Choice Hotels Reports Record Results for Third Quarter 2006; Adjusted Diluted EPS Up 16%, New Domestic Hotel Franchise Contracts Up 24% Over Prior Year

SILVER SPRING, Md., Oct. 30 /PRNewswire-FirstCall/ -- Choice Hotels International, Inc., today reported the following highlights for the third quarter of 2006:

* Adjusted diluted earnings per share (EPS) for the third quarter increased 16% to $0.50, compared to adjusted diluted EPS of $0.43 for the third quarter 2005. Diluted EPS for the third quarter 2006 was $0.69, compared to $0.48 for the same period in 2005. * Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 14% to $56.9 million from $50.0 million in third quarter 2005. * Operating income increased 14% to $54.6 million, compared to $47.8 million for the same period in 2005. * New domestic hotel franchise contracts in the third quarter of 2006 increased 24% to 178 over the prior year. * Initial franchise and relicensing fees increased 34% for third quarter 2006. * Royalty revenues rose 11% and franchising revenues increased 13% for third quarter 2006. * Domestic system-wide RevPAR increased approximately 5% for the quarter and approximately 7% year-to-date. Domestic revenue per available room (RevPAR) for the Company's midscale without food and beverage brands increased approximately 7% for the quarter and approximately 10% year- to-date. * The domestic hotel pipeline of hotels under construction, awaiting conversion or approved for development increased more than 48% to 736 hotels representing 57,117 rooms; the worldwide pipeline increased 39% to 808 hotels representing 63,579 rooms. * Domestic unit growth increased 3.2% compared to third quarter 2005. * Five new contracts executed for the upscale Cambria Suites brand during the quarter, with 20 signed year-to-date and 33 since the brand was introduced in 2005.

"The strong growth we are seeing in domestic franchise contracts for both new construction and conversion hotels demonstrates that the demand for our brands is strong," said Charles A. Ledsinger, Jr., vice chairman and chief executive officer. "As a result, we remain confident in our ability to achieve our long-term growth objectives by leveraging the combined strength of our high-caliber management team, sound business strategies and brand-centric organization to benefit our shareholders, franchisees, hotel guests and associates."

Outlook for 2006

The company's fourth quarter 2006 diluted EPS is expected to be $0.34. The company expects full year 2006 adjusted diluted EPS of $1.47, which excludes the effect of the reversal of provisions for certain income tax contingencies and the loss on extinguishment of debt described below. The company's full year 2006 diluted EPS is expected to be $1.66. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is expected to be $175 million. These estimates include the following assumptions.

* The company expects net domestic unit growth of approximately 4% in 2006; * RevPAR is expected to increase 4.5% for fourth quarter 2006 and 5.5% for full-year 2006; * The effective royalty rate is expected to increase 2 basis points for full-year 2006; * All figures assume the existing share count, include stock-based compensation expense and assume an effective tax rate of 36.5% for fourth quarter 2006. Adjusted Net Income and Diluted EPS

Net income and diluted earnings per share for the three and nine months ended September 30, 2006 include a reduction of income tax expense related to reversal of provisions for certain income tax contingencies of approximately $12.8 million and $12.6 million, respectively. Net income and diluted earnings per share for the nine months ended September 30, 2006 also include a loss of approximately $0.3 million ($0.2 million, net of the related tax effect) related to the extinguishment of debt. Those items represent diluted EPS of $0.19, net, for the three and nine months ended September 30, 2006. Adjusted diluted EPS and adjusted net income for the three and nine months ended September 30, 2006 exclude these items.

Net income and diluted earnings per share for the three and nine months ended September 30, 2005 include additional income tax expense of approximately $1.2 million related to the Company's plan to repatriate approximately $23.5 million of foreign earnings pursuant to the American Jobs Creation Act and a reduction of income tax expense related to the resolution of certain tax contingencies of approximately $4.9 million. Those items represent diluted EPS of $0.05, net, for the three and nine months ended September 30, 2005. Adjusted diluted EPS and adjusted net income for the three and nine months ended September 30, 2005 exclude these items.

Use of Free Cash Flow

The company has consistently used its free cash flow (cash flow from operations less capital expenditures) generated from its operations to return value to shareholders. This is primarily achieved through share repurchases and dividends.

For the nine months ended September 30, 2006, the company paid $25.5 million of cash dividends to shareholders. The annual dividend rate per common share was increased 15% by the Board of Directors in September and is now $0.60.

The company has authorization to purchase up to an additional 5.1 million shares under the share repurchase program. Repurchases will continue to be made in the open market and through privately negotiated transactions subject to market and other conditions. No minimum number of shares has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 33.6 million shares of its common stock for a total cost of $711.9 million through October 30, 2006. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 66.6 million shares at an average price of $10.69 per share.

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 Tuesday, October 31, 2006, at 10 a.m. EST to discuss the company's third quarter 2006 results. The call-in number to listen to the call is 1-877-209-0397. International callers should dial 612-288-0329. The conference call also will be Web cast simultaneously via the company's Web site, http://www.choicehotels.com/. Interested investors and other parties wishing to access the call on the Web 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 audio of the call will be archived and available on http://www.choicehotels.com/ for those unable to listen to the call on October 31st. The call will also be available for replay until November 30, 2006, by calling 1-800-475-6701 (access code 842696). International callers should dial 320-365-3844 and enter access code 842696

Items Impacting Comparability Acquisition of Suburban

During 2005, the company acquired Suburban Franchise Holding Company, Inc. ("Suburban"), which included 67 Suburban Extended Stay Hotel units open and operating in the United States. The results of operations for Suburban have been included in the company's results of operations since September 28, 2005.

About Choice Hotels

Choice Hotels International franchises more than 5,300 hotels, representing more than 430,000 rooms, in the United States and more than 40 countries and territories. As of September 30, 2006, 736 hotels are under development in the United States, representing 57,117 rooms, and an additional 72 hotels, representing 6,462 rooms, are under development in more than 20 countries and territories. The company's Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites and Suburban Extended Stay Hotel brands serve guests worldwide.

Additional corporate information may be found on Choice Hotels' Internet site, which may be accessed at http://www.choicehotels.com/.

Forward-Looking Statements

Certain matters discussed in this press release may constitute forward- looking statements within the meaning of the federal securities law. Such statements are based on management's beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice's ability to predict or control. The company's Form 10-K for the year ended December 31, 2005 details some of the important risk factors that you should review.

Statement Concerning Non-GAAP Financial Measurements

Franchising revenues, franchising margins, EBITDA, and free cash flows are non-GAAP financial measurements. These financial measurements are presented as 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 as promulgated under accounting principles generally accepted in the United States (GAAP), such as total revenues, operating income, operating margins, and cash flows from operations. The company's calculation of these measurements may be different from the calculation used by other companies and therefore comparability may be limited. The company has included exhibits accompanying this release that reconcile these measures to the comparable GAAP measurement.

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

Choice Hotels International, Inc. Exhibit 1 Consolidated Statements of Income (Unaudited) Three Months Ended September 30, Variance 2006 2005 $ % (In thousands, except per share amounts) REVENUES: Royalty fees $64,364 $58,063 $6,301 11% Initial franchise and relicensing fees 7,733 5,769 1,964 34% Partner services 3,171 3,122 49 2% Marketing and reservation 73,001 72,841 160 0% Hotel operations 1,182 1,153 29 3% Other 1,545 1,003 542 54% Total revenues 150,996 141,951 9,045 6% OPERATING EXPENSES: Selling, general and administrative 20,279 18,311 1,968 11% Depreciation and amortization 2,344 2,188 156 7% Marketing and reservation 73,001 72,841 160 0% Hotel operations 820 824 (4) (0%) Total operating expenses 96,444 94,164 2,280 2% Operating income 54,552 47,787 6,765 14% OTHER INCOME AND EXPENSES: Interest expense 3,207 3,815 (608) (16%) Interest and other investment (income) loss (569) (721) 152 (21%) Equity in net income of affiliates (349) (267) (82) 31% Loss on extinguishment of debt - - - NM Other - (197) 197 (100%) Total other income and expenses, net 2,289 2,630 (341) (13%) Income before income taxes 52,263 45,157 7,106 16% Income taxes 5,906 12,691 (6,785) (53%) Net income $46,357 $32,466 $13,891 43% Weighted average shares outstanding- basic 65,668 64,756 Weighted average shares outstanding- diluted 67,152 66,963 Basic earnings per share $0.71 $0.50 $0.21 42% Diluted earnings per share $0.69 $0.48 $0.21 44% Nine Months Ended September 30, Variance 2006 2005 $ % (In thousands, except per share amounts) REVENUES: Royalty fees $157,374 $138,220 $19,154 14% Initial franchise and relicensing fees 20,099 16,671 3,428 21% Partner services 10,853 10,358 495 5% Marketing and reservation 203,719 184,494 19,225 10% Hotel operations 3,342 3,214 128 4% Other 5,567 2,457 3,110 127% Total revenues 400,954 355,414 45,540 13% OPERATING EXPENSES: Selling, general and administrative 60,796 54,263 6,533 12% Depreciation and amortization 7,335 6,769 566 8% Marketing and reservation 203,719 184,494 19,225 10% Hotel operations 2,365 2,385 (20) (1%) Total operating expenses 274,215 247,911 26,304 11% Operating income 126,739 107,503 19,236 18% OTHER INCOME AND EXPENSES: Interest expense 11,291 11,294 (3) (0%) Interest and other investment (income) loss (1,099) (994) (105) 11% Equity in net income of affiliates (737) (621) (116) 19% Loss on extinguishment of debt 342 - 342 NM Other - (383) 383 (100%) Total other income and expenses, net 9,797 9,296 501 5% Income before income taxes 116,942 98,207 18,735 19% Income taxes 28,784 32,194 (3,410) (11%) Net income $88,158 $66,013 $22,145 34% Weighted average shares outstanding- basic 65,272 64,452 Weighted average shares outstanding- diluted 67,009 66,630 Basic earnings per share $1.35 $1.02 $0.33 32% Diluted earnings per share $1.32 $0.99 $0.33 33% Choice Hotels International, Inc. Exhibit 2 Consolidated Balance Sheets (In thousands) September 30, December 31, 2006 2005 (Unaudited) ASSETS Cash and cash equivalents $27,078 $16,921 Accounts receivable, net 45,280 37,155 Deferred income taxes 2,622 2,616 Other current assets 6,000 6,308 Total current assets 80,980 63,000 Fixed assets and intangibles, net 144,170 150,376 Receivable -- marketing fees 4,675 13,225 Investments, employee benefit plans, at fair value 29,096 23,337 Other assets 27,347 15,162 Total assets 286,268 265,100 LIABILITIES AND SHAREHOLDERS' DEFICIT Current portion of long-term debt 146 146 Other current liabilities 128,845 119,999 Total current liabilities 128,991 120,145 Long-term debt 187,411 273,972 Deferred compensation & retirement plan obligations 35,464 28,987 Other liabilities 12,709 9,172 Total liabilities 364,575 432,276 Total shareholders' deficit (78,307) (167,176) Total liabilities and shareholders' deficit $286,268 $265,100 Choice Hotels International, Inc. Exhibit 3 Consolidated Statements of Cash Flows (Unaudited) (In thousands) Nine Months Ended September 30, 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $88,158 $66,013 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,335 6,769 Gain on sale of assets - (383) Provision for bad debts 35 102 Non-cash stock compensation and other charges 8,250 3,877 Non-cash interest and other investment income (385) (346) Loss on extinguishment of debt 342 - Equity in net income of affiliates (737) (621) Changes in assets and liabilities, net of acquisitions: Receivables (8,149) (8,089) Receivable - marketing and reservation fees, net 18,585 13,351 Accounts payable (2,227) (1,545) Accrued expenses and other (17,237) 5,041 Income taxes payable 19,776 23,842 Deferred income taxes (12,319) (7,006) Deferred revenue 7,142 4,000 Other assets 476 87 Other liabilities 5,888 (6,179) NET CASH PROVIDED BY OPERATING ACTIVITIES* 114,933 98,913 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in property and equipment (5,281) (10,242) Proceeds from disposition of assets - 2,811 Issuance of notes receivable (1,780) (1,456) Proceeds from sales of investments 2,885 3,239 Purchases of investments (7,976) (7,723) Acquisition of Suburban, net of cash acquired - (7,345) Other items, net 570 (515) NET CASH USED IN INVESTING ACTIVITIES (11,582) (21,231) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments of long-term debt (109) (109) Net repayments pursuant to revolving credit facility (86,500) (32,604) Debt issuance costs (477) (193) Excess tax benefits from stock-based compensation 12,550 - Purchase of treasury stock (1,326) (23,935) Dividends paid (25,494) (21,813) Proceeds from exercise of stock options 8,162 9,705 NET CASH USED IN FINANCING ACTIVITIES (93,194) (68,949) Net change in cash and cash equivalents 10,157 8,733 Cash and cash equivalents at beginning of period 16,921 28,518 CASH AND CASH EQUIVALENTS AT END OF PERIOD $27,078 $37,251 * Net cash provided by operating activities for the nine months ended September 30, 2005 includes approximately $6.0 million of excess tax benefits related to stock-based compensation. Effective January 1, 2006, the Company began reporting these excess tax benefits as cash flows from financing activities as a result of the adoption of Statement of Financial Accounting Standards No. 123R "Accounting for Stock-Based Compensation" CHOICE HOTELS INTERNATIONAL, INC. EXHIBIT 4 SUPPLEMENTAL OPERATING INFORMATION DOMESTIC HOTEL SYSTEM (UNAUDITED) For the Nine Months Ended September 30, 2006 Average Daily Rate Occupancy RevPAR Comfort Inn $73.06 62.9% $45.92 Comfort Suites 83.12 67.4% 55.99 Sleep 66.58 62.3% 41.48 Midscale without Food & Beverage 74.22 63.7% 47.25 Quality 67.27 55.6% 37.40 Clarion 79.18 51.2% 40.56 Midscale with Food & Beverage 70.10 54.5% 38.20 Econo Lodge 53.21 47.7% 25.38 Rodeway 52.32 46.7% 24.44 Economy 53.05 47.5% 25.20 MainStay 67.39 68.2% 45.97 Total Domestic System* $69.86 58.1% $40.60 For the Nine Months Ended September 30, 2005 Average Daily Rate Occupancy RevPAR Comfort Inn $68.85 61.1% $42.05 Comfort Suites 77.59 65.6% 50.91 Sleep 62.46 60.7% 37.91 Midscale without Food & Beverage 69.68 61.9% 43.11 Quality 65.37 54.4% 35.57 Clarion 74.25 52.0% 38.59 Midscale with Food & Beverage 67.71 53.8% 36.39 Econo Lodge 50.99 48.3% 24.64 Rodeway 50.57 47.4% 23.99 Economy 50.92 48.2% 24.53 MainStay 64.48 64.9% 41.84 Total Domestic System* $66.33 57.3% $37.99 Change Average Daily Rate Occupancy RevPAR Comfort Inn 6.1% 180 bps 9.2% Comfort Suites 7.1% 180 bps 10.0% Sleep 6.6% 160 bps 9.4% Midscale without Food & Beverage 6.5% 180 bps 9.6% Quality 2.9% 120 bps 5.1% Clarion 6.6% -80 bps 5.1% Midscale with Food & Beverage 3.5% 70 bps 5.0% Econo Lodge 4.4% -60 bps 3.0% Rodeway 3.5% -70 bps 1.9% Economy 4.2% -70 bps 2.7% MainStay 4.5% 330 bps 9.9% Total Domestic System* 5.3% 80 bps 6.9% For the Three Months Ended September 30, 2006 Average Daily Rate Occupancy RevPAR Comfort Inn $78.25 72.6% $56.79 Comfort Suites 86.19 73.3% 63.22 Sleep 69.80 69.6% 48.61 Midscale without Food & Beverage 78.67 72.3% 56.88 Quality 71.73 64.7% 46.42 Clarion 82.51 57.1% 47.14 Midscale with Food & Beverage 74.19 62.8% 46.60 Econo Lodge 57.22 56.1% 32.11 Rodeway 57.14 54.9% 31.38 Economy 57.20 55.9% 31.96 MainStay 68.86 77.1% 53.12 Total Domestic System* $73.99 66.5% $49.23 For the Three Months Ended September 30, 2005 Average Daily Rate Occupancy RevPAR Comfort Inn $73.81 71.6% $52.87 Comfort Suites 80.71 73.5% 59.32 Sleep 65.77 69.1% 45.43 Midscale without Food & Beverage 74.03 71.6% 53.02 Quality 69.99 63.5% 44.42 Clarion 77.94 60.1% 46.87 Midscale with Food & Beverage 72.01 62.6% 45.07 Econo Lodge 55.11 57.1% 31.49 Rodeway 56.80 54.8% 31.10 Economy 55.38 56.7% 31.42 MainStay 67.97 73.4% 49.89 Total Domestic System* $70.59 66.5% $46.93 Change Average Daily Rate Occupancy RevPAR Comfort Inn 6.0% 100 bps 7.4% Comfort Suites 6.8% -20 bps 6.6% Sleep 6.1% 50 bps 7.0% Midscale without Food & Beverage 6.3% 70 bps 7.3% Quality 2.5% 120 bps 4.5% Clarion 5.9% -300 bps 0.6% Midscale with Food & Beverage 3.0% 20 bps 3.4% Econo Lodge 3.8% -100 bps 2.0% Rodeway 0.6% 10 bps 0.9% Economy 3.3% -80 bps 1.7% MainStay 1.3% 370 bps 6.5% Total Domestic System* 4.8% 0 bps 4.9% * Amounts exclude Suburban activity from January 1, 2006 through September 30, 2006 because comparable pre-acquisition data for Q3 2005 is not available For the Quarter For the Nine Months Ended Ended 9/30/2006 9/30/2005 9/30/2006 9/30/2005 System-wide effective royalty rate 4.08% 4.07% 4.09% 4.08% CHOICE HOTELS INTERNATIONAL, INC. EXHIBIT 5 SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA (UNAUDITED) Sept. 30, 2006 Sept. 30, 2005 Hotels Rooms Hotels Rooms Comfort Inn 1,411 110,525 1,440 112,903 Comfort Suites 427 33,573 410 32,142 Sleep 327 24,609 316 24,032 Midscale without Food & Beverage 2,165 168,707 2,166 169,077 Quality 709 69,699 644 64,908 Clarion 160 23,733 148 22,685 Midscale with Food & Beverage 869 93,432 792 87,593 Econo Lodge 815 50,013 803 49,851 Rodeway 217 13,245 172 10,646 Economy 1,032 63,258 975 60,497 MainStay 27 2,046 28 2,190 Suburban 64 8,441 67 8,942 Extended Stay 91 10,487 95 11,132 Domestic Franchises 4,157 335,884 4,028 328,299 International Franchises 1,171 98,811 1,167 98,058 Total Franchises 5,328 434,695 5,195 426,357 Variance Hotels Rooms % % Comfort Inn (29) (2,378) (2.0%) (2.1%) Comfort Suites 17 1,431 4.1% 4.5% Sleep 11 577 3.5% 2.4% Midscale without Food & Beverage (1) (370) (0.0%) (0.2%) Quality 65 4,791 10.1% 7.4% Clarion 12 1,048 8.1% 4.6% Midscale with Food & Beverage 77 5,839 9.7% 6.7% Econo Lodge 12 162 1.5% 0.3% Rodeway 45 2,599 26.2% 24.4% Economy 57 2,761 5.8% 4.6% MainStay (1) (144) (3.6%) (6.6%) Suburban (3) (501) (4.5%) (5.6%) Extended Stay (4) (645) (4.2%) (5.8%) Domestic Franchises 129 7,585 3.2% 2.3% International Franchises 4 753 0.3% 0.8% Total Franchises 133 8,338 2.6% 2.0% CHOICE HOTELS INTERNATIONAL, INC. EXHIBIT 6 SUPPLEMENTAL INFORMATION BY BRAND DEVELOPMENT RESULTS -- NEW HOTEL CONTRACTS (UNAUDITED) For the Nine Months Ended September 30, 2006 New Construction Conversion Total Comfort Inn 38 43 81 Comfort Suites 55 3 58 Sleep 27 1 28 Midscale without Food & Beverage 120 47 167 Quality 5 100 105 Clarion 1 22 23 Midscale with Food & Beverage 6 122 128 Econo Lodge - 43 43 Rodeway 2 73 75 Economy 2 116 118 MainStay 5 1 6 Suburban 9 5 14 Extended Stay 14 6 20 Cambria Suites 20 - 20 Total Domestic System 162 291 453 For the Nine Months Ended September 30, 2005 New Construction Conversion Total Comfort Inn 33 40 73 Comfort Suites 42 4 46 Sleep 36 1 37 Midscale without Food & Beverage 111 45 156 Quality 4 112 116 Clarion 2 15 17 Midscale with Food & Beverage 6 127 133 Econo Lodge 4 61 65 Rodeway - 47 47 Economy 4 108 112 MainStay 10 - 10 Suburban - - - Extended Stay 10 - 10 Cambria Suites 8 - 8 Total Domestic System 139 280 419 % Change New Construction Conversion Total Comfort Inn 15% 8% 11% Comfort Suites 31% (25%) 26% Sleep (25%) 0% (24%) Midscale without Food & Beverage 8% 4% 7% Quality 25% (11%) (9%) Clarion (50%) 47% 35% Midscale with Food & Beverage 0% (4%) (4%) Econo Lodge (100%) (30%) (34%) Rodeway NM 55% 60% Economy (50%) 7% 5% MainStay (50%) NM (40%) Suburban NM NM NM Extended Stay 40% NM 100% Cambria Suites 150% NM 150% Total Domestic System 17% 4% 8% For the Three Months Ended September 30, 2006 New Construction Conversion Total Comfort Inn 14 25 39 Comfort Suites 14 1 15 Sleep 17 1 18 Midscale without Food & Beverage 45 27 72 Quality - 43 43 Clarion - 4 4 Midscale w/ Food & Beverage - 47 47 Econo Lodge - 20 20 Rodeway 1 25 26 Economy 1 45 46 MainStay 2 - 2 Suburban 3 3 6 Extended Stay 5 3 8 Cambria Suites 5 - 5 Total Domestic System 56 122 178 For the Three Months Ended September 30, 2005 New Construction Conversion Total Comfort Inn 13 15 28 Comfort Suites 13 1 14 Sleep 14 - 14 Midscale without Food & Beverage 40 16 56 Quality 2 40 42 Clarion 1 7 8 Midscale w/ Food & Beverage 3 47 50 Econo Lodge - 12 12 Rodeway - 22 22 Economy - 34 34 MainStay 1 - 1 Suburban - - - Extended Stay 1 - 1 Cambria Suites 2 - 2 Total Domestic System 46 97 143 % Change New Construction Conversion Total Comfort Inn 8% 67% 39% Comfort Suites 8% 0% 7% Sleep 21% NM 29% Midscale without Food & Beverage 13% 69% 29% Quality (100%) 8% 2% Clarion (100%) (43%) (50%) Midscale w/ Food & Beverage (100%) 0% (6%) Econo Lodge NM 67% 67% Rodeway NM 14% 18% Economy NM 32% 35% MainStay 100% NM 100% Suburban NM NM NM Extended Stay 400% NM 700% Cambria Suites 150% NM 150% Total Domestic System 22% 26% 24% CHOICE HOTELS INTERNATIONAL, INC. EXHIBIT 7 DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT (UNAUDITED) A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors. September 30, 2006 Units New Conversion Construction Total Comfort Inn 50 108 158 Comfort Suites 5 197 202 Sleep Inn - 95 95 Midscale without Food & Beverage 55 400 455 Quality 67 11 78 Clarion 14 4 18 Midscale with Food & Beverage 81 15 96 Econo Lodge 32 5 37 Rodeway 56 2 58 Economy 88 7 95 MainStay 1 33 34 Suburban 4 19 23 Extended Stay 5 52 57 Cambria Suites - 33 33 229 507 736 September 30, 2005 Units New Conversion Construction Total Comfort Inn 32 68 100 Comfort Suites 2 132 134 Sleep Inn 1 77 78 Midscale without Food & Beverage 35 277 312 Quality 51 11 62 Clarion 10 2 12 Midscale with Food & Beverage 61 13 74 Econo Lodge 34 9 43 Rodeway 32 1 33 Economy 66 10 76 MainStay 1 26 27 Suburban - - - Extended Stay 1 26 27 Cambria Suites - 8 8 163 334 497 Variance New Conversion Construction Total Units % Units % Units % Comfort Inn 18 56% 40 59% 58 58% Comfort Suites 3 150% 65 49% 68 51% Sleep Inn (1) -100% 18 23% 17 22% Midscale without Food & Beverage 20 57% 123 44% 143 46% Quality 16 31% - 0% 16 26% Clarion 4 40% 2 100% 6 50% Midscale with Food & Beverage 20 33% 2 15% 22 30% Econo Lodge (2) -6% (4) -44% (6) -14% Rodeway 24 75% 1 100% 25 76% Economy 22 33% (3) -30% 19 25% MainStay - 0% 7 27% 7 26% Suburban 4 NM 19 NM 23 NM Extended Stay 4 400% 26 100% 30 111% Cambria Suites - NM 25 313% 25 313% 66 40% 173 52% 239 48% CHOICE HOTELS INTERNATIONAL, INC. EXHIBIT 8 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (UNAUDITED) CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS (dollar amounts in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Franchising Revenues: Total Revenues $150,996 $141,951 $400,954 $355,414 Adjustments: Marketing and reservation revenues (73,001) (72,841) (203,719) (184,494) Hotel Operations (1,182) (1,153) (3,342) (3,214) Franchising Revenues $76,813 $67,957 $193,893 $167,706 Franchising Margins: Operating Margin: Total Revenues $150,996 $141,951 $400,954 $355,414 Operating Income $54,552 $47,787 $126,739 $107,503 Operating Margin 36.1% 33.7% 31.6% 30.2% Franchising Margin: Franchising Revenues $76,813 $67,957 $193,893 $167,706 Operating Income $54,552 $47,787 $126,739 $107,503 Less: Hotel Operations 362 329 977 829 $54,190 $47,458 $125,762 $106,674 Franchising Margins 70.5% 69.8% 64.9% 63.6% CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) (in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Net income $46,357 $32,466 $88,158 $66,013 Adjustments: Loss on Debt Extinguishment Costs - - 217 - Reversal of Provisions for Income Tax Contingencies (12,785) (4,896) (12,581) (4,896) Income Tax Expense Incurred Due to Foreign Earnings Repatriation 1,192 1,192 Adjusted Net Income $33,572 $28,762 $75,794 $62,309 Weighted average shares outstanding- diluted 67,152 66,963 67,009 66,630 Diluted Earnings Per Share $0.69 $0.48 $1.32 $0.99 Adjustments: Loss on Debt Extinguishment Costs - - - - Reversal of Provisions for Income Tax Contingencies (0.19) (0.07) (0.19) (0.07) Income Tax Expense Incurred Due to Foreign Earnings Repatriation - 0.02 - 0.02 Adjusted Diluted Earnings Per Share (EPS) $0.50 $0.43 $1.13 $0.94 EBITDA Reconciliation (in millions) Full-Year Q3 2006 Q3 2005 2006 Actuals Actuals Outlook Operating Income (per GAAP) $54.6 $47.8 $165.2 Depreciation and amortization 2.3 2.2 9.8 Earnings before interest, taxes, depreciation & amortization (non- GAAP) $56.9 $50.0 $175.0