than 5% of rental transactions booked. The Company’s revenue is earned when evidence of an arrangement exists, delivery has occurred or the services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectibility is reasonably assured. The Company also earns rental fees in connection with properties it owns or operates under long-term capital leases and such fees are recognized when the rental customer’s stay occurs, as this is the point at which the service is rendered.

 

Annual dues and exchange revenues increased $3 million (1%) during the nine months ended September 30, 2008 compared with the same period during 2007. Excluding the favorable impact of foreign exchange movements, annual dues and exchange revenues declined $1 million driven by a 4% decline in revenue generated per member, offset by a 4% increase in the average number of members. The decrease in revenue generated per member was driven by lower exchange transactions per member, partially offset by the impact of favorable exchange transaction pricing. We believe that lower transactions reflects: (i) recent heightened economic uncertainty and (ii) recent trends among timeshare vacation ownership developers to enroll members in private label clubs, whereby the members have the option to exchange within the club or through other RCI channels. Such trends have a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. An increase in ancillary revenues of $15 million was driven by (i) $9 million from various sources, which include fees from additional services provided to transacting members, club servicing revenues, fees from our credit card loyalty program and fees generated from programs with affiliated resorts, as well as (ii) the $5 million Asia Pacific adjustment, as discussed above, and (iii) $1 million due to the favorable translation effects of foreign exchange movements.

 

EBITDA further reflects an increase in expenses of $57 million (8%) primarily driven by (i) the unfavorable impact of foreign currency translation on expenses of $37 million, (ii) $15 million of increased resort services expenses as a result of the conversion of two of our Landal parks from franchised to managed, as discussed above, (iii) a $9 million increase in volume-related expenses, which was substantially comprised of incremental costs to support growth in rental transaction volume at our Landal business, as discussed above, higher rental inventory fulfillment costs and increased staffing costs to support member growth, (iv) $2 million of consulting costs to improve web-based search and booking functionalities and (v) $2 million of costs relating to organizational realignment initiatives (see Restructuring Plan for more details). Such increases were partially offset by (i) the absence of $8 million of severance related expenses recorded during the nine months ended September 30, 2007 and (ii) $8 million in cost savings from overhead reductions.

 

Net revenues generated from rental transactions and related services increased $21 million (15%) (or $8 million (6%), excluding the favorable impact of foreign exchange movements) during the first quarter of 2008 driven by (i) a 14% increase in the average net price per rental (or 5%, excluding the favorable impact of foreign exchange movements) and (ii) the conversion of two of our Landal parks from franchised to managed, which contributed an incremental $5 million to revenues or 4% to average net price per rental. Such increases were partially offset by a 3% decline in rental transaction volume. Excluding the favorable impact of foreign exchange movements and the conversion of two of our Landal parks from franchised to managed, the 5% increase in average net price per rental was primarily a result of increased pricing at our Landal and Novasol European vacation rental businesses. The decline in rental transaction volume was primarily driven by lower rental volume at our Holiday Cottages business which we believe was due to (i) a continuing trend of customers booking their vacations closer to travel date and (ii) a reduction in internet search engine bookings. Such decline in rental transaction volume was partially offset by increased rentals at our Landal and Novasol businesses, both of which benefited from enhanced marketing programs initiated to support an expansion strategy to provide consumers with broader inventories and more destinations. In addition, our Landal business, which recognizes revenues on a customer arrival basis, also experienced increased arrivals due to the Easter holiday falling in the first quarter of 2008 as compared to the second quarter of 2007.

 

Annual dues and exchange revenues increased $2 million (1%) during the first quarter of 2008 compared with the first quarter of 2007 due to a 5% increase in the average number of members, partially offset by a 3% decline in revenue generated per member. The decrease in revenue generated per member was driven by lower exchange transactions per member, partially offset by the impact of favorable transaction pricing. We believe that during the first quarter of 2008, exchange transactions per member were negatively impacted from having a shorter prime season booking window as a result of the Easter holiday falling during the third week in March of 2008, which was two weeks earlier than the holiday fell during 2007. In addition, we believe that recent trends among timeshare vacation ownership developers have been to enroll members in private label clubs, whereby the members have the option to exchange within the club or through other RCI channels. Such trends have a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. Ancillary revenues increased $4 million during the first quarter of 2008 from various sources, which include fees from additional services provided to transacting members, club servicing revenues, fees from our credit card loyalty program and fees generated from programs with affiliates. The increase in annual dues and exchange revenues and ancillary revenues included the translation effects of foreign exchange movements, which favorably impacted revenues by $3 million.

 

EBITDA further reflects an increase in expenses of $19 million (8%) primarily driven by (i) the unfavorable impact of foreign currency translation on expenses of $12 million, (ii) $5 million of increased resort services expenses as a result of increased Landal park volume and the conversion of two of our Landal parks from franchised to managed, as discussed above, and (iii) a $4 million increase in volume-related expenses, which was substantially comprised of incremental costs to support growth in rental transaction volume at our Landal and Novasol businesses, as discussed above, increased staffing costs to support member growth and increased call volumes.

 

increase in net revenues from rental transactions, a $22 million increase in annual dues and exchange revenues and a $4 million increase in ancillary revenues, partially offset by a $5 million decrease in revenues related to an adjustment recorded during the second quarter of 2007 to previously recorded revenues relating to consulting activities in Asia Pacific. Our increase in EBITDA also includes an increase in expenses, partially offset by the absence of a $21 million charge recorded in second quarter 2006 related to local taxes payable to certain foreign jurisdictions. Net revenue and expense increases include a favorable currency translation impact of $35 million and $26 million, respectively, from a weaker U.S. dollar compared to other foreign currencies.

 

Net revenues generated from rental transactions and related services increased $63 million (16%) during the nine months ended September 30, 2007 driven by (i) a 3% increase in rental transaction volume, (ii) a 9% increase in the average net price per rental and (iii) the conversion of one of our Landal parks from franchised to managed, which contributed an incremental $11 million or 3% to average net price per rental. Excluding the favorable impact of foreign exchange movements, average net price per rental increased 6% primarily due to higher capacities in premium destinations. The growth in rental transaction volume was driven by increased rentals at our Landal and Novasol European vacation rental businesses, which primarily resulted from (i) enhanced marketing programs initiated to support an expansion strategy to provide consumers with broader inventories and more destinations and (ii) improved local economies. The growth in rental transactions was also the result of increased rentals in Latin America due to increased marketing efforts and broader distribution channels. Such growth was partially offset by decreased rentals in the domestic United Kingdom cottage market due to severe weather conditions during the third quarter of 2007 and a decline in European cottage and apartment rentals at French destinations. The increase in net revenues from rental transactions includes the translation effects of foreign exchange movements, which favorably impacted net rental revenues by $28 million.

 

Annual dues and exchange revenues increased $22 million (6%) during the nine months ended September 30, 2007 as compared with the same period in 2006 primarily due to a 1% increase in annual dues and exchange revenue per member and a 5% increase in the average number of members. The increase in the annual dues and exchange revenue per member was a result of favorable transaction pricing; partially offset by a decline in exchange transactions per average member as compared with the nine months ended September 30, 2006. The timing of intervals and points deposits and the mix of intervals and points to be utilized in third quarter 2007 compared with last year contributed to the decline in exchange transactions per average member. In addition, we believe that trends among timeshare vacation ownership developers are (i) to sell multiyear products, whereby the members have access to the product every second or third year and (ii) to enroll members in private label clubs, whereby the members have the option to exchange within the club or through other RCI channels. Such trends have a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. Ancillary revenues decreased by $5 million related to an adjustment recorded during the second quarter of 2007 to previously recorded revenues relating to consulting activities in Asia Pacific, partially offset by an increase of $4 million from various sources during the nine months ended September 30, 2007 as compared with the same period in 2006 primarily including fees from additional services provided to transacting members, club servicing revenues, fees from our credit card loyalty program and fees generated from programs with affiliates. The increase in annual dues and exchange revenues and ancillary revenues includes the translation effects of foreign exchange movements, which favorably impacted revenues by $7 million.

 

EBITDA further reflects an increase in expenses of $53 million (8%) primarily driven by (i) a $30 million increase in volume-related expenses, which was substantially comprised of incremental costs to support growth in rental transaction volume, as discussed above, increased staffing costs to support member growth and increased call volumes as well as incremental investments in our information technology infrastructure, (ii) the unfavorable impact of foreign currency translation on expenses of $26 million, (iii) $10 million of increased resort services expenses as a result of converting one of our Landal parks from franchised to managed, as discussed above, (iv) $9 million in employee incentive program expenses not incurred in the nine months ended September 30, 2006, (v) $8 million of severance related expenses recorded during the nine months ended September 30, 2007 and (vi) $3 million of incremental marketing expenses incurred to support product and geographic expansion. These increases were partially offset by (i) the absence of a $21 million charge recorded during the second quarter of 2006 related to local taxes payable to certain foreign jurisdictions, (ii) the absence of $5 million of costs incurred during the nine months ended September 30, 2006 to close offices and consolidate certain call center operations and (iii) the absence of $3 million of costs related to our separation from Cendant recorded during the nine months ended September 30, 2006.

 

Net revenues generated from rental transactions and related services increased $38 million (16%) during the six months ended June 30, 2007 driven by (i) a 4% increase in rental transaction volume and (ii) an 11% increase in the average net price per rental. Excluding the favorable impact of foreign exchange movements, average net price per rental increased 5%. The growth in rental transaction volume was primarily due to increased bookings and arrivals at our Novasol and Landal businesses, which primarily resulted from (i) enhanced marketing programs initiated to support an expansion strategy to provide consumers with broader inventories and more destinations and (ii) improved local economies. Such growth was partially offset by a decline primarily related to our French destination camping activities. The increase in net revenues from rental transactions and the average net price per rental includes the translation effects of foreign exchange movements, which favorably impacted net rental revenues by $16 million.

 

Annual dues and exchange revenues increased $17 million (7%) during the six months ended June 30, 2007 as compared with the same period in 2006 primarily due to a 2% increase in annual dues and exchange revenue per member and a 5% increase in the average number of members. The increase in the annual dues and exchange revenue per member was a result of favorable transaction pricing, partially offset by a 3% decline in exchange transactions per average member as compared with the six months ended June 30, 2006. We believe that a growing trend in timeshare vacation ownership sales to sell multiyear products, whereby the members have access to the product every second or third year, has a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. Ancillary revenues from various sources collectively increased $8 million during the six months ended June 30, 2007 as compared with the same period in 2006 primarily including additional consulting fees, fees from club servicing, fees from our credit card loyalty program and fees generated from programs with affiliates, partially offset by a $5 million decrease in revenues related to an adjustment to previously recorded revenues relating to consulting activities in Asia Pacific. The increase in annual dues and exchange revenues and ancillary revenues includes the translation effects of foreign exchange movements, which favorably impacted revenues by $5 million.

 

EBITDA further reflects an increase in expenses of $33 million (8%) primarily driven by (i) the unfavorable impact of foreign currency translation on expenses of $19 million, (ii) a $14 million increase in volume-related expenses, which was substantially comprised of incremental costs to support growth in rental transaction volume, as discussed above, and increased staffing costs to support member growth and increased call volumes, (iii) $9 million in employee incentive program expenses not incurred in the six months ended June 30, 2006, (iv) $7 million of higher cost of sales on rentals of vacation stay intervals and (v) $4 million of incremental expenses incurred for product and geographic expansion, including increased marketing campaigns, timing of certain other marketing expenses, expansion of property recruitment efforts and investment in our consulting and international activities. These increases were partially offset by (i) the absence of a $21 million charge recorded during the second quarter of 2006 related to local taxes payable to certain foreign jurisdictions.

 

Excluding the favorable impact of foreign exchange movements, average net price per rental increased 5%. The growth in rental transaction volume was primarily due to (i) increased booking volumes of approximately 9,600 rental transactions (12%) at our Novasol brand, (ii) an increase of approximately 7,200 rental transactions (12%) in arrivals at our Landal GreenParks camping vacation sites and (iii) the conversion of one of our Landal parks from franchised to managed, which contributed $3 million of net revenues generated from related transactions. The increase in net revenues from rental transactions and the average net price per rental includes the translation effects of foreign exchange movements, which favorably impacted net rental revenues by $9 million.

 

Annual dues and exchange revenues increased $10 million (8%) during the first quarter of 2007 as compared with the first quarter of 2006 primarily due to a 2% increase in annual dues and exchange revenue per member. Such increase reflects a 6% increase in the average number of members and favorable transaction pricing, partially offset by a 3% decline in exchange transactions per average member as compared with first quarter 2006. We believe that a growing trend in timeshare vacation ownership sales to sell multiyear products, whereby the members have access to the product every second or third year, which has a positive impact on the average number of members but an offsetting effect on the number of exchange transactions per average member. Ancillary revenues from various sources collectively increased $3 million during the first quarter of 2007 as compared with the first quarter of 2006 primarily including additional consulting fees, club servicing fees, fees from our credit card loyalty program and fees generated from programs with affiliates. The increase in annual dues and exchange revenues and ancillary revenues includes the translation effects of foreign exchange movements, which favorably impacted revenues by $2 million.

 

EBITDA further reflects an increase in expenses of $24 million (12%) primarily driven by (i) the unfavorable impact of foreign currency translation on expenses of $9 million, (ii) an $8 million increase in volume-related expenses, which was substantially comprised of increased staffing costs to support member growth and increased call volumes, (iii) $4 million of higher cost of sales on rentals of vacation stay intervals, (iv) $4 million in employee incentive program expenses not incurred in the first quarter of 2006, (v) $3 million of increased resort services expenses as a result of converting one of our Landal parks from franchised to managed and (vi) $2 million of incremental expenses incurred for product and geographic expansion, including increased marketing campaigns, timing of certain other marketing expenses, expansion of property recruitment efforts and investment in our consulting and international activities. These increases were partially offset by (i) $5 million of cost savings due to efficiencies realized in 2007 and (ii) the absence of a $2 million of restructuring costs incurred during the first quarter of 2006.