8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 28, 2006

CHOICE HOTELS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-13393	52-1209792
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

10750 Columbia Pike, Silver Spring, Maryland	20901
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (301) 592-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01. Regulation FD Disclosure.

The Company is furnishing the following pursuant to Item 7.01, “Regulation FD Disclosure.”

On April 28, 2006, the Company released a presentation scheduled to be presented at the Jefferies Gaming, Lodging, Media & Entertainment Conference to be held May 8, 2006 in Las Vegas, Nevada. The materials attached hereto as Exhibit 99.1 were distributed in advance of the meeting. The materials include certain non-GAAP financial measures. A reconciliation of those measures to the most directly related comparable GAAP measures is included in the presentation materials.

The attached materials and reconciliations are also available on the Choice Hotels’ website, www.choicehotels.com.

Item 9.01. Financial Statements and Exhibits.

(c)

Exhibit 99.1—Materials Issued by the Company to potential investors on April 28, 2006.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 28, 2006	/s/ Joseph M. Squeri
	Joseph M. Squeri Executive Vice President, Operations & Chief Financial Officer

EX-99.1

Jefferies Gaming, Lodging, Media &

Entertainment Conference

May 8, 2006

Exhibit 99.1

*

*

*

2

Disclaimer

Certain

matters

discussed

in

this

presentation

may

constitute

forward-looking

statements

within

the

meaning

of

the

federal

securities

law.

Such

statements

are

based

on

management’s

beliefs,

assumptions and expectations, which in turn are based on information currently available to

management.  Actual performance and results could differ from those expressed in or

contemplated by the forward-looking statements due to a number of risks, uncertainties and

other factors, many of which are beyond Choice’s ability to predict or control.  For further

information on factors that could impact Choice and the statements contained herein, we refer

you to the filings made by Choice with the Securities and Exchange Commission, including our

report on Form 10-K for the period ended December 31, 2005.

Additional

corporate

information

may

be

found

on

the

Choice

Hotels’

Internet

site,

which

may

be accessed at www.choicehotels.com

*

Company Profile

*

*

*

*

4

Company Profile

One of the Largest Hotel Companies in the World

More than 5,200 hotels open worldwide representing more

than 425,000 rooms

722 hotels under development representing approximately

57,000 rooms

Our Brands Cover Many Segments

Source: Choice Internal Data as of March 2006.

Limited Service

Full Service

Economy

Mid-Price

Upscale

*

5

Company Profile

(cont.)

Core Competency

Hotel Franchising

Highest returning model in the industry (vs.

management or ownership)

High margin, high cash flow with low capital

requirements

Scaleable and predictable

Provides profitable growth opportunities

Highly skilled in this area

*

6

Lodging Industry

Lodging Industry Is A Large, Profitable & Permanent Fixture of

the Economy

Roughly 50,000 hotels representing approximately 4.5 million rooms in the U.S.

Provides profitable growth opportunities --

Industry profits grew 23% to $21B in

2005

More than 30% of domestic hotel rooms (1.5 million) are independent (not

affiliated with a chain)

Choice Is One Of The Largest Participants In The Industry

Only “pure-play”

franchisor

Choice branded properties represent approximately 7% of U.S. hotel market share

Cendant (12%), Marriott (5%), Hilton (5%), IHG (5%)

Source: Smith Travel Research and Choice Internal Data as of March 2006 and December 2005.

*

7

Source:

U.S.

Census

Bureau

(2000

Census)

and

Choice

Internal

Data.

Lodging Industry (cont.) --

Typical Guest Profile

U.S.

Hotel

Choice Hotels'

Population

Industry

Guests

Household Income (mean)

$57,000

$74,000

$67,000

Age (average years)

35 years

47 years

47 years

Education (% college graduates)

24%

50%

45%

Employment

Professional/Executive/Manager

21%

48%

44%

Other Employment

41%

31%

36%

Retired/Homemaker/Student/Not Employed

38%

21%

20%

Child in Household

33%

34%

37%

Gender

(ages 18+)

(of travel party)

(of travel party)

Men (solo on trip)

49%

25%

26%

Women (solo on trip)

51%

15%

10%

Couple on Trip

N/A

39%

44%

With Children or Other Adults

N/A

22%

20%

8

Domestic System Growth

In Any Environment

3,039

3,123

3,244

3,327

3,482

3,636

3,834

4,048

2,500

2,700

2,900

3,100

3,300

3,500

3,700

3,900

4,100

1998

1999

2000

2001

2002

2003

2004

2005

Exceptional Franchise

Sales Capabilities

Source: Choice Internal Data as of December 2005.

Domestic Franchises On-Line

Investment Thesis

+5.6%

250

300

350

400

450

500

550

600

650

700

2000

2001

2002

2003

2004

2005

$5.0

$7.0

$9.0

$11.0

$13.0

$15.0

$17.0

Deals

Initial Fee Revenue

Franchise Development

Initial Fees

$ in millions

New Executed

Contracts

*

9

Strong & Growing

Earnings

Source: Choice Internal Data as of December 2005. See Supplemental.

Investment Thesis (cont.)

+18%

Recurring EBITDA

$0.58

$0.76

$0.93

$1.07

$1.26

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

2001

2002

2003

2004

2005

Adjusted Diluted EPS

$108.7

$116.0

$125.2

$134.9

$152.8

$50

$65

$80

$95

$110

$125

$140

$155

$170

2001

2002

2003

2004

2005

+13%

….and EBITDA

*

10

Superior Returns On

Invested Capital

Investment Thesis (cont.)

15.3%

15.9%

14.7%

10.4%

27.7%

36.9%

49.5%

69.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

1998

1999

2000

2001

2002

2003

2004

2005

ROIC

Source:

Bear

Stearns

March

2006

Equity

Research

–

“U.S.

Lodging

–

All

Priced

In

–

Our

Current

Thinking

on

the

Sector”

*

11

Investment Thesis (cont.)

Source:

Bear

Stearns

March

2006

Equity

Research

–

“U.S.

Lodging

–

All

Priced

In

–

Our Current Thinking on the Sector”

Disclaimer:

Return

on

invested

capital

percentages

are

calculated

by

Bear

Stearns’

lodging

industry

analysts

in

accordance

with

that

firms’

methodologies.

Please

note

that

any

calculations,

opinions,

estimates

or

forecasts

regarding

Choice

Hotels

International,

Inc.'s

performance

made

by

Bear

Stearns

(and

therefore

the

return

on

invested

capital

percentages)

are

theirs

alone

and

do

not

represent

calculations,

opinions,

forecasts

or

predictions

of

Choice

Hotels

International,

Inc.

or

its

management.

Choice

Hotels

International,

Inc.

does

not

by

its

reference

above

or

distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.

Company

1998

1999

2000

2001

2002

2003

2004

2005

Owners- Operators

Hilton

6.1%

6.2%

5.8%

7.7%

7.9%

7.7%

8.2%

10.7%

Starwood

8.4%

6.9%

9.2%

7.5%

8.1%

6.3%

6.8%

6.3%

Orient Express International

9.1%

10.3%

11.1%

7.9%

6.5%

4.8%

4.9%

7.3%

Host Marriott

10.8%

11.8%

11.3%

8.3%

10.7%

6.2%

6.6%

7.1%

Sunstone Hotel Investors

NA

NA

NA

NA

NA

NA

7.6%

10.0%

Highland Hospitality

NA

NA

NA

NA

NA

NA

2.6%

6.4%

Owner/Operator Average

8.6%

8.8%

9.4%

7.8%

8.3%

6.2%

6.1%

8.0%

Managers-Franchisers

Marriott International

12.6%

11.2%

11.8%

8.5%

6.5%

6.4%

7.7%

8.5%

Four Seasons

12.0%

9.1%

12.4%

7.0%

4.3%

1.6%

4.2%

-2.7%

Choice Hotels International

15.3%

15.9%

14.7%

10.4%

27.7%

36.9%

49.5%

69.1%

Manager/Franchiser Average

13.3%

12.1%

13.0%

8.6%

12.8%

14.9%

20.5%

25.0%

Overall Average

10.6%

10.2%

10.9%

8.2%

10.2%

10.0%

10.9%

13.6%

ROIC Trends Since 1998

*

12

Investment Thesis

(cont.)

Management Focused on Creating Value

Share repurchases –

66.6 million repurchased at $10.69 per

share as of March 31, 2006; represents nearly $712 million

since inception of program

Dividends –

Current quarterly cash dividend of $0.13/share;

subject to board approval and business performance, expect to

pay future dividends at comparable or increased rate in the

future

Equity Performance

5 year annualized share price appreciation in excess of 45%

Source: Choice Internal Data as of March 2006.  All share and per share amounts have been

retroactively adjusted to reflect the 2 for 1 stock split effected in October 2005.

*

13

Investment Thesis (cont.)

Source: Copyright©

2006, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

All rights reserved. www.researchdatagroup.com/S&P.htm

* $100 invested on

12/31/00 in stock or

index-including

reinvestment of

dividends. Fiscal year

ending December 31.

*

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

AMONG CHOICE HOTELS INTERNATIONAL, INC., THE NYSE COMPOSITE (US)

INDEX

AND THE S & P HOTELS, RESORTS & CRUISE LINES INDEX

0

100

200

300

400

500

600

700

12/00

6/01

12/01

6/02

12/02

6/03

12/03

6/04

12/04

6/05

12/05

D

O

L

L

A

R

S

CHOICE HOTELS INTERNATIONAL, INC.

NYSE COMPOSITE

S & P HOTELS, RESORTS & CRUISE LINES

Choice Hotels –

A Solid Foundation Built On Innovation

*

15

A Solid Foundation Built On Innovation

Rich History of Innovation

“Good People”

–

Franchisees Recognize Choice

Associates As Being “Well-Liked”

& “Easy To Work

With”

Quality Courts –

1st

Brand Name In

Hospitality (1939)

Wall-To-Wall Carpeting, In-Room Phones,

Daily Linen Changes, 24-Hour Front Desk

(1950’s)

Pre-Paid Telephone Reservations (1960)

24/7 Toll Free Reservations Number (1970)

Traveler Centric “3 Brand”

Segmentation (1981)

1st

Comfort Inn Opens (1981)

“Sunburst”

Reservations System (1983)

Non-Smoking Rooms Standard (1984)

Sleep Inn Introduction (1986)

Source: Choice Internal Data as of March 2006.

*

16

Brand Portfolio Built Over 5 Decades

Organic Innovation

Acquisitions

1940’s

1980’s

1990’s

Scale & Distribution Created By Focus On Core Competencies  --

Selling Franchises, Selling Hotel Rooms, Servicing Hotel

Operators

A Solid Foundation Built On Innovation (Cont.)

Source: Choice Internal Data as of March 2006.

*

17

7

500

575

675

900

1,962

3,244

0

1,000

2,000

3,000

4,000

1940

1950

1960

1970

1980

1990

2000

Domestic Franchises On-Line By Decade

Source: On-Line Franchise Numbers For 1950 through 1980 Are Estimates From Choice Internal Data.

A Solid Foundation Built On Innovation (Cont.)

*

18

Re-Imaging Flagship Brand

Acquiring & Launching New Products

Creating Leading Edge Technology

A Solid Foundation Built On Innovation (Cont.)

*

Vision and Mission

*

20

Vision and Mission

Our Vision:

To

generate

the

highest

return

on

investment

of

any

hotel

franchise

Our Mission:

Deliver

a

franchise

success

system

of

strong

brands, exceptional services, vast consumer reach, and size,

scale and distribution that delivers guests, satisfies guests,

and reduces costs for our hotel owners

Our Passion:

Customer

Profitability

*

21

Strategy & Management Philosophy

Strategy & Franchise Success System Clearly Articulated And

Centered Around Core Competencies & Growth  

2006 Strategic Initiatives

•

Strategically Grow Our Existing Brands

•

Enter New Markets

•

Improve Brands, Brand Recognition,

& Property Performance

•

Improve Business Delivery

•

Maximize Shareholder Returns

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

•

Shareholders     •

Franchisees     •

Guests     •

Employees

•

Franchise Success System

*

2006 Focus

*

23

Strategically Grow Existing Brands

Optimize Development Organization

Continue to Align With Brand Strategies

Diversify and Develop New Customers

*

24

Achieve Growth In New Market Segments

Cambria Suites

Suburban Extended Stay Hotels

Build Capabilities in Upscale and Other Segments

Grow Internationally

Corporate Development

Transactions That Improve Our Core Business

Investments in Synergistic Businesses

*

25

Cambria Suites

Limited Service, Upscale, All-suites Brand

100% new construction

Rooms 25% larger than competition at similar per key cost

Targeted ADR of $110-$125

Primary audience is corporate traveler –

secondary focus on leisure

23 Contracts Signed (10 in Q1 2006) –

First Properties Opening This Winter

Ideal Location is Medium or Large Cities

Significant Interest from Mixed-Use Developers Based on Value and Design

Contracts To Date Include:

Akron/Canton

Aurora, CO (Denver)

Avondale, AZ (Phoenix)

Baltimore

Boise

Columbus

Fort Collins

Fort Myers

Green Bay, WI

Madison, WI

Savannah

Scottsdale

Source: Choice Internal Data as of March 2006.

*

26

Suburban Extended Stay Hotels

Acquired 2005

64 Franchises, nearly 8,500 rooms

Economy Extended Stay Segment

Targeted Construction Cost Per Key -

$35K

Total Investment -

$4-$5 million

Targeted

Unlevered

Return

–

10%

-

12%

Targeted Average Weekly Rate of $200+

Extended

Stay

Demand

--

+4.9%

in

2004

(faster

than 4.6% reported by STR for overall US hotel

industry)

Extended

Stay

Hotel

Supply

--

+2.4%

in

2004;

5

year projected supply growth of 8%

Complements MainStay Suites Mid-Scale Brand

Significant Interest from Developers Based on

Value and Design

Franchises Located In 11 States Including:

Alabama

Florida

Georgia

Kentucky

Louisiana

Mississippi

North Carolina

South Carolina

Tennessee

Texas

Virginia

Source: Third Party Research; Choice Internal Data as of March 2006.

*

27

Improve Our Brands and Property Performance

Stronger Property-Level Support

Improve Property Management Systems

Improve Brand Consistency

Improve Guest Experience

*

28

Improve Brand Recognition and Business Delivery

Marketing and Reservations Programs

Revenue Management Services

Drive Reservations to Central Channels

*

Strategy

*

30

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Build Strong Brands

Among World’s Most Recognizable Hotel Brands

Improved Brand Consistency and Quality

Improved ROI for Owners

Significantly Enhanced Franchise                             

Sales Capability

*

31

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Vast Consumer Reach

$50+ Million Marketing and Advertising Plan

Creates brand awareness and loyalty

Drives traffic

Enhanced Loyalty Program

Over 4 million members

+$2 billion hotel program revenue to date

Strong Direct Sales Capability

$700 million in revenue

Source: Choice Internal Data as of December 2005.

*

32

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Vast Consumer Reach

(cont.)

State-of-the-Art Reservations System –

All Channels

$1.3 billion room revenue booked in 2005 –

31% delivery

Strong Synergies with Internet Distribution Channels

New Internet Channels Strengthen

Franchise

•

Increase distribution

•

Improve placement

•

Decrease complexity

•

Lower cost

•

Increase yield

Source: Choice Internal Data as of December 2005.

*

33

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Exceptional Services

Complete Life-Cycle Service Offering

Nationwide Footprint of Field-Based Employees

State-of-the-Art Training Capabilities

Operational and Yield Management Technology

Purchasing Assistance

Generates more than $13 million in annual

revenue and lowers owner costs

Full Complement of Hands-On Services Improve

Profitability and Create Loyalty

Source: Choice Internal Data as of December 2005.

*

34

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Guest

Satisfaction

Brand

Growth

& Equity

Increase

Business

Delivery

Reduce

Costs

Strong

Brands

Vast

Consumer

Reach

Exceptional

Services

Size,

Scale &

Distribution

Franchise Success System

Brand and Hotel Performance

Size, Scale, and Distribution

Lowers Costs and Increases Revenues for Owners

Enables Highly-Valued Capabilities

Brand awareness

National marketing

Reservations

Services

Technologies

Franchising Model is Difficult to Duplicate

Scale required to generate reasonable returns for

shareholders

Capital required to generate scale

Scale is a barrier to entry

*

Profitably Grow & Maximize Returns

*

36

Business Focus

Profitably Grow

Improve brand performance –

ROI to owners (business delivery, reduced

operating and development costs, products, marketing, services)

Introduce new concepts (product design/innovation)

Increase distribution (franchise development)

Maximize Financial Returns and Create Value for Shareholders

Capital allocation –

focus on returns

Capital structure –

prudent leverage to maximize returns

S&P upgraded credit rating to BBB from BBB-

in early 2005

Share repurchases

Dividends

*

37

Maximize Returns

1960 bps

49.5%

69.1%

ROIC

15.6%

66.7%

22.9%

100 bps

Change

$94.4

$6.9

$108.1

61.0%

2004

$109.1

$11.5

$132.9

62.0%

2005

Year Ended December 31,

After-Tax Free Cash Flow

CAPEX

Cash Flow From Operations

Franchising Margins

($ in millions)

High Margins, After-Tax Free Cash Flow, and

Returns on Capital

Source:

Choice

Internal

Financial

Data,

December

2005

and

Bear

Stearns

March

2006

Equity

Research

–

“U.S.

Lodging

–

All

Priced

In

–

Our

Current

Thinking

on

the

Sector”

See

Supplemental.

*

38

Strong Financial Results

$170.0

$172.1

$187.1

$203.7

$230.0

$160.0

$170.0

$180.0

$190.0

$200.0

$210.0

$220.0

$230.0

$240.0

2001

2002

2003

2004

2005

Franchising Revenues

($ in millions)

Source: Choice Internal Data, December 2005. See Supplemental.

+ 13%

CAGR = 7.9%

*

39

Strong Financial Results

Unit Growth In Any Environment

Source: Choice Internal Data, December 2005.

2,500

2,700

2,900

3,100

3,300

3,500

3,700

3,900

4,100

1997

1998

1999

2000

2001

2002

2003

2004

2005

Domestic System Size

CAGR = 4.4%

*

40

Strong Financial Results

$108.7

$116.0

$125.2

$134.9

$152.8

$90

$100

$110

$120

$130

$140

$150

$160

2001

2002

2003

2004

2005

Recurring EBITDA

($ in millions)

Source: Choice Internal Data, December 2005. See Supplemental.

CAGR = 8.9%

+ 13%

*

41

Strong Financial Results

$0.58

$0.76

$0.93

$1.07

$1.26

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

2001

2002

2003

2004

2005

Adjusted Diluted EPS

Source: Choice Internal Data, December 2005. See Supplemental. Per share amounts

retroactively adjusted for 2 for 1 stock split in October 2005.

CAGR = 21.4%

+ 18%

*

42

Strong Financial Results

Source: Choice Internal Data, December 2005.

250

300

350

400

450

500

550

600

650

700

1999

2000

2001

2002

2003

2004

2005

$5.0

$7.0

$9.0

$11.0

$13.0

$15.0

$17.0

Deals

Initial

Fee

Revenue

Franchise Development

(New Contracts Sold)

$ in millions

Executed Contracts

*

43

171

164

243

138

188

287

0

50

100

150

200

250

300

350

Limited Service

Full Service

Economy

2004

2005

2005 Year End Development Results

Source: Choice Internal Data, December 2005.

16% Franchise Sales Improvement (552 to 639 deals)

Strong Financial Results

*

44

2005

Units

2004

Units

%

Change

2005

Units

2004

Units

%

Change

2005

Units

2004

Units

%

Change

Comfort Inn

53

38

39.5%

56

71

-21.1%

109

109

0.0%

Comfort Suites

89

79

12.7%

5

5

0.0%

94

84

11.9%

MainStay

14

16

-12.5%

0

1

-100.0%

14

17

-17.6%

Sleep

55

33

66.7%

2

0

NM

57

33

72.7%

Subtotal

211

166

27.1%

63

77

-18.2%

274

243

12.8%

Clarion

4

2

100.0%

31

28

10.7%

35

30

16.7%

Quality

5

8

-37.5%

148

133

11.3%

153

141

8.5%

Subtotal

9

10

-10.0%

179

161

11.2%

188

171

9.9%

Econo Lodge

4

4

0.0%

85

97

-12.4%

89

101

-11.9%

Rodeway

0

2

-100%

75

35

114.3%

75

37

102.7%

Subtotal

4

6

-33.3%

160

132

21.2%

164

138

18.8%

Cambria

13

0

NM

0

0

NM

13

0

NM

Total

237

182

30.2%

402

370

8.6%

639

552

15.8%

NEW CONSTRUCTION

TOTAL

CONVERSION

Year End Development Results

Source: Choice Internal Data, December 2005.

Strong Financial Results

*

45

Source: Choice Internal Data as of March 2006. See Supplemental.

1

st

Quarter Performance

(Dollars in thousands, except per share amounts)

2006

2005

% Change

Financial

Franchising Revenues

50,462

$        

41,205

$      

22.5%

Franchising Margins

59.1%

53.7%

540 bps

Cash Flow From Operations

24,283

$        

16,867

$      

44.0%

EBITDA (in thousands)

32,422

$        

24,624

$      

31.7%

Diluted EPS

0.26

$            

0.18

$          

44.4%

RevPAR*

31.23

$          

28.54

$        

9.4%

Development (Domestic)

Units On-line

4,070

3,868

5.2%

Rooms On-line

329,934

312,630

5.5%

Executed Contracts (Excludes Relicencings and

120

103

16.5%

                                Assumptions)

Franchised Hotels Under Development

653

399

63.7%

Three-Months Ended March 31,

* Amounts exclude Suburban activity from January 1, 2006 through March 31, 2006 because comparable pre-acquisition data for Q1 2005 is not

available.

*

Create Value

*

47

Create Value

Management Focused on Creating Value

Share repurchases –

66.6 million repurchased at $10.69 per

share as of March 31, 2006; represents nearly $712 million

since inception of program

Dividends –

Current quarterly cash dividend of $0.13/share;

subject to board approval and business performance, expect to

pay future dividends at comparable or increased rate in the

future

Equity Performance

5 year annualized share price appreciation in excess of 45%

Source: Choice Internal Data as of March 2006.  All share and per share amounts have been

retroactively adjusted to reflect the 2 for 1 stock split effected in October 2005.

*

48

Closing Comments

Strong Earnings Per Share, EBITDA, and Cash Flow

Growth

Proven Earnings Stability Even through Industry/

Economic Downturns

Pure-Play Franchise Focus, Highest Returning

“Model”

in the Industry

High Operating Margins

Significant Free Cash Flow

Experienced Management Team Focused on

Shareholder Value

*

Supplemental

*

50

$2,360,000

$472,000

$9,595,000

$1,919,000

$8,955,000

$1,791,000

Estimated

Impact on

Royalties

$0.02

$0.004

$0.09

$0.02

$0.08

$0.02

Estimated

Impact on

Diluted EPS

1,2

5 bps increase =

1 bps increase =

Improvement in 

Royalty Rate

5% (200 units)=

1% (40 units) =

5% =

1% =

Growth

New Franchise

Improvement

RevPAR

Revenue Driver

(1) Assumes Outstanding Diluted Shares of 66,727,799

(2) Assumed tax rate of 37.75%

Source: Choice Internal Analysis

Continuing Cash Flow Potential Multiple Revenue Levers

(Unaudited)

*

51

Brand Targets

Conversion

New Construction

$29,000

$32,500

$52,000

$45,500

$67,000

$45

$65

$100+

Targeted Average

Daily/Weekly

Rate

Source: Choice Internal Data as of December 2005.

*Excludes cost of land.

$47,000

$38,500

$80

*

52

Recurring EBITDA

(Unaudited)

Source: Choice Internal Data, March 2006 & December 2005.

March 31

March 31

2006

2005

2005

2004

2003

2002

2001

Operating Income

30,073

$                

22,299

$                

143,750

$          

124,983

$          

113,946

$          

104,700

$          

73,577

$            

Adjustments

Depreciation and Amortization

2,349

2,325

9,051

9,947

11,225

11,251

12,452

EBITDA

32,422

$                

24,624

$                

152,801

$          

134,930

$          

125,171

$          

115,951

$          

86,029

$            

Adjustments

Impairment of Friendly Hotels plc investment

-

-

-

-

-

-

22,713

Recurring EBITDA

32,422

$                

24,624

$                

152,801

$          

134,930

$          

125,171

$          

115,951

$          

108,742

$          

Twelve Months Ended December 31,

Three Months Ended

53

Calculation of Adjusted Net Income and Adjusted

Diluted Earnings Per Share (EPS) (Unaudited)

Source: Choice Internal Data, March 2006 & December 2005.

(In thousands, except per share amounts)

March 31

March 31

2006

2005

2005

2004

2003

2002

2001

Net Income

17,665

$        

11,999

$        

87,565

$        

74,345

$        

71,863

$        

60,844

$        

14,327

$        

Adjustments:

Debt Extinguishment Costs

-

-

-

433

-

-

-

Reversal of Provisions for Income Tax Contingencies

-

-

(4,855)

(1,182)

-

-

-

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

-

-

1,192

-

-

-

-

Loss(Gain) on Sunburst Note Transactions

-

-

-

-

(3,383)

-

-

Impairment of and Equity Losses in Friendly Hotels PLC Investment

-

-

-

-

-

-

37,166

Adjusted Net Income

17,665

$        

11,999

$        

83,902

$        

73,596

$        

68,480

$        

60,844

$        

51,493

$        

Weighted Average Shares Outstanding-Diluted

66,728

66,643

66,336

69,000

73,349

80,114

89,144

Diluted Earnings Per Share

0.26

$            

0.18

$            

1.32

$            

1.08

$            

0.98

$            

0.76

$            

0.16

$            

Adjustments:

Debt Extinguishment Costs

-

-

-

0.01

-

-

-

Reversal of Provisions for Income Tax Contingencies

-

-

(0.08)

(0.02)

-

-

-

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

-

-

0.02

-

-

-

-

Loss(Gain) on Sunburst Note Transactions

-

-

-

-

(0.05)

-

-

Impairment of and Equity Losses in Friendly Hotels PLC Investment

-

-

-

-

-

-

0.42

Adjusted Diluted Earnings Per Share (EPS)

0.26

$            

0.18

$            

1.26

$            

1.07

$            

0.93

$            

0.76

$            

0.58

$            

Three Months Ended

Twelve Months Ended December 31,

*

54

Calculation of Franchising Revenues and

Margins (Unaudited)

Source: Choice Internal Data, March 2006 & December 2005.

(1)

Marketing and reservation revenues are excluded as these represent contractual pass-throughs and are not profitable

components of the company’s business.

(Dollar amounts in thousands)

March 31

March 31

2006

2005

2005

2004

2003

2002

2001

Franchising Revenues and Margins

Total Revenues

109,418

$         

91,168

$           

477,399

$         

428,208

$         

385,866

$         

365,562

$         

341,428

$         

Adjustments:

     Marketing and Reservation  (1)

(57,976)

(49,043)

(243,123)

(220,732)

(195,219)

(190,145)

(168,170)

     Hotel Operations

(980)

(920)

(4,293)

(3,729)

(3,565)

(3,331)

(3,215)

Franchising Revenues

50,462

$           

41,205

$           

229,983

$         

203,747

$         

187,082

$         

172,086

$         

170,043

$         

Operating Income

30,073

$           

22,299

$           

143,750

$         

124,983

$         

Adjustment:

     Hotel Operations

(235)

(172)

(1,068)

(725)

Net

29,838

$           

22,127

$           

142,682

$         

124,258

$         

Franchising Margins

59.1%

53.7%

62.0%

61.0%

Three Months Ended

Twelve Months Ended December 31,

55

Calculation of After-Tax Free Cash Flows

(Unaudited)

(In thousands)

December 31,

December 31,

2005

2004

Net Cash Provided by Operating Activities

132,907

$        

108,080

$        

Acquisition of Suburban, net of cash acquired

(7,314)

-

Investment in property and equipment

(11,504)

(6,859)

Issuance of notes receivable

(2,667)

(2,264)

(Purchases) sales of investments, net

(5,390)

(4,158)

Proceeds from disposition of assets

2,811

-

Other items, net

214

(435)

Total Adjustments:

(23,850)

(13,716)

After-Tax Free Cash Flow

109,057

$        

94,364

$          

Twelve Months Ended

Source: Choice Internal Data, December 2005.

56

Non-GAAP Financial Measures

Recurring

EBITDA,

adjusted

net

income,

adjusted

diluted

earnings

per

share,

franchising

revenues and margins and after-tax free cash flows are non-GAAP financial measurements.

These financial measurements are presented as supplemental disclosures because they are used

by management in reviewing and analyzing the company’s performance. This information

should not be considered as an alternative to any measure of performance as promulgated under

accounting

principles

generally

accepted

in

the

United

States

(GAAP),

such

as

operating

income,

net income, diluted earnings per share, total revenues or net cash provided by operating

activities.

The

calculation

of

these

non-GAAP

measures

may

be

different

from

the

calculation

by

other companies and therefore comparability may be limited. The company has included the

preceding exhibits which reconcile these measures to the comparable GAAP measurement.

*