Press Releases

Choice Hotels Reports Record Results for Second Quarter 2006; Diluted EPS Up 12.5%, Net Income Up 12% Over Prior Year
PRNewswire-FirstCall
SILVER SPRING, Md.

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

    * Diluted earnings per share (EPS) increased 12.5% to $0.36, compared to
      $0.32 for second quarter 2005.

    * Net income grew 12% from $21.5 million in second quarter 2005 to $24.1
      million in the same period of this year.

    * Earnings before interest, taxes, depreciation and amortization
      ("EBITDA") increased 13% to $44.7 million from $39.7 million in second
      quarter 2005.

    * Operating income increased 13% to $42.1 million, compared to $37.4
      million for the same period in 2005.

    * Total revenues increased 15% to $140.5 million compared to the second
      quarter of 2005.

    * Domestic system-wide revenue per available room (RevPAR) increased
      7.7%, Average Daily Rate (ADR) increased 5.7% and occupancy rose 110
      basis points compared to the second quarter of 2005.

    * Domestic unit growth increased 4.8% compared to the second quarter
      2005 (excluding the 2005 acquisition of Suburban, domestic unit growth
      increased 3.2%).

    * Year-to-date contracts for new construction hotel franchises increased
      14% to 106; overall year-to-date new domestic hotel franchise
      contracts were comparable to the second quarter 2005, with 275
      contracts executed in 2006 as compared to 276 in the prior year's
      first two quarters.

    * Executed five contracts for new upscale Cambria Suites brand during
      the quarter, with 15 signed year-to-date and 28 since the brand was
      introduced in 2005.  First property in Boise, Idaho expected to open
      in December 2006.

    * The domestic hotel pipeline of hotels under construction, awaiting
      conversion or approved for development increased more than 45% from
      the prior year to 687 hotels, representing 53,765 rooms; an additional
      65 hotels, representing 5,993 rooms, were in the worldwide pipeline at
      June 30, 2006.

"We continue to focus on brand enhancements and are seeing strong growth in occupancy, average daily rate and RevPAR," said Charles A. Ledsinger, Jr., president and chief executive officer. "We are pleased with the substantial increase in year-to-date sales of our new construction brands, most notably with our Cambria Suites and Comfort Suites offerings."

"We believe that the inherent strength of our business model, the ongoing improvements to our core brands, and the expansion of our newest brands will enable us to drive top-line and bottom-line growth in a variety of economic cycles," Ledsinger added. "We are very pleased with the 13 percent increase in EBITDA over the prior year's second quarter and remain confident about the company's long-term prospects."

Outlook for 2006

The company's third quarter 2006 diluted EPS is expected to be $0.46. Full-year 2006 diluted EPS is expected to be $1.45. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is expected to be $175 million. These estimates include the following assumptions.

    * The company expects net domestic unit growth of approximately 4% in
      2006;
    * RevPAR is expected to increase 5% for third quarter 2006 and 6% 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% 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 six months ended June 30, 2006, the company paid $16.9 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 July 25, 2006. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 66.6 million shares at an average price of $10.69 per share.

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

Conference Call

Choice will conduct a conference call on Wednesday, July 26, 2006, at 10 a.m. EDT to discuss the company's second quarter 2006 results. The call-in number to listen to the call is 1-877-209-0397. 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 July 26. The call will also be available for replay until August 26, 2006, by calling 1-800-475-6701 (access code 832732).

  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 430,000 rooms, in the United States and more than 40 countries and territories. As of June 30, 2006, 687 hotels are under development in the United States, representing 53,765 rooms, and an additional 65 hotels, representing 5,993 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. The company's Form 10-K for the year ended December 31, 2005 details some of the important risk factors that you should review.

Statement Concerning Non-GAAP Financial Measurements

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.

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

                                            Three Months Ended June 30,
                                                                Variance
                                          2006      2005       $        %
  (In thousands, except per share amounts)

  REVENUES:

   Royalty fees                          $53,146   $46,515   $6,631     14%
   Initial franchise and relicensing
    fees                                   6,723     6,591      132      2%
   Partner services                        4,900     4,596      304      7%
   Marketing and reservation              72,742    62,610   10,132     16%
   Hotel operations                        1,180     1,141       39      3%
   Other                                   1,849       842    1,007    120%
        Total revenues                   140,540   122,295   18,245     15%

  OPERATING EXPENSES:

   Selling, general and administrative    22,242    19,199    3,043     16%
   Depreciation and amortization           2,642     2,256      386     17%
   Marketing and reservation              72,742    62,610   10,132     16%
   Hotel operations                          800       813      (13)    (2%)
        Total operating expenses          98,426    84,878   13,548     16%

  Operating income                        42,114    37,417    4,697     13%

  OTHER INCOME AND EXPENSES:
   Interest expense                        4,044     3,872      172      4%
   Interest and other investment
    (income) loss                            174      (404)     578   (143%)
   Equity in net income of affiliates       (130)     (155)      25    (16%)
   Loss on extinguishment of debt            342       -        342    NM
   Other                                     -         (53)      53   (100%)
        Total other income and
         expenses, net                     4,430     3,260    1,170     36%

  Income before income taxes              37,684    34,157    3,527     10%
  Income taxes                            13,548    12,609      939      7%
  Net income                             $24,136   $21,548   $2,588     12%


  Weighted average shares outstanding-
   basic                                  65,356    64,452

  Weighted average shares outstanding-
   diluted                                67,105    66,677

  Basic earnings per share                 $0.37     $0.33    $0.04     12%

  Diluted earnings per share               $0.36     $0.32    $0.04   12.5%



                                           Six Months Ended June 30,
                                                             Variance
                                         2006     2005       $       %
  (In thousands, except per share amounts)

  REVENUES:

   Royalty fees                         $93,010  $80,157  $12,853    16%
   Initial franchise and relicensing
    fees                                 12,366   10,902    1,464    13%
   Partner services                       7,682    7,236      446     6%
   Marketing and reservation            130,718  111,653   19,065    17%
   Hotel operations                       2,160    2,061       99     5%
   Other                                  4,022    1,454    2,568   177%
        Total revenues                  249,958  213,463   36,495    17%

  OPERATING EXPENSES:

   Selling, general and administrative   40,517   35,952    4,565    13%
   Depreciation and amortization          4,991    4,581      410     9%
   Marketing and reservation            130,718  111,653   19,065    17%
   Hotel operations                       1,545    1,561      (16)   (1%)
        Total operating expenses        177,771  153,747   24,024    16%

  Operating income                       72,187   59,716   12,471    21%

  OTHER INCOME AND EXPENSES:
   Interest expense                       8,084    7,479      605     8%
   Interest and other investment
    (income) loss                          (530)    (273)    (257)   94%
   Equity in net income of affiliates      (388)    (354)     (34)   10%
   Loss on extinguishment of debt           342        -      342   NM
   Other                                      -     (186)     186  (100%)
        Total other income and
          expenses, net                   7,508    6,666      842    13%

  Income before income taxes             64,679   53,050   11,629    22%
  Income taxes                           22,878   19,503    3,375    17%
  Net income                            $41,801  $33,547   $8,254    25%


  Weighted average shares outstanding-
   basic                                 65,070   64,297

  Weighted average shares outstanding-
   diluted                               66,925   66,498

  Basic earnings per share                $0.64    $0.52    $0.12    23%

  Diluted earnings per share              $0.62    $0.50    $0.12    24%



  Choice Hotels International, Inc.                               Exhibit 2
  Consolidated Balance Sheets

  (In thousands)                                June 30,        December 31,
                                                  2006              2005
                                               (Unaudited)

  ASSETS

  Cash and cash equivalents                       $21,658           $16,921
  Accounts receivable, net                         40,724            37,155
  Deferred income taxes                             2,620             2,616
  Other current assets                              6,728             6,308
       Total current assets                        71,730            63,000

  Fixed assets and intangibles, net               146,679           150,376
  Receivable -- marketing and
   reservation fees                                16,565            13,225
  Investments, employee benefit plans,
   at fair value                                   28,043            23,337
  Other assets                                     17,259            15,162

             Total assets                         280,276           265,100


  LIABILITIES AND SHAREHOLDERS' DEFICIT

  Current portion of long-term debt                   146               146
  Other current liabilities                       129,361           119,999
       Total current liabilities                  129,507           120,145

  Long-term debt                                  224,331           273,972
  Deferred compensation & retirement
   plan obligations                                35,147            28,987
  Other liabilities                                 9,314             9,172

       Total liabilities                          398,299           432,276

       Total shareholders' deficit               (118,023)         (167,176)

             Total liabilities and
              shareholders' deficit              $280,276          $265,100



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

  (In thousands)                                Six Months Ended June 30,

                                                  2006              2005
  CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income                                     $41,801           $33,547

  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                  4,991             4,581
    Gain on sale of assets                           -                (186)
    Provision for bad debts                         (127)               68
    Non-cash stock compensation                    5,550             2,561
    Non-cash interest and other investment
     (income) loss                                  (107)               87
    Loss on extinguishment of debt                   342               -
    Equity in net income of affiliates              (388)             (354)

  Changes in assets and liabilities:
    Receivables                                   (3,414)           (2,778)
    Receivable -- marketing and reservation
     fees, net                                       670            (5,754)
    Accounts payable                               8,404            10,109
    Accrued expenses and other                    (7,549)           (2,240)
    Income taxes payable                           4,815            13,610
    Deferred income taxes                         (1,912)              309
    Deferred revenue                               3,603             4,255
    Other current assets                            (420)              449
    Other liabilities                              6,200             5,014

   NET CASH PROVIDED BY OPERATING ACTIVITIES*     62,459            63,278

  CASH FLOWS FROM INVESTING ACTIVITIES:

  Investment in property and equipment            (4,045)           (8,023)
  Proceeds from disposition of assets                -               1,812
  Issuance of notes receivable                    (1,277)             (449)
  Proceeds from sales of investments               1,387             2,834
  Purchases of investments                        (5,784)           (6,508)
  Other items, net                                   232              (441)

   NET CASH USED IN INVESTING ACTIVITIES          (9,487)          (10,775)

  CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments of long-term debt               (73)              (73)
  Net repayments pursuant to revolving
   credit facility                               (49,600)          (23,704)
  Debt issuance costs                               (472)             (193)
  Excess tax benefits from stock-based
   compensation                                   11,983               -
  Purchase of treasury stock                      (1,132)          (18,843)
  Dividends paid                                 (16,925)          (14,494)
  Proceeds from exercise of stock options          7,984             9,255

   NET CASH USED IN FINANCING ACTIVITIES         (48,235)          (48,052)

  Net change in cash and cash equivalents          4,737             4,451
  Cash and cash equivalents at beginning of
   period                                         16,921            28,518

  CASH AND CASH EQUIVALENTS AT END OF PERIOD     $21,658           $32,969

* Net cash provided by operating activities for the six month ended June 30, 2005 includes approximately $6.0 million of excess tax benefits related to stock-based compensation. Effective January 1, 2006, the Company began reporting these excess tax benefits as cash flows from financing activities as a result of the adoption of Statement of Financial Accounting Standards no. 123R "Accounting for Stock-Based Compensation."

                                                                  EXHIBIT 4
                    CHOICE HOTELS INTERNATIONAL, INC.
                    SUPPLEMENTAL OPERATING INFORMATION
                          DOMESTIC HOTEL SYSTEM
                               (UNAUDITED)

                                    For the Six Months Ended June 30, 2006

                                        Average Daily
                                             Rate     Occupancy    RevPAR

  COMFORT INN                               $69.76      57.9%      $40.40

  COMFORT SUITES                             81.30      64.3%       52.24

  QUALITY                                    64.26      50.8%       32.63

  CLARION                                    77.11      48.1%       37.11

  SLEEP                                      64.64      58.6%       37.87

  MAINSTAY                                   66.48      63.7%       42.33

  ECONO LODGE                                50.52      43.3%       21.89

  RODEWAY                                    48.57      41.9%       20.33

  TOTAL DOMESTIC SYSTEM*                    $67.21      53.7%      $36.12


                                    For the Six Months Ended June 30, 2005

                                        Average Daily
                                             Rate     Occupancy    RevPAR

  COMFORT INN                               $65.58      55.7%      $36.51

  COMFORT SUITES                             75.65      61.5%       46.52

  QUALITY                                    62.17      49.5%       30.78

  CLARION                                    71.87      47.8%       34.35

  SLEEP                                      60.39      56.4%       34.06

  MAINSTAY                                   62.37      60.6%       37.80

  ECONO LODGE                                48.13      43.6%       21.00

  RODEWAY                                    46.22      43.4%       20.05

  TOTAL DOMESTIC SYSTEM*                    $63.51      52.5%      $33.32


                                                      Change

                                       Average Daily
                                            Rate     Occupancy     RevPAR

  COMFORT INN                                6.4%     220 bps       10.7%

  COMFORT SUITES                             7.5%     280 bps       12.3%

  QUALITY                                    3.4%     130 bps        6.0%

  CLARION                                    7.3%      30 bps        8.0%

  SLEEP                                      7.0%     220 bps       11.2%

  MAINSTAY                                   6.6%     310 bps       12.0%

  ECONO LODGE                                5.0%     -30 bps        4.2%

  RODEWAY                                    5.1%    -150 bps        1.4%

  TOTAL DOMESTIC SYSTEM*                     5.8%     120 bps        8.4%



                                    For the Three Months Ended June 30, 2006

                                        Average Daily
                                             Rate     Occupancy    RevPAR

  COMFORT INN                               $71.84      64.0%      $45.97

  COMFORT SUITES                             83.04      69.5%       57.72

  QUALITY                                    66.18      56.5%       37.36

  CLARION                                    77.77      53.5%       41.63

  SLEEP                                      66.69      65.2%       43.47

  MAINSTAY                                   67.43      70.3%       47.39

  ECONO LODGE                                52.09      47.5%       24.75

  RODEWAY                                    49.98      44.5%       22.23

  TOTAL DOMESTIC SYSTEM*                    $69.01      59.2%      $40.87


                                    For the Three Months Ended June 30, 2005

                                        Average Daily
                                             Rate     Occupancy    RevPAR

  COMFORT INN                               $67.32      61.7%      $41.51

  COMFORT SUITES                             77.37      67.3%       52.09

  QUALITY                                    64.39      55.0%       35.44

  CLARION                                    73.33      53.8%       39.46

  SLEEP                                      62.49      62.5%       39.07

  MAINSTAY                                   63.75      66.7%       42.55

  ECONO LODGE                                49.68      48.4%       24.05

  RODEWAY                                    46.93      47.2%       22.15

  TOTAL DOMESTIC SYSTEM*                    $65.30      58.1%      $37.95


                                                      Change

                                       Average Daily
                                            Rate     Occupancy    RevPAR

  COMFORT INN                                6.7%     230 bps      10.7%

  COMFORT SUITES                             7.3%     220 bps      10.8%

  QUALITY                                    2.8%     150 bps       5.4%

  CLARION                                    6.1%     -30 bps       5.5%

  SLEEP                                      6.7%     270 bps      11.3%

  MAINSTAY                                   5.8%     360 bps      11.4%

  ECONO LODGE                                4.9%     -90 bps       2.9%

  RODEWAY                                    6.5%    -270 bps       0.4%

  TOTAL DOMESTIC SYSTEM*                     5.7%     110 bps       7.7%


  * Amounts exclude Suburban activity from January 1, 2006 through June 30,
    2006 because comparable pre-acquisition data for Q2 2005 is not
    available.


                           For the Quarter Ended    For the Six Months Ended
                          6/30/2006    6/30/2005      6/30/2006   6/30/2005

  System-wide effective
   royalty rate              4.12%        4.09%          4.10%       4.08%





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

                                         June 30, 2006     June 30, 2005

                                        Hotels    Rooms   Hotels    Rooms

  COMFORT INN                            1,411   110,440   1,448   114,023

  COMFORT SUITES                           417    32,786     402    31,648

  QUALITY                                  692    68,407     612    61,783

  CLARION                                  157    23,262     155    23,543

  SLEEP                                    320    24,133     317    24,169

  MAINSTAY                                  27     2,047      28     2,189

  SUBURBAN                                  64     8,439       -         -

  ECONO LODGE                              825    50,673     795    49,741

  RODEWAY                                  203    12,469     169    10,381

  DOMESTIC FRANCHISES                    4,116   332,656   3,926   317,477

  INTERNATIONAL FRANCHISES               1,168    98,818   1,161    97,211

  TOTAL FRANCHISES                       5,284   431,474   5,087   414,688


                                                     Variance

                                         Hotels   Rooms       %        %

  COMFORT INN                              (37)   (3,583)   (2.6%)   (3.1%)

  COMFORT SUITES                            15     1,138     3.7%     3.6%

  QUALITY                                   80     6,624    13.1%    10.7%

  CLARION                                    2      (281)    1.3%    (1.2%)

  SLEEP                                      3       (36)    0.9%    (0.1%)

  MAINSTAY                                  (1)     (142)   (3.6%)   (6.5%)

  SUBURBAN                                  64     8,439     NM       NM

  ECONO LODGE                               30       932     3.8%     1.9%

  RODEWAY                                   34     2,088    20.1%    20.1%

  DOMESTIC FRANCHISES                      190    15,179     4.8%     4.8%

  INTERNATIONAL FRANCHISES                   7     1,607     0.6%     1.7%

  TOTAL FRANCHISES                         197    16,786     3.9%     4.0%


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

                                      For the Six Months Ended June 30, 2006

                                             New
                                         Construction   Conversion     Total

  COMFORT INN                                   24          18          42

  COMFORT SUITES                                41           2          43

  QUALITY                                        5          57          62

  CLARION                                        1          18          19

  SLEEP                                         10           -          10

  MAINSTAY                                       3           1           4

  SUBURBAN                                       6           2           8

  CAMBRIA SUITES                                15           -          15

  ECONO LODGE                                    -          23          23

  RODEWAY                                        1          48          49

  TOTAL DOMESTIC SYSTEM                        106         169         275


                                      For the Six Months Ended June 30, 2005

                                            New
                                        Construction   Conversion     Total

  COMFORT INN                                  20          25          45

  COMFORT SUITES                               29           3          32

  QUALITY                                       2          72          74

  CLARION                                       1           8           9

  SLEEP                                        22           1          23

  MAINSTAY                                      9           -           9

  SUBURBAN                                      -           -           -

  CAMBRIA SUITES                                6           -           6

  ECONO LODGE                                   4          49          53

  RODEWAY                                       -          25          25

  TOTAL DOMESTIC SYSTEM                        93         183         276


                                                    % Change

                                            New
                                       Construction   Conversion     Total

  COMFORT INN                                  20%        (28%)       (7%)

  COMFORT SUITES                               41%        (33%)       34%

  QUALITY                                     150%        (21%)      (16%)

  CLARION                                       0%        125%       111%

  SLEEP                                       (55%)      (100%)      (57%)

  MAINSTAY                                    (67%)      NM          (56%)

  SUBURBAN                                   NM          NM         NM

  CAMBRIA SUITES                              150%       NM          150%

  ECONO LODGE                                (100%)       (53%)      (57%)

  RODEWAY                                    NM            92%        96%

  TOTAL DOMESTIC SYSTEM                        14%         (8%)       (0%)


                                    For the Three Months Ended June 30, 2006

                                             New
                                        Construction   Conversion     Total

  COMFORT INN                                   9           5          14

  COMFORT SUITES                               29           2          31

  QUALITY                                       3          32          35

  CLARION                                       -           9           9

  SLEEP                                         7           -           7

  MAINSTAY                                      1           -           1

  SUBURBAN                                      3           2           5

  CAMBRIA                                       5           -           5

  ECONO LODGE                                   -          14          14

  RODEWAY                                       1          33          34

  TOTAL DOMESTIC SYSTEM                        58          97         155



                                    For the Three Months Ended June 30, 2005

                                             New
                                        Construction   Conversion     Total

  COMFORT INN                                  12          15          27

  COMFORT SUITES                               16           3          19

  QUALITY                                       1          42          43

  CLARION                                       -           5           5

  SLEEP                                        15           -          15

  MAINSTAY                                      9           -           9

  SUBURBAN                                      -           -           -

  CAMBRIA                                       5           -           5

  ECONO LODGE                                   1          33          34

  RODEWAY                                       -          16          16

  TOTAL DOMESTIC SYSTEM                        59         114         173


                                                    % Change

                                            New
                                        Construction   Conversion     Total


  COMFORT INN                                 (25%)       (67%)      (48%)

  COMFORT SUITES                               81%        (33%)       63%

  QUALITY                                     200%        (24%)      (19%)

  CLARION                                    NM            80%        80%

  SLEEP                                       (53%)      NM          (53%)

  MAINSTAY                                    (89%)      NM          (89%)

  SUBURBAN                                   NM          NM         NM

  CAMBRIA                                       0%       NM            0%

  ECONO LODGE                                (100%)       (58%)      (59%)

  RODEWAY                                    NM           106%       113%

  TOTAL DOMESTIC SYSTEM                        (2%)       (15%)      (10%)



                                                                  EXHIBIT 7
                    CHOICE HOTELS INTERNATIONAL, INC.
               SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
                               (UNAUDITED)

  CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

                                    Three Months Ended   Six Months Ended
  (dollar amounts in thousands)          June 30,            June 30,

                                      2006      2005      2006      2005
    Franchising Revenues:

    Total Revenues                  $140,540  $122,295  $249,958  $213,463
    Adjustments:
         Marketing and reservation
          revenues                   (72,742)  (62,610) (130,718) (111,653)
         Hotel Operations             (1,180)   (1,141)   (2,160)   (2,061)
    Franchising Revenues             $66,618   $58,544  $117,080   $99,749

    Franchising Margins:

    Operating Margin:

    Total Revenues                  $140,540  $122,295  $249,958  $213,463
    Operating Income                 $42,114   $37,417   $72,187   $59,716
         Operating Margin              30.0%     30.6%     28.9%     28.0%

    Franchising Margin:

    Franchising Revenues             $66,618   $58,544  $117,080   $99,749

    Operating Income                 $42,114   $37,417   $72,187   $59,716
    Less: Hotel Operations               380       328       615       500
                                     $41,734   $37,089   $71,572   $59,216

         Franchising Margins           62.6%     63.4%     61.1%     59.4%



  CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE
  (EPS)

  (In thousands, except per share       Three Months Ended Six Months Ended
   amounts)                                  June 30,          June 30,

                                          2006     2005     2006     2005

  Net Income                             $24,136  $21,548  $41,801  $33,547
  Adjustments:
    Loss on Debt Extinguishment Costs        217      -        217      -
  Adjusted Net Income                    $24,353  $21,548  $42,018  $33,547

  Weighted average shares outstanding-
   diluted                                67,105   66,677   66,925   66,498

  Diluted Earnings Per Share               $0.36    $0.32    $0.62    $0.50
  Adjustments:
    Loss on Debt Extinguishment Costs        -        -       0.01      -
  Adjusted Diluted Earnings Per Share
   (EPS)                                   $0.36    $0.32    $0.63    $0.50



  EBITDA Reconciliation

  (in millions)
                                                                  Full-Year
                                             Q2 2006    Q2 2005     2006
                                             Actuals    Actuals    Outlook

    Operating Income (per GAAP)                $42.1      $37.4     $164.9
    Depreciation and amortization                2.6        2.3       10.1
    Earnings before interest, taxes,
     depreciation & amortization (non-GAAP)    $44.7      $39.7     $175.0

SOURCE: Choice Hotels International

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