Rodeway Inn Finishes Year with a Q4 Frenzy

Year-End Performance Caps Record Year for Choice's Budget Brand Hotel

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. October 14, 2008

SILVER SPRING, MD, March 2, 2006. Choice Hotels International, Inc. (NYSE:CHH) recently announced record-breaking growth for its Rodeway Inn brand. A total of 75 new Rodeway Inn hotel contracts were executed in 2005 - the best year ever for the brand according to Kevin Bradt, senior director, brand strategy for the Choice economy brands.

In addition, the fourth quarter of 2005 represented the biggest signing period ever for Rodeway Inn hotel deals with 43 of the 75 contracts - or 57 percent - executed following a franchisee fee restructuring initiative in September-October 2005. "The exponential growth of Rodeway Inn properties in 2005 is a testament not only to the hard work of the hotel's sales development team but also the realization by hotel developers of the value of the Rodeway Inn brand," Bradt said. "Rodeway Inn hotels ranked first in percentage growth of new properties for Choice for 2005 with a 203 percent increase in deals signed during 2005 compared to 2004."

The 43 Rodeway Inn hotel deals executed during the fourth quarter of 2005 were six more than the 37 contracts executed for the brand in all of 2004. Reservation contribution for Rodeway Inn hotels also rose during 2005, from 23 percent in 2004 to 27.6 percent in 2005, representing a 4.6 percent increase for the year. "With its combined performance in both development and system delivery, Rodeway Inn has a strong competitive advantage and broad appeal for developers in this market segment," Bradt added.

Choice Hotels began 2005 with 160 Rodeway Inn properties and ended the year with 180 open hotels representing more than 13,000 rooms across North America, a 12.5 percent net online opening increase compared to 2004.

The New Fee Structure

Choice announced its new fee structure for Rodeway Inn franchisees in October 2005, explaining that the new fee structure greatly enhanced ease of entry into the Rodeway Inn system and jumpstarted the brand's growth potential in the burgeoning budget hotel segment. The new structure is as follows:

-- A flat fee starting at $25 per room, per month is charged to franchisees for the first two years, followed by annual increases of $1.00 over the next four years. This represents a change from the revenue percentage fee structure previously in place for the brand.

-- The initial fee to franchise with Rodeway Inn is reduced to $5,000, a significant reduction from previous fee(s) and approximately $1,000 less than some competitors in the segment.

-- Mutual windows have been reduced from five years to one year, giving franchisees greater flexibility in their businesses and control over their franchising decisions.

"One of the main priorities for Choice Hotels is to produce the best return on investment possible for our franchisees. This new fee structure, which makes franchising with Rodeway Inn more compelling for developers and makes budgeting franchise fees a lot easier, is just one way we are meeting that goal," said Ron Burgett, vice president, franchise development for Choice Hotels. "We created this structure to enhance the brand's growth potential, which seems to be coming to fruition based on strong developer interest thus far."