Stephen P. Joyce – President, Chief Executive Officer, Chief Operating Officer & Director David L. White – Chief Financial Officer, Senior Vice President & Treasurer

Patrick Scholes – Friedman, Billings, Ramsey & Co. Will Truelove – UBS Joseph Greff – JP Morgan Steve Kent – Goldman Sachs Jeff Donnelly – Wachovia Securities David Katz – Oppenheimer Felicia Hendrick – Barclays Capital Michael Millman – Millman Research Associates

Welcome to the Choice Hotels International fourth quarter and full year 2008 earnings conference call. At this time all lines are in a listen only mode. Later there will be a question and answer session and further instructions will be given at that time. As a reminder, today’s call is being recorded. During the course of this conference call certain predictive or forward-looking statements will be used to assist you in understanding the company and its results which constitute forward-looking statements under the Safe Harbor provision of the Securities Act of 1995. These forward-looking statements generally can be identified by phrases such as choice or risk management, believes, expects, anticipates, foresees, forecasts, estimates or other words or phrases of similar importance. Such statements are subject to risk and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Please consult the company’s Form 10K for the year ended December 31, 2007 and other SEC filings for the information about the important risk factors affecting the company that you should consider. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We caution you to not place undue reliance on forward-looking statements which reflect our analysis only and speak only as of today’s date. We undertake no obligation to publically update our forward-looking statements to reflect subsequent events or circumstances. You can find a reconciliation of our non-GAAP financial measures referred to in our remarks as part of our fourth quarter and full year 2008 earnings press release which is posted on our website at www.ChoiceHotels.com on the investor information section. With that being said, I would now like to introduce Steve Joyce, President and Chief Executive Officer of Choice Hotels International Incorporated. Stephen P. Joyce: Welcome to our fourth quarter and our full year 2008 earnings call. With me this morning as usual is David White our Chief Financial Officer. Before we get in to a discussion or our recent results, I wanted to spend a couple of minutes with you reemphasizing some of the important concepts we talked about in our ’09 outlook call that we had in December around the kind of terrific and important characteristics of our business and our model that have enabled us to return value to shareholders over an extended period of time and in most importantly a variety of industry and economic climates, obviously important today. Those characteristics include a stable of 10 diversified value oriented brands that are well known both by consumers and hotel developers and our Ascend collection portfolio which we have high hopes for this year which is a collection and membership program of hotels that are boutique, resort and historic. A strong central reservation system and a rapidly growing global loyalty program that deliver a large percentage of valuable business to our franchisee hotels, strong relationships with our franchisee community, a highly attractive fee for service business model that generates strong free cash flows and high returns on invested capital unseen in the lodging industry. The business coupled with a disciplined approach to capital allocation has enabled us to put our excess free cash flows to their highest and best use over time including returning excess cash flows to shareholders over time through share repurchase and dividends. One of the most remarkable things about this model is that since its inception, the company has generated roughly $1 billion in earnings and has returned roughly $1 billion to their shareholders through these avenues. Let’s talk a little bit about the current environment, obviously the near term remains challenging and visibility is difficult as evidenced by the wide range of opinions on where the hotel business is going. The economic pressures, unemployment, weakening consumer confidence, are clearly having a negative impact on the hotel industry and we are not immune to those factors. Having said that, I’d like to highlight a few of the near term drivers of our business that impact our financial results and review how our model is different than that of other lodging companies. The first and probably most important is unit growth. We have brands that meet all stages of the hotels lifecycle. We have successfully grown our core brand units and Choice’s market share at a faster pace than our competitors and over the past five years we have been the leading domestic gainer of market share amongst the major hotel companies. We typically covert hotels in to our systems in difficult times such as this and add new construction hotels in good times. But, I want to reiterate one thing about our family of brands and that is that we have a brand that meets all stages of the hotel lifecycle which allows us to be extraordinarily flexible in how we grow this company throughout various cycles in the business. We remain very confident in our stable of brands that position us for continued unit and room growth and with some help of liquidity in the market, should lead to a great environment for conversions for us later this year and in to 2010. RevPAR which is another differentiator from other public companies, has been our ability to deliver financial performance that is relatively less volatile than RevPAR fluctuations given our moderate tier positioning, given our franchise pure model and given the way that our brands perform. As you know, the lodging business is a cyclical industry and RevPAR in the segments in which we compete while still negative have not been impacted as much as the higher end segments. In addition, a higher concentration of our hotels are located on interstate and in small metro locations and over the last year RevPAR for hotels in these locations have been less severely impacted than urban hotels. So, we encourage you to go beyond the industry headlines when it comes to RevPAR as Choice while not immune to broad macro trends, is very much different than the other lodging companies that you’re looking at as you examine RevPAR. There are very few companies like ours that can offset negative RevPAR with supply growth on a one-for-one basis. A 1% negative RevPAR scenario and a 1% supply growth scenario equals a revenue neutral environment for us which is not matched by other companies. To talk about a current perspective on RevPAR and turning to the current industry environment, the RevPAR has declined since August. Occupancy declines were experienced through 2008 and they steepened during the summer travel season. In November we started to see rate declines which we continue to experience, however our declines in rate are much less severe than the declines in the luxury, upper upscale and upscale lodging segments. The RevPAR projections updated by the various prognosticators at the ALIS Conference in late January, range from a low decline of 5.9% for STR to an 11.2% decline by PWC. The quarter-to-date industry RevPAR has been extremely soft with Stars showing RevPAR down 16.5% in midscale with food and beverage and 15.9% down without and overall a 12.5% decline in economy segments. The Choice RevPAR numbers lag for one month so our Q1 reflects rates received by our franchisees during December, January and February. Industry RevPAR for December declined 10% and 15% to 17% in January. For comparison, Choice’s RevPAR in December was down approximately 8% and down further in January and February to date. The tightening of the credit markets and global economic uncertainty makes RevPAR very difficult to forecast going forward however, we do anticipate that RevPAR declines will be the steepest in the first half of the year and then will moderate in the back half in part due to favorable comparisons as last year’s results were dropping off. On the development and unit growth front, new hotel construction environment obviously remains challenging due to lack of available credit. Still, we are seeing some smaller deals being financed by local and regional banks typically in the range of $7 million to $8 million and below which is our sweet spot for the bulk of our hotel growth. We are hopeful that as credit becomes easier to obtain in the back half of the year, this will provide a rosier environment for conversions, transactions and will help our growth of our brands. During the 2008 application flow decreased 12% from 2007 with new construction applications down 19% and conversion applications down 7%. We saw evidence that in the fourth quarter of 2008 new construction contracts were down sharply to a level of 45% down. On the conversion side, while not as dramatic, domestic franchise agreements were down less than new construction but they were still down around 20%. We remain confident that when hotel transaction volumes pick up and credit becomes more available we will see an uptick in conversions as we have typically seen in other negative RevPAR performances and that Choice has experienced. Let’s talk a little bit about franchisees and their operations which obviously is a critical focus for us. For open and operating hotels, this environment is obviously difficult. We realize that if our owners aren’t successful we aren’t going to be successful both in retaining them and growing our brands. We are committed to allocating and managing the resources we have available to maximize guest delivery and property level success and return on investment. We are committed to our franchisees that we will not initiative any additional brand standards that require their investment of capital during 2009. We have committed to maintaining our marketing efforts and will allocate a greater part of our marketing spend towards focused transactional efforts to drive greater share of reservations to their hotels. We are focused on growing our Choice Privileges Program dramatically. We are looking for a target of 1.75 million additional members which is a 75% increase over the new members added in 2008 on top of an already very strong program of roughly 7.5 million members. We are providing at no cost to our franchisees additional training that directly addresses how to maximize performance and increase market share in the current economic environment. We are strengthening the operationally educational value at our annual convention which we will maintain by focusing session content on tools and resources that drive property level success during tough times. We believe that our franchisees generally operate with less financial leverage and can be profitable at lower occupancies than other major hotel chains so we are not anticipating any significant financial distress issues impacting our revenues and fee collection. Let’s talk a little bit about managing our corporate resources. As you can see in our earnings release, we took a $3.5 million charge related to employee termination expenses. These adjustments to our infrastructure will provide important cost savings in this difficult environment going forward. We remain extremely cautious about managing our resources. Our run rate currently is below our budgeted levels, we have a hiring freeze in place like many companies and we are taking all of the normal precautions watching the relative revenue declines and our ability to mandate that our resources and liquidity stay strong. I reiterate what I said in December on the call, you will see declines in our companies' expenditures given this current environment. This will represent a departure from our recent cost growth trajectory. Having contingency plans in place in the event the environment deteriorates further to a greater extent than we forecasted are an important part of our ongoing process. However, we are fully committed to our strategic plan which focuses on our long term growth. As a company, we will maintain our commitment to items on our strategic agenda which will facilitated continued long term growth of the business and returns to our shareholders. We as a company and as a first priority remain committed to returning excess capital to shareholders over time via share repurchases and dividends. In 2008 we repurchased 2.2 million shares, year-to-date in ’09 we have added another 500,000 shares to that collection. During 2008 we paid $43.1 million in cash dividends to our shareholders and even with all that at the end of this year we had very, very low leverage levels. I will not however, given liquidity in the markets, our borrowing capacity is currently limited to what’s available through our current credit facility based on financing markets which we hope will improve. Let’s talk a little bit about Q4 and 2008 results. Our domestic unit and room growth for 2008 was 6.1% and 5.6% respectively for the full year. This represents the strongest unit and room growth year that Choice has had in its 10 years as a public company. It is really a remarkable accomplishment given the environment in the back half of the year. Domestic RevPAR declined 7.7% for the fourth quarter and 1.8% for the full year compared to periods in 2007. These declines were primarily occupancy related and were partially offset by rate increases. While facing headwinds due to the current economic and credit market environments, the company still executed $698 domestic hotel franchise contracts for the year, down 9% compared to full year 2007 but which actually met our budget for the year. Adjusted earnings before interest, taxes and depreciation where $200.5 million for the year ended December 31 ’08 compared to $198.1 million for that same period in ’07. Adjusted diluted earnings per share for full year 2008 were $1.78 compared to $1.74 for full year ’07. Adjusted EBITDA and EPS for the year ended ’08 excluding special items which are described and reconciled to our GAAP results in exhibit 8 of our press release totaling $17.7 million resulting in an $0.18 diluted EPS impact. Respectively related to a $6.6 million benefit discussed previously related to our acceleration of the company’s management succession plan, $3.5 million related to the employment termination costs just discussed and a $7.6 million adjustment related to an increase in reserves related to impaired notes receivable. Adjusted EBITDA and EPS for the year ended in ’07 excludes special items totaling $4.3 million or $0.04 of diluted EPS also related to employee termination benefits. A little bit on the outlook, looking forward we expect first quarter 2009 diluted EPS to be roughly $0.24 and a full year ’09 diluted earnings per share of $1.68. EBITDA for the full year 2009 is expected to be approximately $178 million. These figures assume domestic unit growth of approximately 3% for full year 2009 and approximately 12% decline in RevPAR for the fourth quarter ’09 followed by a 10% decline for the full year ’09, a three basis point increase in the effective royalty rate and an effective tax rate of 36.5% for the quarter and the year. So, in closing I’d like to note that while the current environment remains challenging, Choice’s business model is ideally positioned for success in this climate. Our highly attractive fee for service business model generates significant cash flow and requires little capital to grow. Our conversion brands have historically demonstrated strong appeal to developers seeking to benefit from our significant distribution system and we remain confident that when the economic and credit environments improve, we will be well positioned for growth in a variety of segments and geographies. I’ll now open up the call to answer any of your questions.

(Operator Instructions) Your first question comes from Patrick Scholes – Friedman, Billings, Ramsey & Co. Patrick Scholes – Friedman, Billings, Ramsey & Co.: On your quarterly RevPAR guidance and your full year RevPAR guidance you know when I look at it for how its implied for the back half of the year it looks like you have more conservative expectations than from what we’ve heard from some of the competitors in their outlooks. Can you just walk me through your thoughts on your expectations for the back half of the year? Stephen P. Joyce: Let’s start with the fact of easier comparisons, we actually turned negative right after Memorial Day last year and then that relative amount of negative RevPAR declined through the back half of the year to have the fourth quarter at the 77 that it was at. So, simply by the fact that we were in that negative environment in the year, we believe that even holding on a current basis that we’re going to see better results. The other is that in our markets we have seen a less sharp decline than is being experienced by the broader industry and we’re also anticipating that as things turn up the folks that we service will probably be the quickest to recover. So, based on all of those, we have arrived sort of at the forecast that we’ve got. Obviously, it is easy in this environment to debate where things will be but in general while we believe the situation is serious and we have seen in the last several months a series of declines, we are also watching very carefully our day-by-day, week-by-week performance and we are reasonably comfortable given the visibility there is that that call is a reasonable call given current performance and then given the comparisons that will be done in the back end of the year. Patrick Scholes – Friedman, Billings, Ramsey & Co.: I guess that covered most of my question but I was just curious because basically what I had been hearing or had been implied in some other conference calls is that fourth quarter ’09 some companies were potentially looking for flat RevPAR where if I back out your first quarter expectation of -12 and match that up with your full year -10, it would imply that you’re expecting worse than flat. Just any thoughts on that? Stephen P. Joyce: I would say that is primarily based on the fact that we are trying to be conservative in our approach to the RevPAR guidance both from the standpoint of making sure we’re prepared on the cost side in case it does hold that long and then in the end, if we see an upturn then we will quickly move to take advantage of that on the growth side. But, we are seeing a relatively stabilized downturn at this point which we think will improve over the year. But, we are not hoping for or counting on a dramatic improvement at the back end of year which would put us in a neutral standpoint. You’re right, our general view would be we’re negative but less negative than we start off the year. Patrick Scholes – Friedman, Billings, Ramsey & Co.: Lastly, on the October/November conference call you had talked that you had seen an uptick in I think it was some potential request for group business. Any change on that? Stephen P. Joyce: Actually we’ve got some interesting information as it relates to that. David, do you want to cover that? David L. White: I would say that what we’ve seen is a lot more interest from basically business customers looking to get us engaged in their RFP process so the number of business customers that have come to us and requested to participate in the RFP process is significantly higher than it was a year or so ago. Our response rate has been strong from our franchisees, they ultimate respond to these RFP requests and it has been strong and higher than prior years and so we’re optimistic that to the extent that there’s trade down, to the extent that the business travel market is there that we would hopefully improve our share of that here in the near term in light of what companies are doing on the travel budget to kind of preserve their cost structures. Stephen P. Joyce: Through ’08 sort of we did see an uptick that was material in the relative number of business rooms booked through the central res system. Patrick Scholes – Friedman, Billings, Ramsey & Co.: Which of your brands to be benefitting the most from these requests for RFPs? David L. White: It would be the kind of higher end stuff, the Comfort Suites, the Cambria Suites to a degree and the Comfort brand.

Your next question comes from Will Truelove – UBS. Will Truelove – UBS: My only question was about the interest income seemed awfully high. Was there something in the press release I’m missing? Why was it over $4 million? David L. White: Interest income? Will Truelove – UBS: Yes, it looked a little high. I wasn’t sure what was going on? David L. White: It’s actually a net loss and it’s basically related to the mark-to-market adjustment for the assets that are in our employee retirement plans. That really reflects what you saw in the broader capital markets in the fourth quarter with the fall off in the equity and even in the credit markets.

Your next question comes from the line of Joseph Greff – JP Morgan. Joseph Greff – JP Morgan: Just a question on the first quarter EPS guidance and then the full year, obviously you’re going from $0.24 to something on average $0.44 a quarter and as I kind of think about the quarter and you discuss sort of how you’re looking at the sequencing of RevPAR declines throughout 2009, is there a lot of volatility in terms of the unit growth quarter-to-quarter or SG&A or are there big swings in the initial franchising and relicensing fees just to get a sense of how you’re looking at it from a quarterly basis throughout this year? David L. White: There’s not a lot of volatility in the unit growth side of things. What I would tell you is that for full year ’08 we’re expecting a pretty call it pretty significant drop off in our franchise revenues which roughly a third of that is driven by the RevPAR environment. The other kind of two thirds of that drop off are really kind of in the initial fee and relicensing lines as well as potentially on the international side just because of the foreign exchange environment is a little bit different than it was a year ago. The drop off though in revenues is more pronounced in the first quarter than it is in the last three quarters of the year. Then on the cost side as Steve pointed out, we had made some adjustments in the organization which is the reason you have that severance charge in the fourth quarter. The relative benefit of those costs reductions is stronger in the last three quarters of the year on the SG&A side than it is in the first quarter. The kind of going down to EPS, the below the line type things, we did have as you can see a loss on the mark-to-market for our investments in the employee retirement plans that happened predominately in the fourth quarter in the second half of ’08 that we’re not modeling that same level of adjustments in the ’09 levels. Plus, put in the share repurchase numbers that we’ve done since our last guidance and that’s kind of how you get there. Joseph Greff – JP Morgan: Then I guess we normally don’t think of you guys having to reserve for receivables, can you just talk about that and what that driver was? I know you don’t have a lot of receivables left on the balance sheet but if you can talk about that a little bit? David L. White: Sure, we have kind of two types of loans that we make to hotel developers, there’s kind of our normal incentive loans which we make in kind of the standard development process, they’re forgivable promissory notes that get forgiven over extended periods of time as kind of an incentive to bring in conversion and new construction in hotels. Then there’s also loans in specific situations more focused on our emerging brands where we’ll loan to a specific hotel developer for a specific project kind of similar to the initiative that we announced in the fourth quarter of last year. If you look at those collectively, the aggregate balance is about $20 million at the end of ’08 and we have a reserve against that including this impairment charge that we talked about in the fourth quarter of close to $10 million. So, the net book value at the end of December for all of those loans is around $10 million or $11 million. The impairment charge specifically relates to a loan that was made really prior to the launch of this emerging brand program and just given the climate and the specifics around those loans thought it was prudent to record an additional reserve. We’re going to aggressively pursue recovery of those loans and hopefully we’ll do better than we’re currently modeling but that’s kind of how you should think about those things. Stephen P. Joyce: I guess the other thing to say Joe in addition to that is that at this point and I think I mentioned this in December, we’re doing almost no incremental unit loans because of the lack of liquidity in the market and because there’s no first mortgage debt, our ability to drive unit growth through providing some incentive programs is severely limited and we don’t see that changing any time soon.

Your next question comes from Steve Kent – Goldman Sachs. Steve Kent – Goldman Sachs: Just a couple of quick questions, first just on your new contracts being down roughly 31% or so, that was somewhat more. You talked about it a little bit but could you give us a little bit more color on that, what you would expect? And sort of how this process – you made a point Steve of saying that you had a product for everybody at different points in the hotel cycle, are you seeing more of that where somebody is saying, “We just can’t afford to be in the Marriott or Starwood system and we want to trade our hotel back down in to the Choice System.” I just wanted to talk more about that and if that’s the case why wouldn’t those new contracts start to accelerate? Stephen P. Joyce: So there’s a couple of different sources for those products particularly in the conversion environment and they come from really three major sources. One is independent hotels deciding that they are really not going to make it without a distribution system and in today’s environment if you look at the Smith numbers you can see how those independents are really struggling and as a matter of fact that’s one of the opportunities we’ve identified for Ascend the new collection of boutique and historic. We’ve got a major development effort underway as it relates to that brand thinking this might be the year of opportunity to really add some units there. So, you’ve got some of the independents trading for the security of a res system and distribution platform in to. Then, you have a series of hotels that are being either required to invest more than their willing to do or simply being pushed out of an existing brand. A good example of that is Holiday Inn Express and Hampton where they are upgrading their prototype and are pushing out older hotels. Those hotels then make excellent conversion opportunities for us either in Quality or depending on the box and EconoLodge scenario. We ourselves do that. It’s interesting there’s been 46 hotels in the last two years that were Comfort Inns that no longer fit the Comfort Inn portfolio well and made conversion to Quality and EconoLodge so that we were able to keep those hotels and fees in the system which both is a benefit to us and a benefit to the franchisees. Then, you’ve got sort of the transactional scenario which is a little lower at this point but we’re hoping will pick up as the year goes on, whereby hotels are trading hands, the new buyer wants to invest in the product but wants to upgrade the brand and as a result that drives a conversion opportunity for us.

Your next question comes from Jeff Donnelly – Wachovia Securities. Jeff Donnelly – Wachovia Securities: Steve, Choice is in a liquidity position that is frankly not enjoyed by most of your competitors and arguably allows you to avoid making operating decisions today you’d regret tomorrow but that doesn’t mean your competitors have that same flexibility. I guess my experience has been that sometimes those acts of desperation if you will, by the weaker competitors that can bring pressure on the better platforms, are you seeing other franchise systems out there that you compete against, even though they might be somewhat weaker getting very aggressive on offering robust conversion incentives or waived upfront fees or even relaxation of brand standards right now that it’s not something you’d be prepared to adopt but it is out there nonetheless? Stephen P. Joyce: Yes, we are seeing people throwing out more aggressive opportunities to help grow their brands and in some cases we think it is an effort that’s ignoring economic reality that even the incentives their putting out aren’t going to result in new units and in some cases we don’t quite understand why people would want to add units and not profitability. We are pretty much though holding the line for ourselves because in our positioning, particularly for our conversion brands, we are in a unique position that we are offering a premium in terms of distribution and productivity for those hotels from the standpoint of customers coming through the door versus their alternative. So, the example of a Hampton coming through which is an opportunity for us to convert. The other options for them to convert in general do not drive anywhere near the relative revenue intensity that our brands do. So, it puts us in a premium position to be able to negotiate and receive our far share of the royalties based on the value of the franchise that we deliver. So, while we are seeing more pressure and more discussion around terms and fees and we are showing some flexibility for the right products, we are not seeing any significant change in the relative terms that we’re achieving through the contracts. We did a lot of contracts in December as normal and those contracts were holding pretty firm. Jeff Donnelly – Wachovia Securities: So I guess to put a finer point on it, I guess I would have expected or at least thought for example with Hilton’s balance sheet, you’d be under pressure that they would become more aggressive with Hampton or some of the extended stay concepts out there. Is it going I’ll call it upstream to some of those more dominant brands or it hasn’t really reached there yet? Stephen P. Joyce: Here’s what we’re seeing, there are two ways of sort of being more aggressive. You can discount your fees and your overall financial deal structure with a franchisee or you can also require less investment. In the upscale segments or the upper brands, I think what we’re seeing is somewhat of a lessening of the investment requirement as the brand comes in the system which is a way of competing. But, even in those segments, we have not seen any significant wholesale discounting of the full term royalties. We’re seeing it more in the shorter change and the kind of lower level performers. Jeff Donnelly – Wachovia Securities: Just a follow up question on some of the comments you made earlier about the ability to be adding units right now on the loans to potential developers. I’m curious, in your sort of sweet spot size, is there a common theme I guess among the folks who are getting financing and getting deals done? Is it just purely sponsor ship with who the lenders are willing to commit capital to or is it more about their location being the urban versus suburban or just low loan to value? Stephen P. Joyce: No, it’s about relationships. The folks we are working with have done one or two hotels with the local bank, worked out very well, leverage levels tend to be low, this is their primary occupation. They’ve done well by the banks, the banks still have some capacity. What you see is in the typical scenario you talk to one of our franchisees and they would have historically put out an RFP for a loan and gotten three or four responses and now they’re getting one that they’ve got to work. But, they’re still finding those loans. Jeff Donnelly – Wachovia Securities: How many of your franchisees have multiple hotels with you guys? David L. White: Well, the average franchisee it works out to something like 2.2 hotels per franchisee within our system. There are only a handful of franchisees that have 15 and more type levels. Jeff Donnelly – Wachovia Securities: One last question, do you have handy what your total international franchisees were in 2008? David L. White: 2008 was $26.7 million compared to last year was $22.2 and keep in mind that we did an acquisition at the beginning of ’08 of the UK master franchising business which is a piece of the up lifter.

Your next question comes from the line of David Katz – Oppenheimer. David Katz – Oppenheimer: A couple of questions, just to follow up on some of the earlier issues with respect to conversions. I read and article recently and I think it may have been an analysis by PKF talking about how there was actually more conversion away from brands late in 2008 and I guess it seemed counterintuitive to me. I guess it begs the question, how does this cycle play out and what kind of timing should we look for in terms of the expectation that conversion will increase for you and become a larger piece of your business and when hotels will seek the benefits of being part of a brand such as yours rather than this article that seemed to suggest that the opposite was going on right now. Stephen P. Joyce: That’s counterintuitive. Now, I also think that’s sort of a lag opinion because I will tell you that for the first time in my career, in ’07 and ’08 you actually saw bankers recommending going independent versus flag which is uniquely different than my experience in the previous 25 years. Now, I might have a jaundice view because I’ve always been a branded guy but it was remarkable to me the relative confidence that banks were showing in people’s ability to market and fill an independent hotel. My sense is that has dramatically reversed at the end of ’08 and in part you’ll see a drive of banks requiring independents as part of issues related to their liquidity and positioning with the banks to actually bring brands on our distribution channels on. But, in ’07 and ’08 I will tell you I had a number of remarkable conversations with potential deal folks that were saying, “My bank is recommending that I go independent.” And, you just sort of shook your head. I don’t think that is the case today. We are actually already strongly shifting in to conversions than new builds as we speak. That is a factor of the conversions holding up significantly better and the new builds falling off. So, our percentages versus ’07 versus ’08 versus ’09 of new build versus conversion, you will see a shift up to conversion. I think ’08 at the end may end up being 60 some percent I think which was an upswing from ’07 in terms of the new builds. Originally, we expected ’08 to be sort of a more even level of new build versus conversion. Then in terms of when will the swing up of the conversion business come, I think we’ll see it as people feel more of the pinch of the next couple of months. But, the big thing that’s really going to drive the conversions is when transaction numbers pick up and so if you listened at ALIS there’s this breathless anticipation of when the markets open up and the brokers start selling hotels again. Our stuff has continued to move to an extent but it has slowed. We will also be thought the first to come out of that because the smaller transactions will lead to the bigger ones. So, whether it’s the trigger of the CMBS maturities coming due that start putting things on the market or some other forces, when those hotels start hitting the market is when we’ll see a big swing up in our conversion activity. The issue for us is it’s so difficult to judge at this point when that might occur that we have been I think appropriately conservative in our supply guidance because it is quarter-by-quarter scenario and there isn’t anything that I could point to today that says, “Hey, you can see this trend improving and therefore we think that more transactions will occur in this quarter.” I think in general people are saying, “Well, it needs to come and it has to come just by its nature.” But, the question is, is it a second, or third, or fourth quarter change and at this point we’re not comfortable betting on any individual one which is why you saw us put car supply guidance where it was which was a fairly significant decline of what we achieved in ’08 even though we had an incredible December. At the end of the day, activity is way down and we are assuming it will come back particularly when transactions begin to occur but we’re struggling to forecast when that might be. David Katz – Oppenheimer: One more with respect to share repurchases and this was the first time your back in it in I guess about a year. I’m not sure how much color on your thought process you’ve given us so far on that and its always been kind of an important indicator for us in looking at your stock. Why today and not last quarter or the quarter before? Stephen P. Joyce: Well, we started buying significant right at the end of the third and continued buying aggressively through the year. I think there was a bit of an interesting reaction to my first call in July when we hadn’t bought any and I forgot to say upfront our primary mission in life is to return value to the shareholders and people kind of got the impression maybe I was slightly off track with the company’s model; I am not. The reason I am here is because I love this model. However, this company will buy shares when we see a significant discount to the intrinsic value of the stock and we will not buy shares when there is not a significant discount. So, that has been the mantra as far as I can tell for seven or eight years and that mantra continues today that based on liquidity and our availability of cash to us that we will be an aggressive purchaser of our stock and as you look at the dividend an aggressive payer of dividends particularly given sort of the comparison set in this scenario and going forward. You can continue to expect behavior from us that would suggest that in a discounted scenario where we think that the market is not recognizing the power of the model and the ability for us to weather downturns better than anyone else and do well in upturns that we will aggressive continue to return value to the shareholders through that stock purchase at significant discounts to where that stock should be valued. David Katz – Oppenheimer: I feel the need to follow that up although I’m not sure what kind of answer I’m going to get. I realize it’s our job but how are you sort of looking at the value of your stock? I think one of the things we all sort of deal with today is the market multiples are kind of a different set, a discount today is not what a discount would have been a couple of quarters ago. Any thoughts you can share on that end would help. Stephen P. Joyce: You guys know this business better than I do but I would tell you that as a former analyst, this company is a set of contracts that have an annuity value to them that is pretty easy to put a number on it. You can talk multiples which would increase or decrease the value but in the end it’s a pretty simple business and if you just apply some pretty basic principles to the value of those contracts it’s not a hard number to arrive at.

Your next question comes from Felicia Hendrick – Barclays Capital. Felicia Hendrick – Barclays Capital: I’m wondering if you can put some numbers to this discussion on your pipeline? I’m just wondering given the statistics that you provided earlier in the prepared remarks and everything that you’ve talked about on the call, the latest actual numbers that we have is from your prior December forecast, 344 conversion units and 129 new construction units for the year. I’m just wondering if that has changed? David L. White: I think Felicia you should think about that being not materially different from what we talked about back in the middle of December. I think the way to think about it is we thought we’d finish up the year I think it was 5.5% unit growth for the full year ’08 and we obviously finished up a little bit better than that so our base is bigger at the end of ’08 than we were thinking it would be in the middle of December and that’s kind of a little bit of timing related to kind of gross openings and also kind of terminations of franchises. So, going forward, kind of put a 3% on that ending number gets you reasonably close to where we would have thought we would have been at the end of ’09 even back in the middle of December so it’s just kind of a little bit of timing on turns and gross openings but it’s not that materially different from what we talked about in the middle of December. Felicia Hendrick – Barclays Capital: But as far as how the mix looks, that also hasn’t changed? David L. White: In terms of mix, really it hasn’t changed dramatically from what we talked about in the middle of December, predominately conversion consistent with our past track record where it’s predominately conversion gross openings. Felicia Hendrick – Barclays Capital: I’m really trying to get to the point if your conversion estimate has declined at all and it doesn’t sound like it. David L. White: Not meaningfully, no. Felicia Hendrick – Barclays Capital: Then also I’m just wondering if in your RevPAR guidance if you could talk a little bit about what kind of occupancy levels that you’re assuming? David L. White: I think kind of what we’re looking towards is kind of what the prognosticators said. So, if you look at kind of the PWC forecast, they’re showing occupancy levels in kind of a midscale space, economy space as being down about 5% to 6% from ’08 levels. Felicia Hendrick – Barclays Capital: Then just one quick one, what was your exact share count at the end of the quarter? David L. White: Common shares outstanding were 60.7 million. That doesn’t include the impact of dilution from stock options.

Your next question comes from Michael Millman – Millman Research Associates. Michael Millman – Millman Research Associates: Could you give us some idea of the relationships, I guess it’s a modeling question between the contracts outstanding and the initial franchise and relicensing fee number? David L. White: The relationship between contracts and initial fees and relicensing in 2009 is going to be driven by the number of new franchise contracts executed and the number of relicensing transactions executed. So, it’s not driven from what we call the pipeline of hotels opened or that are underdevelopment basically. So, kind of the way to think of that for ’08 is initial fees were roughly $19.5 million on 698 executed domestic contracts. Relicensing fees were around $8.5 million on 312 relicensing transactions. You can kind of get comparable contract and revenue numbers out of our previous 10Ks and 10Qs. So, that’s kind of the relationship, it’s driven by the number of contracts we execute during a given year. Michael Millman – Millman Research Associates: What should we assume about the relicensing. David L. White: I think what we’re looking at, if you look at some recent research that has been out there and actually, I’d point you out to the Slide in our investor deck kind of shows how relicensing transactions since they’re correlated a lot with kind of credit markets, the liquidity available in the credit markets for hotel transactions, they tend to move directionally the same why our new construction contracts do. So, typically in years where we’ve had higher levels of new construction contracts we’ve also had higher levels of relicensing transactions. But, I think if you look at the trends in relicensing for us over the past four quarters it’s been a gradually kind of erosion because of the credit markets we find ourselves. I think what I’m seeing in terms of some research we saw from Jones Lang LaSalle, I think they’re modeling that would continue in 2009 so that’s kind of our expectation, that the relicensing environment remains soft in ’09 and hopefully once the liquidity comes back you’ll start to see improvements there. So, we’ve modeled kind of downward trend in ’09 for both initial fees and relicensing based upon kind of everything worsening. Michael Millman – Millman Research Associates: To change the subject a bit, at least when you look at fourth quarter, I guess as you would expect, the economy numbers looked better than the other numbers in terms of occupancy and to some extend in ADRs as well. Could you talk about if you’re seeing a trading down, if indeed those hotels tend to be more on the road and I think you’ve said in the past something like two thirds of guests come off the road, what kind of pricing sensitivity or elasticity do those people tend to have? Or, do they have any different guest set at all levels of your franchise? David L. White: Yes, I think if you look at the numbers on the exhibit we have here on the operating statistics, kind of from a rate perspective, I mean obviously absolute rates for the economy segment are kind of lower than where we are for our midscale brands but the rate held up pretty well in both of those segments. I call that a testament to our franchisees really understanding that kind of lowering your rate is not going to induce demand and so it doesn’t make a lot of sense to reduce your hotel rates thinking that is going to drive your occupancies. On the occupancy side of things, the economy occupancies fell off a lot less in the fourth quarter then they did in kind of the midscale segment. So, it’s a little difficult to kind of conclude how the trade down affect is playing out across these different segments. But, I think the economy is starting kind of from a lower base and has over a long period of time a little more stable RevPAR than the higher up chain scales. Michael Millman – Millman Research Associates: A question, one answer might be that these were September to November, are we seeing the same relative performance in January and February? David L. White: Yes, I mean in January and February I think, I don’t have it by kind of chain scale here in front of me but you can see the SGR numbers that get published kind of every week and you saw January and February for SGR results for midscale and economy segments continued to be pretty challenging on the occupancy side of things and a little less challenging on the rate side but challenging nonetheless. Stephen P. Joyce: I think what you need to keep in mind is while we think we are seeing some trade down we’re also seeing a fair amount of trade out and one of the things that we monitor very closely and one of the things that’s very strongly correlated with our results are unemployment figures. Obviously, based on recent trends, you’d have to look at that and say, “That’s got to be a concern not just for us but for the industry and particularly at the moderate tier and below.” Michael Millman – Millman Research Associates: Finally, on your 3% supply guidance, what does that translate in to room growth? David L. White: Typically the room growth levels are just a little bit below our unit growth numbers so that’s what we’ve seen pretty consistently for the past several years. I think you can consider that a good assumption in ’09 as well.

I would now like to turn the call over to Mr. Steve Joyce for closing remarks. Stephen P. Joyce: Thank you for your time and attention. I think based on the other calls that you guys have experienced, I think there was a wise man that said, “The future isn’t what it used to be.” However, this come remains strongly focused on growth opportunities. We have I think an appropriate sense of caution of monitoring and being appropriately positioned but also see this as probably a unique time which should provide opportunities and benefits for this company to accelerate its growth and to continue to perform. We are we think a somewhat unique model in the industry which puts us in a very strong position to take advantage of current circumstances and we look forward to being able to report to you in the future on how we’re doing that. Thank you for your time and attention.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a good day.