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Choice Hotels Reports Second Quarter 2010 Diluted EPS of $0.45, Domestic Unit Growth of 2.6%

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SILVER SPRING, Md., July 27, 2010 /PRNewswire via COMTEX/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for second quarter 2010:

  • Adjusted diluted earnings per share ("EPS") for second quarter 2010 were $0.45 compared to $0.44 for the same period of the prior year. Diluted EPS were $0.45 for second quarter 2010 compared to $0.42 for second quarter 2009. Adjusted diluted EPS for second quarter 2009 exclude certain special items, as described below, totaling $0.02.
  • Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") were $45.7 million for the three months ended June 30, 2010, compared to $42.0 million for the same period of 2009. Operating income for the three months ended June 30, 2010 and 2009 was $43.6 million and $38.1 million, respectively.
  • Franchising revenues increased 2% from $66.9 million for the three months ended June 30, 2009 to $68.4 million for the same period of 2010. Total revenues for the three months ended June 30, 2010 increased 5% compared to the same period of 2009.
  • Adjusted selling, general and administrative ("SG&A") costs for the second quarter 2010 totaled $22.9 million which represented a 9% decline from the same period of the prior year. Adjusted SG&A costs exclude special items totaling ($0.1) million and $1.9 million for the three months ended June 30, 2010 and 2009, respectively.
  • Interest and other investment income (loss) for the three months ended June 30, 2010 declined by approximately $4.3 million from the same period of the prior year primarily due to the decline in the fair value of investments held in the company's non-qualified employee benefit plans during the current period compared to an appreciation in the fair value of these investments in the same period of the prior year.
  • Domestic unit and room growth increased 2.6 percent and 2.2 percent, respectively, from June 30, 2009.
  • Domestic system-wide revenue per available room ("RevPAR") increased 0.3% for the second quarter of 2010 compared to the same period of 2009 as occupancy rate increases of 130 basis points were partially offset by a 2.2% decline in average daily rates.
  • The effective royalty rate increased 6 basis points to 4.32% for the three months ended June 30, 2010 compared to 4.26% for the same period of the prior year.
  • The company executed 62 new domestic hotel franchise contracts for the three months ended June 30, 2010, a decline of 47% compared to the 118 contracts executed in the same period of the prior year.
  • The number of domestic hotels under construction, awaiting conversion or approved for development declined 29% from June 30, 2009 to 586 hotels representing 47,056 rooms; the worldwide pipeline declined 27% from June 30, 2009 to 683 hotels representing 55,782 rooms.

"We're pleased to report positive domestic RevPAR for the first time since the second quarter of 2008, due in large part to gains in occupancy and a gradually improving average daily rate environment from this year's first quarter," said Stephen P. Joyce, president and chief executive officer. "We expect RevPAR to continue to show improvement for the remainder of the year, however we believe the hotel transaction environment will remain difficult and thus continue to adversely impact our franchise sales results. We are squarely focused on enhancing our ability to deliver reservations to our franchisees' hotels and strengthening our range of centralized support services designed to enhance our franchisees' profitability."

Special Items

During the three and six months ended June 30, 2010, the company recorded employee termination benefits charges (reversals) of approximately ($0.1) million and $0.2 million, respectively. These amounts did not have an effect on the reported diluted EPS for the periods reported.

During the three and six months ended June 30, 2009, the company recorded employee termination benefits of approximately $0.4 million and $0.8 million, respectively. During the three and six months ended June 30, 2009, the company also recorded a $1.5 million charge related to the sublease of a portion of its office space. These special items represent diluted EPS of $0.02 for both the three and six months ended June 30, 2009.

Outlook for 2010

The company's third quarter 2010 diluted EPS is expected to be $0.57. The company expects full-year 2010 diluted EPS to be between $1.70 and $1.72. Adjusted EBITDA for full-year 2010 are expected to be between $167.5 million and $170 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth ranging from 1% to 2% in 2010;
  • RevPAR is expected to increase approximately 6% for third quarter of 2010 and range from flat to an increase of 2% for full-year 2010;
  • The effective royalty rate is expected to increase 6 basis points for full-year 2010;
  • All figures assume the existing share count and an effective tax rate of 35.8% for the third quarter and full-year 2010;
  • Projections assume that the company's existing credit facility remains in place for full-year 2010.

Use of Free Cash Flow

The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.

For the six months ended June 30, 2010 the company paid $21.9 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

During the six months ended June 30, 2010, the company purchased approximately 0.2 million shares of its common stock at an average price of $31.75 for a total cost of $6.9 million under the share repurchase program and has authorization to purchase up to an additional 3.6 million shares under this program. No shares were repurchased under the repurchase program during the three months ended June 30, 2010. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 43.1 million shares of its common stock for a total cost of $1 billion through June 30, 2010. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.1 million shares through June 30, 2010 under the share repurchase program at an average price of $13.33 per share.

Our Board previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets. Recent market conditions have resulted in an increase in opportunities to incent development under these programs. As a result, during the six months ended June 30, 2010, the Company has advanced approximately $10.2 million pursuant to these programs (of which $5 million has been repaid to the Company subsequent to June 30, 2010). In addition, during the three-months ended June 30, 2010 a $1.0 million loan guarantee issued in 2007 related to the development of a Cambria franchise expired. Subsequent to June 30, 2010 and through July 27, 2010, the Company advanced an additional $7.6 million under these programs.

Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. The amount and timing of the investment in these programs will be dependent on market and other conditions. Our current expectation is that our annual investment in these programs will range from $20 million to $40 million. Notwithstanding these programs, 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 28, 2010 at 10:00 a.m. EDT to discuss the company's second quarter 2010 results. The dial-in number to listen to the call is 1-866-730-5770, and the access code is 71416248. International callers should dial 1-857-350-1594 and enter the access code 71416248. The conference call also will be Webcast simultaneously via the company's Web site, http://www.choicehotels.com/. Interested investors and other parties wishing to access the call via the Webcast 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 call will be recorded and available for replay beginning at 1:00 p.m. EDT on July 28, 2010 through August 27, 2010 by calling 1-888-286-8010 and entering access code 10540629. The international dial-in number for the replay is 617-801-6888, access code 10540629. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc. franchises more than 6,000 hotels, representing more than 490,000 rooms, in the United States and more than 35 other countries and territories. As of June 30, 2010, more than 580 hotels are under construction, awaiting conversion or approved for development in the United States, representing more than 47,000 rooms, and approximately 100 hotels, representing approximately 8,700 rooms, are under construction, awaiting conversion or approved for development in 20 other countries and territories. The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels.

Additional corporate information may be found on the Choice Hotels International, Inc. Web site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.

Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 1, 2010. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements

Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. 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 diluted earnings per share, operating income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.

Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the company's financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the three and six months June 30, 2010 and 2009 as well as a loss on the sublease of a portion of the Company's office space during the three and six months ended June 30, 2009. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.

Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collectionare proprietary trademarks and service marks of Choice Hotels International.

(C) 2010 Choice Hotels International, Inc. All rights reserved.

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

                                      Three Months Ended June 30,
                                      ---------------------------
                                                               Variance
                                2010           2009             $         %
                                ----           ----           ---        ---
    (In thousands,
     except per
     share amounts)

    REVENUES:

      Royalty fees           $57,443        $54,929        $2,514           5%
      Initial
       franchise and
       relicensing
       fees                    2,655          3,993        (1,338)       (34%)
      Procurement
       services                6,611          6,772          (161)        (2%)
      Marketing and
       reservation            80,389         75,296         5,093           7%
      Hotel operations         1,109          1,179           (70)        (6%)
      Other                    1,641          1,174           467          40%
                               -----          -----           ---         ---
              Total revenues 149,848        143,343         6,505           5%

    OPERATING
     EXPENSES:

      Selling, general
       and
       administrative         22,824         27,076        (4,252)       (16%)
      Depreciation and
       amortization            2,220          2,032           188           9%
      Marketing and
       reservation            80,389         75,296         5,093           7%
      Hotel operations           808            829           (21)        (3%)
                                                              ---        ----
         Total operating
          expenses           106,241        105,233         1,008           1%

    Operating income          43,607         38,110         5,497          14%

    OTHER INCOME AND
     EXPENSES, NET:
      Interest expense           675          1,265          (590)       (47%)
      Interest and
       other
       investment
       (income) loss           1,103         (3,173)        4,276       (135%)
      Equity in net
       income of
       affiliates               (195)          (225)           30        (13%)
        Total other
         income and
         expenses, net         1,583         (2,133)        3,716       (174%)
                               -----         ------         -----      ------

    Income before
     income taxes             42,024         40,243         1,781           4%
    Income taxes              15,013         14,740           273           2%
                              ------         ------           ---         ---
    Net income               $27,011        $25,503        $1,508           6%
                             =======        =======        ======         ===


    Weighted average
     shares
     outstanding-
     basic                    59,592         60,467
                              ======         ======

    Weighted average
     shares
     outstanding-
     diluted                  59,676         60,598
                              ======         ======

    Basic earnings
     per share                 $0.45          $0.42         $0.03           7%
                               =====          =====         =====         ===

    Diluted earnings
     per share                 $0.45          $0.42         $0.03           7%
                               =====          =====         =====         ===


                                      Six Months Ended June 30,
                                      -------------------------
                                                              Variance
                                2010         2009             $         %
                                ----         ----           ---        ---
    (In thousands,
     except per share
     amounts)

    REVENUES:

      Royalty fees           $98,464      $98,370           $94            0%
      Initial franchise
       and relicensing
       fees                    4,567        6,642        (2,075)        (31%)
      Procurement
       services                9,856       10,162          (306)         (3%)
      Marketing and
       reservation           139,229      137,338         1,891            1%
      Hotel operations         1,976        2,297          (321)        (14%)
      Other                    3,177        2,692           485           18%
                               -----        -----           ---          ---
              Total revenues 257,269      257,501          (232)         (0%)

    OPERATING
     EXPENSES:

      Selling, general
       and
       administrative         44,640       48,537        (3,897)         (8%)
      Depreciation and
       amortization            4,392        4,147           245            6%
      Marketing and
       reservation           139,229      137,338         1,891            1%
      Hotel operations         1,564        1,614           (50)         (3%)
                               -----        -----           ---         ----
         Total operating
          expenses           189,825      191,636        (1,811)         (1%)

    Operating income          67,444       65,865         1,579            2%

    OTHER INCOME AND
     EXPENSES, NET:
      Interest expense         1,296        2,805        (1,509)        (54%)
      Interest and
       other investment
       (income) loss              26       (2,341)        2,367        (101%)
      Equity in net
       income of
       affiliates               (548)        (443)         (105)          24%
        Total other
         income and
         expenses, net           774           21           753         3586%
                                 ---          ---           ---         ----

    Income before
     income taxes             66,670       65,844           826            1%
    Income taxes              23,866       24,033          (167)         (1%)
                              ------       ------          ----
    Net income               $42,804      $41,811          $993            2%
                             =======      =======          ====          ===


    Weighted average
     shares
     outstanding-
     basic                    59,553       60,499
                              ======       ======

    Weighted average
     shares
     outstanding-
     diluted                  59,639       60,708
                              ======       ======

    Basic earnings
     per share                 $0.72        $0.69         $0.03            4%
                               =====        =====         =====          ===

    Diluted earnings
     per share                 $0.72        $0.69         $0.03            4%
                               =====        =====         =====          ===


    Choice Hotels International, Inc.                       Exhibit 2
    Consolidated Balance Sheets

    (In thousands, except per share                                 December
     amounts)                                     June 30,             31,
                                                      2010              2009
                                                      ----              ----
                                               (Unaudited)

    ASSETS

    Cash and cash equivalents                       $70,926           $67,870
    Accounts receivable, net                         50,342            41,898
    Deferred income taxes                            7,980             7,980
    Other current assets                            20,982            10,114
                                                    ------            ------
                 Total current assets              150,230           127,862

    Fixed assets and intangibles, net              136,763           133,999
    Receivable --marketing and
     reservation fees                               58,508            33,872
    Investments, employee benefit plans,
     at fair value                                  20,868            20,931
    Other assets                                    23,839            23,373
                                                    ------            ------

                 Total assets                     $390,208          $340,037
                                                  --------          --------



    LIABILITIES AND SHAREHOLDERS' DEFICIT

    Accounts payable and accrued expenses          $73,177           $70,933
    Deferred revenue                                57,226            51,765
    Revolving credit facility                      291,100                 -
    Deferred compensation & retirement
     plan obligations                                2,461             2,798
    Other current liabilities                       17,648             6,310
                                                    ------             -----
                 Total current liabilities         441,612           131,806

    Long-term debt                                       -           277,700
    Deferred compensation & retirement
     plan obligations                               33,348            34,956
    Other liabilities                               12,283             9,787
                                                    ------             -----

                 Total liabilities                 487,243           454,249
                                                   -------

    Common stock, $0.01 par value                      596               595
    Additional paid-in-capital                      89,130            90,731
    Accumulated other comprehensive income
     (loss)                                           (850)              333
    Treasury stock, at cost                       (871,211)         (870,302)
    Retained earnings                              685,300           664,431
                                                   -------           -------

                 Total shareholders' deficit       (97,035)         (114,212)
                                                  --------

                  Total liabilities and
                  shareholders' deficit           $390,208          $340,037
                                                  --------          --------


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

                                                     Six Months Ended
    (In thousands)                                       June 30,
                                                       ----------------

                                                      2010           2009
                                                      ----           ----
    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income                                     $42,804        $41,811

    Adjustments to reconcile net income to net
     cash provided
     by operating activities:
      Depreciation and amortization                  4,392          4,147
      Provision for bad debts                        1,637            743
      Non-cash stock compensation and other
       charges                                       5,297          6,601
      Non-cash interest and other (income) loss        307         (2,107)
      Dividends received from equity method
       investments                                     148            488
      Equity in net income of affiliates              (548)          (443)

    Changes in assets and liabilities, net of
     acquisitions:
      Receivables                                  (10,061)        (1,774)
      Receivable -marketing and reservation
       fees, net                                   (17,996)       (19,513)
      Accounts payable                               9,043          1,523
      Accrued expenses                              (6,601)        (7,167)
      Income taxes payable/receivable               11,492         20,093
      Deferred income taxes                            (55)             -
      Deferred revenue                               5,475          6,083
      Other assets                                  (4,307)         1,574
      Other liabilities                                577         (3,685)
                                                       ---         ------

     NET CASH PROVIDED BY OPERATING ACTIVITIES      41,604         48,374
                                                    ------         ------

    CASH FLOWS FROM INVESTING ACTIVITIES:

    Investment in property and equipment           (12,249)        (4,989)
    Acquisitions, net of cash acquired                (466)             -
    Purchases of investments, employee benefit
     plans                                          (1,204)        (2,464)
    Proceeds from sales of investments,
     employee benefit plans                            836          1,171
    Issuance of notes receivable                    (8,008)        (1,329)
    Collections of notes receivable                     37            125
    Other items, net                                  (361)          (246)
                                                      ----           ----

     NET CASH USED IN INVESTING ACTIVITIES         (21,415)        (7,732)
                                                   -------         ------

    CASH FLOWS FROM FINANCING ACTIVITIES:

    Net borrowings pursuant to revolving
     credit facility                                13,400         19,700
    Excess tax benefits from stock-based
     compensation                                       12          2,033
    Purchase of treasury stock                      (9,242)       (36,350)
    Dividends paid                                 (21,924)       (22,321)
    Proceeds from exercise of stock options          1,315          4,603
                                                     -----          -----

     NET CASH USED IN FINANCING ACTIVITIES         (16,439)       (32,335)
                                                   -------        -------

    Net change in cash and cash equivalents          3,750          8,307
    Effect of foreign exchange rate changes on
     cash and cash equivalents                        (694)           823
    Cash and cash equivalents at beginning of
     period                                         67,870         52,680
                                                    ------         ------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD     $70,926        $61,810
                                                   =======        =======


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

                                      For the Six Months Ended June 30,
                                                    2010*
                                      ---------------------------------

                                    Average
                                     Daily
                                     Rate          Occupancy      RevPAR
                                     ----          ---------      ------

    Comfort Inn                        $73.44           49.5%      $36.33
    Comfort Suites                      81.05           50.5%       40.92
    Sleep                               66.93           47.3%       31.68
      Midscale without Food &
       Beverage                         74.48           49.4%       36.79
                                        -----           ----        -----

    Quality                             64.10           42.6%       27.31
    Clarion                             72.34           39.1%       28.27
      Midscale with Food & Beverage     65.80           41.8%       27.52
                                        -----           ----        -----

    Econo Lodge                         51.21           40.7%       20.87
    Rodeway                             47.06           40.7%       19.14
                                        -----           ----        -----
      Economy                           49.95           40.7%       20.34
                                        -----           ----        -----

    MainStay                            64.20           59.3%       38.06
    Suburban                            38.47           62.4%       24.01
      Extended Stay                     45.47           61.5%       27.98
                                        -----           ----        -----

    Total                              $67.31           46.0%      $30.98
                                       ======           ====       ======



                                        For the Six Months Ended June
                                                  30, 2009*
                                        -----------------------------

                                    Average
                                     Daily
                                     Rate         Occupancy      RevPAR
                                     ----         ---------      ------

    Comfort Inn                       $75.01           50.5%      $37.90
    Comfort Suites                     85.14           51.2%       43.56
    Sleep                              68.94           49.6%       34.20
      Midscale without Food &
       Beverage                        76.57           50.5%       38.70
                                       -----           ----        -----

    Quality                            66.15           43.3%       28.64
    Clarion                            75.98           40.5%       30.76
      Midscale with Food & Beverage    68.10           42.7%       29.08
                                       -----           ----        -----

    Econo Lodge                        52.68           40.3%       21.24
    Rodeway                            50.41           40.0%       20.16
                                       -----           ----        -----
      Economy                          52.03           40.2%       20.93
                                       -----           ----        -----

    MainStay                           70.90           55.3%       39.19
    Suburban                           42.76           53.9%       23.05
      Extended Stay                    50.68           54.3%       27.51
                                       -----           ----        -----

    Total                             $69.57           46.5%      $32.37
                                      ======           ====       ======



                                               Change
                                               ------

                                    Average
                                     Daily
                                     Rate       Occupancy  RevPAR
                                     ----       ---------  ------

    Comfort Inn                        (2.1%) (100)  bps   (4.1%)
    Comfort Suites                     (4.8%)   (70) bps   (6.1%)
    Sleep                              (2.9%) (230)  bps   (7.4%)
      Midscale without Food &
       Beverage                        (2.7%) (110)  bps   (4.9%)
                                      ------   ----  ---  ------

    Quality                            (3.1%)   (70) bps   (4.6%)
    Clarion                            (4.8%) (140)  bps   (8.1%)
      Midscale with Food & Beverage    (3.4%)   (90) bps   (5.4%)
                                      ------    ---  ---  ------

    Econo Lodge                        (2.8%)    40  bps   (1.7%)
    Rodeway                            (6.6%)    70  bps   (5.1%)
                                      ------    ---  ---  ------
      Economy                          (4.0%)    50  bps   (2.8%)
                                      ------    ---  ---  ------

    MainStay                           (9.4%)   400  bps   (2.9%)
    Suburban                          (10.0%)   850  bps     4.2%
      Extended Stay                   (10.3%)   720  bps     1.7%
                                     -------    ---  ---     ---

    Total                              (3.2%)   (50) bps   (4.3%)
                                      ======    ===  ===  ======



    * Operating statistics represent hotel operations from December
    through May

                                         For the Three Months Ended
                                               June 30, 2010*
                                           --------------------------

                                    Average
                                     Daily
                                     Rate          Occupancy      RevPAR
                                     ----          ---------      ------

    Comfort Inn                       $75.22            55.9%      $42.04
    Comfort Suites                     82.40            56.9%       46.88
    Sleep                              68.54            53.3%       36.51
      Midscale without Food &
       Beverage                        76.13            55.8%       42.44
                                       -----            ----        -----

    Quality                            65.93            48.0%       31.62
    Clarion                            74.37            44.2%       32.85
      Midscale with Food & Beverage    67.70            47.1%       31.89
                                       -----            ----        -----

    Econo Lodge                        52.44            45.7%       23.95
    Rodeway                            48.32            44.8%       21.63
                                       -----            ----        -----
      Economy                          51.20            45.4%       23.24
                                       -----            ----        -----

    MainStay                           65.04            66.3%       43.09
    Suburban                           39.51            65.8%       25.98
      Extended Stay                    46.65            65.9%       30.74
                                       -----            ----        -----

    Total                             $69.01            51.7%      $35.69
                                      ======            ====       ======




                                         For the Three Months Ended
                                               June 30, 2009*
                                          --------------------------

                                    Average
                                      Daily
                                      Rate         Occupancy      RevPAR
                                      ----         ---------      ------

    Comfort Inn                       $75.86            55.0%     $41.72
    Comfort Suites                     85.67            55.0%      47.12
    Sleep                              70.10            54.1%      37.94
      Midscale without Food &
       Beverage                        77.38            54.9%      42.46
                                       -----            ----       -----

    Quality                            67.27            47.3%      31.83
    Clarion                            77.52            43.8%      33.96
      Midscale with Food & Beverage    69.29            46.6%      32.28
                                       -----            ----       -----

    Econo Lodge                        53.54            43.5%      23.30
    Rodeway                            51.07            42.8%      21.87
                                       -----            ----       -----
      Economy                          52.83            43.3%      22.89
                                       -----            ----       -----

    MainStay                           70.76            59.7%      42.25
    Suburban                           42.89            55.7%      23.90
      Extended Stay                    51.05            56.8%      29.02
                                       -----            ----       -----

    Total                             $70.53            50.4%     $35.58
                                      ======            ====      ======




                                                Change
                                                ------

                                    Average
                                      Daily
                                      Rate      Occupancy   RevPAR
                                      ----      ---------   ------

    Comfort Inn                        (0.8%)    90  bps     0.8%
    Comfort Suites                     (3.8%)   190  bps   (0.5%)
    Sleep                              (2.2%)   (80) bps   (3.8%)
      Midscale without Food &
       Beverage                        (1.6%)    90  bps   (0.0%)
                                      ------    ---  ---  ------

    Quality                            (2.0%)    70  bps   (0.7%)
    Clarion                            (4.1%)    40  bps   (3.3%)
      Midscale with Food & Beverage    (2.3%)    50  bps   (1.2%)
                                      ------    ---  ---  ------

    Econo Lodge                        (2.1%)   220  bps     2.8%
    Rodeway                            (5.4%)   200  bps   (1.1%)
                                      ------    ---  ---  ------
      Economy                          (3.1%)   210  bps     1.5%
                                      ------    ---  ---     ---

    MainStay                           (8.1%)   660  bps     2.0%
    Suburban                           (7.9%) 1,010  bps     8.7%
      Extended Stay                    (8.6%)   910  bps     5.9%
                                      ------    ---  ---     ---

    Total                              (2.2%)   130  bps     0.3%
                                      ======    ===  ===     ===




    * Operating statistics represent hotel operations from March through May

                       For the Quarter           For the Six Months
                            Ended                      Ended
                  6/30/2010       6/30/2009  6/30/2010       6/30/2009

    System-wide
     effective
     royalty rate      4.32%           4.26%      4.33%           4.26%


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

                                   June 30, 2010          June 30, 2009
                                   -------------          -------------

                              Hotels        Rooms  Hotels        Rooms
                              ------        -----  ------        -----

    Comfort Inn                1,446       113,677  1,461       114,531
    Comfort Suites               621        48,200    576        45,056
    Sleep                        392        28,586    376        27,576
      Midscale without Food &
       Beverage                2,459       190,463  2,413       187,163
                               -----       -------  -----       -------

    Quality                      984        88,453    941        86,675
    Clarion                      175        25,188    163        23,444
      Midscale with Food &
       Beverage                1,159       113,641  1,104       110,119
                               -----       -------  -----       -------

    Econo Lodge                  785        48,543    796        49,596
    Rodeway                      381        21,473    362        20,840
                                 ---        ------    ---        ------
      Economy                  1,166        70,016  1,158        70,436
                               -----        ------  -----        ------

    MainStay                      36         2,798     37         2,866
    Suburban                      63         7,608     64         7,657
      Extended Stay               99        10,406    101        10,523
                                 ---        ------    ---        ------

    Ascend Collection             32         2,646     22         1,444
    Cambria Suites                21         2,453     14         1,540
                                 ---         -----    ---         -----

    Domestic Franchises        4,936       389,625  4,812       381,225

    International Franchises   1,138       100,858  1,102        98,603
                               -----       -------  -----        ------

    Total Franchises           6,074       490,483  5,914       479,828
                               =====       =======  =====       =======


                                                      Variance
                                                      --------

                                       Hotels   Rooms          %       %
                                       ------   -----         ---     ---

    Comfort Inn                           (15)    (854)      (1.0%)  (0.7%)
    Comfort Suites                         45    3,144         7.8%    7.0%
    Sleep                                  16    1,010         4.3%    3.7%
      Midscale without Food & Beverage     46    3,300         1.9%    1.8%
                                          ---    -----         ---     ---

    Quality                                43    1,778         4.6%    2.1%
    Clarion                                12    1,744         7.4%    7.4%
      Midscale with Food & Beverage        55    3,522         5.0%    3.2%
                                          ---    -----         ---     ---

    Econo Lodge                           (11) (1,053)       (1.4%)  (2.1%)
    Rodeway                                19      633         5.2%    3.0%
                                          ---      ---         ---
      Economy                               8     (420)        0.7%  (0.6%)
                                          ---     ----         ---  ------

    MainStay                               (1)     (68)      (2.7%)  (2.4%)
    Suburban                               (1)     (49)      (1.6%)  (0.6%)
      Extended Stay                        (2)    (117)      (2.0%)  (1.1%)
                                          ---     ----      ------  ------

    Ascend Collection                      10    1,202        45.5%   83.2%
    Cambria Suites                          7      913        50.0%   59.3%
                                          ---      ---        ----    ----

    Domestic Franchises                   124    8,400         2.6%    2.2%

    International Franchises               36    2,255         3.3%    2.3%
                                          ---    -----         ---     ---

    Total Franchises                      160   10,655         2.7%    2.2%
                                          ===   ======         ===     ===


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

                                          For the Six Months Ended
                                                June 30, 2010
                                              ------------------------

                                         New
                                    Construction       Conversion      Total
                                    ------------       ----------      -----

    Comfort Inn                                3               13         16
    Comfort Suites                             8                1          9
    Sleep                                      2                -          2
      Midscale without Food &
       Beverage                               13               14         27
                                             ---              ---        ---

    Quality                                    1               31         32
    Clarion                                    -                6          6
      Midscale with Food & Beverage            1               37         38
                                             ---              ---        ---

    Econo Lodge                                -               22         22
    Rodeway                                    1               19         20
      Economy                                  1               41         42
                                             ---              ---        ---

    MainStay                                   3                -          3
    Suburban                                   1                -          1
      Extended Stay                            4                -          4
                                             ---              ---        ---

    Ascend Collection                          -                3          3
    Cambria Suites                             3                -          3
                                             ---              ---        ---

    Total Domestic System                     22               95        117
                                             ===              ===        ===


                                           For the Six Months Ended
                                                 June 30, 2009
                                              ------------------------

                                        New
                                    Construction       Conversion      Total
                                    ------------       ----------      -----

    Comfort Inn                                2               15         17
    Comfort Suites                             5                1          6
    Sleep                                      7                2          9
      Midscale without Food &
       Beverage                               14               18         32
                                             ---              ---        ---

    Quality                                    2               64         66
    Clarion                                    -               14         14
      Midscale with Food & Beverage            2               78         80
                                             ---              ---        ---

    Econo Lodge                                -               29         29
    Rodeway                                    1               28         29
      Economy                                  1               57         58
                                             ---              ---        ---

    MainStay                                   1                1          2
    Suburban                                   2                -          2
      Extended Stay                            3                1          4
                                             ---              ---        ---

    Ascend Collection                          -                2          2
    Cambria Suites                             2                -          2
                                             ---              ---        ---

    Total Domestic System                     22              156        178
                                             ===              ===        ===


                                                  % Change
                                                  --------

                                        New
                                    Construction       Conversion  Total
                                    ------------       ----------  -----

    Comfort Inn                               50%            (13%)    (6%)
    Comfort Suites                            60%               0%     50%
    Sleep                                   (71%)           (100%)   (78%)
      Midscale without Food &
       Beverage                              (7%)            (22%)   (16%)
                                            ----            -----   -----

    Quality                                 (50%)            (52%)   (52%)
    Clarion                              NM                  (57%)   (57%)
      Midscale with Food & Beverage         (50%)            (53%)   (53%)
                                           -----            -----   -----

    Econo Lodge                          NM                  (24%)   (24%)
    Rodeway                                    0%            (32%)   (31%)
      Economy                                  0%            (28%)   (28%)
                                             ---            -----   -----

    MainStay                                 200%           (100%)     50%
    Suburban                                (50%)          NM        (50%)
      Extended Stay                           33%           (100%)      0%
                                             ---           ------     ---

    Ascend Collection                    NM                    50%     50%
    Cambria Suites                            50%          NM          50%
                                             ---           ---        ---

    Total Domestic System                      0%            (39%)   (34%)
                                             ===            =====   =====


                                         For the Three Months Ended
                                                June 30, 2010
                                             --------------------------

                                         New
                                    Construction       Conversion       Total
                                    ------------       ----------       -----

    Comfort Inn                                2                5           7
    Comfort Suites                             6                1           7
    Sleep                                      -                -           -
      Midscale without Food &
       Beverage                                8                6          14
                                             ---              ---         ---

    Quality                                    -               20          20
    Clarion                                    -                3           3
      Midscale with Food & Beverage            -               23          23
                                             ---              ---         ---

    Econo Lodge                                -               12          12
    Rodeway                                    -                8           8
      Economy                                  -               20          20
                                             ---              ---         ---

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

    Ascend Collection                          -                1           1
    Cambria Suites                             3                -           3
                                             ---              ---         ---

    Total Domestic System                     12               50          62
                                             ===              ===         ===



                                          For the Three Months Ended
                                                 June 30, 2009
                                            --------------------------

                                        New
                                    Construction       Conversion      Total
                                    ------------       ----------      -----

    Comfort Inn                                2                8         10
    Comfort Suites                             4                -          4
    Sleep                                      5                2          7
      Midscale without Food &
       Beverage                               11               10         21
                                             ---              ---        ---

    Quality                                    1               41         42
    Clarion                                    -                8          8
      Midscale with Food & Beverage            1               49         50
                                             ---              ---        ---

    Econo Lodge                                -               20         20
    Rodeway                                    -               21         21
      Economy                                  -               41         41
                                             ---              ---        ---

    MainStay                                   1                -          1
    Suburban                                   2                -          2
      Extended Stay                            3                -          3
                                             ---              ---        ---

    Ascend Collection                          -                2          2
    Cambria Suites                             1                -          1
                                             ---              ---        ---

    Total Domestic System                     16              102        118
                                             ===              ===        ===



                                                  % Change
                                                  --------

                                        New
                                    Construction       Conversion  Total
                                    ------------       ----------  -----

    Comfort Inn                                0%            (38%)   (30%)
    Comfort Suites                            50%          NM          75%
    Sleep                                  (100%)           (100%)  (100%)
      Midscale without Food &
       Beverage                             (27%)            (40%)   (33%)
                                           -----            -----   -----

    Quality                                (100%)            (51%)   (52%)
    Clarion                              NM                  (63%)   (63%)
      Midscale with Food & Beverage        (100%)            (53%)   (54%)
                                          ------            -----   -----

    Econo Lodge                          NM                  (40%)   (40%)
    Rodeway                              NM                  (62%)   (62%)
      Economy                            NM                  (51%)   (51%)
                                        ---                 -----   -----

    MainStay                                   0%          NM           0%
    Suburban                               (100%)          NM       (100%)
      Extended Stay                         (67%)          NM        (67%)
                                           -----           ---      -----

    Ascend Collection                    NM                  (50%)   (50%)
    Cambria Suites                           200%          NM         200%
                                             ---           ---        ---

    Total Domestic System                   (25%)            (51%)   (47%)
                                           =====            =====   =====



                         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.


                                            June 30, 2010
                                                Units
                                                -----
                                                       New
                                Conversion       Construction       Total
                                ----------       -------------      -----

    Comfort Inn                         33                  69        102
    Comfort Suites                       1                 136        137
    Sleep Inn                            1                 101        102
                                       ---                 ---        ---
       Midscale without
        Food & Beverage                 35                 306        341
                                       ---                 ---        ---

    Quality                             41                  11         52
    Clarion                             15                   5         20
                                       ---                 ---        ---
         Midscale with
          Food & Beverage               56                  16         72
                                       ---                 ---        ---

    Econo Lodge                         35                   2         37
    Rodeway                             26                   3         29
                                       ---                 ---        ---
         Economy                        61                   5         66
                                       ---                 ---        ---

    MainStay                             -                  39         39
    Suburban                             -                  26         26
                                       ---                 ---        ---
         Extended Stay                   -                  65         65
                                       ---                 ---        ---

    Ascend Collection                    3                   4          7
    Cambria Suites                       -                  35         35
                                       ---                 ---        ---

                                       155                 431        586
                                       ===                 ===        ===


                                            June 30, 2009
                                                Units
                                                -----
                                                      New
                                Conversion       Construction       Total
                                ----------       -------------      -----

    Comfort Inn                         37                 110        147
    Comfort Suites                       1                 227        228
    Sleep Inn                            3                 139        142
                                       ---                 ---        ---
       Midscale without
        Food & Beverage                 41                 476        517
                                       ---                 ---        ---

    Quality                             57                  15         72
    Clarion                             25                   5         30
                                       ---                 ---        ---
         Midscale with
          Food & Beverage               82                  20        102
                                       ---                 ---        ---

    Econo Lodge                         36                   4         40
    Rodeway                             48                   2         50
                                       ---                 ---        ---
         Economy                        84                   6         90
                                       ---                 ---        ---

    MainStay                             -                  35         35
    Suburban                             -                  32         32
                                       ---                 ---        ---
         Extended Stay                   -                  67         67
                                       ---                 ---        ---

    Ascend Collection                    2                   1          3
    Cambria Suites                       -                  48         48
                                       ---                 ---        ---

                                       209                 618        827
                                       ===                 ===        ===


                                       Variance
                                       --------

                                                      New
                            Conversion                       Construction
                            ----------           -------------
                          Units         %       Units         %
                          -----        ---      -----       ---

    Comfort Inn              (4)       (11%)      (41)       (37%)
    Comfort Suites            -           0%      (91)       (40%)
    Sleep Inn                (2)       (67%)      (38)       (27%)
                            ---       -----       ---       -----
       Midscale without
        Food & Beverage      (6)       (15%)    (170)        (36%)
                            ---       -----      ----       -----

    Quality                 (16)       (28%)       (4)       (27%)
    Clarion                 (10)       (40%)        -           0%
                            ---       -----       ---         ---
         Midscale with
          Food & Beverage   (26)       (32%)       (4)       (20%)
                            ---       -----       ---       -----

    Econo Lodge              (1)        (3%)       (2)       (50%)
    Rodeway                 (22)       (46%)        1          50%
                            ---       -----       ---         ---
         Economy            (23)       (27%)       (1)       (17%)
                            ---       -----       ---       -----

    MainStay                  -        NM           4          11%
    Suburban                  -        NM          (6)       (19%)
                            ---        ---        ---       -----
         Extended Stay        -        NM          (2)        (3%)
                            ---        ---        ---        ----

    Ascend Collection         1          50%        3         300%
    Cambria Suites            -        NM         (13)       (27%)
                            ---        ---        ---       -----

                            (54)       (26%)    (187)        (30%)
                            ===       =====      ====       =====


                                 Variance
                                 --------

                                     Total
                                     -----
                               Units         %
                               -----       ---

    Comfort Inn                  (45)       (31%)
    Comfort Suites               (91)       (40%)
    Sleep Inn                    (40)       (28%)
                                 ---       -----
       Midscale without
        Food & Beverage        (176)        (34%)
                                ----       -----

    Quality                      (20)       (28%)
    Clarion                      (10)       (33%)
                                 ---       -----
         Midscale with
          Food & Beverage        (30)       (29%)
                                 ---       -----

    Econo Lodge                   (3)        (8%)
    Rodeway                      (21)       (42%)
                                 ---       -----
         Economy                 (24)       (27%)
                                 ---       -----

    MainStay                       4          11%
    Suburban                      (6)       (19%)
                                 ---       -----
         Extended Stay            (2)        (3%)
                                 ---        ----

    Ascend Collection              4         133%
    Cambria Suites               (13)       (27%)
                                 ---       -----

                               (241)        (29%)
                                ====       =====


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


    CALCULATION OF FRANCHISING
     REVENUES AND ADJUSTED
     FRANCHISING MARGINS

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

                                  2010          2009      2010           2009
                                  ----          ----      ----           ----
      Franchising
       Revenues:

      Total Revenues          $149,848      $143,343  $257,269       $257,501
      Adjustments:
           Marketing and
            reservation
            revenues          (80,389)      (75,296)  (139,229)     (137,338)
           Hotel
            operations          (1,109)       (1,179)   (1,976)        (2,297)
      Franchising
       Revenues                $68,350       $66,868  $116,064       $117,866
                               -------       -------  --------       --------

      Franchising
       Margins:

      Operating
       Margin:

      Total Revenues          $149,848      $143,343  $257,269       $257,501
      Operating
       Income                  $43,607       $38,110   $67,444        $65,865
           Operating
            Margin                29.1%         26.6%     26.2%          25.6%
                                  ----          ----      ----           ----

      Adjusted
       Franchising
       Margin:

      Franchising
       Revenues                $68,350       $66,868  $116,064       $117,866

      Operating
       Income                  $43,607       $38,110   $67,444        $65,865
      Employee
       termination
       benefits                   (119)          399       233            774
      Loss on
       sublease of
       office space                  -         1,503         -          1,503
      Hotel
       operations                 (301)         (350)     (412)          (683)
                               $43,187       $39,662   $67,265        $67,459
                               -------       -------   -------        -------

           Adjusted
            Franchising
            Margins               63.2%         59.3%     58.0%          57.2%
                                  ----          ----      ----           ----


    CALCULATION OF ADJUSTED
     SELLING, GENERAL AND
     ADMINISTRATIVE COSTS


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

                               2010         2009     2010          2009
                               ----         ----     ----          ----

      Selling, general
       and
       administrative
       costs                $22,824      $27,076  $44,640       $48,537
      Employee
       termination
       benefits                 119         (399)    (233)         (774)
      Loss on sublease
       of office space            -      (1,503)        -        (1,503)
      Adjusted Selling,
       General and
       Administrative
       Costs                $22,943      $25,174  $44,407       $46,260
                            =======      =======  =======       =======


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

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

                                       2010          2009    2010         2009
                                       ----          ----    ----         ----

    Net Income                      $27,011       $25,503 $42,804      $41,811
    Adjustments:
      Employee termination
       benefits                         (74)          250     146          485
      Loss on sublease of
       office space                       -           941       -          941
                                        ---           ---     ---          ---
    Adjusted Net Income             $26,937       $26,694 $42,950      $43,237
                                    -------       ------- -------      -------

    Weighted average shares
     outstanding-diluted             59,676        60,598  59,639       60,708

    Diluted Earnings Per
     Share                            $0.45         $0.42   $0.72        $0.69
    Adjustments:
      Employee termination
       benefits                           -             -       -            -
      Loss on sublease of
       office space                       -          0.02       -         0.02
                                        ---          ----     ---         ----
    Adjusted Diluted Earnings
     Per Share (EPS)                  $0.45         $0.44   $0.72        $0.71
                                      -----         -----   -----        -----


    Adjusted EBITDA
     Reconciliation

    (in millions)
                                          Q2 2010        Q2 2009
                                          Actuals        Actuals
                                         --------       --------

      Operating Income (per GAAP)            $43.6          $38.1
      Employee termination benefits           (0.1)           0.4
      Loss on sublease of office
       space                                     -            1.5
      Depreciation and amortization            2.2            2.0
      Adjusted Earnings before
       interest, taxes,
       depreciation & amortization
       (non-GAAP)                            $45.7          $42.0
                                             =====          =====


    Adjusted EBITDA
     Reconciliation

    (in millions)
                        Six
                      Months
                       Ended     Six Months
                       June         Ended
                        30,       June 30,         Full-Year
                        2010         2009             2010
                      Actuals      Actuals          Outlook
                         -------       -----------          ----------

      Operating
       Income (per
       GAAP)               $67.4             $65.9        $158.7 - $161.2
      Employee
       termination
       benefits              0.2               0.8                    0.2
      Loss on
       sublease of
       office space            -               1.5                      -
      Depreciation
       and
       amortization          4.4               4.1                    8.6
                                                                      ---
      Adjusted
       Earnings
       before
       interest,
       taxes,
       depreciation &
       amortization
       (non-GAAP)       $72.0          $72.3      $167.5 - $170
                           =====             =====          =============


SOURCE Choice Hotels International, Inc.