Choice Hotels International 8K Regulation FD Disclosure | CHH 17 Dec 08

2009 OUTLOOK

December 17, 2008

Exhibit 99.1

DISCLAIMER

Certain

matters

discussed

throughout

all

today’s

presentation

constitute

forward-looking

statements

within

the

meaning

the

federal

securities

law.

Generally,

our

use

words

such

“expect,”

“estimate,”

“believe,”

“anticipate,”

“will,”

“forecast,”

“plan,”

“project,”

“assume”

similar

words

futurity

identify

statements

that

are

forward-looking

and

that

intend

included

within

the

Safe

Harbor

protections

provided

Section

27A

the

Securities

Act

and

Section

21E

the

Securities

Exchange

Act

1934.

Such

forward-

looking

statements

are

based

management’s

current

beliefs,

assumptions

and

expectations

regarding

future

events,

which

turn

are

based

information

currently

available

management.

Such

statements

may

relate

projections

for

the

company’s

revenue,

earnings

and

other

financial

and

operational

measures,

company

debt

levels,

payment

stock

dividends,

and

future

operations.

caution

you

not

place

undue

reliance

any

forward-looking

statements,

which

are

made

the

date

this

presentation.

Forward-

looking

statements

not

guarantee

future

performance

and

involve

known

and

unknown

risks,

uncertainties

and

other

factors.

Several

factors

could

cause

actual

results,

performance

achievements

the

company

differ

materially

from

those

expressed

contemplated

the

forward-looking

statements.

Such

risks

include,

but

are

not

limited

to,

changes

general,

domestic

and

foreign

economic

conditions;

operating

risks

common

the

lodging

and

franchising

industries;

changes

the

desirability

our

brands

viewed

hotel

operators

and

customers;

changes

the

terms

termination

our

contracts

with

franchisees;

our

ability

keep

pace

with

improvements

technology

utilized

for

reservations

systems

and

other

operating

systems;

fluctuations

the

supply

and

demand

for

hotels

rooms;

and

our

ability

manage

effectively

our

indebtedness.

These

and

other

risk

factors

are

discussed

detail

the

Risk

Factors

section

the

company’s

Form

10-K

for

the

year

ended

December

31,

2007,

filed

with

the

Securities

and

Exchange

Commission

February

29,

2008.

undertake

obligation

publicly

update

revise

any

forward-looking

statement,

whether

result

new

information,

future

events

otherwise.

CHOICE HOTELS OVERVIEW

Leading gainer of US hotel market

share*

–

9.4% share of branded US hotels (+180

basis points over last 5 years)*

–

2nd largest U.S. hotelier*

65+ year-old company with well-known,

diversified brands suitable for various

stages of hotel life cycle

Core competencies and services drive

demand for our brands and deliver

business for our franchisees

Global pipeline of 1,074 hotels under

construction, awaiting conversion or

approved for development

Source: Choice Internal Data, September 30, 2008

Based

number

hotels

October

31,

2008

(Smith

Travel

Research)

Fee-for-service business model

Predictable, profitable growth in a variety

of lodging and economic environments

–

10 consecutive years of franchising

revenue and adjusted EBITDA growth

Cumulative free cash flows of more than

$1 billion since 1997

–

>99% returned to shareholders through

share repurchases and dividends

Capital “light”

model generates strong

returns on invested capital

Long-term franchise contracts and scale

represent barriers to entry

Strong, Growing, Global Hotel

Franchising Business

Highly Attractive Business Model

With Strong Financial Returns

ONE OF THE LARGEST HOTELIERS

Source: Smith Travel Research, Annual data as of October 31. October 2008

Market Share

11.9%

9.4%

5.8% 5.6% 5.2% 4.1% 1.9% 1.2% 0.8% 0.5%

5 yr. bps

(03-08)

-60

180

130 70

-40

-60

0 -70

Leading Gainer of Market Share (% of Hotels Open in U.S.)

Wyndham

Choice

IHG

Hilton

Marriott

Best

Western

Accor

Carlson

Starwood

Hyatt

2003

2004

2005

2006

2007

2008

* Excludes cost of land

Conversion

$40,000+

$84,000+

$76,000+

$95,000+

$50

$70

$100+

Targeted Average Daily Rate

$61,000+

$54,000+

$80

FAMILY OF WELL KNOWN AND

DIVERSIFIED BRANDS

Estimated Per Room Investment*

New Construction

Source: Choice Internal Data, April 2008

$65,000+

Source: Smith Travel Research, Choice Internal Data, October 2008

WELL POSITIONED FOR LONG-TERM GROWTH IN

LIMITED SERVICE NEW CONSTRUCTION SEGMENT

Domestic Hotels

1,606

1,451

678

555

431

363

532

1,557

Holiday Inn

Express

Hampton

Inn / Inn &

Suites

La Quinta

Inn/Inn &

Suites

Fairfield

Inn

Country

Inn &

Suites

2,029

1,891

1,757

1,703

1,606

1,557

910

899

824

788

787

678

555

381

361

347

338

291

281

169

Domestic Hotels

Source: Smith Travel Research, Choice Internal Data, October 2008

SIGNIFICANT GROWTH OPPORTUNITIES

REMAIN IN LARGE CONVERSION MARKET

Chart does not include

17,000+ independent

hotels

in budget, economy and

mid-scale segments

Best

Western

Holiday Inn

Express

Motel

La Quinta Inn/

La Quinta Inn

& Suites

Hampton Inn /

Hampton Inn

& Suites

Fairfield

Inn

Red Roof

Inn

Knights

Inn

Other

(includes

60+ brands)

Days Inn

Holiday Inn /

Holiday Inn

Select

Americas

Best Value

Inn

Travelodge

Howard

Johnson

Microtel

Super 8

Ramada/

Ramada

Limited

DOMESTIC PIPELINE OF 955 HOTELS

283

167

149

Mid-scale

Extended Stay

Economy

Upscale

Source: Choice Internal Data, September 2008

New Construction

Conversion

275 hotels

Canada

16 hotels

Mexico

262 hotels

Continental

Europe, UK

& Ireland

155 hotels

Scandinavia

48 hotels

Brazil

49 hotels

Japan

4 hotels

China

2 hotels

Malaysia

1 hotel

Lebanon

25 hotels

India

1,100 properties

32 countries and

territories on 5

continents

Large global “pure

hotel franchising”

business

Track record of

consistent,

conservative,

profitable growth

Significant long-term

growth opportunity in

underrepresented

regions/countries

119 hotels under

construction, awaiting

conversion or

approved for

development

Source: Choice Internal Data, September 2008

STRONG PRESENCE IN MAJOR

TRAVEL MARKETS OUTSIDE OF THE U.S.

13 hotels

Central

America

2 hotels

Singapore

258 hotels

Australia &

New Zealand

SERVICES LIFECYCLE IMPROVES

BRANDS AND PROPERTY PERFORMANCE

FRANCHISED

PROPERTIES

RETURN ON

INVESTMENT

Brand Planning

and Management

•

Targeted, differentiated

programs, amenities and

services for each brand

Brand Performance

•

Revenue and guest service

consulting

•

Inventory and rate

management

•

Local sales and marketing

•

Independent third-party quality

assurance

Training

•

On-site

•

Regional

•

Web-based

•

GM Certification

Opening Services

•

Ensure hotels open

successfully and meet or

exceed brand standards

Portfolio

Management

•

Repositioning

•

Relicensing

•

Termination

Procurement

Services

•

Value-engineered

prototypes and

design packages

•

Negotiated vendor

relationships

MARKETING LEVERAGES SIZE,

SCALE AND DISTRIBUTION

$300-plus million in annual marketing and reservation system fees

Leverage expertise in on-line, targeted interactive marketing to influence

guest hotel stay decisions

Multi and single brand advertising campaigns

Focus on driving guests to Choice central channels

Facilitate “one-stop”

shopping

Strong and growing loyalty program

Growing brand awareness

Source: Choice Internal Data, September 2008

STRONG AND GROWING AIDED

BRAND AWARENESS

Comfort

Inn

Comfort

Suites

Sleep Inn

Quality

Clarion

Econo

Lodge

Rodeway MainStay

Inn

Suburban

Cambria

Suites

Choice

Hotels

2001

2008 YTD

Source: Millward

Brown, September 2008

8.3%

10.0%

12.2%

15.3%

16.2%

17.9%

20.0%

21.6%

2001

2002

2003

2004

2005

2006

2007

YTD 10/31/08

STRONG, GROWING LOYALTY PROGRAM

Comprehensive loyalty rewards program

7.5

million

members

worldwide–

contribute

over

20%

domestic

gross

room

revenues

More than 1 million members added in 2008

Delivers incremental business to all Choice brand

hotels

Important selling point for franchise sales

Excludes

Econo

Lodge

and

Rodeway

Inn

brands

Source: Choice Internal Data, October 31, 2008

Choice Privileges Revenue as Percent

of Domestic Gross Room Revenues*

LARGE AND GROWING CENTRAL RESERVATIONS

SYSTEM (“CRS”) DELIVERY PUTS “HEADS IN BEDS”

All

Hotel Direct

Reservation

Choice Central

Reservation

Contribution

1/3

Domestic Franchise System

Gross Room Revenue Source

Domestic Choice CRS

Net Room Revenue

$1,668

$1,161

$1,000

$1,200

$1,400

$1,600

$1,800

2005

2006

2007

TTM

9/30/08

$ in Millions

Source: Choice Internal Data, September 2008

Central Channel ADR

Source: Choice Internal Data, September 2008

Domestic Choice CRS

Net Channel Share

$66.11

$73.54

$71.59

$77.90

$73.35

$84.22

2005

2006

2007

TTM 9/30/08

Systemwide

Call Center

choicehotels.com

SIGNIFICANT AVERAGE DAILY RATE PREMIUM

ON CENTRAL RESERVATIONS BOOKINGS

47%

61%

23%

35%

16%

18%

2005

2006

2007

Internet

Voice

Travel Agent (GDS)

TMM

Sept 2008

MANAGING DIFFERENTLY

IN LODGING DOWNTURN

Leverage brand preference and conversion opportunity during

lodging down cycle to drive market share

Reallocate resources and deliver tools to position franchisees to

capture larger share of shrinking travel demand

Implement contingency plans at all levels of the organization

Delay non-mission critical operating and capital spending

Ensure adequate liquidity

LODGING DOWNCYCLE TRENDS

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

GDP

Demand

Supply

1990 +2.0%

1991 - 2.5%

1992 +2.5%

2001 -7.0%

2002 -2.7%

2003 +0.3%

Financial

Markets/

Housing Crisis

IND. REVPAR

1990 +1.7%

1991 - 2.7%

1992 +1.4%

CHH REVPAR

2001 -2.4%

2002 -3.8%

2003 -0.8%

Each

recession

supply

grew

faster

than

demand

and

the

economy

(GDP)

9/11

recession

Gulf war

recession

Source: Bureau of Economic Analysis, Blue Chip Economic Indicators, Smith Travel Research, Choice Internal Data, December 2008

184

174

116

128

182

237

288

327

322

134

124

184

241

342

370

402

432

443

470

318

298

300

304

470

552

639

720

770

792

1999

2000

2001

2002

2003

2004

2005

2006

2007

TTM 9/30/08

New Construction

Conversion

Total

Source: Choice Internal Data, September 2008

CONVERSION BRAND FRANCHISE SALES

OPPORTUNITY IN SOFT NEW CONSTRUCTION

ENVIRONMENT

153

188

158

146

190

254

332

403

383

378

5.0%

6.0%

4.9%

4.4%

5.5%

7.0%

8.7%

9.3%

8.7%

9.6%

1999

2000

2001

2002

2003

2004

2005

2006

2007

TTM

9/30/08

Relicensing Contracts

Relicensings as % of the prior year's ending system size

Source: Choice Internal Data, September 2008

RELICENSING ACTIVITY SIMILAR TO NEW

CONSTRUCTION BRAND SALES

STRONG, STEADY FRANCHISE

SYSTEM GROWTH

3,039

3,123

3,244

3,327

3,482

3,636

3,834

4,048

4,211

4,445

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

252

258

266

271

294

310

329

339

354

282

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Domestic Hotels On-Line

Domestic Rooms On-Line

(in thousands)

Source: Choice Internal Data, December 2007

CAGR = 4.4%

CAGR = 5.0%

CAGR = 3.9%

CAGR = 4.7%

FRANCHISING REVENUE STREAM LESS

VOLATILE THAN REVPAR

-6%

-4%

-2%

10%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

$50

$100

$150

$200

$250

$300

$350

CHH RevPAR

STR Chain Scale (Supply Weighted)

Industry RevPAR

Franchising Revenue

Source: Smith Travel Research, Choice Internal Data, December 2007

($ in millions)

ADJUSTED EBITDA LESS VOLATILE

THAN INDUSTRY PROFITABILITY

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

100

150

200

250

Industry Profits

Adjusted EBITDA

Source: Smith Travel Research, Choice Internal Data, December 2007

CAPITAL “LIGHT”

MODEL GENERATES

STRONG RETURNS ON INVESTED CAPITAL

19.5%

78.5%

15.2%

16.1%

14.7%

27.6%

36.7%

49.7%

62.9%

68.8%

63.3%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

TTM

9/30/08

Source: Choice Internal Data, September 2008

TRACK RECORD OF STRONG

EARNINGS PER SHARE GROWTH

$0.40

$0.51

$0.58

$0.76

$0.93

$1.07

$1.26

$1.49

$1.74

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: Choice Internal Data, December 2007, Per Share Amounts Retroactively Adjusted For 2005 Stock Split

Adjusted Diluted Earnings Per Share

7.9

7.2

24.0

10.8

5.7

6.4

4.9

3.2

1.6

2.2

10.2 x

14.8 x

20.3 x

17.0 x

14.9 x

11.0 x

11.9 x

10.2 x

8.6 x

11.3 x

11.9 x

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

YTD 12/17/08

Millions of Shares Repurchased

Avg. TEV/EBITDA

Source: Capital IQ, Choice Internal Data, December 2008, Share amounts for 2005 and prior years retroactively adjusted for 2005 two-for-one stock split

Remaining authority on current authorization –

5.9 million shares as of December 17, 2008

OPPORTUNISTIC SHARE REPURCHASES KEY

PART OF CAPITAL ALLOCATION STRATEGY

2.17%

0.00%

2.85%

0.00%

5.94%

2.95%

2.94%

0.00%

Choice

Great

Wolf

Starwood

Morgans

Hotel Group

Wyndham

Gaylord

Home Inns

Marriott

Red Lion

Orient-Express

IHG

Source: Bloomberg Financial, December 12, 2008

HIGH DIVIDEND YIELD COMPARED

TO OTHER LODGING C-CORPS

CREDIT STRENGTHS

Solid investment grade company

–

Moody’s Baa3

–

Standard & Poor’s BBB

Strong liquidity position

–

$350 million committed revolver matures June 2011 with $76 million

available as of December 15, 2008

–

No debt maturities until 2011

Substantial financial flexibility

Minimal contingent liability exposure

Source: Choice Internal Data, December 2008

STRATEGIC AGENDA FOR CHOICE’S BRANDS,

GROWTH AND SHAREHOLDERS

Continue core brand market share, unit growth and brand

performance improvements

Continue shareholder-friendly capital allocation policies

Leverage financial capacity/strength to expand scale of emerging

brands

Evaluate opportunities to enter new segments

Continue international expansion

Source: Choice Internal Data, December 2008

FINANCIAL PROJECTIONS

Gross Domestic Unit Openings

–

2008E –

332 Conversion Units (68%), 156 New Construction Units (32%)

–

2009E –

344 Conversion Units (73%), 129 New Construction Units (27%)

Adjusted diluted earnings per share projections assume no share repurchases subsequent to December 17, 2008

Outstanding common shares approximately 60.8 million as of December 17, 2008

Previous Expectations

Current Expectations

Full Year 2008

Target

2% RevPAR

Sensitivity

Unit Growth

5.5%

3.5%

RevPAR

Decline

-1.50%

-1.80%

-6.0%

-8.0%

Effective Royalty Rate Improvement

6 bps

3 bps

Adjusted EBITDA (in millions)

$197.5

$196.5

(1)

$184.2

$179.8

Adjusted Diluted EPS

$1.76

$1.71

(2)

$1.74

$1.69

Effective Tax Rate

37.0%

36.5%

(1)

Our current expectation for adjusted EBITDA for 2008 has been reduced by an incremental $2.1 million of termination benefits

compared to our previous expectation as a result of certain

previously unanticipated workforce reductions.

(2)

Our current expectation for adjusted diluted EPS for 2008 includes termination benefits of $0.02 per share mentioned above

and incremental investment losses of approximately $0.03 per diluted share related to assets held in the Company's

non-qualified retirement plans compared to our previous expectation.

Current Expectations

Full Year 2009

Appendix

Reconciliation of Non-GAAP

Financial Measurements to GAAP

DISCLAIMER

Adjusted

franchising

margins,

adjusted

earnings

before

interest

depreciation

and

amortization

(EBITDA),

adjusted

net

income,

adjusted

diluted

earnings

per

share,

franchising

revenues,

net

operating

profits

after

taxes

(NOPAT),

return

invested

capital

(ROIC)

and

free

cash

flows

are

non-GAAP

financial

measurements.

These

financial

measurements

are

presented

supplemental

disclosures

because

they

are

used

management

reviewing

and

analyzing

the

company’s

performance.

This

information

should

not

considered

alternative

any

measure

performance

promulgated

under

accounting

principles

generally

accepted

the

United

States

(GAAP),

such

operating

income,

net

income,

diluted

earnings

per

share,

total

revenues

net

cash

provided

operating

activities.

The

calculation

these

non-

GAAP

measures

may

different

from

the

calculation

other

companies

and

therefore

comparability

may

limited.

The

company

has

included

the

following

appendix

which

reconcile

these

measures

the

comparable

GAAP

measurement.

FRANCHISING REVENUES AND ADJUSTED

FRANCHISING MARGINS

Source: Choice Internal Data, December 2007

($ amounts in thousands)

Year Ended

December 31,

2007

2006

2005

2004

2003

2002

Total Revenues

615,494

539,903

472,098

428,208

385,866

365,562

Adjustments:

Marketing and Reservation

(316,827)

(273,267)

(237,822)

(220,732)

(195,219)

(190,145)

Product Sales

Hotel Operations

(4,692)

(4,505)

(4,293)

(3,729)

(3,565)

(3,331)

Franchising Revenues

293,975

262,131

229,983

203,747

187,082

172,086

Operating Income

185,199

166,625

143,750

124,983

113,946

104,700

Adjustments

Hotel Operations

(1,451)

(1,311)

(1,068)

(725)

(842)

(385)

Acceleration of Management Succession Plan

Executive Termination Benefits

3,690

Product Sales

Impairment of Friendly Investment

Net

187,438

165,314

142,682

124,258

113,104

104,315

Adjusted Franchising Margin

63.8%

63.1%

62.0%

61.0%

60.5%

60.6%

FRANCHISING REVENUES AND ADJUSTED

FRANCHISING MARGINS (CONTINUED)

Source: Choice Internal Data, December 2007

($ amounts in thousands)

Year Ended

December 31,

2001

2000

1999

1998

1997

Total Revenues

341,428

352,841

324,203

165,474

175,416

Adjustments:

Marketing and Reservation

(168,170)

(185,367)

(162,603)

Product Sales

(3,871)

(20,748)

(23,806)

Hotel Operations

(3,215)

(1,249)

(1,098)

(17,303)

Franchising Revenues

170,043

166,225

157,729

143,628

134,307

Operating Income

73,577

92,427

94,170

85,151

77,068

Adjustments

Hotel Operations

(714)

(640)

(1,679)

Acceleration of Management Succession Plan

Executive Termination Benefits

Product Sales

(1,216)

(1,037)

Impairment of Friendly Investment

22,713

Net

95,576

91,787

94,182

83,970

74,352

Adjusted Franchising Margin

56.2%

55.2%

59.7%

58.5%

55.4%

RETURN ON INVESTED CAPITAL

Source: Choice Internal Data, December 2008

(a) Operating income and tax rate for the year ended December 31, 2001 have been adjusted to exclude the effect

of a $22.7 million impairment charge related to the write-off of the company’s investment in Friendly Hotels.

Year Ended

($ in millions)

December 31,

1997

1998

1999

2000

2001

2002

Operating Income (a)

$77.1

$85.2

$94.2

$92.4

$96.3

$104.7

Tax Rate(a)

41.7%

39.5%

39.0%

35.0%

36.5%

After-Tax Operating Income

45.0

49.7

57.0

56.4

62.6

66.5

+ Depreciation & Amortization

9.2

6.7

7.7

11.6

12.5

11.3

- Maintenance CAPEX

9.2

6.7

7.7

11.6

12.5

11.3

Net Op. Profit After-tax (NOPAT)

$45.0

$49.7

$57.0

$56.4

$62.6

$66.5

Total Assets

386.4

398.2

464.7

484.1

321.2

316.8

- Current Liabilities

68.2

64.7

88.7

93.8

71.2

84.3

Invested Capital

318.2

333.6

375.9

390.3

250.0

232.5

Return on Average Invested Capital

17.8%

15.2%

16.1%

14.7%

19.5%

27.6%

RETURN ON INVESTED CAPITAL (CONTINUED)

Trailing Twelve

Year Ended

Months Ended

($ in millions)

December 31,

September 30,

2003

2004

2005

2006

2007

2008

Operating Income (a)

$113.9

$125.0

$143.8

$166.6

$185.2

$188.6

Tax Rate(a)

36.1%

35.1%

33.0%

27.4%

36.0%

36.6%

After-Tax Operating Income

72.8

81.1

96.3

121.0

118.5

119.6

+ Depreciation & Amortization

11.2

9.9

9.1

9.7

8.6

8.4

- Maintenance CAPEX

11.2

9.9

9.1

9.7

8.6

8.4

Net Op. Profit After-tax (NOPAT)

$72.8

$81.1

$96.3

$121.0

$118.5

$119.6

Total Assets

267.3

263.4

265.3

303.3

328.4

349.9

- Current Liabilities

102.2

102.1

120.3

139.8

147.5

153.1

Invested Capital

165.1

161.3

145.0

163.5

180.9

196.8

Return on Average Invested Capital

36.7%

49.7%

62.9%

78.5%

68.8%

63.3%

(a) Operating income and tax rate for the year ended December 31, 2001 have been adjusted to exclude the effect

of a $22.7 million impairment charge related to the write-off of the company’s investment in Friendly Hotels.

Source: Choice Internal Data, December 2008

FREE CASH FLOWS

Trailing Twelve

Months Ended

Nine Months Ended

Year Ended

September 30,

December 31,

($ in thousands)

2008

2007

2006

2005

2004

Net Cash Provided by Operating Activities

138,364

92,391

146,135

153,928

133,588

108,908

Net Cash Provided(Used) by Investing Activities

(17,610)

(14,932)

(21,260)

(17,331)

(24,531)

(14,544)

Free Cash Flows

120,754

77,459

124,875

136,597

109,057

94,364

Source: Choice Internal Data, December 2008

FREE CASH FLOWS (continued)

Year Ended

December 31,

($ in thousands)

2003

2002

2001

2000

1999

1998

Net Cash Provided by Operating Activities

115,304

99,018

101,712

53,879

65,040

38,952

Net Cash Provided(Used) by Investing Activities

27,784

(14,683)

87,738

(16,617)

(36,031)

(9,056)

Free Cash Flows

143,088

84,335

189,450

37,262

29,009

29,896

Source: Choice Internal Data, December 2008

ADJUSTED EBITDA

Source: Choice Internal Data, December 2008

Forecasted

Trailing Twelve

Year Ended

Months Ended

Year Ended

($ in thousands)

December 31,

September 30,

December 31,

December

31,

TARGET

2% RevPAR

Sensitivity

2008

2007

2006

2005

2004

Operating Income

175,242

170,802

182,224

188,590

185,199

166,625

143,750

124,983

Adjustments

Acceleration of Management Succession Plan

6,069

Executive Termination Benefits

3,690

Product Sales

Impairment of Friendly investment

Depreciation and Amortization

8,994

8,232

8,392

8,637

9,705

9,051

9,947

Adjusted EBITDA

184,236

179,796

196,525

203,051

197,526

176,330

152,801

134,930

Forecasted Year Ended,

December 31, 2009

ADJUSTED EBITDA (CONTINUED)

Source: Choice Internal Data, December 2008

Year Ended

($ in thousands)

December 31,

2003

2002

2001

2000

1999

1998

1997

Operating Income

113,946

104,700

73,577

92,427

94,170

85,151

77,068

Adjustments

Acceleration of Management Succession Plan

Executive Termination Benefits

Product Sales

(1,216)

(1,037)

Impairment of Friendly investment

22,713

Depreciation and Amortization

11,225

11,251

12,452

11,623

7,687

6,710

9,173

Adjusted EBITDA

125,171

115,951

108,742

104,050

101,869

90,645

85,204

ADJUSTED DILUTED EARNINGS PER SHARE

Source: Choice Internal Data, December 2008

Forecasted

Year Ended

December 31,

(In thousands, except per share amounts)

TARGET

2% RevPAR

Sensitivity

2008

2007

2006

2005

2004

Net Income

106,747

103,875

103,422

111,301

112,787

87,565

74,345

Adjustments:

Loss(Gain) on Extinguishment of Debt

217

433

Acceleration of Management Sucession Plan, Net of Taxes

3,799

Executive Termination Benefits, Net of Taxes

2,310

Resolution of Provisions for Income Tax Contingencies

(12,791)

(4,855)

(1,182)

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

1,192

Loss(Gain) on Sunburst Note Transactions

Impairment of and Equity Losses in Friendly Hotels PLC Investment

Adjusted Net Income

106,747

103,875

107,221

113,611

100,213

83,902

73,596

Weighted Average Shares Outstanding-Diluted

61,515

62,523

65,331

67,050

66,336

69,000

Diluted Earnings Per Share

1.74

1.69

1.65

1.70

1.68

1.32

1.08

Adjustments:

Loss(Gain) on Extinguishment of Debt

0.01

Acceleration of Management Sucession Plan, Net of Taxes

0.06

Executive Termination Benefits, Net of Taxes

0.04

Resolution of Provisions for Income Tax Contingencies

(0.19)

(0.08)

(0.02)

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

0.02

Loss(Gain) on Sunburst Note Transactions

Impairment of and Equity Losses in Friendly Hotels PLC Investment

Adjusted Diluted Earnings Per Share (EPS)

1.74

1.69

1.71

1.74

1.49

1.26

1.07

December 31, 2009

Forecasted Year Ending

ADJUSTED DILUTED EARNINGS PER SHARE

(CONTINUED)

Year Ended

December 31,

(In thousands, except per share amounts)

2003

2002

2001

2000

1999

1998

Net Income

71,863

60,844

14,327

42,445

57,155

55,305

Adjustments:

Loss(Gain) on Extinguishment of Debt

(7,232)

Executive Termination Benefits, Net of Taxes

Resolution of Provisions for Income Tax Contingencies

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

Loss(Gain) on Sunburst Note Transactions

(3,383)

4,721

Impairment of and Equity Losses in Friendly Hotels PLC Investment

37,166

7,532

Adjusted Net Income

68,480

60,844

51,493

54,698

57,155

48,073

Weighted Average Shares Outstanding-Diluted

73,349

80,114

89,144

106,506

111,334

119,096

Diluted Earnings Per Share

0.98

0.76

0.16

0.40

0.51

0.46

Adjustments:

Loss(Gain) on Extinguishment of Debt

(0.06)

Executive Termination Benefits, Net of Taxes

Resolution of Provisions for Income Tax Contingencies

Income Tax Expense Incurred Due to Foreign Earnings Repatriation

Loss(Gain) on Sunburst Note Transactions

(0.05)

0.04

Impairment of and Equity Losses in Friendly Hotels PLC Investment

0.42

0.07

Adjusted Diluted Earnings Per Share (EPS)

0.93

0.76

0.58

0.51

0.40

Source: Choice Internal Data, December 2008

Choice Hotels International (CHH) 8-KRegulation FD Disclosure