Press Releases

Choice Hotels Reports Record Results For First Quarter 2006: Diluted EPS up 44%, Net Income up 47% Over Prior Year
Company Raises 2006 Earnings Guidance
PRNewswire-FirstCall
SILVER SPRING, Md.

Choice Hotels International, Inc., today reported the following highlights for the first quarter of 2006:

  *  Diluted earnings per share (EPS) increased 44% to $0.26, compared to
     $0.18 for first quarter 2005.

  *  Net income grew 47% from $12.0 million in first quarter 2005 to $17.7
     million in the same period of this year.

  *  Earnings before interest, taxes, depreciation and amortization
     ("EBITDA") increased 32% to $32.4 million from $24.6 million in first
     quarter 2005.

  *  Operating income increased 35% to $30.1 million, compared to $22.3
     million for the same period in 2005.

  *  Total revenues increased 20% to $109.4 million compared to the first
     quarter of 2005.

  *  Domestic system-wide revenue per available room (RevPAR) increased 9.4%
     compared to the first quarter of 2005.

  *  Domestic unit growth increased 5.2% compared to the first quarter 2005
     (excluding the acquisition of Suburban, domestic unit growth increased
     3.6%).

  *  Year-to-date new domestic hotel franchise contracts were up 17% to 120,
     with new construction contracts increasing 41 percent to 48, as
     compared to 34 in first quarter 2005, including 10 contracts for the
     new Cambria Suites brand, as compared to 13 for the full year 2005.

  *  Franchising revenues were up 22% for first quarter.

  *  The domestic hotel pipeline of hotels under construction, awaiting
     conversion or approved for development increased more than 60% to 653
     hotels, representing 51,157 rooms; an additional 69 hotels,
     representing 6,223 rooms, were in the worldwide pipeline at March 31,
     2006.

"Choice's franchising business model continues to deliver strong revenue and earnings growth, as evidenced by our track record of outstanding results and total returns to shareholders, which have been in excess of 45% on an annualized basis over the past five years," said Charles A. Ledsinger, Jr., president and chief executive officer. "Choice has shown that it can generate solid, predictable growth in a wide variety of economic conditions and industry cycles, further underscoring the strength of our business model and the predictability of our business. As a result, we are confident that the combination of our sound operating strategies and the strength of the lodging and hospitality industry positions us well for continued top-line and bottom- line growth."

"We also are quite pleased with the significant increase in our new construction projects, particularly our new upscale Cambria Suites brand," continued Ledsinger. "Since we introduced the brand a little over a year ago, we have executed 23 contracts, including 10 in the first quarter of this year."

Outlook for 2006

The company's second quarter 2006 diluted EPS is expected to be $0.36 to $0.39. Full-year 2006 diluted EPS is expected to be $1.46 to $1.49. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is expected to be $175 million to $179 million for full-year 2006. These estimates include the following assumptions.

  *  The company expects net domestic unit growth of approximately 4% in
     2006;

  *  RevPAR is expected to increase 6% to 7.5% for second quarter 2006 and
     5.5% to 7% for full-year 2006;

  *  The effective royalty rate is expected to increase 3 basis points for
     full-year 2006;

  *  All figures assume the existing share count, include stock-based
     compensation expense and assume an effective tax rate of 36.5% for
     full-year 2006.

  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 quarter ended March 31, 2006, the company paid $8.4 million of cash dividends to shareholders. The annual dividend rate per common share is $0.52.

The company has remaining authorization to purchase up to 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 April 25, 2006. Considering the effect of the 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, April 26, 2006, at 10 a.m. EDT to discuss the company's first quarter 2006 results. The call-in number to listen to the call is 1-800-553-0351. The conference call also will be Web cast simultaneously via the company's Web site, http://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 http://www.choicehotels.com/ for those unable to listen to the call on April

26. The call will also be available for replay until May 26, 2006, by calling 1-800-475-6701 (access code 824816).

  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.

Two-for-One Stock Split

In October 2005, the company effected a two-for-one stock split of its outstanding shares of common stock, par value $.01 per share. Unless otherwise noted, all share information in this release and in the accompanying exhibits, including per share amounts, have been proportionally adjusted as if the two- for-one stock split had been effective as of the date or period presented.

About Choice Hotels

Choice Hotels International franchises more than 5,200 hotels, representing more than 425,000 rooms, in the United States and more than 40 countries and territories. As of March 31, 2006, 653 hotels are under development in the United States, representing 51,157 rooms, and an additional 69 hotels, representing 6,223 rooms, are under development in more than 20 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 http://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. For further information on factors that could impact Choice the statements contained therein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its form 10-K for the period ended December 31, 2005.

Statement Concerning Non-GAAP Financial Measurements

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 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.

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.

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


                                           Three Months Ended March 31,
                                                               Variance
                                          2006      2005       $       %
  (In thousands, except per share
   amounts)

  REVENUES:

    Royalty fees                         $39,864   $33,642   $6,222     18%
    Initial franchise and relicensing
     fees                                  5,643     4,311    1,332     31%
    Partner services                       2,782     2,640      142      5%
    Marketing and reservation             57,976    49,043    8,933     18%
    Hotel operations                         980       920       60      7%
    Other                                  2,173       612    1,561    255%
        Total revenues                   109,418    91,168   18,250     20%

  OPERATING EXPENSES:

    Selling, general and administrative   18,275    16,753    1,522      9%
    Depreciation and amortization          2,349     2,325       24      1%
    Marketing and reservation             57,976    49,043    8,933     18%
    Hotel operations                         745       748       (3)    (0%)
        Total operating expenses          79,345    68,869   10,476     15%

  Operating income                        30,073    22,299    7,774     35%

  OTHER INCOME AND EXPENSES:
    Interest expense                       4,040     3,607      433     12%
    Interest and other investment
     (income) loss                          (704)      131     (835)   637%
    Equity in net income of affiliates      (258)     (199)     (59)    30%
    Other                                      -      (133)     133   (100%)
        Total other income and
         expenses, net                     3,078     3,406     (328)   (10%)

  Income before income taxes              26,995    18,893    8,102     43%
  Income taxes                             9,330     6,894    2,436     35%
  Net income                             $17,665   $11,999   $5,666     47%


  Weighted average shares outstanding-
   basic                                  64,781    64,141

  Weighted average shares outstanding-
   diluted                                66,728    66,643

  Basic earnings per share                 $0.27     $0.19    $0.08     42%

  Diluted earnings per share               $0.26     $0.18    $0.08     44%



                    Choice Hotels International, Inc.
                       Consolidated Balance Sheets


  (In thousands)                                March 31,       December 31,
                                                  2006              2005
                                               (Unaudited)

  ASSETS

  Cash and cash equivalents                       $19,936           $16,921
  Accounts receivable, net                         34,313            37,155
  Deferred income taxes                             2,607             2,616
  Other current assets                              5,500             6,308
       Total current assets                        62,356            63,000

  Fixed assets and intangibles, net               147,689           150,376
  Receivable -- marketing fees                     22,875            13,225
  Investments, employee benefit plans,
   at fair value                                   27,441            23,337
  Other assets                                     13,569            15,162

             Total assets                        $273,930          $265,100


  LIABILITIES AND SHAREHOLDERS' DEFICIT

  Current portion of long-term debt               $10,146              $146
  Other current liabilities                       120,292           119,999
       Total current liabilities                  130,438           120,145

  Long-term debt                                  249,151           273,972
  Deferred compensation & retirement
   plan obligations                                33,308            28,987
  Other liabilities                                 8,643             9,172

       Total liabilities                          421,540           432,276

       Total shareholders' deficit               (147,610)         (167,176)

             Total liabilities and
              shareholders' deficit              $273,930          $265,100



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


  (In thousands)                              Three Months Ended March 31,

                                                 2006              2005
  CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income                                     $17,665           $11,999

  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
    Depreciation and amortization                  2,349             2,325
    Gain on sale of assets                             -              (133)
    Provision for bad debts                         (409)               15
    Non-cash stock compensation                    3,369             1,182
    Non-cash interest and other
     investment (income) loss                       (505)              289
    Equity in net income of affiliates              (258)             (199)

  Changes in assets and liabilities,
   net of acquisitions:
    Receivables                                    3,231            (2,021)
    Receivable - marketing and
     reservation fees, net                        (8,319)           (7,396)
    Accounts payable                               5,785             4,820
    Accrued expenses and other                    (8,665)           (3,595)
    Income taxes payable                             708             3,597
    Deferred income taxes                          1,799             1,542
    Deferred revenue                               2,450             2,023
    Other current assets                             808            (1,297)
    Other liabilities                              4,275             3,716

   NET CASH PROVIDED BY OPERATING
    ACTIVITIES                                    24,283            16,867

  CASH FLOWS FROM INVESTING ACTIVITIES:

  Investment in property and equipment            (1,193)           (2,993)
  Proceeds from disposition of assets                -               1,706
  Issuance of notes receivable                      (649)             (264)
  Proceeds from sales of investments                 859               941
  Purchases of investments                        (4,353)           (3,604)
  Other items, net                                   131              (266)

   NET CASH USED IN INVESTING
    ACTIVITIES                                    (5,205)           (4,480)

  CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments of long-term debt               (37)              (36)
  Net (repayments) borrowings pursuant
   to revolving credit facility                  (14,800)            4,097
  Stock-based compensation windfall tax
   benefits                                        5,050                 -
  Purchase of treasury stock                      (1,277)          (14,052)
  Dividends paid                                  (8,436)           (7,235)
  Proceeds from exercise of stock
   options                                         3,437             4,944

   NET CASH USED IN FINANCING
    ACTIVITIES                                   (16,063)          (12,282)

  Net change in cash and cash
   equivalents                                     3,015               105
  Cash and cash equivalents at
   beginning of period                            16,921            28,518

  CASH AND CASH EQUIVALENTS AT END OF
   PERIOD                                        $19,936           $28,623



                    CHOICE HOTELS INTERNATIONAL, INC.
                    SUPPLEMENTAL OPERATING INFORMATION
                          DOMESTIC HOTEL SYSTEM
                               (UNAUDITED)


                                   For the Three Months Ended March 31, 2006

                                         Average Daily
                                             Rate     Occupancy    RevPAR

  COMFORT INN                               $67.12      51.7%      $34.70

  COMFORT SUITES                             79.18      58.8%       46.58

  QUALITY                                    61.79      44.9%       27.77

  CLARION                                    76.25      42.5%       32.44

  SLEEP                                      62.00      51.8%       32.14

  MAINSTAY                                   65.31      57.0%       37.23

  ECONO LODGE                                48.54      39.0%       18.92

  RODEWAY                                    46.80      39.0%       18.23

  TOTAL DOMESTIC SYSTEM*                    $64.93      48.1%      $31.23


                                   For the Three Months Ended March 31, 2005

                                         Average Daily
                                             Rate     Occupancy    RevPAR

  COMFORT INN                               $63.34      49.5%      $31.37

  COMFORT SUITES                             73.50      55.5%       40.77

  QUALITY                                    59.22      43.7%       25.87

  CLARION                                    69.98      41.8%       29.24

  SLEEP                                      57.69      50.1%       28.90

  MAINSTAY                                   60.62      54.3%       32.92

  ECONO LODGE                                46.16      38.8%       17.92

  RODEWAY                                    45.34      39.4%       17.87

  TOTAL DOMESTIC SYSTEM*                    $61.21      46.6%      $28.54


                                                         Change

                                           Average Daily
                                               Rate     Occupancy   RevPAR

  COMFORT INN                                  6.0%      220 bps     10.6%

  COMFORT SUITES                               7.7%      330 bps     14.3%

  QUALITY                                      4.3%      120 bps      7.3%

  CLARION                                      9.0%       70 bps     10.9%

  SLEEP                                        7.5%      170 bps     11.2%

  MAINSTAY                                     7.7%      270 bps     13.1%

  ECONO LODGE                                  5.2%       20 bps      5.6%

  RODEWAY                                      3.2%      -40 bps      2.0%

  TOTAL DOMESTIC SYSTEM*                       6.1%      150 bps      9.4%


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


                                         For the Three Months Ended
                                          03/31/2006    03/31/2005

  System-wide effective royalty rate*        4.09%         4.08%



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


                                         March 31, 2006    March 31, 2005

                                          Hotels   Rooms    Hotels   Rooms

  COMFORT INN                            1,418   111,032   1,430   112,461

  COMFORT SUITES                           415    32,666     393    31,021

  QUALITY                                  670    66,657     594    60,545

  CLARION                                  151    23,157     154    23,058

  SLEEP                                    322    24,384     316    24,133

  MAINSTAY                                  27     2,047      27     2,150

  SUBURBAN                                  64     8,460       -         -

  ECONO LODGE                              818    50,144     788    49,043

  RODEWAY                                  185    11,387     166    10,219

  DOMESTIC FRANCHISES                    4,070   329,934   3,868   312,630

  INTERNATIONAL FRANCHISES               1,168    98,456   1,140    94,679

  TOTAL FRANCHISES                       5,238   428,390   5,008   407,309


                                                     Variance

                                          Hotels   Rooms       %        %

  COMFORT INN                              (12)   (1,429)   (0.8%)   (1.3%)

  COMFORT SUITES                            22     1,645     5.6%     5.3%

  QUALITY                                   76     6,112    12.8%    10.1%

  CLARION                                   (3)       99    (1.9%)    0.4%

  SLEEP                                      6       251     1.9%     1.0%

  MAINSTAY                                   -      (103)    0.0%    (4.8%)

  SUBURBAN                                  64     8,460      NM       NM

  ECONO LODGE                               30     1,101     3.8%     2.2%

  RODEWAY                                   19     1,168    11.4%    11.4%

  DOMESTIC FRANCHISES                      202    17,304     5.2%     5.5%

  INTERNATIONAL FRANCHISES                  28     3,777     2.5%     4.0%

  TOTAL FRANCHISES                         230    21,081     4.6%     5.2%



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


                        For the Three                   For the Three
                         Months Ended                   Months Ended
                        March 31, 2006                 March 31, 2005

                      New                          New
                 Construction Conversion Total Construction Conversion Total


  COMFORT INN        15         13        28         8        10        18

  COMFORT SUITES     12          -        12        13         -        13

  QUALITY             2         25        27         1        30        31

  CLARION             1          9        10         1         3         4

  SLEEP               3          -         3         7         1         8

  MAINSTAY            2          1         3         -         -         -

  SUBURBAN            3          -         3         -         -         -

  CAMBRIA            10          -        10         1         -         1

  ECONO LODGE         -          9         9         3        16        19

  RODEWAY             -         15        15         -         9         9

  TOTAL DOMESTIC
    SYSTEM           48         72       120        34        69       103



                                        % Change

                             New
                        Construction    Conversion      Total

  COMFORT INN                88%           30%           56%

  COMFORT SUITES             (8%)          NM            (8%)

  QUALITY                   100%          (17%)         (13%)

  CLARION                     0%          200%          150%

  SLEEP                     (57%)        (100%)         (63%)

  MAINSTAY                   NM            NM            NM

  SUBURBAN                   NM            NM            NM

  CAMBRIA                   900%           NM           900%

  ECONO LODGE              (100%)        (44%)          (53%)

  RODEWAY                    NM           67%            67%

  TOTAL DOMESTIC SYSTEM      41%           4%            17%



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


  CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

  (dollar amounts in thousands)         Three Months Ended March 31,
                                             2006        2005
    Franchising Revenues:

    Total Revenues                         $109,418     $91,168
    Adjustments:
         Marketing and reservation
          revenues                          (57,976)    (49,043)
         Hotel Operations                      (980)       (920)
    Franchising Revenues                    $50,462     $41,205

    Franchising Margins:

    Operating Margin:

    Total Revenues                         $109,418     $91,168
    Operating Income                        $30,073     $22,299
         Operating Margin                     27.5%       24.5%

    Franchising Margin:

    Franchising Revenues                    $50,462     $41,205

    Operating Income                        $30,073     $22,299
    Less: Hotel Operations                      235         172
                                            $29,838     $22,127

         Franchising Margins                  59.1%       53.7%


  EBITDA Reconciliation

  (in millions)
                                                                 Full-Year
                                          Q1 2006     Q1 2005      2006
                                          Actuals     Actuals     Outlook

    Operating Income (per GAAP)            $30.1       $22.3    $165 - $169
    Depreciation and amortization            2.3         2.3             10
    Earnings before interest, taxes,
     depreciation & amortization
     (non-GAAP)                            $32.4       $24.6    $175 - $179

SOURCE: Choice Hotels International, Inc.

CONTACT: Joseph M. Squeri, Executive Vice President, Operations and
Chief Financial Officer, +1-301-592-5006, or Anne Madison, Vice President,
Corporate Communications, +1-301-592-6723, both of Choice Hotels
International, Inc.