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): February 13, 2007

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 2.02. Results of Operations and Financial Condition.

On February 13, 2007, Choice Hotels International, Inc. issued a press release announcing earnings for the quarter and year ended December 31, 2006. A copy of the release is furnished herewith as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits

Exhibit 99.1—Press Release issued by Choice Hotels International, Inc. dated February 13, 2007.

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: February 14, 2007	/s/ David L. White
	David L. White
	Chief Financial Officer

EX-99.1

Exhibit 99.1

For Immediate Release

CHOICE HOTELS REPORTS FULL YEAR 2006 DILUTED EPS OF $1.68, ADJUSTED

DILUTED EPS OF $1.49 UP 18%

New Domestic Hotel Franchise Contracts Up 13% To A Record 720 For Full-Year 2006;

30 Contracts Executed For New Cambria Suites Brand In 2006

SILVER SPRING, Md. (February 13, 2007) – Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for the fourth quarter and full-year 2006:

• Diluted earnings per share (“EPS”) for full-year 2006 were $1.68, up 27% compared to $1.32 for full-year 2005; Diluted EPS for fourth quarter 2006 were $0.37, a 16% increase compared to $0.32 for the same period in 2005.

• Adjusted diluted EPS for full-year 2006 were $1.49, an 18% increase compared to $1.26 for full-year 2005; Adjusted diluted EPS for fourth quarter 2006 were $0.36, up 13% compared to $0.32 reported in the same period of the prior year.

• Operating income increased 16% to $166.6 million for full-year 2006, as compared to $143.8 reported in the same period of the prior year. Operating income for fourth quarter 2006 increased 10% to $39.9 million compared to $36.2 million reported for the same period in 2005.

• Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for full-year 2006 increased 15% to $176 million from $153 million in 2005. EBITDA for fourth quarter 2006 was $42.3 million, an increase of 10% compared to $38.5 million reported for the same period in 2005.

• Franchising revenues and total revenues increased 14% for full-year 2006. Franchising revenues increased 10% and total revenues increased 18% for fourth quarter 2006 compared to the same period of the prior year.

• New domestic hotel franchise contracts for full-year 2006 increased 13% to a record 720. Fourth quarter new domestic hotel franchise contracts increased 21% to 267 compared to fourth quarter 2005.

• Domestic unit growth increased 4 percent for 2006.

• Domestic system-wide revenue per available room (RevPAR) increased 6.1% for full-year 2006 and 3.7% for the fourth quarter. Domestic RevPAR for the company’s midscale without food and beverage brands increased approximately 9% for 2006 and approximately 6% for the fourth quarter of 2006.

• The domestic hotel pipeline of hotels under construction, awaiting conversion or approved for development increased more than 43% to 860 hotels representing 66,238 rooms; the worldwide pipeline increased 35% to 930 hotels representing 72,555 rooms.

• Thirty domestic hotel contracts executed for the new upscale Cambria Suites brand during 2006, with 43 executed since the brand was introduced in 2005.

“2006 was another strong year for Choice Hotels, as we saw significant growth in domestic franchise contracts for both new construction and conversion hotels,” said Charles A. Ledsinger, Jr., vice chairman and chief executive officer. “We are very pleased with Cambria Suites’ progress and the momentum we are seeing for the brand among hotel developers. For 2007 and beyond, our solid operating model, prudent management of our strong portfolio of ten brands, and continued focus on both new construction and conversion markets positions Choice for continued long-term growth.”

Outlook for 2007

The company’s first quarter 2007 diluted EPS is expected to be $0.23. The company expects full year 2007 diluted EPS of $1.59. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for full-year 2007 is expected to be approximately $186 million. These estimates include the following assumptions.

• The company expects net domestic unit growth of approximately 4% in 2007;

• RevPAR is expected to increase 2% for first quarter 2007 and 4% for full-year 2007;

• The effective royalty rate is expected to increase 3 basis points for full-year 2007;

• All figures assume the existing share count and assume an effective tax rate of 36.25%;

• All figures assume approximately $3.6 million ($0.03 diluted EPS) in first-quarter 2007 and $4.5 million ($0.04 diluted EPS) for full-year 2007, respectively, of severance costs related to the previously announced termination of certain executive officers.

Adjusted Net Income and Diluted EPS

Net income and diluted earnings per share for the three and twelve months ended December 31, 2006 include a reduction of income tax expense related to reversal of provisions for certain income tax contingencies of approximately $0.2 million and $12.8 million, respectively. Net income and diluted earnings per share for the twelve months ended December 31, 2006 also include a loss of approximately $0.3 million ($0.2 million, net of the related tax effect) related to the extinguishment of debt. Those items represent diluted EPS of $0.01 and $0.19, net, for the three and twelve months ended December 31, 2006, respectively. Adjusted diluted EPS and adjusted net income for the three and twelve months ended December 31, 2006 exclude these items.

Net income and diluted earnings per share for the twelve months ended December 31, 2005 include additional income tax expense of approximately $1.2 million related to the Company’s plan to repatriate approximately $23.5 million of foreign earnings pursuant to the American Jobs Creation Act. Net income and diluted earnings per share for the three and twelve months ended December 31, 2005 include a reduction of income tax expense related to the reversal of provisions for certain income tax contingencies of approximately $0.5 million and $4.9 million, respectively. Those items represent diluted EPS of less than $0.01, net, for the three months and $0.06, net, for the twelve months ended December 31, 2006. Adjusted diluted EPS and adjusted net income for the three and twelve months ended December 31, 2005 exclude these items.

Use of Free Cash Flow

The company has consistently used its free cash flow (cash flow from operations less capital expenditures) generated from its operations to return value to shareholders. This is primarily achieved through share repurchases and dividends.

For the twelve months ended December 31, 2006, the company paid $35.4 million of cash dividends to shareholders. The annual dividend rate per common share was increased 15% by the Board of Directors in September 2006 and is now $0.60.

The company has authorization to purchase up to an additional 5.1 million shares under the share repurchase program. Repurchases will continue to be made in the open market and through privately negotiated transactions subject to market and other conditions. No minimum number of shares has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 33.6 million shares of its common stock for a total cost of $711.9 million through February 13, 2007. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 66.6 million shares at an average price of $10.69 per share.

The company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.

Conference Call

Choice will conduct a conference call on Wednesday, February 14, 2007 at 9:30 a.m. EST to discuss the company’s fourth quarter and full-year 2006 results. The call-in number to listen to the call is 1-877-209-0397. International callers should dial 612-332-0637. The conference call also will be Web cast simultaneously via the company’s Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call on the Web should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.

The audio of the call will be archived and available on www.choicehotels.com for those unable to listen to the call on February 14th. The call will also be available for replay beginning at 4:30 p.m. EST on February 14 and will be available until March 14 by calling 1-800-475-6701, access code 860608. International callers should dial 320-365-3844 and enter access code 860608.

Items Impacting Comparability

Acquisition of Suburban

During 2005, the company acquired Suburban Franchise Holding Company, Inc. (“Suburban”), which included 67 Suburban Extended Stay Hotel units open and operating in the United States. The results of operations for Suburban have been included in the company’s results of operations since September 28, 2005.

About Choice Hotels

Choice Hotels International franchises more than 5,300 hotels, representing more than 435,000 rooms, in the United States and more than 40 countries and territories. As of December 31, 2006, 860 hotels are under development in the United States, representing 66,238 rooms, and an additional 70 hotels, representing 6,317 rooms, are under development in more than 15 countries and territories. The company’s Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites and Suburban Extended Stay Hotel brands serve guests worldwide.

Additional corporate information may be found on Choice Hotels’ Internet site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements

Certain matters discussed in this press release 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. The company’s Form 10-K for the year ended December 31, 2005 details some of the important risk factors that you should review.

Statement Concerning Non-GAAP Financial Measurements

Adjusted net income, adjusted diluted EPS, franchising revenues, franchising margins, EBITDA, and 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 net income, diluted earnings per share, total revenues, operating income, operating margins, and cash flows from operations. The company’s calculation of these measurements may be different from the calculation used by other companies and therefore comparability may be limited. The company has included exhibits accompanying this release that reconcile these measures to the comparable GAAP measurement.

Contacts

David White, Chief Financial Officer

(301) 592-5117

Anne Madison, Vice President, Corporate Communications

(301) 592-6723

Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, and Rodeway Inn are proprietary trademarks and service marks of Choice Hotels International, Inc.

© 2007 Choice Hotels International, Inc. All rights reserved.

Choice Hotels International, Inc.	Exhibit 1
Consolidated Statements of Income
(Unaudited)

	Three Months Ended December 31,											Twelve Months Ended December 31,
(In thousands, except per share amounts)	2006			2005			Variance					2006			2005			Variance
							$			%								$			%
REVENUES:
Royalty fees	$	54,271		$	49,120		$	5,151		10	%	$	211,645		$	187,340		$	24,305		13	%
Initial franchise and relicensing fees		9,530			8,717			813		9	%		29,629			25,388			4,241		17	%
Brand solutions		3,092			3,024			68		2	%		13,945			13,382			563		4	%
Marketing and reservation		74,307			58,629			15,678		27	%		278,026			243,123			34,903		14	%
Hotel operations		1,163			1,079			84		8	%		4,505			4,293			212		5	%
Other		1,345			1,416			(71	)	(5	)%		6,912			3,873			3,039		78	%
Total revenues		143,708			121,985			21,723		18	%		544,662			477,399			67,263		14	%
OPERATING EXPENSES:
Selling, general and administrative		26,316			23,987			2,329		10	%		87,112			78,250			8,862		11	%
Depreciation and amortization		2,370			2,282			88		4	%		9,705			9,051			654		7	%
Marketing and reservation		74,307			58,629			15,678		27	%		278,026			243,123			34,903		14	%
Hotel operations		829			840			(11	)	(1	)%		3,194			3,225			(31	)	(1	)%
Total operating expenses		103,822			85,738			18,084		21	%		378,037			333,649			44,388		13	%
Operating income		39,886			36,247			3,639		10	%		166,625			143,750			22,875		16	%
OTHER INCOME AND EXPENSES:
Interest expense		2,807			4,031			(1,224	)	(30	)%		14,098			15,325			(1,227	)	(8	)%
Interest and other investment income		(942	)		(134	)		(808	)	603	%		(2,041	)		(1,094	)		(947	)	87	%
Equity in net income of affiliates		(315	)		(182	)		(133	)	73	%		(1,052	)		(803	)		(249	)	31	%
Loss on extinguishment of debt		—			—			—		NM			342			—			342		NM
Other		—			(3	)		3		(100	)%		—			(420	)		420		(100	)%
Total other income and expenses, net		1,550			3,712			(2,162	)	(58	)%		11,347			13,008			(1,661	)	(13	)%
Income before income taxes		38,336			32,535			5,801		18	%		155,278			130,742			24,536		19	%
Income taxes		13,707			10,983			2,724		25	%		42,491			43,177			(686	)	(2	)%
Net income	$	24,629		$	21,552		$	3,077		14	%	$	112,787		$	87,565		$	25,222		29	%
Weighted average shares outstanding-basic		65,728			64,360								65,387			64,429
Weighted average shares outstanding-diluted		67,171			66,360								67,050			66,336
Basic earnings per share	$	0.37		$	0.33		$	0.04		12	%	$	1.72		$	1.36		$	0.36		26	%
Diluted earnings per share	$	0.37		$	0.32		$	0.05		16	%	$	1.68		$	1.32		$	0.36		27	%

Choice Hotels International, Inc.	Exhibit 2
Consolidated Balance Sheets

(In thousands)	December 31, 2006			December 31, 2005
	(Unaudited)
ASSETS
Cash and cash equivalents	$	35,841		$	16,921
Accounts receivable, net		41,694			37,155
Deferred income taxes		1,790			2,616
Other current assets		7,757			6,308
Total current assets		87,082			63,000
Fixed assets and intangibles, net		144,124			150,376
Receivable — marketing fees		6,662			13,225
Investments, employee benefit plans, at fair value		31,529			23,337
Other assets		33,912			15,333
Total assets		303,309			265,271
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current portion of long-term debt		146			146
Other current liabilities		139,645			120,170
Total current liabilities		139,791			120,316
Long-term debt		172,390			273,972
Deferred compensation & retirement plan obligations		40,101			28,987
Other liabilities		13,407			9,172
Total liabilities		365,689			432,447
Total shareholders’ deficit		(62,380	)		(167,176	)
Total liabilities and shareholders’ deficit	$	303,309		$	265,271

Choice Hotels International, Inc.	Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)

	Twelve months ended December 31,
(In thousands)	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	112,787		$	87,565
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,705			9,051
Gain on sale of assets		—			(386	)
Provision for bad debts		(163	)		391
Non-cash stock compensation and other charges		10,644			5,288
Loss on extinguishment of debt		342			—
Non-cash interest and other income		(1,576	)		(294	)
Dividends received from equity method investees		1,095			681
Equity in net income of affiliates		(1,052	)		(803	)
Changes in assets and liabilities, net of acquisitions:
Receivables		(3,007	)		(2,415	)
Receivable - marketing and reservation fees, net		19,049			19,393
Accounts payable		6,888			1,923
Accrued expenses and other		(7,631	)		12,894
Income taxes payable		2,857			11,250
Deferred income taxes		(17,214	)		(13,318	)
Deferred revenue		15,036			8,822
Other assets		(1,724	)		(2,040	)
Other liabilities		7,892			(4,414	)
NET CASH PROVIDED BY OPERATING ACTIVITIES*		153,928			133,588
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment		(7,707	)		(11,504	)
Acquisitions, net of cash acquired		(826	)		(7,314	)
Purchases of investments		(10,515	)		(8,929	)
Proceeds from sales of investments		3,728			3,539
Issuance of notes receivable		(2,433	)		(2,667	)
Collection of notes receivable		868			462
Proceeds from disposition of assets		—			2,811
Other items, net		(446	)		(929	)
NET CASH USED IN INVESTING ACTIVITIES		(17,331	)		(24,531	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt		(146	)		(150	)
Net repayments pursuant to revolving credit facility		(101,500	)		(55,129	)
Debt issuance costs		(477	)		(193	)
Excess tax benefits from stock-based compensation		12,699			—
Purchase of treasury stock		(1,365	)		(49,154	)
Dividends paid		(35,386	)		(30,241	)
Proceeds from exercise of stock options		8,498			14,213
NET CASH USED IN FINANCING ACTIVITIES		(117,677	)		(120,654	)
Net change in cash and cash equivalents		18,920			(11,597	)
Cash and cash equivalents at beginning of period		16,921			28,518
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	35,841		$	16,921

* Net cash provided by operating activities for the twelve months ended December 31, 2005 includes approximately $9.9 million of excess tax benefits related to stock-based compensation. Effective January 1, 2006, the Company began reporting these excess tax benefits as cash flows from financing activities as a result of the adoption of Statement of Financial Accounting Standards No. 123R “Accounting for Stock-Based Compensation”.

Exhibit 4

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL OPERATING INFORMATION

DOMESTIC HOTEL SYSTEM

(UNAUDITED)

	For the Twelve Months Ended December 31, 2006						For the Twelve Months Ended December 31, 2005						Change
	Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR
Comfort Inn	$	73.08	63.0	%	$	46.06	$	68.84	61.7	%	$	42.45	6.2	%	130	bps	8.5	%
Comfort Suites		82.93	67.0	%		55.59		77.51	66.3	%		51.36	7.0	%	70	bps	8.2	%
Sleep		66.44	62.4	%		41.43		62.52	61.0	%		38.16	6.3	%	140	bps	8.6	%
Midscale without Food & Beverage		74.18	63.7	%		47.26		69.68	62.4	%		43.51	6.5	%	130	bps	8.6	%
Quality		66.89	55.3	%		37.01		64.86	54.6	%		35.41	3.1	%	70	bps	4.5	%
Clarion		78.98	51.2	%		40.41		74.62	52.5	%		39.15	5.8	%	-130	bps	3.2	%
Midscale with Food & Beverage		69.76	54.3	%		37.87		67.41	54.0	%		36.41	3.5	%	30	bps	4.0	%
Econo Lodge		53.09	47.7	%		25.31		50.95	48.2	%		24.56	4.2	%	-50	bps	3.1	%
Rodeway		51.66	45.8	%		23.66		49.91	46.7	%		23.31	3.5	%	-90	bps	1.5	%
Economy		52.83	47.3	%		24.99		50.78	48.0	%		24.35	4.0	%	-70	bps	2.6	%
MainStay		67.26	69.4	%		46.66		64.76	65.7	%		42.54	3.9	%	370	bps	9.7	%
Total Domestic System*	$	69.71	58.0	%	$	40.46	$	66.24	57.6	%	$	38.15	5.2	%	40	bps	6.1	%
	For the Three Months Ended December 31, 2006						For the Three Months Ended December 31, 2005						Change
	Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR
Comfort Inn	$	73.14	63.5	%	$	46.46	$	68.81	63.4	%	$	43.65	6.3	%	10	bps	6.4	%
Comfort Suites		82.35	66.1	%		54.42		77.28	68.2	%		52.70	6.6	%	-210	bps	3.3	%
Sleep		66.04	62.5	%		41.29		62.68	62.0	%		38.88	5.4	%	50	bps	6.2	%
Midscale without Food & Beverage		74.04	63.9	%		47.30		69.68	64.1	%		44.69	6.3	%	-20	bps	5.8	%
Quality		65.79	54.6	%		35.89		63.47	55.1	%		34.95	3.7	%	-50	bps	2.7	%
Clarion		78.38	51.0	%		39.98		75.70	53.9	%		40.80	3.5	%	-290	bps	(2.0	)%
Midscale with Food & Beverage		68.79	53.7	%		36.91		66.57	54.8	%		36.46	3.3	%	-110	bps	1.2	%
Econo Lodge		52.74	47.6	%		25.10		50.83	47.9	%		24.35	3.8	%	-30	bps	3.1	%
Rodeway		49.79	43.4	%		21.61		48.01	44.7	%		21.47	3.7	%	-130	bps	0.7	%
Economy		52.18	46.7	%		24.38		50.37	47.3	%		23.85	3.6	%	-60	bps	2.2	%
MainStay		66.91	72.8	%		48.74		65.55	68.1	%		44.64	2.1	%	470	bps	9.2	%
Total Domestic System*	$	69.27	57.8	%	$	40.04	$	65.99	58.5	%	$	38.60	5.0	%	-70	bps	3.7	%

* Amounts exclude Suburban activity because comparable pre-acquisition data is not available

	For the Quarter Ended				For the Year Ended
	12/31/2006		12/31/2005		12/31/2006		12/31/2005
System-wide effective royalty rate	4.13	%	4.08	%	4.10	%	4.08	%

CHOICE HOTELS INTERNATIONAL, INC.	Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)

	December 31, 2006		December 31, 2005		Variance
	Hotels	Rooms	Hotels	Rooms	Hotels		Rooms		%		%
Comfort Inn	1,415	110,877	1,428	111,598	(13	)	(721	)	(0.9	)%	(0.6	)%
Comfort Suites	433	33,976	411	32,251	22		1,725		5.4	%	5.3	%
Sleep	327	24,575	319	24,205	8		370		2.5	%	1.5	%
Midscale without Food & Beverage	2,175	169,428	2,158	168,054	17		1,374		0.8	%	0.8	%
Quality	736	72,054	660	66,316	76		5,738		11.5	%	8.7	%
Clarion	162	23,945	153	23,554	9		391		5.9	%	1.7	%
Midscale with Food & Beverage	898	95,999	813	89,870	85		6,129		10.5	%	6.8	%
Econo Lodge	816	49,679	805	49,763	11		(84	)	1.4	%	(0.2	)%
Rodeway	233	14,168	180	11,051	53		3,117		29.4	%	28.2	%
Economy	1,049	63,847	985	60,814	64		3,033		6.5	%	5.0	%
MainStay	29	2,183	27	2,047	2		136		7.4	%	6.6	%
Suburban	60	7,984	65	8,568	(5	)	(584	)	(7.7	)%	(6.8	)%
Extended Stay	89	10,167	92	10,615	(3	)	(448	)	(3.3	)%	(4.2	)%
Domestic Franchises	4,211	339,441	4,048	329,353	163		10,088		4.0	%	3.1	%
International Franchises	1,165	97,944	1,162	97,703	3		241		0.3	%	0.2	%
Total Franchises	5,376	437,385	5,210	427,056	166		10,329		3.2	%	2.4	%

CHOICE HOTELS INTERNATIONAL, INC.	Exhibit 6
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS — NEW HOTEL CONTRACTS
(UNAUDITED)

	For the Twelve Months Ended December 31, 2006			For the Twelve Months Ended December 31, 2005			% Change
	New Construction	Conversion	Total	New Construction	Conversion	Total	New Construction		Conversion		Total
Comfort Inn	67	65	132	53	56	109	26	%	16	%	21	%
Comfort Suites	98	3	101	89	5	94	10	%	(40	)%	7	%
Sleep	58	1	59	55	2	57	5	%	(50	)%	4	%
Midscale without Food & Beverage	223	69	292	197	63	260	13	%	10	%	12	%
Quality	6	143	149	5	148	153	20	%	(3	)%	(3	)%
Clarion	2	26	28	4	31	35	(50	)%	(16	)%	(20	)%
Midscale with Food & Beverage	8	169	177	9	179	188	(11	)%	(6	)%	(6	)%
Econo Lodge	1	80	81	4	85	89	(75	)%	(6	)%	(9	)%
Rodeway	3	105	108	—	75	75	NM		40	%	44	%
Economy	4	185	189	4	160	164	0	%	16	%	15	%
MainStay	9	1	10	14	—	14	(36	)%	NM		(29	)%
Suburban	14	8	22	—	—	—	NM		NM		NM
Extended Stay	23	9	32	14	—	14	64	%	NM		129	%
Cambria Suites	30	—	30	13	—	13	131	%	NM		131	%
Total Domestic System	288	432	720	237	402	639	22	%	7	%	13	%
	For the Three Months Ended December 31, 2006			For the Three Months Ended December 31, 2005			% Change
	New Construction	Conversion	Total	New Construction	Conversion	Total	New Construction		Conversion		Total
Comfort Inn	29	22	51	18	16	34	61	%	38	%	50	%
Comfort Suites	43	—	43	49	1	50	(12	)%	(100	)%	(14	)%
Sleep	31	—	31	19	1	20	63	%	(100	)%	55	%
Midscale without Food & Beverage	103	22	125	86	18	104	20	%	22	%	20	%
Quality	1	43	44	1	36	37	0	%	19	%	19	%
Clarion	1	4	5	2	16	18	(50	)%	(75	)%	(72	)%
Midscale w/ Food & Beverage	2	47	49	3	52	55	(33	)%	(10	)%	(11	)%
Econo Lodge	1	37	38	—	24	24	NM		54	%	58	%
Rodeway	1	32	33	—	28	28	NM		14	%	18	%
Economy	2	69	71	—	52	52	NM		33	%	37	%
MainStay	4	—	4	4	—	4	0	%	NM		0	%
Suburban	5	3	8	—	—	—	NM		NM		NM
Extended Stay	9	3	12	4	—	4	125	%	NM		200	%
Cambria Suites	10	—	10	5	—	5	100	%	NM		100	%
Total Domestic System	126	141	267	98	122	220	29	%	16	%	21	%

Exhibit 7

CHOICE HOTELS INTERNATIONAL, INC.

DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT

(UNAUDITED)

A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors.

	December 31, 2006 Units			December 31, 2005 Units			Variance
							Conversion				New Construction				Total
	Conversion	New Construction	Total	Conversion	New Construction	Total	Units		%		Units		%		Units		%
Comfort Inn	56	124	180	41	85	126	15		37	%	39		46	%	54		43	%
Comfort Suites	3	233	236	2	165	167	1		50	%	68		41	%	69		41	%
Sleep Inn	—	123	123	1	88	89	(1	)	-100	%	35		40	%	34		38	%
Midscale without Food & Beverage	59	480	539	44	338	382	15		34	%	142		42	%	157		41	%
Quality	76	10	86	54	12	66	22		41	%	(2	)	-17	%	20		30	%
Clarion	11	4	15	13	4	17	(2	)	-15	%	—		0	%	(2	)	-12	%
Midscale with Food & Beverage	87	14	101	67	16	83	20		30	%	(2	)	-13	%	18		22	%
Econo Lodge	41	5	46	41	9	50	—		0	%	(4	)	-44	%	(4	)	-8	%
Rodeway	66	3	69	35	—	35	31		89	%	3		NM		34		97	%
Economy	107	8	115	76	9	85	31		41	%	(1	)	-11	%	30		35	%
MainStay	—	33	33	1	29	30	(1	)	-100	%	4		14	%	3		10	%
Suburban	5	24	29	2	9	11	3		150	%	15		167	%	18		164	%
Extended Stay	5	57	62	3	38	41	2		67	%	19		50	%	21		51	%
Cambria Suites	—	43	43	—	12	12	—		NM		31		258	%	31		258	%
	258	602	860	190	413	603	68		36	%	189		46	%	257		43	%

CHOICE HOTELS INTERNATIONAL, INC.	Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)

CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

	Three Months Ended December 31,						Year Ended December 31,
(dollar amounts in thousands)	2006			2005			2006			2005
Franchising Revenues:
Total Revenues	$	143,708		$	121,985		$	544,662		$	477,399
Adjustments:
Marketing and reservation revenues		(74,307	)		(58,629	)		(278,026	)		(243,123	)
Hotel Operations		(1,163	)		(1,079	)		(4,505	)		(4,293	)
Franchising Revenues	$	68,238		$	62,277		$	262,131		$	229,983
Franchising Margins:
Operating Margin:
Total Revenues	$	143,708		$	121,985		$	544,662		$	477,399
Operating Income	$	39,886		$	36,247		$	166,625		$	143,750
Operating Margin		27.8	%		29.7	%		30.6	%		30.1	%
Franchising Margin:
Franchising Revenues	$	68,238		$	62,277		$	262,131		$	229,983
Operating Income	$	39,886		$	36,247		$	166,625		$	143,750
Less: Hotel Operations		334			239			1,311			1,068
	$	39,552		$	36,008		$	165,314		$	142,682
Franchising Margins		58.0	%		57.8	%		63.1	%		62.0	%
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
	Three Months Ended December 31,						Year Ended December 31,
(In thousands, except per share amounts)	2006			2005			2006			2005
Net Income	$	24,629		$	21,552		$	112,787		$	87,565
Adjustments:
Loss on Debt Extinguishment Costs		—			—			217			—
Resolution of Provisions for Income Tax Contingencies		(210	)		(454	)		(12,791	)		(4,855	)
Income Tax Expense Incurred Due to Foreign Earnings Repatriation		—			—			—			1,192
Adjusted Net Income	$	24,419		$	21,098		$	100,213		$	83,902
Weighted average shares outstanding-diluted		67,171			66,360			67,050			66,336
Diluted Earnings Per Share	$	0.37		$	0.32		$	1.68		$	1.32
Adjustments:
Loss on Debt Extinguishment Costs		—			—			—			—
Resolution of Provisions for Income Tax Contingencies		(0.01	)		(0.00	)		(0.19	)		(0.08	)
Income Tax Expense Incurred Due to Foreign Earnings Repatriation		—			—			—			0.02
Adjusted Diluted Earnings Per Share (EPS)	$	0.36		$	0.32		$	1.49		$	1.26

EBITDA Reconciliation

(in millions)	Q4 2006 Actuals		Q4 2005 Actuals		Year Ended December 31, 2006 Actuals		Year Ended December 31, 2005 Actuals		Full-Year 2007 Outlook*
Operating Income (per GAAP)	$	39.9	$	36.2	$	166.6	$	143.7	$	176.2
Depreciation and amortization		2.4		2.3		9.7		9.1		9.8
Earnings before interest, taxes, depreciation & amortization (non-GAAP) (“EBITDA”)	$	42.3	$	38.5	$	176.3	$	152.8	$	186.0

* Full Year 2007 Operating income and EBITDA include approximately $4.5 million of severance costs related to the previously announced termination certain executive officers.