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Choice Hotels 2009 Q1 Net Income Declines Slightly from $16.3 million to $18.6 million
in the Prior Year Same Quarter; Domestic RevPAR Down 10.3%
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Hotel Operating Statistics
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First Quarter 2009 Diluted EPS of $0.27, Domestic Unit Growth of 5.7%

 
SILVER SPRING, Md., April 30, 2009 - Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for first quarter 2009:

  • Diluted earnings per share ("EPS") for first quarter 2009 were $0.27, compared to $0.29 for the same period of the prior year.
  • Earnings before interest, taxes and depreciation ("EBITDA") were $29.9 million for the three months endedMarch 31, 2009, compared to $36.1 million for the same period of 2008. Operating income for the three months ended March 31, 2009 was $27.8 million compared to $34.1 million for the same period of 2008.
  • Domestic unit and room growth increased 5.7 percent and 5.6 percent, respectively, from March 31, 2008.
  • Domestic system-wide revenue per available room ("RevPAR") declined 10.3% for the first quarter of 2009 compared to the same period of 2008.
  • The effective royalty rate increased 8 basis points to 4.26% for the three months ended March 31, 2009compared to 4.18% for the same period of the prior year.
  • Franchising revenues declined 14% from $59.4 million for the three months ended March 31, 2008 compared to $51.0 million for the same period of 2009. Total revenues for the three months ended March 31, 2009declined 11% compared to the same period of 2008.
  • New domestic hotel franchise contracts for the three months ended March 31, 2009 declined to 60 compared to 133 contracts executed in the same period of the prior year.
  • The number of domestic hotels under construction, awaiting conversion or approved for development declined 9% from March 31, 2008 to 896 hotels representing 70,381 rooms; the worldwide pipeline declined 7% from March 31, 2008 to 1,007 hotels representing 79,495 rooms.
"While we remain in the midst of an incredibly difficult environment, we once again were able to achieve significant domestic system growth on account of our range of value-oriented brands that appeal to both developers and consumers," said Stephen P. Joyce, president and chief executive officer. "However, RevPAR continues to deteriorate and the credit markets remain challenging. These macro-level factors have impacted our domestic franchise development efforts and our relicensing transactions. In this current downturn, we are working closely with our franchisees and providing them a wealth of tools and resources to enhance their operations. We are also aggressively and intelligently investing in marketing and reservations delivery efforts to drive guests to Choice-brand hotels."

Outlook for 2009

The uncertainty around the current economic environment and credit market conditions and their impact on travel patterns and hotel development activities makes it difficult to predict future results, particularly as it relates to underlying assumptions for RevPAR, new hotel franchise and relicensing sales and interest and investment income and expense.

The company's second quarter 2009 diluted EPS is expected to be $0.41. The company expects full-year of 2009 diluted EPS of $1.68. EBITDA for the full-year of 2009 are expected to be approximately $175.5 million. These estimates include the following assumptions:

The company expects net domestic unit growth of approximately 3.0% in 2009;
RevPAR is expected to decline approximately 16% for the second quarter of 2009 and decline approximately 11% for the full-year of 2009;
The effective royalty rate is expected to increase 3 basis points for the full-year of 2009;
All figures assume the existing share count and an effective tax rate of 36.3% for the second quarter and full-year of 2009.

Use of Free Cash Flow

The company has consistently 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 three months ended March 31, 2009 the company paid $11.2 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.

For the three months ended March 31, 2009, the company purchased approximately 0.7 million shares of its common stock at an average price of $26.82 for a total cost of $18.0 million under the share repurchase program and has authorization to purchase up to an additional 5.3 million shares under this program. 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 41.5 million shares of its common stock for a total cost of $968.6 million through March 31, 2009. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 74.4 million shares under the share repurchase program at an average price of$13.01 per share.

Our Board has authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees to incent multi-unit franchise development in top markets. We expect to opportunistically deploy this capital over the next several years. Our annual investment in these programs is dependent on market and other conditions. 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.
 
 
Choice Hotels International, Inc. 
Exhibit 1
Consolidated Statements of Income
(Unaudited)



                                            Three Months Ended March 31,
                                            ----------------------------
                                                                 Variance
                                          2009     2008       $           %
                                          ----     ----       -           -
    (In thousands, except per
     share amounts)

    REVENUES:

      Royalty fees                     $43,441  $47,780  $(4,339)        (9%)
      Initial franchise and
       relicensing fees                  2,649    6,044   (3,395)       (56%)
      Procurement services               3,390    3,342       48          1%
      Marketing and reservation         62,042   68,426   (6,384)        (9%)
      Hotel operations                   1,118    1,042       76          7%
      Other                              1,518    2,221     (703)       (32%)
                                         -----    -----     ----        ---
              Total revenues           114,158  128,855  (14,697)       (11%)

    OPERATING EXPENSES:

      Selling, general and
       administrative                   21,461   23,555   (2,094)        (9%)
      Depreciation and amortization      2,115    2,057       58          3%
      Marketing and reservation         62,042   68,426   (6,384)        (9%)
      Hotel operations                     785      765       20          3%
                                           ---      ---       --          -
          Total operating expenses      86,403   94,803   (8,400)        (9%)

    Operating income                    27,755   34,052   (6,297)       (18%)

    OTHER INCOME AND EXPENSES:
      Interest expense                   1,540    3,837   (2,297)       (60%)
      Interest and other investment
       loss                                832    1,068     (236)       (22%)
      Equity in net income of
       affiliates                         (218)    (301)      83        (28%)
                                          ----     ----       --        ---
        Total other income and
         expenses, net                   2,154    4,604   (2,450)       (53%)
                                         -----    -----   ------        ---

    Income before income taxes          25,601   29,448   (3,847)       (13%)
    Income taxes                         9,293   10,871   (1,578)       (15%)
                                         -----   ------   ------        ---
    Net income                         $16,308  $18,577  $(2,269)       (12%)
                                       =======  =======  =======        ===
 

    Weighted average shares
     outstanding-basic*                 60,532   62,240
                                        ======   ======

    Weighted average shares
     outstanding-diluted*               60,851   63,032
                                        ======   ======

    Basic earnings per share*            $0.27    $0.30   $(0.03)       (10%)
                                         =====    =====   ======        ===

    Diluted earnings per share*          $0.27    $0.29   $(0.02)        (7%)
                                         =====    =====   ======         ==
 

    * The Company's weighted average shares outstanding for the three months
    ended March 31, 2008 have been retrospectively
    adjusted due to the application of EITF Issue 03-6-1 "Determining
    Whether Instruments Granted in Share Based Payment Transactions are
    Participating Securities" which became effective for the Company in
    2009. The application of this guidance has resulted in the revision of
    diluted earnings per share for the three months ended March 31, 2008
    from $0.30 to $0.29 per share.
 
 

    Choice Hotels International, Inc.                              Exhibit 2
    Consolidated Balance Sheets

    (In thousands, except per share amounts)      March 31,     December 31,
                                                    2009            2008
                                                    ----            ----
                                                (Unaudited)

    ASSETS

    Cash and cash equivalents                       $57,395         $52,680
    Accounts receivable, net                         38,087          43,141
    Deferred income taxes                             8,223           8,223
    Other current assets                             12,996          16,172
                                                     ------          ------
      Total current assets                          116,701         120,216

    Fixed assets and intangibles, net               136,984         138,867
    Receivable -- marketing and reservation fees     24,077          13,527
    Investments, employee benefit plans, at
     fair value                                      25,303          25,360
    Other assets                                     30,649          30,249
                                                     ------          ------

        Total assets                               $333,714        $328,219
                                                   --------        --------
 

    LIABILITIES AND SHAREHOLDERS' DEFICIT

    Accounts payable and accrued expenses           $61,980         $79,897
    Deferred revenue                                 55,966          47,004
    Deferred compensation & retirement plan
     obligations                                      2,808           6,960
    Other current liabilities                         6,728           1,206
                                                      -----           -----
      Total current liabilities                     127,482         135,067

    Long-term debt                                  309,800         284,400
    Deferred compensation & retirement plan
     obligations                                     33,097          33,462
    Other liabilities                                 9,537          12,960
                                                      -----          ------

      Total liabilities                             479,916         465,889
                                                    -------         -------

    Common stock, $0.01 par value                       605             607
    Additional paid-in-capital                       84,062          90,141
    Accumulated other comprehensive loss             (3,695)         (3,472)
    Treasury stock, at cost                        (842,554)       (835,186)
    Retained earnings                               615,380         610,240
                                                    -------         -------

      Total shareholders' deficit                  (146,202)       (137,670)
                                                   --------        --------

        Total liabilities and shareholders'
         deficit                                   $333,714        $328,219
                                                   --------        --------
 
 

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

                                                            Three Months
    (In thousands)                                         Ended March 31,
                                                           ---------------
                                                           2009       2008
                                                           ----       ----
    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income                                          $16,308    $18,577

    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization                       2,115      2,057
      Provision for bad debts                               350         44
      Non-cash stock compensation and other charges       2,406      3,293
      Non-cash interest and other loss                      949      1,577
      Dividends received from equity method
       investments                                          166        192
      Equity in net income of affiliates                   (218)      (301)

    Changes in assets and liabilities:
      Receivables                                         4,455     (2,208)
      Receivable - marketing and reservation fees, net  (10,370)    (9,533)
      Accounts payable                                   (9,095)   (13,610)
      Accrued expenses                                   (8,708)    (5,442)
      Income taxes payable/receivable                     8,321      5,660
      Deferred income taxes                                   -      2,389
      Deferred revenue                                    8,964      5,890
      Other assets                                          456       (903)
      Other liabilities                                  (5,643)       684
                                                         ------        ---

    NET CASH PROVIDED BY OPERATING ACTIVITIES            10,456      8,366
                                                         ------      -----

    CASH FLOWS FROM INVESTING ACTIVITIES:

    Investment in property and equipment                 (2,068)    (2,606)
    Purchases of investments, employee benefit plans     (2,003)    (4,405)
    Proceeds from sales of investments, employee
     benefit plans                                        1,149      4,430
    Issuance of notes receivable                           (948)      (775)
    Collections of notes receivable                           2        176
    Other items, net                                        (74)      (267)
                                                            ---       ----

    NET CASH USED IN INVESTING ACTIVITIES                (3,942)    (3,447)
                                                         ------     ------

    CASH FLOWS FROM FINANCING ACTIVITIES:

    Net borrowings pursuant to revolving
     credit facility                                     25,400      6,800
    Excess tax benefits from stock-based compensation       694      2,085
    Purchase of treasury stock                          (19,308)    (1,446)
    Dividends paid                                      (11,157)   (10,484)
    Proceeds from exercise of stock options               2,711      2,795
                                                          -----      -----

    NET CASH USED IN FINANCING ACTIVITIES                (1,660)      (250)
                                                         ------       ----

    Net change in cash and cash equivalents               4,854      4,669
    Effect of foreign exchange rate changes on cash and
     cash equivalents                                      (139)       272
    Cash and cash equivalents at beginning of period     52,680     46,377
                                                         ------     ------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD          $57,395    $51,318
                                                        =======    =======
 
 

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

                                               For the Three Months
                                               Ended March 31, 2009*
                                               ---------------------
                                      Average Daily
                                          Rate       Occupancy     RevPAR
                                          ----       ---------     ------

    Comfort Inn                          $73.96        45.9%       $33.96
    Comfort Suites                        84.48        47.1%        39.77
    Sleep                                 67.49        44.9%        30.32
                                          -----        ----         -----
      Midscale without Food & Beverage    75.56        46.0%        34.79
                                          -----        ----         -----

    Quality                               64.73        39.1%        25.29
    Clarion                               74.03        37.0%        27.35
                                          -----        ----         -----
      Midscale with Food & Beverage       66.57        38.6%        25.72
                                          -----        ----         -----

    Econo Lodge                           51.65        37.1%        19.14
    Rodeway                               49.60        37.0%        18.34
                                          -----        ----         -----
      Economy                             51.07        37.0%        18.92
                                          -----        ----         -----

    MainStay                              71.08        50.5%        35.90
    Suburban                              42.60        52.0%        22.15
                                          -----        ----         -----
      Extended Stay                       50.25        51.6%        25.92
                                          -----        ----         -----

    Total                                $68.39        42.4%       $29.02
                                         ======        ====        ======
 

                                               For the Three Months
                                               Ended March 31, 2008*
                                               ---------------------
                                      Average Daily
                                          Rate       Occupancy     RevPAR
                                          ----       ---------     ------

    Comfort Inn                          $73.70        50.5%       $37.23
    Comfort Suites                        86.06        54.0%        46.49
    Sleep                                 67.66        50.2%        33.98
                                          -----        ----         -----
      Midscale without Food & Beverage    75.65        51.2%        38.76
                                          -----        ----         -----

    Quality                               66.36        43.3%        28.76
    Clarion                               79.75        41.4%        33.04
                                          -----        ----         -----
      Midscale with Food & Beverage       69.30        42.9%        29.74
                                          -----        ----         -----

    Econo Lodge                           50.93        38.5%        19.60
    Rodeway                               49.52        40.9%        20.25
                                          -----        ----         -----
      Economy                             50.58        39.1%        19.75
                                          -----        ----         -----

    MainStay                              69.02        58.2%        40.14
    Suburban                              41.05        59.3%        24.35
                                          -----        ----         -----
      Extended Stay                       48.12        59.0%        28.39
                                          -----        ----         -----

    Total                                $69.19        46.8%       $32.37
                                         ======        ====        ======
 
 

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

    Comfort Inn                             0.4%       (460) bps     (8.8%)
    Comfort Suites                         (1.8%)      (690) bps    (14.5%)
    Sleep                                  (0.3%)      (530) bps    (10.8%)
                                           ----        ----  ---    -----
      Midscale without Food & Beverage     (0.1%)      (520) bps    (10.2%)
                                           ----        ----  ---    -----

    Quality                                (2.5%)      (420) bps    (12.1%)
    Clarion                                (7.2%)      (440) bps    (17.2%)
                                           ----        ----  ---    -----
      Midscale with Food &
       Beverage                            (3.9%)      (430) bps    (13.5%)
                                           ----        ----  ---    -----

    Econo Lodge                             1.4%       (140) bps     (2.3%)
    Rodeway                                 0.2%       (390) bps     (9.4%)
                                            ---        ----  ---     ----
      Economy                               1.0%       (210) bps     (4.2%)
                                            ---        ----  ---     ----

    MainStay                                3.0%       (770) bps    (10.6%)
    Suburban                                3.8%       (730) bps     (9.0%)
                                            ---        ----  ---     ----
      Extended Stay                         4.4%       (740) bps     (8.7%)
                                            ---        ----  ---     ----

    Total                                  (1.2%)      (440) bps    (10.3%)
                                           ====        ====  ===    =====
 
 
 

                                           For the Quarter Ended*
                                           ----------------------
                                           3/31/2009    3/31/2008

    System-wide effective royalty rate       4.26%        4.18%
 
 
 

    * Operating statistics represent hotel operations from December through
      February
 
 

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

                                        March 31, 2009   March 31, 2008
                                        --------------   --------------

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

    Comfort Inn                         1,452  114,008   1,436   112,150
    Comfort Suites                        560   43,694     490    38,128
    Sleep                                 366   26,956     347    25,781
                                          ---   ------     ---    ------
      Midscale without Food & Beverage  2,378  184,658   2,273   176,059
                                        -----  -------   -----   -------

    Quality                               926   85,943     847    80,484
    Clarion                               155   22,562     169    23,340
                                          ---   ------     ---    ------
      Midscale with Food & Beverage     1,081  108,505   1,016   103,824
                                        -----  -------   -----   -------

    Econo Lodge                           821   51,288     831    51,104
    Rodeway                               352   20,442     297    17,628
                                          ---   ------     ---    ------
      Economy                           1,173   71,730   1,128    68,732
                                        -----   ------   -----    ------

    MainStay                               37    2,867      32     2,421
    Suburban                               64    7,675      55     6,739
                                           --    -----      --     -----
      Extended Stay                       101   10,542      87     9,160
                                          ---   ------      --     -----

    Ascend Collection                      21    1,363       -         -
    Cambria Suites                         13    1,448       5       567
                                           --    -----      --       ---

    Domestic Franchises                 4,767  378,246   4,509   358,342

    International Franchises            1,099   97,989   1,111    98,354
                                        -----   ------   -----    ------

    Total Franchises                    5,866  476,235   5,620   456,696
                                        =====  =======   =====   =======
 
 

                                                    Variance
                                                    --------

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

    Comfort Inn                            16    1,858     1.1%      1.7%
    Comfort Suites                         70    5,566    14.3%     14.6%
    Sleep                                  19    1,175     5.5%      4.6%
                                           --    -----     ---       ---
      Midscale without Food & Beverage    105    8,599     4.6%      4.9%
                                          ---    -----     ---       ---

    Quality                                79    5,459     9.3%      6.8%
    Clarion                               (14)    (778)   (8.3%)    (3.3%)
                                          ---     ----    ----      ----
      Midscale with Food & Beverage        65    4,681     6.4%      4.5%
                                           --    -----     ---       ---

    Econo Lodge                           (10)     184    (1.2%)     0.4%
    Rodeway                                55    2,814    18.5%     16.0%
                                           --    -----    ----      ----
      Economy                              45    2,998     4.0%      4.4%
                                           --    -----     ---       ---

    MainStay                                5      446    15.6%     18.4%
    Suburban                                9      936    16.4%     13.9%
                                           --      ---    ----      ----
      Extended Stay                        14    1,382    16.1%     15.1%
                                           --    -----    ----      ----

    Ascend Collection                      21    1,363    NM        NM
    Cambria Suites                          8      881   160.0%    155.4%
                                           --      ---   -----     -----

    Domestic Franchises                   258   19,904     5.7%      5.6%

    International Franchises              (12)    (365)   (1.1%)    (0.4%)
                                          ---     ----    ----      ----

    Total Franchises                      246   19,539     4.4%      4.3%
                                          ===   ======     ===       ===
 
 

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

                               For the Three Months  For the Three Months
                               Ended March 31, 2009  Ended March 31, 2008
                               --------------------  --------------------

                                 New                   New
                                Cons-   Conv-         Cons-   Conv-
                              truction ersion Total truction ersion Total
                              -------- ------ ----- -------- ------ -----

    Comfort Inn                      -      7     7       11      9    20
    Comfort Suites                   1      1     2       15      3    18
    Sleep                            2      -     2       11      2    13
                                    --     --    --       --     --    --
      Midscale without Food &
       Beverage                      3      8    11       37     14    51
                                    --     --    --       --     --    --

    Quality                          1     23    24        -     28    28
    Clarion                          -      6     6        1     10    11
                                    --     --    --       --     --    --
      Midscale with Food &
       Beverage                      1     29    30        1     38    39
                                    --     --    --       --     --    --

    Econo Lodge                      -      9     9        1     19    20
    Rodeway                          1      7     8        1     18    19
                                    --     --    --       --     --    --
      Economy                        1     16    17        2     37    39
                                    --     --    --       --     --    --

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

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

    Total Domestic System            6     54    60       44     89   133
                                     =     ==    ==       ==     ==   ===
 
 

                                                    % Change
                                                    --------

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

    Comfort Inn                             (100%)        (22%)     (65%)
    Comfort Suites                           (93%)        (67%)     (89%)
    Sleep                                    (82%)       (100%)     (85%)
                                             ---         ----       ---
      Midscale without Food & Beverage       (92%)        (43%)     (78%)
                                             ---          ---       ---

    Quality                                   NM          (18%)     (14%)
    Clarion                                 (100%)        (40%)     (45%)
                                            ----          ---       ---
      Midscale with Food & Beverage            0%         (24%)     (23%)
                                              --          ---       ---

    Econo Lodge                             (100%)        (53%)     (55%)
    Rodeway                                    0%         (61%)     (58%)
                                              --          ---       ---
      Economy                                (50%)        (57%)     (56%)
                                             ---          ---       ---

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

    Ascend Collection                         NM           NM        NM
    Cambria Suites                             0%          NM         0%
                                              --           --        --

    Total Domestic System                    (86%)        (39%)     (55%)
                                             ===          ===       ===
 
 

                                                                    Exhibit 7
                        CHOICE HOTELS INTERNATIONAL, INC.
          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.

                                    March 31, 2009         March 31, 2008
                                         Units                  Units
                                         -----                  -----
                                 Conv- New Cons-        Conv- New Cons-
                                ersion truction  Total ersion truction  Total
                                ------ --------- ----- ------ --------- -----

    Comfort Inn                     48       118   166     53       131   184
    Comfort Suites                   2       253   255      3       275   278
    Sleep Inn                        1       151   152      2       140   142
                                    --       ---   ---     --       ---   ---
       Midscale without Food &
        Beverage                    51       522   573     58       546   604
                                    --       ---   ---     --       ---   ---

    Quality                         64        13    77     67        15    82
    Clarion                         27         7    34     34         7    41
                                    --        --    --     --        --    --
       Midscale with Food &
        Beverage                    91        20   111    101        22   123
                                    --        --   ---    ---        --   ---

    Econo Lodge                     35         4    39     46         3    49
    Rodeway                         48         3    51     59         2    61
                                    --        --    --     --        --    --
         Economy                    83         7    90    105         5   110
                                    --        --    --    ---        --   ---

    MainStay                         -        36    36      2        45    47
    Suburban                         -        30    30      3        38    41
                                    --        --    --     --        --    --
         Extended Stay               -        66    66      5        83    88
                                    --        --    --     --        --    --

    Ascend Collection                -         1     1      -         -     -
    Cambria Suites                   -        55    55      -        61    61
                                    --        --    --     --        --    --

                                   225       671   896    269       717   986
                                   ===       ===   ===    ===       ===   ===
 
 

                                                  Variance
                                                  --------

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

    Comfort Inn                     (5)   (9%)     (13)   (10%)    (18) (10%)
    Comfort Suites                  (1)  (33%)     (22)    (8%)    (23)  (8%)
    Sleep Inn                       (1)  (50%)      11      8%      10    7%
                                    --   ---        --     --       --   --
       Midscale without Food &
        Beverage                    (7)  (12%)     (24)    (4%)    (31)  (5%)
                                    --   ---       ---     --      ---   --

    Quality                         (3)   (4%)      (2)   (13%)     (5)  (6%)
    Clarion                         (7)  (21%)       -      0%      (7) (17%)
                                    --   ---        --     --       --  ---
       Midscale with Food &
        Beverage                   (10)  (10%)      (2)    (9%)    (12) (10%)
                                   ---   ---        --     --      ---  ---

    Econo Lodge                    (11)  (24%)       1     33%     (10) (20%)
    Rodeway                        (11)  (19%)       1     50%     (10) (16%)
                                   ---   ---        --     --      ---  ---
         Economy                   (22)  (21%)       2     40%     (20) (18%)
                                   ---   ---        --     --      ---  ---

    MainStay                        (2) (100%)      (9)   (20%)    (11) (23%)
    Suburban                        (3) (100%)      (8)   (21%)    (11) (27%)
                                    --  ----        --    ---      ---  ---
         Extended Stay              (5) (100%)     (17)   (20%)    (22) (25%)
                                    --  ----       ---    ---      ---  ---

    Ascend Collection                -   NM          1    NM         1   NM
    Cambria Suites                   -   NM         (6)   (10%)     (6) (10%)
                                    --   --         --    ---       --  ---

                                   (44)  (16%)     (46)    (6%)    (90)  (9%)
                                   ===   ===       ===     ==      ===   ==
 
 

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

    CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

                                      Three Months Ended
    (dollar amounts in thousands)          March 31,
                                      ------------------

                                          2009      2008
                                          ----      ----
      Franchising Revenues:

      Total Revenues                  $114,158  $128,855
      Adjustments:
           Marketing and reservation
            revenues                   (62,042)  (68,426)
           Hotel Operations             (1,118)   (1,042)
                                        ------    ------
      Franchising Revenues             $50,998   $59,387
                                       -------   -------

      Franchising Margins:

      Operating Margin:

      Total Revenues                  $114,158  $128,855
      Operating Income                 $27,755   $34,052
                                       -------   -------
           Operating Margin               24.3%     26.4%
                                          ----      ----

      Franchising Margin:

      Franchising Revenues             $50,998   $59,387

      Operating Income                 $27,755   $34,052
      Less: Hotel Operations               333       277
                                           ---       ---
                                       $27,422   $33,775
                                       -------   -------

                                          ----      ----
           Franchising Margins            53.8%     56.9%
                                          ----      ----
 
 
 

    EBITDA Reconciliation

    (in millions)
                                       Q1 2009   Q1 2008         Full-Year
                                       Actuals   Actuals       2009 Outlook
                                       -------   -------       ------------

      Operating Income                   $27.8     $34.1          $167.0
      Depreciation and amortization        2.1       2.0             8.5
                                           ---       ---             ---
      Earnings before interest,
       taxes, depreciation &
       amortization                      $29.9     $36.1          $175.5
                                         =====     =====          ======
 
 

Impact of the Adoption of New Accounting Pronouncements on Earnings Per Share

In June 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position Emerging Issues Task Force No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 clarified that all share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common shareholders. Therefore, awards of this nature are considered participating securities and the two-class method of computing basic and diluted earnings per share must be applied rather than the treasury stock method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. In addition, once effective, all prior period earnings per share data presented must be adjusted retrospectively to conform to the provisions of FSP EITF 03-6-1.

The Company's outstanding unvested restricted stock awards contain rights to non-forfeitable dividends and as a result, the Company applied this guidance in the first quarter of 2009. The two-class method of calculating earnings per share is more dilutive to both basic and diluted shares outstanding than the previously utilized treasury stock method. In accordance with FSP EITF 03-6-1, the Company has also retrospectively adjusted its basic and diluted shares outstanding for the three months ended March 31, 2008 under the two-class method which resulted in a reduction of the Company's diluted earnings per share from $0.30 to $0.29 per share.

Conference Call

Choice will conduct a conference call on Friday, May 1, 2009 at 10:00 a.m. EDT to discuss the company's first quarter results. The dial-in number to listen to the call is 1-866-804-6927, and the access code is 46241510. International callers should dial 1-857-350-1673 and enter the access code 46241510. The conference call also will be Webcast simultaneously via the company's Web site, 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 May 1, 2009 through May 30, 2009 by calling 1-888-286-8010 and entering access code 34310817. The international dial-in number for the replay is 617-801-6888, access code 34310817. In addition, the call will be archived and available on choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International franchises more than 5,800 hotels, representing more than 475,000 rooms, in the United States and more than 30 countries and territories. As of March 31, 2009, 896 hotels are under construction, awaiting conversion or approved for development in the United States, representing 70,381 rooms, and an additional 111 hotels, representing 9,114 rooms, are under construction, awaiting conversion or approved for development in more than 15 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 and theCaribbean have upscale lodging options at historic, boutique and unique hotels.

Additional corporate information may be found on the Choice Hotels Web site, which may be accessed atwww.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, 2008, filed with the Securities and Exchange Commission on March 2, 2009. 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

EBITDA, franchising revenues and 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 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.

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.

.
Contact:

Choice Hotels International, Inc.
http://www.choicehotels.com
 

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Also See: Choice Hotels Reports 4th Qtr Net Income of $18.7 million, Compared with $27.9 million a Year Earlier; System-wide RevPAR Fell 7.7% in the Quarter / Brand Operating Statistics / February 2009
Choice Hotels International Inc. Reports a 6.5% Decline in Third Qtr Net Income of $35.9 million Compared with $38.4 million a Year Earlier; Higher Operating Costs Wipes Away a 9.2% Increase in Revenues / October 2008
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