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  Choice Hotels 3rd Qtr 2010 Net Income of $40.5 Million Up from Prior Year's
 $32.8 million, an Increase of 23%; Domestic RevPAR Up 7.4%  /

Hotel Operating Statistics

 

 


SILVER SPRING, Md.
, October 27, 2010 -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for third quarter 2010:

  • Adjusted diluted earnings per share (“EPS”) for third quarter 2010 were $0.68 compared to $0.56 for the same period of the prior year.  Diluted EPS were $0.68 for third quarter 2010 compared to $0.55 for third quarter 2009.  Adjusted diluted EPS for third quarter 2009 exclude certain special items, as described below, totaling $0.01.

  • Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $57.3 million for the three months ended September 30, 2010, compared to $51.7 million for the same period of 2009. Operating income for the three months ended September 30, 2010 and 2009 was $54.9 million and $48.1 million, respectively.

  • Franchising revenues increased 7% from $74.6 million for the three months ended September 30, 2009 to $79.9 millionfor the same period of 2010.  Total revenues for the three months ended September 30, 2010 increased 11% compared to the same period of 2009.

  • Domestic unit and room growth increased 1.2% and 0.7%, respectively, from September 30, 2009.  

  • Domestic system-wide revenue per available room (“RevPAR”) increased 7.4% for the third quarter of 2010 compared to the same period of 2009 primarily as a result of occupancy rates increasing 420 basis points.    

  • The effective royalty rate increased 7 basis points to 4.30% for the three months ended September 30, 2010 compared to 4.23% for the same period of the prior year.

  • The company executed 79 new domestic hotel franchise contracts for both the three months ended September 30, 2010and 2009.

  • The number of domestic hotels under construction, awaiting conversion or approved for development declined 27% fromSeptember 30, 2009 to 545 hotels representing 44,627 rooms; the worldwide pipeline declined 26% from September 30, 2009 to 638 hotels representing 52,723 rooms.

  • On August 25, 2010, the company completed and issued unsecured senior notes in an aggregate principal amount of$250 million, in an underwritten, registered public offering. The notes will mature in August 2020 and bear a coupon rate of interest of 5.7%. Considering bond issuance and related interest rate hedging costs, the company’s effective interest cost is approximately 6.2%. The proceeds from these senior notes were utilized to repay other outstanding indebtedness under the company’s unsecured revolving credit facility.

  • The effective income tax rate for the three months ended September 30, 2010 was 26.4% compared to 35.0% for the same period of the prior year. Excluding discrete items, totaling $3.8 million (approximately $0.06 diluted earnings per share), recorded during the three months ended September 30, 2010, the company’s effective income tax rate was approximately 34.7%.

“During the third quarter, we were pleased to see strong gains in RevPAR domestically across every brand in the Choice family, enabling us to post positive year-to-date domestic RevPAR performance,” said Stephen P. Joyce, president and chief executive officer.  “While the hotel transaction environment and lack of access to financing continues to impact our franchise sales results, our recently launched incentive program for the Quality, Clarion, and Econo Lodge brands has been well-received by developers.  With our roster of strong, well-known brands and proven ability to deliver reservations to our franchisees’ hotels, we are well-positioned for growth as the hotel development environment improves.”

Special Items

During the three and nine months ended September 30, 2010, the company recorded employee termination benefits charges of approximately $0.3 million and $0.5 million, respectively. These special items did not have an impact on diluted EPS for the three and nine months ended September 30, 2010.

During the three and nine months ended September 30, 2009, the company recorded employee termination benefits of approximately $1.5 million and $2.3 million, respectively. During the nine months ended September 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 $0.01 and $0.03 for the three and nine months ended September 30, 2009.

Outlook for 2010

The company’s fourth quarter 2010 adjusted diluted EPS is expected to be $0.38. The company expects full-year 2010 adjusted diluted EPS to be between $1.77 and $1.79.  Adjusted EBITDA for full-year 2010 are expected to be between $168.5 million and $170.5 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth of approximately 1% in 2010;
  • RevPAR is expected to increase approximately 7% to 8% for fourth quarter of 2010 and increase approximately 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 34.7% for the fourth quarter and 32.3% for full-year 2010.
  • Adjusted EBITDA and adjusted diluted EPS for the fourth quarter and full year 2010 exclude $1.0 million and $1.5 million, respectively of operating expenses related to employee termination benefits which represent approximately $0.01 diluted EPS for both periods.

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 nine months ended September 30, 2010 the company paid $32.9 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 nine months ended September 30, 2010, the company purchased approximately 0.3 million shares of its common stock at an average price of $32.36 for a total cost of $8.7 million under the share repurchase program and has authorization to purchase up to an additional 3.6 million shares under this program.  During the three months ended September 30, 2010 the Company purchased approximately 0.1 million shares of its common stock for a total cost of $1.9 million at an average price of$34.85. 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 43.2 million shares of its common stock for a total cost of $1 billion through September 30, 2010. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.2 million shares through September 30, 2010 under the share repurchase program at an average price of$13.35 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 nine months ended September 30, 2010, the Company has advanced approximately $18.9 millionpursuant to these programs (of which $5 million has been repaid to the Company).

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 between $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 Thursday, October 28, 2010 at 10:15 a.m. EDT to discuss the company’s third quarter 2010 results. The dial-in number to listen to the call is 1-866-314-5232, and the access code is 99130444. International callers should dial 1-617-213-8052 and enter the access code 99130444.  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 1:15 p.m. EDT on October 28, 2010 through November 28, 2010by calling 1-888-286-8010 and entering access code 42827909. The international dial-in number for the replay is 617-801-6888, access code 42827909. 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 September 30, 2010, more than 540 hotels are under construction, awaiting conversion or approved for development in the United States, representing more than 44,000 rooms, and approximately 90 hotels, representing approximately 8,000 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 theCaribbean 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 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, 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 nine months September 30, 2010 and 2009 as well as a loss on the sublease of a portion of the Company’s office space during the nine months ended September 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 Collection are proprietary trademarks and service marks of Choice Hotels International.

Choice Hotels International, Inc.












Exhibit 1


Consolidated Statements of Income


















(Unaudited)








































































Three Months Ended September 30,


Nine Months Ended September 30,








Variance






Variance




2010


2009


$


%


2010


2009


$


%


(In thousands, except per share amounts)




































REVENUES:




































Royalty fees


$       72,565


$       66,401


$ 6,164


9%


$ 171,029


$ 164,771


$ 6,258


4%


Initial franchise and relicensing fees


1,970


2,957


(987)


(33%)


6,537


9,599


(3,062)


(32%)


Procurement services


3,756


3,922


(166)


(4%)


13,612


14,084


(472)


(3%)


Marketing and reservation


102,867


90,465


12,402


14%


242,096


227,803


14,293


6%


Hotel operations


1,068


934


134


14%


3,044


3,231


(187)


(6%)


Other


1,575


1,297


278


21%


4,752


3,989


763


19%


     Total revenues


183,801


165,976


17,825


11%


441,070


423,477


17,593


4%




















OPERATING EXPENSES:




































Selling, general and administrative


23,156


24,517


(1,361)


(6%)


67,796


73,054


(5,258)


(7%)


Depreciation and amortization


2,078


2,105


(27)


(1%)


6,470


6,252


218


3%


Marketing and reservation


102,867


90,465


12,402


14%


242,096


227,803


14,293


6%


Hotel operations


823


764


59


8%


2,387


2,378


9


0%


Total operating expenses


128,924


117,851


11,073


9%


318,749


309,487


9,262


3%




















Operating income


54,877


48,125


6,752


14%


122,321


113,990


8,331


7%




















OTHER INCOME AND EXPENSES:


















Interest expense


1,864


926


938


101%


3,160


3,731


(571)


(15%)


Interest and other investment income


(1,671)


(2,961)


1,290


(44%)


(1,645)


(5,302)


3,657


(69%)


Equity in net income of affiliates


(342)


(336)


(6)


2%


(890)


(779)


(111)


14%


Total other income and expenses, net


(149)


(2,371)


2,222


(94%)


625


(2,350)


2,975


(127%)




















Income before income taxes


55,026


50,496


4,530


9%


121,696


116,340


5,356


5%


Income taxes


14,532


17,688


(3,156)


(18%)


38,398


41,721


(3,323)


(8%)


Net income


$       40,494


$       32,808


$ 7,686


23%


$   83,298


$   74,619


$ 8,679


12%






































Basic earnings per share


$           0.68


$           0.55


$   0.13


24%


$       1.40


$       1.24


$   0.16


13%




















Diluted earnings per share


$           0.68


$           0.55


$   0.13


24%


$       1.40


$       1.24


$   0.16


13%





















Choice Hotels International, Inc.




Exhibit 2


Consolidated Balance Sheets






















(In thousands, except per share amounts)


September 30,


December 31,






2010


2009






(Unaudited)












ASSETS















Cash and cash equivalents


$               79,548


$          67,870


Accounts receivable, net


53,682


41,898


Deferred income taxes


7,980


7,980


Other current assets


23,980


10,114



Total current assets


165,190


127,862










Fixed assets and intangibles, net


140,657


133,999


Receivable -- marketing and reservation fees


46,127


33,872


Investments, employee benefit plans, at fair value


22,370


20,931


Other assets


28,963


23,373












Total assets


$             403,307


$        340,037


























LIABILITIES AND SHAREHOLDERS' DEFICIT














Accounts payable and accrued expenses


$               76,240


$          70,933


Deferred revenue


71,296


51,765


Revolving credit facility


6,600


-


Deferred compensation & retirement plan obligations


2,510


2,798


Current portion of long-term debt


294


-


Income taxes payable


19,775


6,310



Total current liabilities


176,715


131,806










Long-term debt



251,613


277,700


Deferred compensation & retirement plan obligations  


34,579


34,956


Other liabilities



15,894


9,787











Total liabilities


478,801


454,249










Common stock, $0.01 par value


596


595


Additional paid-in-capital


89,611


90,731


Accumulated other comprehensive income (loss)


(7,545)


333


Treasury stock, at cost


(872,999)


(870,302)


Retained earnings


714,843


664,431



Total shareholders' deficit


(75,494)


(114,212)












Total liabilities and shareholders' deficit


$             403,307


$        340,037











Choice Hotels International, Inc.



Exhibit 3


Consolidated Statements of Cash Flows





(Unaudited)


















(In thousands)

Nine Months Ended September 30,








2010


2009


CASH FLOWS FROM OPERATING ACTIVITIES:










Net income

$  83,298


$ 74,619







Adjustments to reconcile net income to net cash provided





by operating activities:





 Depreciation and amortization  

6,470


6,252


 Provision for bad debts

2,421


1,643


 Non-cash stock compensation and other charges

6,969


8,796


 Non-cash interest and other income

(987)


(4,953)


 Dividends received from equity method investments

618


819


 Equity in net income of affiliates

(890)


(779)







Changes in assets and liabilities, net of acquisitions:





 Receivables

(14,511)


(9,409)


 Receivable - marketing and reservation fees, net

(2,594)


(13,742)


 Accounts payable

6,274


(2,061)


 Accrued expenses

(1,210)


(5,754)


 Income taxes payable/receivable

11,940


22,314


 Deferred income taxes

(2,704)


-


 Deferred revenue

19,443


5,349


 Other assets

(11,755)


2,087


 Other liabilities

5,457


(5,215)







NET CASH PROVIDED BY OPERATING ACTIVITIES

108,239


79,966







CASH FLOWS FROM INVESTING ACTIVITIES:










Investment in property and equipment

(17,673)


(7,539)


Acquisitions, net of cash acquired

(466)


-


Issuance of notes receivable

(8,901)


(1,731)


Collections of notes receivable

5,055


190


Purchases of investments, employee benefit plans

(1,396)


(3,239)


Proceeds from sales of investments, employee benefit plans

1,018


13,839


Other items, net

(296)


(447)







NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES

(22,659)


1,073







CASH FLOWS FROM FINANCING ACTIVITIES:










Proceeds from the issuance of long-term debt

247,733


-


Net borrowings (repayments) pursuant to revolving credit facility

(271,100)


7,900


Principal payments on long-term debt

(20)


-


Settlement of forward starting interest rate swap agreement

(8,663)


-


Debt issuance costs

(804)


-


Purchase of treasury stock

(11,171)


(57,042)


Excess tax benefits from stock-based compensation

331


4,374


Dividends paid

(32,884)


(33,335)


Proceeds from exercise of stock options

1,321


6,744







NET CASH USED IN FINANCING ACTIVITIES

(75,257)


(71,359)







Net change in cash and cash equivalents

10,323


9,680


Effect of foreign exchange rate changes on cash and cash equivalents

1,355


1,285


Cash and cash equivalents at beginning of period

67,870


52,680







CASH AND CASH EQUIVALENTS AT END OF PERIOD

$  79,548


$ 63,645








CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4


SUPPLEMENTAL OPERATING INFORMATION



DOMESTIC HOTEL SYSTEM



(UNAUDITED)

























































































For the Nine Months Ended September 30, 2010*


For the Nine Months Ended September 30, 2009*


Change

























Average Daily






Average Daily






Average Daily









Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR























Comfort Inn


$            77.16


55.4%


$ 42.72


$          77.48


54.7%


$ 42.36


(0.4%)


70

bps


0.8%


Comfort Suites


82.92


55.1%


45.72


85.72


54.2%


46.50


(3.3%)


90

bps


(1.7%)


Sleep


68.94


51.8%


35.69


70.16


52.5%


36.80


(1.7%)


(70)

bps


(3.0%)


 Midscale without Food & Beverage


77.47


54.8%


42.42


78.41


54.2%


42.53


(1.2%)


60

bps


(0.3%)























Quality


67.30


48.0%


32.31


68.73


46.9%


32.20


(2.1%)


110

bps


0.3%


Clarion


75.54


43.3%


32.73


77.95


43.0%


33.55


(3.1%)


30

bps


(2.4%)


 Midscale with Food & Beverage


68.98


47.0%


32.40


70.54


46.1%


32.48


(2.2%)


90

bps


(0.2%)























Econo Lodge


54.26


45.7%


24.81


54.96


43.9%


24.15


(1.3%)


180

bps


2.7%


Rodeway


51.42


46.0%


23.64


53.24


43.9%


23.35


(3.4%)


210

bps


1.2%


 Economy


53.39


45.8%


24.45


54.46


43.9%


23.92


(2.0%)


190

bps


2.2%























MainStay


66.03


63.8%


42.09


71.68


58.1%


41.65


(7.9%)


570

bps


1.1%


Suburban


39.24


64.2%


25.20


42.37


56.0%


23.72


(7.4%)


820

bps


6.2%


 Extended Stay


46.76


64.1%


29.97


50.76


56.6%


28.71


(7.9%)


750

bps


4.4%























Total


$            70.36


51.2%


$ 36.02


$          71.59


50.1%


$ 35.85


(1.7%)


110

bps


0.5%























* Operating statistics represent hotel operations from December through August




































































For the Three Months Ended September 30, 2010*


For the Three Months Ended September 30, 2009*


Change

























Average Daily






Average Daily






Average Daily









Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR























Comfort Inn


$            82.46


66.7%


$ 54.99


$          81.35


62.7%


$ 51.04


1.4%


400

bps


7.7%


Comfort Suites


85.78


64.2%


55.03


86.67


60.0%


52.02


(1.0%)


420

bps


5.8%


Sleep


72.03


60.4%


43.52


72.14


57.9%


41.74


(0.2%)


250

bps


4.3%


 Midscale without Food & Beverage


81.84


65.1%


53.28


81.32


61.4%


49.89


0.6%


370

bps


6.8%























Quality


71.76


58.3%


41.84


72.71


53.7%


39.02


(1.3%)


460

bps


7.2%


Clarion


80.18


51.5%


41.27


81.07


47.8%


38.75


(1.1%)


370

bps


6.5%


 Midscale with Food & Beverage


73.44


56.8%


41.72


74.33


52.4%


38.97


(1.2%)


440

bps


7.1%























Econo Lodge


58.62


55.4%


32.47


58.54


51.2%


29.94


0.1%


420

bps


8.5%


Rodeway


57.40


56.0%


32.15


57.37


51.1%


29.30


0.1%


490

bps


9.7%


 Economy


58.24


55.6%


32.37


58.19


51.1%


29.75


0.1%


450

bps


8.8%























MainStay


68.96


72.5%


49.98


73.01


63.6%


46.44


(5.5%)


890

bps


7.6%


Suburban


40.61


67.8%


27.52


41.68


60.1%


25.06


(2.6%)


770

bps


9.8%


 Extended Stay


49.01


69.1%


33.87


50.88


61.1%


31.10


(3.7%)


800

bps


8.9%























Total


$            74.79


61.1%


$ 45.71


$          74.77


56.9%


$ 42.56


0.0%


420

bps


7.4%












































* Operating statistics represent hotel operations from June through August
















































































For the Quarter Ended




For the Nine Months Ended




9/30/2010


9/30/2009




9/30/2010


9/30/2009














System-wide effective royalty rate


4.30%


4.23%




4.32%


4.25%















CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5


SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA



(UNAUDITED)



























































September 30, 2010


September 30, 2009


Variance






















Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%




















Comfort Inn


1,450


113,952


1,457


114,377


(7)


(425)


(0.5%)


(0.4%)


Comfort Suites


624


48,411


601


46,853


23


1,558


3.8%


3.3%


Sleep


394


28,714


389


28,459


5


255


1.3%


0.9%


 Midscale without Food & Beverage


2,468


191,077


2,447


189,689


21


1,388


0.9%


0.7%




















Quality


990


88,831


963


88,129


27


702


2.8%


0.8%


Clarion


176


25,208


167


24,063


9


1,145


5.4%


4.8%


 Midscale with Food & Beverage


1,166


114,039


1,130


112,192


36


1,847


3.2%


1.6%




















Econo Lodge


774


48,022


795


49,504


(21)


(1,482)


(2.6%)


(3.0%)


Rodeway


387


21,522


374


21,834


13


(312)


3.5%


(1.4%)


 Economy


1,161


69,544


1,169


71,338


(8)


(1,794)


(0.7%)


(2.5%)




















MainStay


37


2,868


37


2,866


-


2


0.0%


0.1%


Suburban


63


7,608


63


7,531


-


77


0.0%


1.0%


 Extended Stay


100


10,476


100


10,397


-


79


0.0%


0.8%




















Ascend Collection


34


2,821


26


1,941


8


880


30.8%


45.3%


Cambria Suites


22


2,558


18


2,073


4


485


22.2%


23.4%




















Domestic Franchises


4,951


390,515


4,890


387,630


61


2,885


1.2%


0.7%




















International Franchises


1,140


101,637


1,116


99,582


24


2,055


2.2%


2.1%




















Total Franchises


6,091


492,152


6,006


487,212


85


4,940


1.4%


1.0%





































Exhibit 6


CHOICE HOTELS INTERNATIONAL, INC.


SUPPLEMENTAL INFORMATION BY BRAND


DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS


(UNAUDITED)




















































































For the Nine Months Ended September 30, 2010


For the Nine Months Ended September 30, 2009


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


                    4


                22


   26


                 4


             22


   26


0%


0%


0%


Comfort Suites


                  13


                  1


   14


                 9


               1


   10


44%


0%


40%


Sleep


                    3


                  -


     3


               11


               2


   13


(73%)


(100%)


(77%)


 Midscale without Food & Beverage


                  20


                23


   43


               24


             25


   49


(17%)


(8%)


(12%)






















Quality


                    1


                54


   55


                 3


             87


   90


(67%)


(38%)


(39%)


Clarion


                     -


                17


   17


                 1


             23


   24


(100%)


(26%)


(29%)


 Midscale with Food & Beverage


                    1


                71


   72


                 4


           110


 114


(75%)


(35%)


(37%)






















Econo Lodge


                     -


                38


   38


                 -


             45


   45


NM


(16%)


(16%)


Rodeway


                    1


                26


   27


                 1


             36


   37


0%


(28%)


(27%)


 Economy


                    1


                64


   65


                 1


             81


   82


0%


(21%)


(21%)






















MainStay


                    4


                  -


     4


                 1


               1


     2


300%


(100%)


100%


Suburban


                    1


                  -


     1


                 2


               -


     2


(50%)


NM


(50%)


 Extended Stay


                    5


                  -


     5


                 3


               1


     4


67%


(100%)


25%






















Ascend Collection


                    1


                  5


     6


                 1


               5


     6


0%


0%


0%


Cambria Suites


                    5


                  -


     5


                 2


               -


     2


150%


NM


150%






















Total Domestic System


                  33


              163


 196


               35


           222


 257


(6%)


(27%)


(24%)





























































































































For the Three Months Ended September 30, 2010


For the Three Months Ended September 30, 2009


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


1


9


10


3


7


10


(67%)


29%


0%


Comfort Suites


5


-


5


3


-


3


67%


NM


67%


Sleep


1


-


1


4


-


4


(75%)


NM


(75%)


 Midscale without Food & Beverage


7


9


16


10


7


17


(30%)


29%


(6%)






















Quality


-


23


23


1


23


24


(100%)


0%


(4%)


Clarion


-


11


11


1


9


10


(100%)


22%


10%


 Midscale with Food & Beverage


-


34


34


2


32


34


(100%)


6%


0%






















Econo Lodge


-


16


16


-


16


16


NM


0%


0%


Rodeway


-


7


7


-


8


8


NM


(13%)


(13%)


 Economy


-


23


23


-


24


24


NM


(4%)


(4%)






















MainStay


1


-


1


-


-


-


NM


NM


NM


Suburban


-


-


-


-


-


-


NM


NM


NM


 Extended Stay


1


-


1


-


-


-


NM


NM


NM






















Ascend Collection


1


2


3


1


3


4


0%


(33%)


(25%)


Cambria Suites


2


-


2


-


-


-


NM


NM


NM






















Total Domestic System


11


68


79


13


66


79


(15%)


3%


0%















































































































































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.











Variance




September 30, 2010


September 30, 2009










Units


Units


Conversion


New Construction


Total




Conversion


New Construction


Total


Conversion


New Construction


Total


Units


%


Units


%


Units


%




























Comfort Inn


35


64


99


37


97


134


(2)


(5%)


(33)


(34%)


(35)


(26%)


Comfort Suites


1


126


127


-


194


194


1


NM


(68)


(35%)


(67)


(35%)


Sleep Inn


1


81


82


1


129


130


-


0%


(48)


(37%)


(48)


(37%)


  Midscale without Food & Beverage


37


271


308


38


420


458


(1)


(3%)


(149)


(35%)


(150)


(33%)




























Quality


38


9


47


49


16


65


(11)


(22%)


(7)


(44%)


(18)


(28%)


Clarion


20


4


24


23


6


29


(3)


(13%)


(2)


(33%)


(5)


(17%)


    Midscale with Food & Beverage


58


13


71


72


22


94


(14)


(19%)


(9)


(41%)


(23)


(24%)




























Econo Lodge


37


2


39


40


4


44


(3)


(8%)


(2)


(50%)


(5)


(11%)


Rodeway


16


2


18


35


2


37


(19)


(54%)


-


0%


(19)


(51%)


    Economy


53


4


57


75


6


81


(22)


(29%)


(2)


(33%)


(24)


(30%)




























MainStay


-


40


40


-


34


34


-


NM


6


18%


6


18%


Suburban


-


26


26


-


31


31


-


NM


(5)


(16%)


(5)


(16%)


    Extended Stay


-


66


66


-


65


65


-


NM


1


2%


1


2%




























Ascend Collection


3


5


8


1


2


3


2


200%


3


150%


5


167%


Cambria Suites


-


35


35


-


43


43


-


NM


(8)


(19%)


(8)


(19%)






























151


394


545


186


558


744


(35)


(19%)


(164)


(29%)


(199)


(27%)





























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 September 30,


Nine Months Ended September 30,


















2010


2009


2010


2009




Franchising Revenues:
























Total Revenues


$            183,801


$            165,976


$                   441,070


$                   423,477




Adjustments:












    Marketing and reservation revenues


(102,867)


(90,465)


(242,096)


(227,803)




    Hotel operations


(1,068)


(934)


(3,044)


(3,231)




Franchising Revenues


$              79,866


$              74,577


$                   195,930


$                   192,443
















Franchising Margins:
























Operating Margin:
























Total Revenues


$            183,801


$            165,976


$                   441,070


$                   423,477




Operating Income


$              54,877


$              48,125


$                   122,321


$                   113,990




    Operating Margin


29.9%


29.0%


27.7%


26.9%
















Adjusted Franchising Margin:
























Franchising Revenues


$              79,866


$              74,577


$                   195,930


$                   192,443
















Operating Income


$              54,877


$              48,125


$                   122,321


$                   113,990




Employee termination benefits


263


1,496


497


2,270




Loss on sublease of office space


-


-


-


1,503




Hotel operations


(245)


(170)


(657)


(853)






$              54,895


$              49,451


$                   122,161


$                   116,910
















    Adjusted Franchising Margins


68.7%


66.3%


62.3%


60.8%





















































CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS























(dollar amounts in thousands)


Three Months Ended September 30,


Nine Months Ended September 30,




















2010


2009


2010


2009


















Selling, general and administrative costs


$              23,156


$              24,517


$                     67,796


$                     73,054





Employee termination benefits


(263)


(1,496)


(497)


(2,270)





Loss on sublease of office space


-


-


-


(1,503)





Adjusted Selling, General and Administrative Costs


$              22,893


$              23,021


$                     67,299


$                     69,281

























































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





















(In thousands, except per share amounts)


Three Months Ended September 30,


Nine Months Ended September 30,




















2010


2009


2010


2009

















Net Income


$              40,494


$              32,808


$                     83,298


$                     74,619




Adjustments:













Employee termination benefits


165


936


311


1,421





Loss on sublease of office space


-


-


-


941




Adjusted Net Income


$              40,659


$              33,744


$                     83,609


$                     76,981

















Weighted average shares outstanding-diluted


59,658


59,818


59,646


60,412

















Diluted Earnings Per Share


$                  0.68


$                  0.55


$                         1.40


$                         1.24




Adjustments:













Employee termination benefits


-


0.01


-


0.02





Loss on sublease of office space


-


-


-


0.01




Adjusted Diluted Earnings Per Share (EPS)


$                  0.68


$                  0.56


$                         1.40


$                         1.27

























































Adjusted EBITDA Reconciliation

























(in millions)















Q3 2010 Actuals


Q3 2009 Actuals


Nine Months Ended September 30, 2010 Actuals


Nine Months Ended September 30, 2009 Actuals


Full-Year 2010 Outlook
















Operating Income (per GAAP)


$                  54.9


$                  48.1


$                       122.3


$                       114.0


$158.5-$160.5



 Employee termination benefits


0.3


1.5


0.5


2.3


1.5



 Loss on sublease of office space


-


-


-


1.5


-



 Depreciation and amortization


2.1


2.1


6.5


6.3


8.5



Adjusted Earnings before interest, taxes, depreciation & amortization (non-GAAP)


$                  57.3


$                  51.7


$                       129.3


$                       124.1


$168.5-$170.5















.
Contact: 

<>Choice Hotels International, Inc.
http://www.choicehotels.com
.
.
 
Also See: For the 2nd Qtr, Choice Hotels Posted Net Income of $27 million, Compared with $25.5 million Last Year; Domestic Systemwide RevPAR in the Quarter Rose 0.3% / July 2010
.

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