Choice Hotels International 8K Regulation FD Disclosure | CHH 25 Feb 09

Investor Presentation

February 2009

Exhibit 99.1

DISCLAIMER

Certain matters discussed throughout all of this 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”

or similar words of 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 on 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 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

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 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

the

supply

and

demand

for

hotels

rooms;

and

our

ability

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,

2007,

filed

with

the

Securities

and

Exchange

Commission

February

29,

2008.

We undertake no obligation to publicly update or revise any forward-looking statement, whether as a

result of new information, future events or 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 1,108 hotels under

construction, awaiting conversion or

approved for development

Source: Choice Internal Data, December 31, 2008

* Based on number of hotels as of December 31, 2008 (Smith Travel Research)

Fee-for-service business model

Predictable, profitable growth in a variety

of lodging and economic environments

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

Wyndham

Choice

IHG

Hilton

Marriott

Best

Western

Accor

Carlson

Starwood

Hyatt

2003

2004

2005

2006

2007

2008

ONE OF THE LARGEST HOTELIERS

Source: Smith Travel Research, Annual data as of Dec 31st each year.

Market Share

11.7%

9.4%

5.8% 5.6% 5.3% 4.0% 1.9% 1.2% 0.8% 0.5%

5 yr. bps

(03-08)

-80

180

130 80

-50

-60 10

0 -70

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

* 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, December 2008

WELL POSITIONED FOR LONG-TERM NEW

CONSTRUCTION HOTEL GROWTH IN LIMITED

SERVICE SEGMENT

Domestic Hotels

1,622

1,462

699

560

438

1,579

541

365

Holiday Inn

Express

Hampton

Inn / Inn &

Suites

La Quinta

Inn/Inn &

Suites

Fairfield

Inn

Country

Inn &

Suites

2,010

1,887

1,692

1,622

1,579

922

799

699

560

550

377

360

279

346

908

816

778

344

292

150

Source: Smith Travel Research, Choice Internal Data, December 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 6

La Quinta Inn/

La Quinta Inn

& Suites

Hampton Inn /

Hampton Inn

& Suites

Fairfield

Inn

Red Roof

Inn

Knights

Inn

Days Inn

Holiday Inn /

Holiday Inn

Select

Americas

Best Value

Inn

Travelodge

Howard

Johnson

Microtel

Super 8

Ramada/

Ramada

Limited

Domestic Hotels

DOMESTIC PIPELINE OF 987 HOTELS

282

176

159

Mid-scale

Extended Stay

Economy

Upscale

Source: Choice Internal Data, December 2008

New Construction

Conversion

275 hotels

Canada

17 hotels

Mexico

258 hotels

Continental

Europe, UK

& Ireland

154 hotels

Scandinavia

49 hotels

Brazil

51 hotels

Japan

4 hotels

China

1 hotel

Malaysia

1 hotel

Lebanon

24 hotels

India

1,111 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

121 hotels under

construction, awaiting

conversion or

approved for

development

Source: Choice Internal Data, December 2008

STRONG PRESENCE IN MAJOR

TRAVEL MARKETS OUTSIDE OF THE U.S.

13 hotels

Central

America

1 hotel

Singapore

263 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, December 2008

STRONG AND GROWING AIDED

BRAND AWARENESS

Comfort

Inn

Comfort

Suites

Sleep Inn

Quality

Clarion

Econo

Lodge

Rodeway

Inn

MainStay

Suburban

Cambria

Suites

Choice

Hotels

2001

2008

Source: Percentage of survey respondents. Millward Brown, December 2008

8.3%

10.0%

12.2%

15.3%

16.2%

17.9%

20.3%

21.8%

2001

2002

2003

2004

2005

2006

2007

2008

STRONG, GROWING LOYALTY PROGRAM

Comprehensive loyalty rewards program

7.5 million members worldwide–

contribute nearly

22% of 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, December 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

$1,161

$1,638

$1,000

$1,200

$1,400

$1,600

$1,800

2005

2006

2007

2008

$ in Millions

Source: Choice Internal Data, December 2008

Central Channel ADR

Source: Choice Internal Data, December 2008

47%

62%

23%

35%

15%

18%

2005

2006

2007

2008

Internet

Voice

Travel Agent (GDS)

Domestic Choice CRS

Net Channel Share

$73.72

$66.11

$77.78

$71.59

$84.03

$73.35

2005

2006

2007

2008

Systemwide

Call Center

choicehotels.com

SIGNIFICANT AVERAGE DAILY RATE PREMIUM

ON CENTRAL RESERVATIONS BOOKINGS

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

9/11

recession

Gulf war

recession

Source: Bureau of Economic Analysis, Blue Chip Economic Indicators, Smith Travel Research, Choice Internal Data, January 2009

-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)

184

174

116

128

182

237

288

327

261

134

124

184

241

342

370

402

432

443

437

318

298

300

304

470

552

639

720

770

698

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

New Construction

Conversion

Total

Source: Choice Internal Data, December 2008

CONVERSION BRAND FRANCHISE SALES

OPPORTUNITY IN SOFT NEW CONSTRUCTION

ENVIRONMENT

153

188

158

146

190

254

332

403

312

378

5.0%

6.0%

4.9%

4.4%

5.5%

7.0%

8.7%

7.0%

9.3%

9.6%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Relicensing Contracts

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

Source: Choice Internal Data, December 2008

RELICENSING ACTIVITY SIMILAR TO NEW

CONSTRUCTION BRAND SALES

STRONG, STEADY FRANCHISE

SYSTEM GROWTH

3,123

3,244

3,327

3,482

3,636

3,834

4,048

4,211

4,445

4,716

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

258

266

271

282

310

329

339

354

374

294

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Domestic Hotels On-Line

Domestic Rooms On-Line

(in thousands)

Source: Choice Internal Data, December 2008

CAGR = 4.5%

CAGR = 5.3%

CAGR = 4.0%

CAGR = 4.9%

FRANCHISING REVENUE STREAM LESS

VOLATILE THAN REVPAR

-6%

-4%

-2%

10%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

$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 2008

($ in millions)

ADJUSTED EBITDA LESS VOLATILE

THAN INDUSTRY PROFITABILITY

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

100

150

200

250

Industry Profits

Adjusted EBITDA

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

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%

59.5%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Choice Internal Data, December 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

$1.75

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Choice Internal Data, December 2008, Per Share Amounts Retroactively Adjusted For 2005 Stock Split

Adjusted Diluted Earnings Per Share

Note> See appendix for reconciliation of adjusted diluted earnings per share to diluted earnings per share. To improve comparability certain employee severance

amounts included in the determination of adjusted diluted earnings per share in this presentation for 2008 and 2007 differ from amounts reported in exhibit 8 of our

February 10, 2009 earnings announcement.

0.5

7.9

7.2

24.0

10.8

5.7

6.4

4.9

3.2

1.6

2.2

9.1 x

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

2008

YTD

02/10/09

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 –

5.5 million shares as of February 10, 2009

OPPORTUNISTIC SHARE REPURCHASES KEY

PART OF CAPITAL ALLOCATION STRATEGY

[Page 26 not used]

CREDIT STRENGTHS

Solid investment grade company

–

Moody’s Baa3

–

Standard & Poor’s BBB

Strong liquidity position

–

$350 million committed revolver matures June 2011 with $65.6 million

available as of December 31, 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

Appendix

Reconciliation of Non-GAAP

Financial Measurements to GAAP

DISCLAIMER

Adjusted

franchising

margins,

adjusted

earnings

before

interest,

taxes

depreciation

and

amortization (EBITDA), adjusted net income, adjusted diluted earnings per share (EPS),

franchising

revenues,

net

operating

profit

after

tax

(NOPAT),

return

average

invested

capital (ROIC) and free cash flows are non-GAAP financial measurements. These

financial

measurements

are

presented

supplemental

disclosures

because

they

are

used by management in reviewing and analyzing the company’s performance. This

information should not be considered as an alternative to any measure of performance

promulgated

under

accounting

principles

generally

accepted

the

United

States

(GAAP), such as operating income, net income, diluted earnings per share, total

revenues

net

cash

provided

operating

activities.

The

calculation

these

non-

GAAP

measures may be different from the calculation by other companies and therefore

comparability may be limited. The company has included the following appendix which

reconcile these measures to the comparable GAAP measurement.

FRANCHISING REVENUES AND ADJUSTED

FRANCHISING MARGINS

Source: Choice Internal Data, December 2008

Note> To improve comparability certain employee severance amounts included in the determination of adjusted franchising margins in this presentation for 2008

and 2007 differ from amounts reported in exhibit 8 of our February 10, 2009 earnings announcement.

($ amounts in thousands)

Year Ended

December 31,

2008

2007

2006

2005

2004

2003

641,680

615,494

539,903

472,098

428,208

385,866

(336,477)

(316,827)

(273,267)

(237,822)

(220,732)

(195,219)

(4,936)

(4,692)

(4,505)

(4,293)

(3,729)

(3,565)

300,267

293,975

262,131

229,983

203,747

187,082

174,596

185,199

166,625

143,750

124,983

113,946

(1,502)

(1,451)

(1,311)

(1,068)

(725)

(842)

6,605

3,690

7,555

187,254

187,438

165,314

142,682

124,258

113,104

Total Revenues

Adjustments:

Marketing and Reservation

Product Sales

Hotel Operations

Franchising Revenues

Operating Income

Adjustments

Hotel Operations

Acceleration of Management Succession Plan

Executive Termination Benefits

Loan Reserves Related to Impaired Notes Receivable

Product Sales

Impairment of Friendly Investment

Net

Adjusted Franchising Margin

62.4%

63.8%

63.1%

62.0%

61.0%

60.5%

FRANCHISING REVENUES AND ADJUSTED

FRANCHISING

MARGINS

(CONTINUED)

Source: Choice Internal Data, December 2008

($ amounts in thousands)

Year Ended

December 31,

2002

2001

2000

1999

1998

1997

Total Revenues

365,562

341,428

352,841

324,203

165,474

175,416

Adjustments:

Marketing and Reservation

(190,145)

(168,170)

(185,367)

(162,603)

Product Sales

(3,871)

(20,748)

(23,806)

Hotel Operations

(3,331)

(3,215)

(1,249)

(1,098)

(17,303)

Franchising Revenues

172,086

170,043

166,225

157,729

143,628

134,307

Operating Income

104,700

73,577

92,427

94,170

85,151

77,068

Adjustments

Hotel Operations

(385)

(714)

(640)

(1,679)

Acceleration of Management Succession Plan

Executive Termination Benefits

Loan Reserves Related to Impaired Notes Receivable

Product Sales

(1,216)

(1,037)

Impairment of Friendly Investment

22,713

Net

104,315

95,576

91,787

94,182

83,970

74,352

Adjusted Franchising Margin

60.6%

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)

Source: Choice Internal Data, December 2008

Year Ended

($ in millions)

December 31,

2003

2004

2005

2006

2007

2008

Operating Income (a)

$113.9

$125.0

$143.8

$166.6

$185.2

$174.6

Tax Rate(a)

36.1%

35.1%

33.0%

27.4%

36.0%

36.3%

After-Tax Operating Income

72.8

81.1

96.3

121.0

118.5

111.2

+ Depreciation & Amortization

11.2

9.9

9.1

9.7

8.6

8.2

Maintenance CAPEX

11.2

9.9

9.1

9.7

8.6

8.2

Net Op. Profit After-tax (NOPAT)

$72.8

$81.1

$96.3

$121.0

$118.5

$111.2

Total Assets

267.3

263.4

265.3

303.3

328.4

328.2

Current Liabilities

102.2

102.1

120.3

139.8

147.5

135.1

Invested Capital

165.1

161.3

145.0

163.5

180.9

193.1

Return on Average Invested Capital

36.7%

49.7%

62.9%

78.5%

68.8%

59.5%

FREE CASH FLOWS

Source: Choice Internal Data, December 2008

Year Ended

December 31,

($ in thousands)

2008

2007

2006

2005

2004

Net Cash Provided by Operating Activities

104,399

145,666

153,680

133,588

108,908

Net Cash Provided (Used) by Investing Activities

(20,265)

(21,284)

(17,244)

(24,531)

(14,544)

Free Cash Flows

84,134

124,382

136,436

109,057

94,364

FREE

CASH

FLOWS

(continued)

Source: Choice Internal Data, December 2008

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

ADJUSTED EBITDA

Source: Choice Internal Data, December 2008

Note> To improve comparability certain employee severance amounts included in the determination of adjusted EBITDA in this presentation for 2008

and 2007 differ from amounts reported in exhibit 8 of our February 10, 2009 earnings announcement.

Year Ended

($ in thousands)

December 31,

2008

2007

2006

2005

2004

2003

Operating Income

174,596

185,199

166,625

143,750

124,983

113,946

Adjustments

Acceleration of Management Succession Plan

6,605

Executive Termination Benefits

3,690

Loan Reserves Related to Impaired Notes Receivable

7,555

Product Sales

Impairment of Friendly investment

Depreciation and Amortization

8,184

8,637

9,705

9,051

9,947

11,225

Adjusted EBITDA

196,940

197,526

176,330

152,801

134,930

125,171

ADJUSTED

EBITDA

(CONTINUED)

Source: Choice Internal Data, December 2008

Year Ended

($ in thousands)

December 31,

2002

2001

2000

1999

1998

1997

Operating Income

104,700

73,577

92,427

94,170

85,151

77,068

Adjustments

Acceleration of Management Succession Plan

Executive Termination Benefits

Loan Reserves Related to Impaired Notes Receivable

Product Sales

(1,216)

(1,037)

Impairment of Friendly investment

22,713

Depreciation and Amortization

11,251

12,452

11,623

7,687

6,710

9,173

Adjusted EBITDA

115,951

108,742

104,050

101,869

90,645

85,204

ADJUSTED DILUTED EARNINGS PER SHARE

Source: Choice Internal Data, December 2008

Year Ended

December 31,

(In thousands, except per share amounts)

2008

2007

2006

2005

2004

Net Income

100,211

111,301

112,787

87,565

74,345

Adjustments:

Loss(Gain) on Extinguishment of Debt, Net of Taxes

217

433

Acceleration of Management Sucession Plan, Net of Taxes

4,135

Executive Termination Benefits, Net of Taxes

2,310

Loan Reserves Related to Impaired Notes Receivable, Net of Taxes

4,729

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, Net of Taxes

Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes

Adjusted Net Income

109,075

113,611

100,213

83,902

73,596

Weighted Average Shares Outstanding-Diluted

62,521

65,331

67,050

66,336

69,000

Diluted Earnings Per Share

1.60

1.70

1.68

1.32

1.08

Adjustments:

Loss(Gain) on Extinguishment of Debt, Net of Taxes

0.01

Acceleration of Management Sucession Plan, Net of Taxes

0.07

Executive Termination Benefits, Net of Taxes

0.04

Loan Reserves Related to Impaired Notes Receivable, Net of Taxes

0.08

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, Net of Taxes

Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes

Adjusted Diluted Earnings Per Share (EPS)

1.75

1.74

1.49

1.26

1.07

Note>

To improve

comparability

certain

employee

severance

amounts

included

the

determination

adjusted

diluted

earnings

per

this

presentation

for

2008

and 2007 differ from amounts reported in exhibit 8 of our February 10, 2009 earnings announcement.

ADJUSTED DILUTED EARNINGS PER SHARE

(CONTINUED)

Source: Choice Internal Data, December 2008

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, Net of Taxes

(7,232)

Acceleration of Management Sucession Plan, Net of Taxes

Executive Termination Benefits, Net of Taxes

Loan Reserves Related to Impaired Notes Receivable, 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, Net of Taxes

(3,383)

4,721

Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes

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, Net of Taxes

(0.06)

Acceleration of Management Sucession Plan, Net of Taxes

Executive Termination Benefits, Net of Taxes

Loan Reserves Related to Impaired Notes Receivable, 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, Net of Taxes

(0.05)

0.04

Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes

0.42

0.07

Adjusted Diluted Earnings Per Share (EPS)

0.93

0.76

0.58

0.51

0.40

Choice Hotels International (CHH) 8-KRegulation FD Disclosure