Press Releases

Choice Hotels Reports 1st Quarter Recurring Net Income of $8.7 Million; Recurring Diluted EPS of $0.19

Choice Hotels International, Inc. today reported first quarter 2001 recurring net income of $8.7 million, or $0.19 recurring diluted earnings per share (EPS), compared to the $9.9 million in recurring net income and $0.18 recurring diluted EPS reported for first quarter 2000.

"We are pleased that our first quarter results exceeded analysts' expectations," said Charles A. Ledsinger, Jr., president and chief executive officer. "Strong royalty fee performance was driven by gains of 4.9% in revenue per available room (RevPAR), domestic unit growth of 2.2% and solid improvement in the effective royalty rate of four basis points. Our technology investments are beginning to pay off handsomely. Profit Manager, our proprietary property and yield management system, is now installed in more than 2,400 hotels. The yield management component of this system is operational in more than 1,600 of our properties, generating premiums of greater than 3% over the Smith Travel market set on average for each hotel."

He continued, "On the development side, we continue to sell hotel contracts with an emphasis on converting existing hotels to our system. As hotel capital becomes tighter and economic times more uncertain, we see greater opportunities for conversions in our Clarion, Quality, Econo Lodge and Rodeway brands as independent and existing hotels look to improve their performance in a slower economy."

Overall, Choice signed 57 hotel franchise contracts in first quarter 2001, roughly equivalent to the 59 contracts signed in the same period a year ago. The company signed 38 contracts to convert existing hotels to a Choice brand, up from 29 conversions from the same period a year ago.

The decline the company reported in initial franchisee fees and relicensing fees is due to a drop in overall relicensing fees, which are generated by Choice when there is a change in control over one of the company's franchised hotels. Overall, the number of relicensing transactions dropped to 34 in first quarter 2001 from 60 a year ago.

The company reported royalty revenues of $27.0 million for first quarter 2001, compared to $24.9 million for first quarter 2000, an increase of 8.3%. The system-wide domestic effective royalty rate increased from 3.84% in first quarter 2000 to 3.88% for the first quarter of 2001. Domestic RevPAR increased 4.9% from $26.94 in first quarter 2000 to $28.25 in the quarter just ended.

During the three months ended March 31, 2001, the company recorded an equity loss of $2.2 million related to changes in its equity investment in Friendly Hotels plc. The equity loss is excluded from the company's recurring net income and recurring diluted EPS. In the event that Friendly has future liquidity issues, the company does not intend to fund future losses.

2001 Outlook

The company announced that 2001 recurring EBITDA should approximate $117 million to $119 million, with 2001 diluted EPS, excluding potential equity or impairment losses on its investment in Friendly Hotels plc, reaching $1.23 to $1.25, given the current number of shares outstanding, which would meet or exceed current estimates.

In discussing the outlook, Ledsinger noted, "Our franchising business model enjoys a level of predictability not common in many of today's industries. We believe that our emphasis on brand re-imaging and quality improvements, coupled with our ongoing focus on efficiency and cost controls, should translate to continued improvements in overall operating performance."

Internet Growth

Choice continues to emphasize cost-effective electronic distribution channels for its reservations activity. Total net revenue sold over the Internet was $49.3 million for first quarter 2001, an increase of 85.3% over the $26.6 million sold in first quarter 2000. Choice Hotels' proprietary web site,, generated more than 55% of the total Internet volume for the quarter. Internet reservations represented 7.6% of total system sales for first quarter 2001, up from 4.4% for the same period a year ago.

The average room rate booked through the company's Internet site was up 4.3% for first quarter 2001 to $75.03 from $71.91 for the same period a year ago. This result compares to system-average daily rates of $58.67 for 2001 and $56.65 for 2000. In addition, the Internet is a less expensive channel for booking reservations.

System Growth

As of March 31, 2001, the total number of Choice hotels worldwide on-line grew 3.2% to 4,390 from 4,253 as of the same date a year ago. As of the same date, the total number of rooms worldwide increased 3.0% to 349,994 from 339,744 as of the same date a year ago.

The company had 684 franchised hotels with 59,230 rooms either in design or under construction in its worldwide hotel system as of March 31, 2001.

Notable Events

Among the notable company events occurring since the previous earnings report:

   *  The company has remaining authority to acquire up to 4.5 million
      shares. Since Choice announced its stock repurchase program on June
      25, 1998, the company has purchased 16.9 million shares of common
      stock at a total cost of $240.3 million, as of April 18, 2001.  Total
      shares outstanding as of April 24, 2001 are 44.8 million.

   *  Guest Privileges, the company's program for frequent travelers, has
      surpassed the one million member mark.

Choice Hotels International is the second-largest hotel franchisor in the world with 4,390 hotels open, representing 349,994 rooms, and another 684 hotels under development, representing 59,230 rooms, in 43 countries, as of March 31, 2001. Its Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide.

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. For further information on factors that could impact Choice and the statements contained therein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its registration statement on Form S-4 and report on Form 10-Q for the period ended June 30, 1999.

Additional corporate information may be found on the Choice Hotels' internet site, which may be accessed at .

Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Guest Privileges and are registered trademarks, service marks and trade names of Choice Hotels International, Inc. Choice Hotels also owns and uses common law marks, including Profit Manager.

                    Choice Hotels International, Inc.
                       Consolidated Balance Sheets

  (In thousands)                                March 31,       December 31,
                                                   2001              2000


  Cash and cash equivalents                        $7,080           $19,701
  Other current assets                             30,539            32,385
       Total current assets                        37,619            52,086

  Fixed assets and intangibles, net               175,198           174,772
  Investment in Friendly Hotels                    32,622            34,616
  Note receivable from Sunburst
   Hospitality                                     35,962           137,492
  Other assets                                     84,867            85,154

             Total assets                         366,268           484,120


  Current portion of long-term debt                53,246            50,046
  Other current liabilities                        43,127            43,782
       Total current liabilities                   96,373            93,828

  Long-term debt                                  224,658           247,179
  Deferred income taxes and other                  52,637            53,020

       Total liabilities                          373,668           394,027

       Total shareholders' (deficit)
        equity                                     (7,400)           90,093

             Total liabilities and
              shareholders' (deficit)
              equity                             $366,268          $484,120

                    Choice Hotels International, Inc.
                    Consolidated Statements of Income

  (In thousands, except per share
  amounts)                                           Three Months Ended
                                                March 31,          March 31,
  Revenues                                         2001               2000

  Royalty fees                                   $26,956            $24,885
  Initial franchise fees and
   relicensing fees                                2,318              3,348
  Partner service revenue                          1,936              2,298
  Hotel Operations                                   784                 --
  Other                                            1,356              1,114
         Total revenues                           33,350             31,645

  Operating expenses

  Selling, general and administrative             12,489             12,228
  Hotel Operations                                   520                 --
  Depreciation and amortization                    2,890              2,502
         Total operating expenses                 15,899             14,730

  Operating income                                17,451             16,915

  Interest and dividend income                    (1,150)            (3,865)
  Interest expense                                 4,312              4,616
  Equity loss-Friendly Hotels                      2,158              1,725
         Total other                               5,320              2,476

  Income before income taxes                      12,131             14,439
  Income taxes                                     4,731              5,631
  Net income                                      $7,400             $8,808

  Recurring net income (a)                        $8,747             $9,885

  Weighted average shares outstanding             45,798             53,390

  Diluted shares outstanding                      46,282             54,262

  Diluted earnings per share                       $0.16              $0.16

  Diluted recurring earnings per share (a)         $0.19              $0.18

  (a)  Recurring net income and diluted recurring earnings per share exclude
       the impact of the equity loss-Friendly Hotels after the effect of
       income taxes.

                         Choice Hotels International
                 Supplemental Operating Information By Brand
                            Domestic Hotel System

                                                      Three Months Ended
                                                            March 31,
                                                    2001               2000

       Hotels                                      1,276              1,253
       Rooms                                      99,879             98,256
       Avg. Daily Rate (ADR)                      $59.35             $56.77
       Occupancy %                                 50.0%              50.1%
       RevPAR                                     $29.67             $28.43

       Hotels                                        278                238
       Rooms                                      21,840             19,065
       Avg. Daily Rate (ADR)                      $71.06             $68.68
       Occupancy %                                 55.6%              55.3%
       RevPAR                                     $39.54             $37.99

       Hotels                                        425                430
       Rooms                                      47,804             49,085
       Avg. Daily Rate (ADR)                      $61.01             $58.08
       Occupancy %                                 46.8%              45.5%
       RevPAR                                     $28.58             $26.42

       Hotels                                        106                112
       Rooms                                      16,915             18,965
       Avg. Daily Rate (ADR)                      $75.50             $77.73
       Occupancy %                                 46.6%              48.7%
       RevPAR                                     $35.16             $37.83

       Hotels                                        262                236
       Rooms                                      20,237             18,050
       Avg. Daily Rate (ADR)                      $53.34             $51.68
       Occupancy %                                 48.1%              47.3%
       RevPAR                                     $25.67             $24.42

       Hotels                                         37                 31
       Rooms                                       3,320              2,885
       Avg. Daily Rate (ADR)                      $63.35             $58.39
       Occupancy %                                 58.5%              60.0%
       RevPAR                                     $37.06             $35.01

       Hotels                                        677                682
       Rooms                                      42,227             42,977
       Avg. Daily Rate (ADR)                      $42.83             $41.68
       Occupancy %                                 42.3%              41.0%
       RevPAR                                     $18.13             $17.10

       Hotels                                        152                161
       Rooms                                      10,042             10,548
       Avg. Daily Rate (ADR)                      $43.12             $42.48
       Occupancy %                                 40.1%              40.1%
       RevPAR                                     $17.27             $17.02

       Hotels                                      3,213              3,143
       Rooms                                     262,264            259,831
       Avg. Daily Rate (ADR)                      $58.67             $56.65
       Occupancy %                                 48.1%              47.6%
       RevPAR                                     $28.25             $26.94
       Effective Royalty Rate                      3.88%              3.84%


SOURCE: Choice Hotels International

Contact: John Hawkins, Corporate Communications, 301-592-5075, or Fax:
301-592-6177, or; or Joe Squeri, Chief Financial
Officer, 301-592-5006, both of Choice Hotels International, Inc.