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 26, 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 7.01. Regulation FD Disclosure.

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

On February 26, 2007, the Company released a presentation scheduled to be presented at the Bear Stearns Retail, Restaurants & Consumer Conference to be held on February 28, 2007 in New York, New York. 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 February 26, 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 28, 2007	/s/ David L. White
	David L. White Chief Financial Officer

EX-99.1

Choice Hotels International

Investor Presentation

Bear Stearns Retail, Restaurants & Consumer

Conference

David White, Chief Financial Officer

February 28, 2007

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

3

One of the World’s Largest Hoteliers

#2 U.S. Hotel Brand By Hotels Open

More than 4,200 hotels open in the U.S.

representing over 335,000 rooms

Worldwide –

more than 5,300 hotels open

representing over 435,000 rooms

Significant Growth Opportunities

Domestic and international unit growth

New brands

Track Record of Delivering Shareholder Value

Over 33% annualized share price return in past five

years

Dividends and share buybacks

Source: Choice Internal Data as of December 2006, Smith Travel Research

4

Strong, Stable, Growing System

Robust Unit Growth Continues

4 percent increase in domestic hotels in 2006

Record 720 new domestic hotel contracts signed in

2006

Strongest pipeline in company’s history

930 hotels under development worldwide, representing

more than 72,000 rooms

20-year contracts, barriers to exit

Source: Choice Internal Data as of December 2006.

5

Choice -

#2 U.S. Hotel Brand

Hilton

5%

U.S. Hotel Market Share –

Leading Hotel Companies

Source: Smith Travel Research, January 2007. 

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Market Share - Hotels

Open (By Percent)

Wyndham

Choice

IHG

Hilton

Marriott

Best Western

Hyatt

Starwood

6

Successful, Proven Business Model

Core Competency -

Franchising

Only pure-play lodging franchisor

Highest returning model in the industry

Substantial size, scale and distribution

Growth in a wide variety of economic conditions and industry

cycles

High margin, high cash flow model with low capital requirements

Difficult to duplicate –

significant scale and capital requirements

Highly-skilled, experienced in this area

7

Brand Portfolio Built Over 5 Decades

Organic Innovation

Acquisitions

1940’s

1980’s

1990’s

Scale & Distribution Created By Focus On Core Competency  --

Selling Franchises, Selling Hotel Rooms, Servicing Hotel Operators

Experience Built On Innovation

2000’s

8

Well-recognized, Segmented Brands

Limited Service

Full Service

Economy

Mid-Scale

Upscale

9

Development Opportunities At Wide Range of Price Points

Conversion

New Construction

$29,000

$36,000

$52,000

$45,500

$68,000

$45

$65

$100+

Targeted Average

Daily/Weekly

Rate

Source: Choice Internal Data as of December 2006.

*Excludes cost of land.

$43,000

$38,500

$80

10

Choice Hotels’

Objectives

Achieve Growth in New Market Segments

Strategically Grow Existing Brands

Improve Brands and Property Performance

Improve Brand Recognition and Business

Delivery

Maximize Financial and Shareholder Returns

11

Cambria Suites –

Upscale, Select Service

Market Opportunity

All-suites Brand

100% new construction

Guest suites 25% larger than standard hotel rooms

Very attractive per-key development cost

Targeted ADR of $100 -

$140

43

Contracts

–

In

20

States

–

Signed

Since

January

2005

Launch

Boise

Hotel

To

Open

in

March

–

5

More

In

2007 (Appleton, Green Bay, Akron/Canton,

Savannah, and Minneapolis)

Positioned Favorably Against Established

Brands –

Courtyard by Marriott and

Hilton

Garden

Inn

–

and

New

Market

Entrants

–

aloft,

NYLO,

Hyatt

Place

and Hotel Indigo.

Source: Choice Internal Data as of December 2006

12

Extended Stay Market Opportunity

Strong Performing Segment Due to Very Favorable Supply/Demand Equation.

Industry Demand Increased 2.5% in 2006 –

With Industry Occupancy At 74.5% and

Industry RevPAR Up 7.5% Over 2005

Suburban

Extended

Stay

Hotel

–

60

Hotels,

nearly

8,000

rooms

Brand Acquired in 2005 –

Serves Economy Market

Choice Is Largest Franchisor In the Segment

MainStay Suites –

29 Hotels, nearly 2,200 rooms

Mid-scale Extended Stay Brand

Source: Highland Group, Choice Internal Data as of December 2006

13

Brand-Centric Organizational Structure

Upscale and Extended Stay

Full-Service

Mid-Market

Economy

Modeled on Cambria Suites Successes, New Structure

Enables Choice To:

Place greater focus on guests and franchisees

Optimize brand positioning and segmentation

Accelerate innovation

Improve agility and remain on top of competitive and industry issues

14

Growing Existing Brands Via Increased Unit Sales

250

300

350

400

450

500

550

600

650

700

750

2001

2002

2003

2004

2005

2006

$5.0

$7.0

$9.0

$11.0

$13.0

$15.0

$17.0

$19.0

Deals

Initial Fee Revenue

Franchise Development

(New Contracts Sold)

$ in millions

Executed Contracts

Source: Choice Internal Data as of December 2006.

300 deals

$7.7 m

304 deals

$8.3 m

470 deals

$11.3 m

552 deals

$13.3 m

639 deals

$15.1 m

Increased Franchise Contracts = Increased Initial Fees

720 deals

$17.9 m

15

2006: Record 720 New Domestic Hotel Franchise Contracts

0

100

200

300

400

500

600

700

800

900

New

Construction

Conversion

Total

2004

2005

2006

237

182

370

402

639

552

Source: Choice Internal Data December 2006

288

432

Up 22% Over 2005

Up 7% Over 2005

720

Up 13% Over 2005

16

Unrelenting Focus on Franchisee ROI

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

It is Working

-

Franchisee Satisfaction with Respective

Choice Brand(s) at 89%, Up From 79% in 2003

Source: Choice Internal Data as of December 2006.

17

Franchise

Success

System

Maximizes

Owners’

ROI

Unmatched Size, Scale, Distribution and

Market Reach

Lowers Costs and Increases Revenues

for Owners

Enables Highly-Valued Capabilities

Services

Technologies

Purchasing Assistance

Generates more than $13 million in annual

revenue and lowers owner costs

Source: Choice Internal Data as of December 2006.

18

Franchise

Success

System

Maximizes

Owners’

ROI

(cont.)

$55+ Million Marketing and Advertising Plan

Creates brand awareness and loyalty

Drives traffic

Enhanced Rewards Program

5 million+ Choice Privileges®

members

$2.9 billion hotel program revenue to date

Delivering Revenue

Direct sales -

$800 million

Intermediary marketing

Reservations System

$1.6

billion

room

revenue

booked

in

2006

–

33%

delivery

Source: Choice Internal Data as of December 2006.

19

Business Model Maximizes Financial and Shareholder Returns

Capital Allocation –

Focus on Returns

Capital Structure –

Prudent Leverage to Maximize Returns

Share Repurchases

66.6 million shares repurchased at an average of $10.69 per share

as of 12/31/06

Nearly $712 million since inception of program

Dividends

Increased quarterly cash dividend by 15% in September 2006 to

$0.15/share

2-for-1 Stock Split Effected in October 2005

Source: Choice Internal Data as of December 2006

20

Business Model Delivers Superior Returns on Invested Capital

10.4%

27.7%

36.9%

49.5%

69.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2001

2002

2003

2004

2005

Source: Bear Stearns 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.

21

Industry-Leading Return on Invested Capital

0

10

20

30

40

50

60

70

2001

2002

2003

2004

2005

Choice Hotels

Intl.

Hilton

Host Hotels

Starwood

Marriott Intl.

Source

–

Bear

Stearns

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.

22

Growing U.S. System

Source: Choice Internal Data as of December 2006.

2,500

2,700

2,900

3,100

3,300

3,500

3,700

3,900

4,100

4,300

2002

2003

2004

2005

2006

Domestic System Size

CAGR = 3.9%

Units

Online

23

Domestic Pipeline –

860 Hotels

Source: Choice Internal Data as of  December 2006.

602 New Construction Hotels (70%)

258 Conversion Hotels (30%)

0

25

50

75

100

125

150

175

200

225

250

Cambria

Suites

Comfort

Suites

Comfort Inn

Sleep Inn

Quality

Clarion

Suburban

MainStay

Suites

Econo

Lodge

Rodeway

Inn

Midscale w/out F&B

Midscale w/F&B

Extended Stay

Economy

Upscale

24

Strong Franchising Revenue Growth

Source: Choice Internal Data, December 2006.  See Appendix. 

$172.1

$187.1

$203.7

$230.0

$262.1

$160.0

$170.0

$180.0

$190.0

$200.0

$210.0

$220.0

$230.0

$240.0

$250.0

$260.0

$270.0

2002

2003

2004

2005

2006

Franchising Revenues

($ in millions)

+ 14%

CAGR = 8.8%

25

EBITDA Growth Up Solidly

Source: Choice Internal Data, December 2006. See Appendix.

$116.0

$125.2

$134.9

$152.8

$176.3

$90

$110

$130

$150

$170

$190

2002

2003

2004

2005

2006

EBITDA

($ in millions)

CAGR = 8.7%

+15%

26

Strong EPS Growth

Source: Choice Internal Data, December 2006.  See Appendix.  Per share amounts retroactively adjusted for 2005 stock split.

$0.76

$0.93

$1.07

$1.26

$1.49

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

2002

2003

2004

2005

2006

Adjusted Diluted EPS

CAGR = 14.4%

+ 18%

27

Why Choice

Growing System and Favorable Industry

Dynamics

Strong EPS, 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

Appendix

29

$2,380,000

$476,000

$10,585,000

$2,117,000

$10,065,000

$2,013,000

Estimated

Impact on

Royalties

$0.02

$0.004

$0.10

$0.02

$0.09

$0.02

Estimated Impact

on Diluted EPS

1,2

5 bps increase =

1 bps increase =

•Improvement

in

Royalty

Rate

5% (210 units)=

1% (42 units) =

5% =

1% =

•New Franchise Growth

•RevPAR Improvement

Revenue Driver

(1) Assumes Outstanding Diluted Shares of 67,049,979

(2) Assumed tax rate of 37.75%

Source: Choice Internal Analysis as of December 2006

Continuing Cash Flow Potential Multiple Revenue Levers (Unaudited)

30

Franchising Revenues and Margins

Source: Choice Internal Data as of December 2006.

(Dollar amounts in thousands)

2006

2005

2004

2003

2002

Franchising Revenues and Margins

Total Revenues

544,662

$         

477,399

$         

428,208

$         

385,866

$         

365,562

$         

Adjustments:

     Marketing and Reservation  (1)

(278,026)

(243,123)

(220,732)

(195,219)

(190,145)

     Hotel Operations

(4,505)

(4,293)

(3,729)

(3,565)

(3,331)

Franchising Revenues

262,131

$         

229,983

$         

203,747

$         

187,082

$         

172,086

$         

Operating Income

166,625

$         

143,750

$         

124,983

$         

113,983

$         

104,700

$         

Adjustment:

     Hotel Operations

(1,311)

(1,068)

(725)

(949)

(385)

Net

165,314

$         

142,682

$         

124,258

$         

113,034

$         

104,315

$         

Franchising Margins

63.1%

62.0%

61.0%

60.4%

60.6%

Twelve Months Ended December 31,

31

EBITDA

Source: Choice Internal Data as of December 2006.

2006

2005

2004

2003

2002

Operating Income

166,625

$          

143,750

$          

124,983

$          

113,946

$          

104,700

$          

Adjustments

Depreciation and Amortization

9,705

9,051

9,947

11,225

11,251

EBITDA

176,330

$          

152,801

$          

134,930

$          

125,171

$          

115,951

$          

Twelve Months Ended December 31,

32

Adjusted Net Income

Source: Choice Internal Data as of December 2006.

(In thousands, except per share amounts)

2006

2005

2004

2003

2002

Net Income

112,787

$      

87,565

$        

74,345

$        

71,863

$        

60,844

$        

Adjustments:

Debt Extinguishment Costs

217

-

433

-

-

Resolution of Provisions for Income Tax Contingencies

(12,791)

(4,855)

(1,182)

-

-

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

-

1,192

-

-

-

Loss(Gain) on Sunburst Note Transactions

-

-

-

(3,383)

-

Adjusted Net Income

100,213

$      

83,902

$        

73,596

$        

68,480

$        

60,844

$        

Weighted Average Shares Outstanding-Diluted

67,050

66,336

69,000

73,349

80,114

Diluted Earnings Per Share

1.68

$            

1.32

$            

1.08

$            

0.98

$            

0.76

$            

Adjustments:

Debt Extinguishment Costs

-

-

0.01

-

-

Resolution of Provisions for Income Tax Contingencies

(0.19)

(0.08)

(0.02)

-

-

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

-

0.02

-

-

-

Loss(Gain) on Sunburst Note Transactions

-

-

-

(0.05)

-

Adjusted Diluted Earnings Per Share (EPS)

1.49

$            

1.26

$            

1.07

$            

0.93

$            

0.76

$            

Twelve Months Ended December 31,