Press Releases

Choice Hotels Reports Record Results for Third Quarter 2006; Adjusted Diluted EPS Up 16%, New Domestic Hotel Franchise Contracts Up 24% Over Prior Year
Domestic Hotel Pipeline Includes 736 Hotels, Representing More Than 57,000 Rooms
PRNewswire-FirstCall
SILVER SPRING, Md.

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

  *  Adjusted diluted earnings per share (EPS) for the third quarter
     increased 16% to $0.50, compared to adjusted diluted EPS of $0.43 for
     the third quarter 2005. Diluted EPS for the third quarter 2006 was
     $0.69, compared to $0.48 for the same period in 2005.

  *  Earnings before interest, taxes, depreciation and amortization
     ("EBITDA") increased 14% to $56.9 million from $50.0 million in third
     quarter 2005.

  *  Operating income increased 14% to $54.6 million, compared to $47.8
     million for the same period in 2005.

  *  New domestic hotel franchise contracts in the third quarter of 2006
     increased 24% to 178 over the prior year.

  *  Initial franchise and relicensing fees increased 34% for third quarter
     2006.

  *  Royalty revenues rose 11% and franchising revenues increased 13% for
     third quarter 2006.

  *  Domestic system-wide RevPAR increased approximately 5% for the quarter
     and approximately 7% year-to-date. Domestic revenue per available room
     (RevPAR) for the Company's midscale without food and beverage brands
     increased approximately 7% for the quarter and approximately 10% year-
     to-date.

  *  The domestic hotel pipeline of hotels under construction, awaiting
     conversion or approved for development increased more than 48% to 736
     hotels representing 57,117 rooms; the worldwide pipeline increased 39%
     to 808 hotels representing 63,579 rooms.

  *  Domestic unit growth increased 3.2% compared to third quarter 2005.

  *  Five new contracts executed for the upscale Cambria Suites brand during
     the quarter, with 20 signed year-to-date and 33 since the brand was
     introduced in 2005.

"The strong growth we are seeing in domestic franchise contracts for both new construction and conversion hotels demonstrates that the demand for our brands is strong," said Charles A. Ledsinger, Jr., vice chairman and chief executive officer. "As a result, we remain confident in our ability to achieve our long-term growth objectives by leveraging the combined strength of our high-caliber management team, sound business strategies and brand-centric organization to benefit our shareholders, franchisees, hotel guests and associates."

Outlook for 2006

The company's fourth quarter 2006 diluted EPS is expected to be $0.34. The company expects full year 2006 adjusted diluted EPS of $1.47, which excludes the effect of the reversal of provisions for certain income tax contingencies and the loss on extinguishment of debt described below. The company's full year 2006 diluted EPS is expected to be $1.66. 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 4.5% for fourth quarter 2006 and 5.5%
     for full-year 2006;

  *  The effective royalty rate is expected to increase 2 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
     fourth quarter 2006.

  Adjusted Net Income and Diluted EPS

Net income and diluted earnings per share for the three and nine months ended September 30, 2006 include a reduction of income tax expense related to reversal of provisions for certain income tax contingencies of approximately $12.8 million and $12.6 million, respectively. Net income and diluted earnings per share for the nine months ended September 30, 2006 also include a loss of approximately $0.3 million ($0.2 million, net of the related tax effect) related to the extinguishment of debt. Those items represent diluted EPS of $0.19, net, for the three and nine months ended September 30, 2006. Adjusted diluted EPS and adjusted net income for the three and nine months ended September 30, 2006 exclude these items.

Net income and diluted earnings per share for the three and nine months ended September 30, 2005 include additional income tax expense of approximately $1.2 million related to the Company's plan to repatriate approximately $23.5 million of foreign earnings pursuant to the American Jobs Creation Act and a reduction of income tax expense related to the resolution of certain tax contingencies of approximately $4.9 million. Those items represent diluted EPS of $0.05, net, for the three and nine months ended September 30, 2005. Adjusted diluted EPS and adjusted net income for the three and nine months ended September 30, 2005 exclude these items.

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 nine months ended September 30, 2006, the company paid $25.5 million of cash dividends to shareholders. The annual dividend rate per common share was increased 15% by the Board of Directors in September and is now $0.60.

The company has authorization to purchase up to an additional 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 October 30, 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 Tuesday, October 31, 2006, at 10 a.m. EST to discuss the company's third quarter 2006 results. The call-in number to listen to the call is 1-877-209-0397. International callers should dial 612-288-0329. 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 October 31st. The call will also be available for replay until November 30, 2006, by calling 1-800-475-6701 (access code 842696). International callers should dial 320-365-3844 and enter access code 842696

  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.

About Choice Hotels

Choice Hotels International franchises more than 5,300 hotels, representing more than 430,000 rooms, in the United States and more than 40 countries and territories. As of September 30, 2006, 736 hotels are under development in the United States, representing 57,117 rooms, and an additional 72 hotels, representing 6,462 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.

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


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

  REVENUES:

   Royalty fees                           $64,364  $58,063   $6,301    11%
   Initial franchise and
    relicensing fees                        7,733    5,769    1,964    34%
   Partner services                         3,171    3,122       49     2%
   Marketing and reservation               73,001   72,841      160     0%
   Hotel operations                         1,182    1,153       29     3%
   Other                                    1,545    1,003      542    54%
        Total revenues                    150,996  141,951    9,045     6%

  OPERATING EXPENSES:

   Selling, general and administrative     20,279   18,311    1,968    11%
   Depreciation and amortization            2,344    2,188      156     7%
   Marketing and reservation               73,001   72,841      160     0%
   Hotel operations                           820      824       (4)   (0%)
        Total operating expenses           96,444   94,164    2,280     2%

  Operating income                         54,552   47,787    6,765    14%

  OTHER INCOME AND EXPENSES:
   Interest expense                         3,207    3,815     (608)  (16%)
   Interest and other investment
    (income) loss                            (569)    (721)     152   (21%)
   Equity in net income of affiliates        (349)    (267)     (82)   31%
   Loss on extinguishment of debt             -        -          -    NM
   Other                                      -       (197)     197  (100%)
        Total other income and
         expenses, net                      2,289    2,630     (341)  (13%)

  Income before income taxes               52,263   45,157    7,106    16%
  Income taxes                              5,906   12,691   (6,785)  (53%)
  Net income                              $46,357  $32,466  $13,891    43%


  Weighted average shares outstanding-
   basic                                   65,668   64,756

  Weighted average shares outstanding-
   diluted                                 67,152   66,963

  Basic earnings per share                  $0.71    $0.50    $0.21    42%

  Diluted earnings per share                $0.69    $0.48    $0.21    44%



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

  REVENUES:

   Royalty fees                          $157,374  $138,220  $19,154    14%
   Initial franchise and
    relicensing fees                       20,099    16,671    3,428    21%
   Partner services                        10,853    10,358      495     5%
   Marketing and reservation              203,719   184,494   19,225    10%
   Hotel operations                         3,342     3,214      128     4%
   Other                                    5,567     2,457    3,110   127%
        Total revenues                    400,954   355,414   45,540    13%

  OPERATING EXPENSES:

   Selling, general and administrative     60,796    54,263    6,533    12%
   Depreciation and amortization            7,335     6,769      566     8%
   Marketing and reservation              203,719   184,494   19,225    10%
   Hotel operations                         2,365     2,385      (20)   (1%)
        Total operating expenses          274,215   247,911   26,304    11%

  Operating income                        126,739   107,503   19,236    18%

  OTHER INCOME AND EXPENSES:
   Interest expense                        11,291    11,294       (3)   (0%)
   Interest and other investment
    (income) loss                          (1,099)     (994)    (105)   11%
   Equity in net income of affiliates        (737)     (621)    (116)   19%
   Loss on extinguishment of debt             342         -      342    NM
   Other                                        -      (383)     383  (100%)
        Total other income and
         expenses, net                      9,797     9,296      501     5%

  Income before income taxes              116,942    98,207   18,735    19%
  Income taxes                             28,784    32,194   (3,410)  (11%)
  Net income                              $88,158   $66,013  $22,145    34%


  Weighted average shares outstanding-
   basic                                   65,272    64,452

  Weighted average shares outstanding-
   diluted                                 67,009    66,630

  Basic earnings per share                  $1.35     $1.02    $0.33    32%

  Diluted earnings per share                $1.32     $0.99    $0.33    33%



  Choice Hotels International, Inc.                               Exhibit 2
  Consolidated Balance Sheets


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

  ASSETS

  Cash and cash equivalents                       $27,078           $16,921
  Accounts receivable, net                         45,280            37,155
  Deferred income taxes                             2,622             2,616
  Other current assets                              6,000             6,308
       Total current assets                        80,980            63,000

  Fixed assets and intangibles, net               144,170           150,376
  Receivable -- marketing fees                      4,675            13,225
  Investments, employee benefit plans,
   at fair value                                   29,096            23,337
  Other assets                                     27,347            15,162

             Total assets                         286,268           265,100



  LIABILITIES AND SHAREHOLDERS' DEFICIT

  Current portion of long-term debt                   146               146
  Other current liabilities                       128,845           119,999
       Total current liabilities                  128,991           120,145

  Long-term debt                                  187,411           273,972
  Deferred compensation & retirement
   plan obligations                                35,464            28,987
  Other liabilities                                12,709             9,172

       Total liabilities                          364,575           432,276

       Total shareholders' deficit                (78,307)         (167,176)

             Total liabilities and
              shareholders' deficit              $286,268          $265,100



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



  (In thousands)                             Nine Months Ended September 30,

                                                   2006              2005
  CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income                                         $88,158        $66,013

  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                      7,335          6,769
    Gain on sale of assets                               -             (383)
    Provision for bad debts                               35            102
    Non-cash stock compensation and other charges      8,250          3,877
    Non-cash interest and other investment income       (385)          (346)
    Loss on extinguishment of debt                       342            -
    Equity in net income of affiliates                  (737)          (621)

  Changes in assets and liabilities,
   net of acquisitions:
    Receivables                                       (8,149)        (8,089)
    Receivable - marketing and
     reservation fees, net                            18,585         13,351
    Accounts payable                                  (2,227)        (1,545)
    Accrued expenses and other                       (17,237)         5,041
    Income taxes payable                              19,776         23,842
    Deferred income taxes                            (12,319)        (7,006)
    Deferred revenue                                   7,142          4,000
    Other assets                                         476             87
    Other liabilities                                  5,888         (6,179)

   NET CASH PROVIDED BY OPERATING ACTIVITIES*        114,933         98,913

  CASH FLOWS FROM INVESTING ACTIVITIES:

  Investment in property and equipment                (5,281)       (10,242)
  Proceeds from disposition of assets                    -            2,811
  Issuance of notes receivable                        (1,780)        (1,456)
  Proceeds from sales of investments                   2,885          3,239
  Purchases of investments                            (7,976)        (7,723)
  Acquisition of Suburban, net of cash acquired          -           (7,345)
  Other items, net                                       570           (515)

   NET CASH USED IN INVESTING ACTIVITIES             (11,582)       (21,231)

  CASH FLOWS FROM FINANCING ACTIVITIES:

  Principal payments of long-term debt                  (109)          (109)
  Net repayments pursuant to revolving
   credit facility                                   (86,500)       (32,604)
  Debt issuance costs                                   (477)          (193)
  Excess tax benefits from stock-based compensation   12,550            -
  Purchase of treasury stock                          (1,326)       (23,935)
  Dividends paid                                     (25,494)       (21,813)
  Proceeds from exercise of stock options              8,162          9,705

   NET CASH USED IN FINANCING ACTIVITIES             (93,194)       (68,949)

  Net change in cash and cash equivalents             10,157          8,733
  Cash and cash equivalents at
   beginning of period                                16,921         28,518

  CASH AND CASH EQUIVALENTS AT END OF PERIOD         $27,078        $37,251

  * Net cash provided by operating activities for the nine months ended
    September 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"




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

                                              For the Nine Months Ended
                                                 September 30, 2006

                                        Average Daily
                                             Rate     Occupancy    RevPAR

  Comfort Inn                               $73.06      62.9%      $45.92
  Comfort Suites                             83.12      67.4%       55.99
  Sleep                                      66.58      62.3%       41.48
     Midscale without Food & Beverage        74.22      63.7%       47.25

  Quality                                    67.27      55.6%       37.40
  Clarion                                    79.18      51.2%       40.56
     Midscale with Food & Beverage           70.10      54.5%       38.20

  Econo Lodge                                53.21      47.7%       25.38
  Rodeway                                    52.32      46.7%       24.44
     Economy                                 53.05      47.5%       25.20

  MainStay                                   67.39      68.2%       45.97

  Total Domestic System*                    $69.86      58.1%      $40.60



                                              For the Nine Months Ended
                                                  September 30, 2005

                                         Average Daily
                                             Rate     Occupancy    RevPAR

  Comfort Inn                               $68.85      61.1%      $42.05
  Comfort Suites                             77.59      65.6%       50.91
  Sleep                                      62.46      60.7%       37.91
     Midscale without Food & Beverage        69.68      61.9%       43.11

  Quality                                    65.37      54.4%       35.57
  Clarion                                    74.25      52.0%       38.59
     Midscale with Food & Beverage           67.71      53.8%       36.39

  Econo Lodge                                50.99      48.3%       24.64
  Rodeway                                    50.57      47.4%       23.99
     Economy                                 50.92      48.2%       24.53

  MainStay                                   64.48      64.9%       41.84

  Total Domestic System*                    $66.33      57.3%      $37.99



                                                          Change

                                           Average Daily
                                               Rate     Occupancy  RevPAR

  Comfort Inn                                  6.1%      180 bps     9.2%
  Comfort Suites                               7.1%      180 bps    10.0%
  Sleep                                        6.6%      160 bps     9.4%
     Midscale without Food & Beverage          6.5%      180 bps     9.6%

  Quality                                      2.9%      120 bps     5.1%
  Clarion                                      6.6%      -80 bps     5.1%
     Midscale with Food & Beverage             3.5%       70 bps     5.0%

  Econo Lodge                                  4.4%      -60 bps     3.0%
  Rodeway                                      3.5%      -70 bps     1.9%
     Economy                                   4.2%      -70 bps     2.7%

  MainStay                                     4.5%      330 bps     9.9%

  Total Domestic System*                       5.3%       80 bps     6.9%



                                              For the Three Months Ended
                                                 September 30, 2006

                                         Average Daily
                                             Rate      Occupancy   RevPAR

  Comfort Inn                               $78.25      72.6%      $56.79
  Comfort Suites                             86.19      73.3%       63.22
  Sleep                                      69.80      69.6%       48.61
     Midscale without Food & Beverage        78.67      72.3%       56.88

  Quality                                    71.73      64.7%       46.42
  Clarion                                    82.51      57.1%       47.14
     Midscale with Food & Beverage           74.19      62.8%       46.60

  Econo Lodge                                57.22      56.1%       32.11
  Rodeway                                    57.14      54.9%       31.38
     Economy                                 57.20      55.9%       31.96

  MainStay                                   68.86      77.1%       53.12

  Total Domestic System*                    $73.99      66.5%      $49.23



                                           For the Three Months Ended
                                               September 30, 2005

                                         Average Daily
                                             Rate     Occupancy    RevPAR

  Comfort Inn                               $73.81      71.6%      $52.87
  Comfort Suites                             80.71      73.5%       59.32
  Sleep                                      65.77      69.1%       45.43
     Midscale without Food & Beverage        74.03      71.6%       53.02

  Quality                                    69.99      63.5%       44.42
  Clarion                                    77.94      60.1%       46.87
     Midscale with Food & Beverage           72.01      62.6%       45.07

  Econo Lodge                                55.11      57.1%       31.49
  Rodeway                                    56.80      54.8%       31.10
     Economy                                 55.38      56.7%       31.42

  MainStay                                   67.97      73.4%       49.89

  Total Domestic System*                    $70.59      66.5%      $46.93



                                                          Change

                                          Average Daily
                                               Rate     Occupancy  RevPAR

  Comfort Inn                                  6.0%      100 bps     7.4%
  Comfort Suites                               6.8%      -20 bps     6.6%
  Sleep                                        6.1%       50 bps     7.0%
     Midscale without Food & Beverage          6.3%       70 bps     7.3%

  Quality                                      2.5%      120 bps     4.5%
  Clarion                                      5.9%     -300 bps     0.6%
     Midscale with Food & Beverage             3.0%       20 bps     3.4%

  Econo Lodge                                  3.8%     -100 bps     2.0%
  Rodeway                                      0.6%       10 bps     0.9%
     Economy                                   3.3%      -80 bps     1.7%

  MainStay                                     1.3%      370 bps     6.5%

  Total Domestic System*                       4.8%        0 bps     4.9%


  * Amounts exclude Suburban activity from January 1, 2006 through September
    30, 2006 because comparable pre-acquisition data for Q3 2005 is not
    available


                                    For the Quarter      For the Nine Months
                                         Ended                 Ended
                                9/30/2006  9/30/2005   9/30/2006  9/30/2005

  System-wide effective
   royalty rate                   4.08%      4.07%       4.09%      4.08%



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

                                          Sept. 30, 2006      Sept. 30, 2005

                                           Hotels   Rooms    Hotels   Rooms

  Comfort Inn                             1,411   110,525   1,440   112,903
  Comfort Suites                            427    33,573     410    32,142
  Sleep                                     327    24,609     316    24,032
      Midscale without Food & Beverage    2,165   168,707   2,166   169,077

  Quality                                   709    69,699     644    64,908
  Clarion                                   160    23,733     148    22,685
      Midscale with Food & Beverage         869    93,432     792    87,593

  Econo Lodge                               815    50,013     803    49,851
  Rodeway                                   217    13,245     172    10,646
       Economy                            1,032    63,258     975    60,497

  MainStay                                   27     2,046      28     2,190
  Suburban                                   64     8,441      67     8,942
       Extended Stay                         91    10,487      95    11,132

  Domestic Franchises                     4,157   335,884   4,028   328,299

  International Franchises                1,171    98,811   1,167    98,058

  Total Franchises                        5,328   434,695   5,195   426,357


                                                      Variance

                                          Hotels    Rooms       %        %

  Comfort Inn                               (29)   (2,378)   (2.0%)   (2.1%)
  Comfort Suites                             17     1,431     4.1%     4.5%
  Sleep                                      11       577     3.5%     2.4%
      Midscale without Food & Beverage       (1)     (370)   (0.0%)   (0.2%)

  Quality                                    65     4,791    10.1%     7.4%
  Clarion                                    12     1,048     8.1%     4.6%
      Midscale with Food & Beverage          77     5,839     9.7%     6.7%

  Econo Lodge                                12       162     1.5%     0.3%
  Rodeway                                    45     2,599    26.2%    24.4%
       Economy                               57     2,761     5.8%     4.6%

  MainStay                                   (1)     (144)   (3.6%)   (6.6%)
  Suburban                                   (3)     (501)   (4.5%)   (5.6%)
       Extended Stay                         (4)     (645)   (4.2%)   (5.8%)

  Domestic Franchises                       129     7,585     3.2%     2.3%

  International Franchises                    4       753     0.3%     0.8%

  Total Franchises                          133     8,338     2.6%     2.0%


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

                                                For the Nine Months Ended
                                                   September 30, 2006

                                                New
                                            Construction Conversion    Total

  Comfort Inn                                    38          43          81
  Comfort Suites                                 55           3          58
  Sleep                                          27           1          28
       Midscale without Food & Beverage         120          47         167

  Quality                                         5         100         105
  Clarion                                         1          22          23
       Midscale with Food & Beverage              6         122         128

  Econo Lodge                                     -          43          43
  Rodeway                                         2          73          75
       Economy                                    2         116         118

  MainStay                                        5           1           6
  Suburban                                        9           5          14
       Extended Stay                             14           6          20

  Cambria Suites                                 20           -          20

  Total Domestic System                         162         291         453


                                                For the Nine Months Ended
                                                    September 30, 2005

                                                 New
                                            Construction Conversion    Total

  Comfort Inn                                    33          40          73
  Comfort Suites                                 42           4          46
  Sleep                                          36           1          37
       Midscale without Food & Beverage         111          45         156

  Quality                                         4         112         116
  Clarion                                         2          15          17
       Midscale with Food & Beverage              6         127         133

  Econo Lodge                                     4          61          65
  Rodeway                                         -          47          47
       Economy                                    4         108         112

  MainStay                                       10           -          10
  Suburban                                        -           -           -
       Extended Stay                             10           -          10

  Cambria Suites                                  8           -           8

  Total Domestic System                         139         280         419


                                                        % Change

                                                New
                                           Construction  Conversion  Total

  Comfort Inn                                   15%         8%        11%
  Comfort Suites                                31%       (25%)       26%
  Sleep                                        (25%)        0%       (24%)
       Midscale without Food & Beverage          8%         4%         7%

  Quality                                       25%       (11%)       (9%)
  Clarion                                      (50%)       47%        35%
       Midscale with Food & Beverage             0%        (4%)       (4%)

  Econo Lodge                                 (100%)      (30%)      (34%)
  Rodeway                                       NM         55%        60%
       Economy                                 (50%)        7%         5%

  MainStay                                     (50%)       NM        (40%)
  Suburban                                      NM         NM         NM
       Extended Stay                            40%        NM        100%

  Cambria Suites                               150%        NM        150%

  Total Domestic System                         17%         4%         8%


                               For the Three Months Ended September 30, 2006

                                       New
                                    Construction   Conversion       Total

  Comfort Inn                          14              25            39
  Comfort Suites                       14               1            15
  Sleep                                17               1            18
    Midscale without Food & Beverage   45              27            72

  Quality                               -              43            43
  Clarion                               -               4             4
    Midscale w/ Food & Beverage         -              47            47

  Econo Lodge                           -              20            20
  Rodeway                               1              25            26
    Economy                             1              45            46

  MainStay                              2               -             2
  Suburban                              3               3             6
    Extended Stay                       5               3             8

  Cambria Suites                        5               -             5

  Total Domestic System                56             122           178



                               For the Three Months Ended September 30, 2005

                                      New
                                   Construction     Conversion      Total

  Comfort Inn                          13              15            28
  Comfort Suites                       13               1            14
  Sleep                                14               -            14
    Midscale without Food & Beverage   40              16            56

  Quality                               2              40            42
  Clarion                               1               7             8
    Midscale w/ Food & Beverage         3              47            50

  Econo Lodge                           -              12            12
  Rodeway                               -              22            22
    Economy                             -              34            34

  MainStay                              1               -             1
  Suburban                              -               -             -
    Extended Stay                       1               -             1

  Cambria Suites                        2               -             2

  Total Domestic System                46              97           143


                                                    % Change

                                       New
                                    Construction   Conversion      Total

  Comfort Inn                          8%             67%           39%
  Comfort Suites                       8%              0%            7%
  Sleep                               21%              NM           29%
    Midscale without Food & Beverage  13%             69%           29%

  Quality                           (100%)             8%            2%
  Clarion                           (100%)           (43%)         (50%)
    Midscale w/ Food & Beverage     (100%)             0%           (6%)

  Econo Lodge                          NM             67%           67%
  Rodeway                              NM             14%           18%
    Economy                            NM             32%           35%

  MainStay                           100%              NM          100%
  Suburban                             NM              NM            NM
    Extended Stay                    400%              NM          700%

  Cambria Suites                     150%              NM          150%

  Total Domestic System               22%             26%           24%



                     CHOICE HOTELS INTERNATIONAL, INC.             EXHIBIT 7
      DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING
                  CONVERSION OR APPROVED FOR DEVELOPMENT
                               (UNAUDITED)

  A hotel in the domestic pipeline does not always result in an open and
  operating hotel due to various factors.

                                                 September 30, 2006
                                                       Units

                                                            New
                                            Conversion  Construction   Total

  Comfort Inn                                    50         108         158
  Comfort Suites                                  5         197         202
  Sleep Inn                                       -          95          95
     Midscale without Food & Beverage            55         400         455

  Quality                                        67          11          78
  Clarion                                        14           4          18
       Midscale with Food & Beverage             81          15          96

  Econo Lodge                                    32           5          37
  Rodeway                                        56           2          58
       Economy                                   88           7          95

  MainStay                                        1          33          34
  Suburban                                        4          19          23
       Extended Stay                              5          52          57

  Cambria Suites                                  -          33          33

                                                229         507         736


                                                    September 30, 2005
                                                          Units

                                                            New
                                            Conversion  Construction   Total

  Comfort Inn                                    32          68         100
  Comfort Suites                                  2         132         134
  Sleep Inn                                       1          77          78
     Midscale without Food & Beverage            35         277         312

  Quality                                        51          11          62
  Clarion                                        10           2          12
       Midscale with Food & Beverage             61          13          74

  Econo Lodge                                    34           9          43
  Rodeway                                        32           1          33
       Economy                                   66          10          76

  MainStay                                        1          26          27
  Suburban                                        -           -           -
       Extended Stay                              1          26          27

  Cambria Suites                                  -           8           8

                                                163         334         497


                                                      Variance

                                                        New
                                       Conversion   Construction  Total

                                        Units   %   Units   %   Units   %

  Comfort Inn                             18    56%    40   59%    58   58%
  Comfort Suites                           3   150%    65   49%    68   51%
  Sleep Inn                               (1) -100%    18   23%    17   22%
     Midscale without Food & Beverage     20    57%   123   44%   143   46%

  Quality                                 16    31%     -    0%    16   26%
  Clarion                                  4    40%     2  100%     6   50%
       Midscale with Food & Beverage      20    33%     2   15%    22   30%

  Econo Lodge                             (2)   -6%    (4) -44%    (6) -14%
  Rodeway                                 24    75%     1  100%    25   76%
       Economy                            22    33%    (3) -30%    19   25%

  MainStay                                 -     0%     7   27%     7   26%
  Suburban                                 4    NM     19   NM     23   NM
       Extended Stay                       4   400%    26  100%    30  111%

  Cambria Suites                           -   NM      25  313%    25  313%

                                          66    40%   173   52%   239   48%





                      CHOICE HOTELS INTERNATIONAL, INC.            EXHIBIT 8
               SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
                               (UNAUDITED)

   CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS
   (dollar amounts in thousands)

                                     Three Months Ended  Nine Months Ended
                                       September 30,       September 30,

                                       2006      2005      2006      2005
  Franchising Revenues:

  Total Revenues                     $150,996  $141,951  $400,954  $355,414
  Adjustments:
       Marketing and reservation
        revenues                      (73,001)  (72,841) (203,719) (184,494)
       Hotel Operations                (1,182)   (1,153)   (3,342)   (3,214)
  Franchising Revenues                $76,813   $67,957  $193,893  $167,706

  Franchising Margins:

  Operating Margin:

  Total Revenues                     $150,996  $141,951  $400,954  $355,414
  Operating Income                    $54,552   $47,787  $126,739  $107,503
       Operating Margin                 36.1%     33.7%     31.6%     30.2%

  Franchising Margin:

  Franchising Revenues                $76,813   $67,957  $193,893  $167,706

  Operating Income                    $54,552   $47,787  $126,739  $107,503
  Less: Hotel Operations                  362       329       977       829
                                      $54,190   $47,458  $125,762  $106,674

       Franchising Margins              70.5%     69.8%     64.9%     63.6%


  CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER
   SHARE (EPS)
  (in thousands, except per share amounts)

                                       Three Months Ended  Nine Months Ended
                                          September 30,      September 30,

                                          2006     2005     2006     2005

  Net income                           $46,357  $32,466  $88,158  $66,013
  Adjustments:
    Loss on Debt Extinguishment Costs        -        -        217      -
    Reversal of Provisions for Income
     Tax Contingencies                 (12,785)  (4,896) (12,581)  (4,896)
    Income Tax Expense Incurred Due to
     Foreign Earnings Repatriation                1,192             1,192
  Adjusted Net Income                  $33,572  $28,762  $75,794  $62,309

  Weighted average shares outstanding-
   diluted                              67,152   66,963   67,009   66,630

  Diluted Earnings Per Share             $0.69    $0.48    $1.32    $0.99
  Adjustments:
    Loss on Debt Extinguishment Costs        -        -        -        -
    Reversal of Provisions for Income
     Tax Contingencies                   (0.19)   (0.07)   (0.19)   (0.07)
    Income Tax Expense Incurred Due to
     Foreign Earnings Repatriation           -     0.02        -     0.02
  Adjusted Diluted Earnings Per
   Share (EPS)                           $0.50    $0.43    $1.13    $0.94


  EBITDA Reconciliation
  (in millions)

                                                          Full-Year
                                         Q3 2006  Q3 2005   2006
                                         Actuals  Actuals  Outlook

  Operating Income (per GAAP)              $54.6    $47.8   $165.2
  Depreciation and amortization              2.3      2.2      9.8
  Earnings before interest, taxes,
   depreciation & amortization (non-
   GAAP)                                   $56.9    $50.0   $175.0

First Call Analyst:
FCMN Contact: david_peikin@choicehotels.com

SOURCE: Choice Hotels International

CONTACT: David White, Chief Financial Officer, +1-301-592-5117, or Anne
Madison, Vice President, Corporate Communications, +1-301-592-6723, both of
Choice Hotels International