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) December 17, 2008

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 No.)	(I.R.S. Employer Identification Number)

10750 Columbia Pike Silver Spring, Maryland	20901
(Address of Principal Executive Office)	(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:

¨ 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.

On December 17, 2008, Choice Hotels International, Inc.’s President and Chief Executive Officer, Stephen P. Joyce and other members of the Company’s senior management team will provide an update on Choice’s business operations, growth strategies and outlook for 2008 and 2009 via teleconference. The presentation slides are furnished as Exhibit 99.1 to this Form 8-K and incorporated by reference.

The presentation material and audio from the event will be accessible via live Webcast at investor.choicehotels.com. An archive of the session will be available on the Web site until January 17, 2009.

ITEM 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is furnished with this report:

Exhibit 99.1 Choice Hotels International, Inc. 2009 Outlook presentation slides, dated December 17, 2008.

SIGNATURE

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.

	Choice Hotels International, Inc.
Date: December 17, 2008	By:	/s/ David L. White
		David L. White
		Senior Vice President, Chief Financial Officer     & Treasurer

EX-99.1

2009 OUTLOOK

December 17, 2008

Exhibit 99.1

2

DISCLAIMER

Certain

matters

discussed

throughout

all

of

today’s

presentation

constitute

forward-looking

statements

within

the

meaning

of

the

federal

securities

law.

Generally,

our

use

of

words

such

as

“expect,”

“estimate,”

“believe,”

“anticipate,”

“will,”

“forecast,”

“plan,”

“project,”

“assume”

or

similar

words

of

futurity

identify

statements

that

are

forward-looking

and

that

we

intend

to

be

included

within

the

Safe

Harbor

protections

provided

by

Section

27A

of

the

Securities

Act

and

Section

21E

of

the

Securities

Exchange

Act

of

1934.

Such

forward-

looking

statements

are

based

on

management’s

current

beliefs,

assumptions

and

expectations

regarding

future

events,

which

in

turn

are

based

on

information

currently

available

to

management.

Such

statements

may

relate

to

projections

for

the

company’s

revenue,

earnings

and

other

financial

and

operational

measures,

company

debt

levels,

payment

of

stock

dividends,

and

future

operations.

We

caution

you

not

to

place

undue

reliance

on

any

forward-looking

statements,

which

are

made

as

of

the

date

of

this

presentation.

Forward-

looking

statements

do

not

guarantee

future

performance

and

involve

known

and

unknown

risks,

uncertainties

and

other

factors.

Several

factors

could

cause

actual

results,

performance

or

achievements

of

the

company

to

differ

materially

from

those

expressed

in

or

contemplated

by

the

forward-looking

statements.

Such

risks

include,

but

are

not

limited

to,

changes

to

general,

domestic

and

foreign

economic

conditions;

operating

risks

common

in

the

lodging

and

franchising

industries;

changes

to

the

desirability

of

our

brands

as

viewed

by

hotel

operators

and

customers;

changes

to

the

terms

or

termination

of

our

contracts

with

franchisees;

our

ability

to

keep

pace

with

improvements

in

technology

utilized

for

reservations

systems

and

other

operating

systems;

fluctuations

in

the

supply

and

demand

for

hotels

rooms;

and

our

ability

to

manage

effectively

our

indebtedness.

These

and

other

risk

factors

are

discussed

in

detail

in

the

Risk

Factors

section

of

the

company’s

Form

10-K

for

the

year

ended

December

31,

2007,

filed

with

the

Securities

and

Exchange

Commission

on

February

29,

2008.

We

undertake

no

obligation

to

publicly

update

or

revise

any

forward-looking

statement,

whether

as

a

result

of

new

information,

future

events

or

otherwise.

3

CHOICE HOTELS OVERVIEW

Leading gainer of US hotel market

share*

–

9.4% share of branded US hotels (+180

basis points over last 5 years)*

–

2nd largest U.S. hotelier*

65+ year-old company with well-known,

diversified brands suitable for various

stages of hotel life cycle

Core competencies and services drive

demand for our brands and deliver

business for our franchisees

Global pipeline of 1,074 hotels under

construction, awaiting conversion or

approved for development

Source: Choice Internal Data, September 30, 2008

*

Based

on

number

of

hotels

as

of

October

31,

2008

(Smith

Travel

Research)

Fee-for-service business model

Predictable, profitable growth in a variety

of lodging and economic environments

–

10 consecutive years of franchising

revenue and adjusted EBITDA growth

Cumulative free cash flows of more than

$1 billion since 1997

–

>99% returned to shareholders through

share repurchases and dividends

Capital “light”

model generates strong

returns on invested capital

Long-term franchise contracts and scale

represent barriers to entry

Strong, Growing, Global Hotel

Franchising Business

Highly Attractive Business Model

With Strong Financial Returns

4

ONE OF THE LARGEST HOTELIERS

Source: Smith Travel Research, Annual data as of October 31. October 2008

Market Share

11.9%

9.4%

5.8%      5.6%       5.2%      4.1%      1.9%       1.2%        0.8%        0.5%

5 yr. bps

(03-08)

-60

180

80

130          70

-40

-60     

10

0             -70

Leading Gainer of Market Share (% of Hotels Open in U.S.)

0

2

4

6

8

10

12

14

Wyndham

Choice

IHG

Hilton

Marriott

Best

Western

Accor

Carlson

Starwood

Hyatt

2003

2004

2005

2006

2007

2008

5

* Excludes cost of land

Conversion

$40,000+

$84,000+

$76,000+

$95,000+

$50

$70

$100+

Targeted Average Daily Rate

$61,000+

$54,000+

$80

FAMILY OF WELL KNOWN AND

DIVERSIFIED BRANDS

Estimated Per Room Investment*

New Construction

Source: Choice Internal Data, April 2008

$65,000+

6

Source: Smith Travel Research, Choice Internal Data, October 2008

WELL POSITIONED FOR LONG-TERM GROWTH IN

LIMITED SERVICE NEW CONSTRUCTION SEGMENT

Domestic Hotels

1,606

1,451

678

555

431

363

532

1,557

Holiday Inn

Express

Hampton

Inn / Inn &

Suites

La Quinta

Inn/Inn &

Suites

Fairfield

Inn

Country

Inn &

Suites

7

2,029

1,891

1,757

1,703

1,606

1,557

910

899

824

788

787

678

555

555

381

361

347

338

291

281

169

Domestic Hotels

Source: Smith Travel Research, Choice Internal Data, October 2008

SIGNIFICANT GROWTH OPPORTUNITIES

REMAIN IN LARGE CONVERSION MARKET

Chart does not include

17,000+ independent

hotels

in budget, economy and

mid-scale segments

Best

Western

Holiday Inn

Express

Motel

6

La Quinta Inn/

La Quinta Inn

& Suites

Hampton Inn /

Hampton Inn

& Suites

Fairfield

Inn

Red Roof

Inn

Knights

Inn

Other

(includes

60+ brands)

Days Inn

Holiday Inn /

Holiday Inn

Select

Americas

Best Value

Inn

Travelodge

Howard

Johnson

Microtel

Super 8

Ramada/

Ramada

Limited

8

DOMESTIC PIPELINE OF 955 HOTELS

63

283

167

149

93

40

40

38

38

44

Mid-scale

Extended Stay

Economy

Upscale

Source: Choice Internal Data, September 2008

New Construction

Conversion

9

275 hotels

Canada

16 hotels

Mexico

262 hotels

Continental

Europe, UK

& Ireland

155 hotels

Scandinavia

48 hotels

Brazil

49 hotels

Japan

4 hotels

China

2 hotels

Malaysia

1 hotel

Lebanon

25 hotels

India

1,100 properties

32 countries and

territories on 5

continents

Large global “pure

hotel franchising”

business

Track record of

consistent,

conservative,

profitable growth

Significant long-term

growth opportunity in

underrepresented

regions/countries

119 hotels under

construction, awaiting

conversion or

approved for

development

Source: Choice Internal Data, September 2008

STRONG PRESENCE IN MAJOR

TRAVEL MARKETS OUTSIDE OF THE U.S.

13 hotels

Central

America

2 hotels

Singapore

258 hotels

Australia &

New Zealand

10

SERVICES LIFECYCLE IMPROVES

BRANDS AND PROPERTY PERFORMANCE

FRANCHISED

FRANCHISED

PROPERTIES

PROPERTIES

RETURN ON

RETURN ON

INVESTMENT

INVESTMENT

Brand Planning

and Management

•

Targeted, differentiated

programs, amenities and

services for each brand

Brand Performance

•

Revenue and guest service

consulting

•

Inventory and rate

management

•

Local sales and marketing

•

Independent third-party quality

assurance

Training

•

On-site

•

Regional

•

Web-based

•

GM Certification

Opening Services

•

Ensure hotels open

successfully and meet or

exceed brand standards

Portfolio

Management

•

Repositioning

•

Relicensing

•

Termination

Procurement

Services

•

Value-engineered

prototypes and

design packages

•

Negotiated vendor

relationships

11

MARKETING LEVERAGES SIZE,

SCALE AND DISTRIBUTION

$300-plus million in annual marketing and reservation system fees

Leverage expertise in on-line, targeted interactive marketing to influence

guest hotel stay decisions

Multi and single brand advertising campaigns

Focus on driving guests to Choice central channels

Facilitate “one-stop”

shopping

Strong and growing loyalty program

Growing brand awareness

Source: Choice Internal Data, September 2008

12

STRONG AND GROWING AIDED

BRAND AWARENESS

98

90

62

87

83

95

58

29

15

20

41

97

76

44

86

70

13

Comfort

Inn

Comfort

Suites

Sleep Inn

Quality

Clarion

Econo

Lodge

Rodeway MainStay

Inn

Suburban

Cambria

Suites

Choice

Hotels

2001

2008 YTD

Source: Millward

Brown, September 2008

13

8.3%

10.0%

12.2%

15.3%

16.2%

17.9%

20.0%

21.6%

2001

2002

2003

2004

2005

2006

2007

YTD 10/31/08

STRONG, GROWING LOYALTY PROGRAM

Comprehensive loyalty rewards program

7.5

million

members

worldwide–

contribute

over

20%

of

domestic

gross

room

revenues

More than 1 million members added in 2008

Delivers incremental business to all Choice brand

hotels

Important selling point for franchise sales

*

Excludes

Econo

Lodge

and

Rodeway

Inn

brands

Source: Choice Internal Data, October 31, 2008

Choice Privileges Revenue as Percent

of Domestic Gross Room Revenues*

14

LARGE AND GROWING CENTRAL RESERVATIONS

SYSTEM (“CRS”) DELIVERY PUTS “HEADS IN BEDS”

All

Hotel Direct

Reservation

Choice Central

Reservation

Contribution

1/3

Domestic Franchise System

Gross Room Revenue Source

Domestic Choice CRS

Net Room Revenue

$1,668

$1,161

$1,000

$1,200

$1,400

$1,600

$1,800

2005

2006

2007

TTM

9/30/08

$ in Millions

Source: Choice Internal Data, September 2008

15

Central Channel ADR

Source: Choice Internal Data, September 2008

Domestic Choice CRS

Net Channel Share

$66.11

$73.54

$71.59

$77.90

$73.35

$84.22

2005

2006

2007

TTM 9/30/08

Systemwide

Call Center

choicehotels.com

SIGNIFICANT AVERAGE DAILY RATE PREMIUM

ON CENTRAL RESERVATIONS BOOKINGS

47%

61%

23%

35%

16%

18%

2005

2006

2007

Internet

Voice

Travel Agent (GDS)

TMM

Sept 2008

16

MANAGING DIFFERENTLY

IN LODGING DOWNTURN

Leverage brand preference and conversion opportunity during

lodging down cycle to drive market share

Reallocate resources and deliver tools to position franchisees to

capture larger share of shrinking travel demand

Implement contingency plans at all levels of the organization

Delay non-mission critical operating and capital spending

Ensure adequate liquidity

17

LODGING DOWNCYCLE TRENDS

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

GDP

Demand

Supply

1990 +2.0%

1991 - 2.5%

1992 +2.5%

2001  -7.0%

2002 -2.7%

2003  +0.3%

Financial

Markets/

Housing Crisis

IND. REVPAR

IND. REVPAR

1990 +1.7%

1991 - 2.7%

1992 +1.4%

CHH REVPAR

CHH REVPAR

2001  -2.4%

2002  -3.8%

2003  -0.8%

Each

recession

-

supply

grew

faster

than

demand

and

the

economy

(GDP)

9/11

recession

Gulf war

recession

Source: Bureau of Economic Analysis, Blue Chip Economic Indicators, Smith Travel Research, Choice Internal Data, December 2008

18

184

174

116

63

128

182

237

288

327

322

134

124

184

241

342

370

402

432

443

470

318

298

300

304

470

552

639

720

770

792

1999

2000

2001

2002

2003

2004

2005

2006

2007

TTM 9/30/08

New Construction

Conversion

Total

Source: Choice Internal Data, September 2008

CONVERSION BRAND FRANCHISE SALES

OPPORTUNITY IN SOFT NEW CONSTRUCTION

ENVIRONMENT

19

153

188

158

146

190

254

332

403

383

378

5.0%

6.0%

4.9%

4.4%

5.5%

7.0%

8.7%

9.3%

8.7%

9.6%

1999

2000

2001

2002

2003

2004

2005

2006

2007

TTM

9/30/08

Relicensing Contracts

Relicensings as % of the prior year's ending system size

Source: Choice Internal Data, September 2008

RELICENSING ACTIVITY SIMILAR TO NEW

CONSTRUCTION BRAND SALES

20

STRONG, STEADY FRANCHISE

SYSTEM GROWTH

3,039

3,123

3,244

3,327

3,482

3,636

3,834

4,048

4,211

4,445

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

252

258

266

271

294

310

329

339

354

282

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Domestic Hotels On-Line

Domestic Rooms On-Line

(in thousands)

Source: Choice Internal Data, December 2007

CAGR = 4.4%

CAGR = 5.0%

CAGR = 3.9%

CAGR = 4.7%

21

FRANCHISING REVENUE STREAM LESS

VOLATILE THAN REVPAR

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

$0

$50

$100

$150

$200

$250

$300

$350

CHH RevPAR

STR Chain Scale (Supply Weighted)

Industry RevPAR

Franchising Revenue

Source: Smith Travel Research, Choice Internal Data, December 2007

($ in millions)

22

ADJUSTED EBITDA LESS VOLATILE

THAN INDUSTRY PROFITABILITY

0

5

10

15

20

25

30

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

0

50

100

150

200

250

Industry Profits

Adjusted EBITDA

Source: Smith Travel Research, Choice Internal Data, December 2007

23

CAPITAL “LIGHT”

MODEL GENERATES

STRONG RETURNS ON INVESTED CAPITAL

19.5%

78.5%

15.2%

16.1%

14.7%

27.6%

36.7%

49.7%

62.9%

68.8%

63.3%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

TTM

9/30/08

Source: Choice Internal Data, September 2008

24

TRACK RECORD OF STRONG

EARNINGS PER SHARE GROWTH

$0.40

$0.51

$0.51

$0.58

$0.76

$0.93

$1.07

$1.26

$1.49

$1.74

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: Choice Internal Data, December 2007, Per Share Amounts Retroactively Adjusted For 2005 Stock Split

Adjusted Diluted Earnings Per Share

25

-

7.9

7.2

24.0

10.8

5.7

6.4

4.9

3.2

1.6

2.2

10.2 x

14.8 x

20.3 x

17.0 x

14.9 x

11.0 x

11.9 x

10.2 x

8.6 x

11.3 x

11.9 x

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

YTD 12/17/08

Millions of Shares Repurchased

Avg. TEV/EBITDA

Source: Capital IQ, Choice Internal Data, December 2008, Share amounts for 2005 and prior years retroactively adjusted for 2005 two-for-one stock split

Remaining authority on current authorization –

5.9 million shares as of December 17, 2008

OPPORTUNISTIC SHARE REPURCHASES KEY

PART OF CAPITAL ALLOCATION STRATEGY

26

2.17%

0.00%

2.85%

0.00%

0.00%

0.00%

5.94%

2.95%

2.94%

0.00%

0.00%

Choice

Great

Wolf

Starwood

Morgans

Hotel Group

Wyndham

Gaylord

Home Inns

Marriott

Red Lion

Orient-Express

IHG

Source: Bloomberg Financial, December 12, 2008

HIGH DIVIDEND YIELD COMPARED

TO OTHER LODGING C-CORPS

27

CREDIT STRENGTHS

Solid investment grade company

–

Moody’s Baa3

–

Standard & Poor’s BBB

Strong liquidity position

–

$350 million committed revolver matures June 2011 with $76 million

available as of December 15, 2008

–

No debt maturities until 2011

Substantial financial flexibility

Minimal contingent liability exposure

Source: Choice Internal Data, December 2008

28

STRATEGIC AGENDA FOR CHOICE’S BRANDS,

GROWTH AND SHAREHOLDERS

Continue core brand market share, unit growth and brand

performance improvements

Continue shareholder-friendly capital allocation policies

Leverage financial capacity/strength to expand scale of emerging

brands

Evaluate opportunities to enter new segments

Continue international expansion

29

Source: Choice Internal Data, December 2008

FINANCIAL PROJECTIONS

Gross Domestic Unit Openings

–

2008E –

332 Conversion Units (68%), 156 New Construction Units (32%)

–

2009E –

344 Conversion Units (73%), 129 New Construction Units (27%)

Adjusted diluted earnings per share projections assume no share repurchases subsequent to December 17, 2008

Outstanding common shares approximately 60.8 million as of December 17, 2008

Previous Expectations

Current Expectations

Full Year 2008

Full Year 2008

Target

2% RevPAR

Sensitivity

Unit Growth

5.5%

5.5%

3.5%

3.5%

RevPAR

Decline

-1.50%

-1.80%

-6.0%

-8.0%

Effective Royalty Rate Improvement

6 bps

6 bps

3 bps

3 bps

Adjusted EBITDA (in millions)

$197.5

$196.5

(1)

$184.2

$179.8

Adjusted Diluted EPS

$1.76

$1.71

(2)

$1.74

$1.69

Effective Tax Rate

37.0%

37.0%

36.5%

36.5%

(1)

Our current expectation for adjusted EBITDA for 2008 has been reduced by an incremental $2.1 million of termination benefits

compared to our previous expectation as a result of certain

previously unanticipated workforce reductions.

(2)

Our current expectation for adjusted diluted EPS for 2008 includes termination benefits of $0.02 per share mentioned above

and incremental investment losses of approximately $0.03 per diluted share related to assets held in the Company's

non-qualified retirement plans compared to our previous expectation.

Current Expectations

Full Year 2009

30

Appendix

Reconciliation of Non-GAAP

Financial Measurements to GAAP

31

DISCLAIMER

Adjusted

franchising

margins,

adjusted

earnings

before

interest

depreciation

and

amortization

(EBITDA),

adjusted

net

income,

adjusted

diluted

earnings

per

share,

franchising

revenues,

net

operating

profits

after

taxes

(NOPAT),

return

on

invested

capital

(ROIC)

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

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

following

appendix

which

reconcile

these

measures

to

the

comparable

GAAP

measurement.

32

FRANCHISING REVENUES AND ADJUSTED

FRANCHISING MARGINS

Source: Choice Internal Data, December 2007

($ amounts in thousands)

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

December 31,

December 31,

December 31,

December 31,

December 31,

December 31,

2007

2006

2005

2004

2003

2002

Total Revenues

615,494

$      

539,903

$      

472,098

$      

428,208

$      

385,866

$      

365,562

$      

Adjustments:

     Marketing and Reservation 

(316,827)

(273,267)

(237,822)

(220,732)

(195,219)

(190,145)

     Product Sales

-

-

-

-

-

-

     Hotel Operations

(4,692)

(4,505)

(4,293)

(3,729)

(3,565)

(3,331)

Franchising Revenues

293,975

$      

262,131

$      

229,983

$      

203,747

$      

187,082

$      

172,086

$      

Operating Income

185,199

$      

166,625

$      

143,750

$      

124,983

$      

113,946

$      

104,700

$      

Adjustments

     Hotel Operations

(1,451)

(1,311)

(1,068)

(725)

(842)

(385)

     Acceleration of Management Succession Plan

     Executive Termination Benefits

3,690

-

-

-

-

-

     Product Sales

-

-

-

-

-

-

     Impairment of Friendly Investment

-

-

-

-

-

-

Net

187,438

$      

165,314

$      

142,682

$      

124,258

$      

113,104

$      

104,315

$      

Adjusted Franchising Margin

63.8%

63.1%

62.0%

61.0%

60.5%

60.6%

33

FRANCHISING REVENUES AND ADJUSTED

FRANCHISING MARGINS (CONTINUED)

Source: Choice Internal Data, December 2007

($ amounts in thousands)

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

December 31,

December 31,

December 31,

December 31,

December 31,

2001

2000

1999

1998

1997

Total Revenues

341,428

$      

352,841

$              

324,203

$              

165,474

$              

175,416

$            

Adjustments:

     Marketing and Reservation 

(168,170)

(185,367)

(162,603)

-

-

     Product Sales

-

-

(3,871)

(20,748)

(23,806)

     Hotel Operations

(3,215)

(1,249)

-

(1,098)

(17,303)

Franchising Revenues

170,043

$      

166,225

$              

157,729

$              

143,628

$              

134,307

$            

Operating Income

73,577

$        

92,427

$                 

94,170

$                 

85,151

$                 

77,068

$              

Adjustments

     Hotel Operations

(714)

(640)

-

35

(1,679)

     Acceleration of Management Succession Plan

     Executive Termination Benefits

-

-

-

-

-

     Product Sales

-

-

12

(1,216)

(1,037)

     Impairment of Friendly Investment

22,713

-

-

-

-

Net

95,576

$        

91,787

$                 

94,182

$                 

83,970

$                 

74,352

$              

Adjusted Franchising Margin

56.2%

55.2%

59.7%

58.5%

55.4%

34

RETURN ON INVESTED CAPITAL

Source: Choice Internal Data, December 2008

(a) Operating income and tax rate for the year ended December 31, 2001 have been adjusted to exclude the effect

of a $22.7 million impairment charge related to the write-off of the company’s investment in Friendly Hotels.

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

($ in millions)

December 31,

December 31,

December 31,

December 31,

December 31,

December 31,

1997

1998

1999

2000

2001

2002

Operating Income (a)

$77.1

$85.2

$94.2

$92.4

$96.3

$104.7

Tax Rate(a)

41.7%

41.7%

39.5%

39.0%

35.0%

36.5%

After-Tax Operating Income

45.0

49.7

57.0

56.4

62.6

66.5

+ Depreciation & Amortization

9.2

6.7

7.7

11.6

12.5

11.3

- Maintenance CAPEX

9.2

6.7

7.7

11.6

12.5

11.3

Net Op. Profit After-tax (NOPAT)

$45.0

$49.7

$57.0

$56.4

$62.6

$66.5

Total Assets

386.4

398.2

464.7

484.1

321.2

316.8

- Current Liabilities

68.2

64.7

88.7

93.8

71.2

84.3

Invested Capital

318.2

333.6

375.9

390.3

250.0

232.5

Return on Average Invested Capital

17.8%

15.2%

16.1%

14.7%

19.5%

27.6%

35

RETURN ON INVESTED CAPITAL (CONTINUED)

Trailing Twelve

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

Months Ended

($ in millions)

December 31,

December 31,

December 31,

December 31,

December 31,

September 30,

2003

2004

2005

2006

2007

2008

Operating Income (a)

$113.9

$125.0

$143.8

$166.6

$185.2

$188.6

Tax Rate(a)

36.1%

35.1%

33.0%

27.4%

36.0%

36.6%

After-Tax Operating Income

72.8

81.1

96.3

121.0

118.5

119.6

+ Depreciation & Amortization

11.2

9.9

9.1

9.7

8.6

8.4

- Maintenance CAPEX

11.2

9.9

9.1

9.7

8.6

8.4

Net Op. Profit After-tax (NOPAT)

$72.8

$81.1

$96.3

$121.0

$118.5

$119.6

Total Assets

267.3

263.4

265.3

303.3

328.4

349.9

- Current Liabilities

102.2

102.1

120.3

139.8

147.5

153.1

Invested Capital

165.1

161.3

145.0

163.5

180.9

196.8

Return on Average Invested Capital

36.7%

49.7%

62.9%

78.5%

68.8%

63.3%

(a) Operating income and tax rate for the year ended December 31, 2001 have been adjusted to exclude the effect

of a $22.7 million impairment charge related to the write-off of the company’s investment in Friendly Hotels.

Source: Choice Internal Data, December 2008

36

FREE CASH FLOWS

Trailing Twelve

Months Ended

Nine Months Ended

Year Ended

Year Ended

Year Ended

Year Ended

September 30,

September 30,

December 31,

December 31,

December 31,

December 31,

($ in thousands)

2008

2008

2007

2006

2005

2004

Net Cash Provided by Operating Activities

138,364

$            

92,391

$                     

146,135

$        

153,928

$        

133,588

$        

108,908

$        

Net Cash Provided(Used) by Investing Activities

(17,610)

(14,932)

(21,260)

(17,331)

(24,531)

(14,544)

Free Cash Flows

120,754

$            

77,459

$                     

124,875

$        

136,597

$        

109,057

$        

94,364

$          

Source: Choice Internal Data, December 2008

37

FREE CASH FLOWS (continued)

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

December 31,

December 31,

December 31,

December 31,

December 31,

December 31,

($ in thousands)

2003

2002

2001

2000

1999

1998

Net Cash Provided by Operating Activities

115,304

$        

99,018

$          

101,712

$        

53,879

$          

65,040

$          

38,952

$          

Net Cash Provided(Used) by Investing Activities

27,784

(14,683)

87,738

(16,617)

(36,031)

(9,056)

Free Cash Flows

143,088

$        

84,335

$          

189,450

$        

37,262

$          

29,009

$          

29,896

$          

Source: Choice Internal Data, December 2008

38

ADJUSTED EBITDA

Source: Choice Internal Data, December 2008

Forecasted

Trailing Twelve

Year Ended

Months Ended

Year Ended

Year Ended

Year Ended

Year Ended

($ in thousands)

December 31,

September 30,

December 31,

December 31,

December 31,

December

31,

TARGET

2% RevPAR

Sensitivity

2008

2008

2007

2006

2005

2004

Operating Income

175,242

$      

170,802

$      

182,224

$     

188,590

$     

185,199

$     

166,625

$     

143,750

$     

124,983

$     

Adjustments

Acceleration of Management Succession Plan

-

-

6,069

6,069

-

-

-

-

Executive Termination Benefits

-

-

-

-

3,690

-

-

-

Product Sales

-

-

-

-

-

-

-

-

Impairment of Friendly investment

-

-

-

-

-

-

-

-

Depreciation and Amortization

8,994

8,994

8,232

8,392

8,637

9,705

9,051

9,947

Adjusted EBITDA

184,236

$      

179,796

$      

196,525

$     

203,051

$     

197,526

$     

176,330

$     

152,801

$     

134,930

$     

Forecasted Year Ended,

December 31, 2009

39

ADJUSTED EBITDA (CONTINUED)

Source: Choice Internal Data, December 2008

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

($ in thousands)

December 31,

December 31,

December 31,

December 31,

December 31,

December 31,

December 31,

2003

2002

2001

2000

1999

1998

1997

Operating Income

113,946

$      

104,700

$      

73,577

$        

92,427

$        

94,170

$        

85,151

$        

77,068

$        

Adjustments

Acceleration of Management Succession Plan

-

-

-

-

-

-

-

Executive Termination Benefits

-

-

-

-

-

-

-

Product Sales

-

-

-

-

12

(1,216)

(1,037)

Impairment of Friendly investment

-

-

22,713

-

-

-

-

Depreciation and Amortization

11,225

11,251

12,452

11,623

7,687

6,710

9,173

Adjusted EBITDA

125,171

$      

115,951

$      

108,742

$      

104,050

$      

101,869

$      

90,645

$        

85,204

$        

40

ADJUSTED DILUTED EARNINGS PER SHARE

Source: Choice Internal Data, December 2008

Forecasted

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

December 31,

December 31,

December 31,

December 31,

December 31,

(In thousands, except per share amounts)

TARGET

2% RevPAR

Sensitivity

2008

2007

2006

2005

2004

Net Income

106,747

$             

103,875

$             

103,422

$           

111,301

$           

112,787

$           

87,565

$             

74,345

$             

Adjustments:

Loss(Gain) on Extinguishment of Debt

-

-

-

-

217

-

433

Acceleration of Management Sucession Plan, Net of Taxes

-

-

3,799

-

-

-

-

Executive Termination Benefits, Net of Taxes

-

-

-

2,310

-

-

-

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

-

-

-

-

-

-

-

Impairment of and Equity Losses in Friendly Hotels PLC Investment

-

-

-

-

-

-

-

Adjusted Net Income

106,747

$             

103,875

$             

107,221

$           

113,611

$           

100,213

$           

83,902

$             

73,596

$             

Weighted Average Shares Outstanding-Diluted

61,515

61,515

62,523

65,331

67,050

66,336

69,000

Diluted Earnings Per Share

1.74

$                    

1.69

$                    

1.65

$                  

1.70

$                  

1.68

$                  

1.32

$                  

1.08

$                  

Adjustments:

Loss(Gain) on Extinguishment of Debt

-

-

-

-

-

-

0.01

Acceleration of Management Sucession Plan, Net of Taxes

-

-

0.06

-

-

-

-

Executive Termination Benefits, Net of Taxes

-

-

-

0.04

-

-

-

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

-

-

-

-

-

-

-

Impairment of and Equity Losses in Friendly Hotels PLC Investment

-

-

-

-

-

-

-

Adjusted Diluted Earnings Per Share (EPS)

1.74

$                    

1.69

$                    

1.71

$                  

1.74

$                  

1.49

$                  

1.26

$                  

1.07

$                  

December 31, 2009

Forecasted Year Ending

41

ADJUSTED DILUTED EARNINGS PER SHARE

(CONTINUED)

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

Year Ended

December 31,

December 31,

December 31,

December 31,

December 31,

December 31,

(In thousands, except per share amounts)

2003

2002

2001

2000

1999

1998

Net Income

71,863

$             

60,844

$             

14,327

$             

42,445

$             

57,155

$             

55,305

$             

Adjustments:

Loss(Gain) on Extinguishment of Debt

-

-

-

-

-

(7,232)

Executive Termination Benefits, Net of Taxes

-

-

-

-

-

-

Resolution of Provisions for Income Tax Contingencies

-

-

-

-

-

-

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

-

-

-

-

-

-

Loss(Gain) on Sunburst Note Transactions

(3,383)

-

-

4,721

-

-

Impairment of and Equity Losses in Friendly Hotels PLC Investment

-

-

37,166

7,532

-

-

Adjusted Net Income

68,480

$             

60,844

$             

51,493

$             

54,698

$             

57,155

$             

48,073

$             

Weighted Average Shares Outstanding-Diluted

73,349

80,114

89,144

106,506

111,334

119,096

Diluted Earnings Per Share

0.98

$                  

0.76

$                  

0.16

$                  

0.40

$                  

0.51

$                  

0.46

$                  

Adjustments:

Loss(Gain) on Extinguishment of Debt

-

-

-

-

-

(0.06)

Executive Termination Benefits, Net of Taxes

-

-

-

-

-

-

Resolution of Provisions for Income Tax Contingencies

-

-

-

-

-

-

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

-

-

-

-

-

-

Loss(Gain) on Sunburst Note Transactions

(0.05)

-

-

0.04

-

-

Impairment of and Equity Losses in Friendly Hotels PLC Investment

-

-

0.42

0.07

-

-

Adjusted Diluted Earnings Per Share (EPS)

0.93

$                  

0.76

$                  

0.58

$                  

0.51

$                  

0.51

$                  

0.40

$                  

Source: Choice Internal Data, December 2008