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

Steve Kent – Goldman Sachs Jeff Donnelly – Wachovia Securities William Truelove – UBS Felicia Hendrix – Barclays Capital Joseph Greff – JP Morgan [Mariah Slaven] - Oppenheimer & Co. Michael Millman – Millman Research Associates Joe Gagan - Atlanta Equity Research

Welcome to the Choice Hotels International first quarter 2009 earnings conference call. (Operator Instructions). During the course of this 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 as management believes, expects, identifies, 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 10-K for the year ended December 31, 2008, and other SEC filings for the information about 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, level 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 first quarter 2009 earnings press release which is posted on our website at www.ChoiceHotels.com under 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 first quarter earnings conference call. With me this morning, as usual, is David White, our Chief Financial Officer. This morning David and I will discuss our first quarter results and share our perspectives on recent trends that we are seeing in the business in this very interesting environment. We will also update you on the progress we are making in managing the business differently in response to the challenging lodging environment that we have had over the past almost a year at this point. And as you are well aware, the economic environment remains extremely challenging. The broad economic measures that we have traditionally shared a strong correlation with—lodging demand, GDP, consumer spending, and employment data—at this point all remain weak. Most economists are expecting continued weakness in the employment markets for some time and only modest improvements in GDP and consumer spending later this year and next. We do believe, however, that sooner than expected improvements in these measures would be an extraordinarily and good positive catalyst for us, both on the RevPAR and the franchise development fronts, and we will discuss that in a little bit more detail. Let's talk a little bit about RevPAR. Our RevPAR results for the first quarter and our revised RevPAR outlook for full year 2009 reflect both the challenging aspect of the environment and also the difficulty in predicting future performance. As a reminder, Choice's RevPAR results lag for one month so our first quarter RevPAR results reflect the performance of our hotel franchising during December of 2008 and January and February of this year. Our RevPAR for the first quarter 2009 declined by approximately 10%. This result was slightly better than the 12% decline we had previously expected and the comparable chain scale results reported by Smith Travel Research, which by our estimate, declined approximately 11%. I would also highlight that a continuing trend that began in October of last year, our first quarter RevPAR results declined meaningfully less than the RevPAR decline reported by Smith Travel for the U.S. lodging industry as a whole. As you know, most of our brands compete in the economy and mid-scale segments, which have outperformed the hard-hit upper-upscale and luxury segments on a relative basis. More recently, in March and April, we have seen a continued deterioration in RevPAR results but consistent with previously mentioned trends, we continue to outperform the chain scale results reported by Smith Travel for the economy and mid-scale segments. Our second quarter RevPAR expectation is for a 16% decline in RevPAR, which reflects these recent trends. This means that we expect the rate of RevPAR decline for the third and fourth quarters of 2009 to moderate gradually due to favorable comparisons. Our monthly year-over-year RevPAR comparisons begin to get easier starting in June as last year we experienced low- to mid-single digit RevPAR reductions beginning in June and continuing through September, followed by monthly declines ranging from 6% to 12% from October through the end of 2008. Third party industry-wide RevPAR projections that we review range from declines of 10% to 14% for full year 2009, however, I would caution you that RevPAR is inherently difficult for us to predict as a result of the broad range of economic forecasts for GDP, consumer spending, and unemployment and the disparate measures that people are putting out, as well as unlimited visibility into forward demand, as our business mix is skewed toward more leisure-oriented and transient business customers, and these customers tend to have shorter booking windows as opposed to those hotels that have group bookings to look forward to going more forward into the future. Let me talk a little bit about development, obviously an important aspect for us. Like the RevPAR environment, the franchise sales environment so far this year has been much tougher than we anticipated. The significant declines in RevPAR and the lack of hotel financing have negatively impacted both our new construction and conversion franchise development efforts. We have also seen consistent but broader industry trends a serious decline in the number of hotel sales transactions that drive our relicensing fees. The last time we saw franchise sales at these levels was during the first and second quarter of 2002, the year following the attacks of September 11, 2001. The second half of that year, and each of the next six years that followed, were very strong development years for us and the long-term development prospects for our brands, as a result, we believe, are very promising. Improvement in the credit markets and liquidity for hoteliers would have a significant positive impact on our development results, with conversion franchise sales activity and relicensing activity improving first, due to the strength of our conversion brands, which are the best in the business, followed by new construction results eventually. I will say, however, at this point we have not seen any significant improvement in either. While we remain optimistic that the development and RevPAR environments will eventually improve, we are also operating with stringent cost controls to be appropriate in this uncertain environment. Talking a little about our franchisees, changing gear from our recent results, I also want to emphasize that this environment is exceedingly challenging for our franchisees and more so than for us, as they live with the bottom line implications of the loss of revenues. We are working harder and smarter than ever hand-in-hand with our owners to continue to improve our efficient and highly profitable guest services delivery model. Over the last several years we have resisted the amenity creep that so many others in lodging have embraced. As a result, many of our competitors have had to make deep cuts in their amenities that drive guests to their properties. Unlike many of our competitors who are reducing services to their franchisees to meet near-term financial objectives, we are in the enviable position of being able to offer more services to them to help them during these times. We are investing aggressively and intelligently in marketing and reservations activities to drive guests to our franchisees hotels and in this current economic environment our value-oriented brands are ideally positioned to capture share from guests that are trading down from higher segments. Our advertising efforts emphasize the great value our hotels provide every day and this is being very well received. We have also developed free of charge training classes around the environment, titled Streetwise Tactics for Tough Times, that directly addressed how to survive, thrive, and increase market share in these times. In just two months we've given this class in 150 markets across the country to more than 1,800 owners, operators, and hotel employees, and the response has been terrific, both from the standpoint of they are valuing their relationship with Choice as a result of this effort but also the impact that this course is having for them in their hotels. We have shared with our owners that we remain driven by our vision of helping them to generate the highest return on investment of any hotel franchise and we have reassured them that they have the full commitment of Choice Hotels organization to their success and to help maximize their returns. We are encouraging trade-down by emphasizing in our marketing efforts the value that our brands offer to both leisure and business consumers and we are also continuing in this market to innovate and move the company forward. For example, in early March we became the first hotel company in the world to launch a global iPhone application. This application has already been downloaded more than 100,000 times in over 60 countries and by most people's comments, is a killer app. Other examples of recent innovations coming soon are dramatic and innovative changes to ChoiceHotels.com, new services and qualified vendor relationships to help our franchisees better manage the cost side of their business in the areas of employee insurance, property taxes, as well as a variety of rate and selling strategy enhancements to improve rate plans, flexibility, and control. These innovations will help our franchisees be more successful, which is the critical priority to us. Now I'm going to turn it over to Dave to cover our first quarter performance in more detail. David L. White: I just want to highlight a few items from our release before we open up the call for questions. For first quarter 2009 domestic net unit and room growth increased 5.7% and 5.6% respectively compared to last year. Our domestic system-wide revenue per available room declined 10.3% for the first quarter of 2009 compared to the same period last year. This RevPAR reflects a 440 basis point decline in occupancy and a 1.2% decline in average daily rates. We achieved an 8 basis point improvement in the system-wide effective royalty rate compared to last year, which increased to 4.26% for the three months ended March 31, 2009. The RevPAR declines we experienced were partially offset by our unit growth and the improved pricing on our contracts. As a result, our domestic royalty fees for the first quarter of 2009 were $39.2 million compared to $42.4 million last year. This represents a decline of only 7.5% compared to our RevPAR decline of more than 10%. The company executed 60 new domestic hotel franchise contracts during the first quarter of 2009, a decrease of 55% compared to 130 contracts executed during the first quarter of 2008. The number of relicensing transactions for first quarter of 2009 was 35, a 63% decline from the 94 relicensing transactions reported last year, which is generally consistent with the industry-wide trends we're seeing in the hotel transaction environment. The reduced contract volumes resulted in initial franchise and relicensing fees revenues declining to $2.6 million for first quarter of 2009, a 56% decline from last year's first quarter results. Diluted earnings per share for first quarter 2009 were $0.27 compared to $0.29 for the same period of last year. Our diluted earnings per share results exceeded our previous estimates for the quarter by $0.03 per share, primarily as a result of lower SG&A costs. On the cost side of the business, based on stringent cost control, our selling, general, and administrative expenses for first quarter 2009 were $21.5 million, or approximately 9% below last year's first quarter. To build on Steve's earlier comments, in light of the current operating environment, we continue to manage our cost structure cautiously by implementing cost controls, particularly around discretionary payroll, professional fees, and new business projects. Our objective is to manage the SG&A expenses of the business for full year 2009 to a mid-single-digit percentage decline compared to last year's full year SG&A expense, excluding the effect on 2008's SG&A of the special items we noted in Exhibit 8 of our year end press release in February. For the three months ended March 31, 2009, the company repurchased approximately 700,000 shares of our common stock at an average price of $26.82 per share for a total cost of $18.0 million. The company has remaining authorization to repurchase up to an additional 5.3 million shares under the share repurchase program. Our balance sheet and liquidity position remain strong. We finished the first quarter with approximately $57.0 million of cash on hand and total long-term debt of $310.0 million which represents a multiple of 1.6 x our trailing 12-month adjusted EBITDA results. As of the close of business yesterday, the company had approximately $40.0 million of available unused borrowing capacity pursuant to revolving bank facilities that are committed until June of 2011. Turning to our outlook for the remainder of 2009, I would remind you that the continuing uncertainty around the economic environment and credit market conditions and the impact of these conditions on travel patterns and hotel development activities make it difficult to predict future results. This particularly applies to underlying assumptions for RevPAR, new hotel franchise and relicensing sales, and interest in investment income and expense. With that in mind, in yesterday's release, we shared our outlook for the second quarter and full year 2009. We currently expect second quarter of 2009 diluted earnings per share of $0.41 and full year 2009 diluted earnings per share of $1.68. EBITDA for full year 2009 are expected to be approximately $175.5 million. These figures assume domestic unit growth of approximately 3% for full year 2009 and approximately 16% decline in RevPAR for second quarter 2009 and 11% for full year 2009. These figures also assume a 3 basis point increase in the effective royalty rate for full year 2009 and an effective tax rate of 36.3% for second quarter and full year 2009. Now let me turn the call back over to Steve. Stephen P. Joyce: As we have said to you many times before, our low levels of debt, our limited exposure to real estate, the lack of a time-share business, makes us unique in lodging space. Despite the challenging and current economic environment, our fee-for-service business model positions us extraordinarily well for long-term profitable growth in a variety of segments and geographies on account of our well-known brands, our exceptional franchise services, our strong central reservation systems, and extraordinary e-business efforts, our collaborative and strong relationships with our owners, and our overall business model. We believe our current formula will last us in this downturn and will do us extraordinarily well in the upturn and as a result are very confident that we will continue to provide to our shareholders the extraordinary returns that they have gotten over the years. We are a company that we believe is well positioned to weather what's going on. We also believe that we are well positioned and first in line to benefit from the upturn, particularly on the conversion markets, and our brands, as positioned and discussed in the moderate tier and below, give us the opportunity to provide real value in this environment where people are so sensitive to cost controls in their businesses and also in their personal lives. And with that, I think we'll open it up to questions.

(Operator Instructions) Your first question comes from Steve Kent – Goldman Sachs. Steve Kent – Goldman Sachs: Just two questions for you. Could you just talk—I know it's hard for you to exactly get the answer to this—but any update or color on the health of your franchisees. Obviously they're not so keen on maybe building new hotels, but how about just making their way through the next two years. Are there any that you're concerned about or do you hear more of them, that you're concerned about them, from a leverage perspective. And the international business, you know that pipeline has been shrinking a little bit, and the numbers have been shrinking a little bit. What initiatives do you have in place to start to rejuvenate that group of hotels? Stephen P. Joyce: On the health of the franchisees, that's actually, again, one of the real bright points for us versus some others. In general, we believe our franchisees have relatively low levels of leverage compared to other hotels and that is part due to kind of the history of lending in the moderate lower tier environment as well as the character of our franchisees, who are typically putting in heavy amounts of equity into their deals. And so while we have had some incremental conversations with some folks needing assistance, the relative levels of our leverage allow our franchisees to operate profitably and being able to cover their debt service at significantly lower occupancies than you kind of see for the rest of the industry. We are obviously monitoring this very closely but I can tell you, our days credit sales outstanding and our receivables and everything have not changed significantly at all. There are some folks that we assist on a one-off basis. That has not been a dramatic increase, either. And so we obviously will continue to monitor that. But for the most part that is a big plus for us in this downturn, that our franchisees are not—you know, this is their livelihood. They own one or two hotels, they are typically operating the hotels themselves. They did not get into the leverage games that were played by a number of investors and developers coming in late into the cycle. And as a result, we will probably deal with a few more cases this year than we did last year, but don't expect anything significant along those lines at this point. Steve Kent – Goldman Sachs: Sorry to interrupt, but I don't think I've ever even asked you this because it's never been an issue, but have any declared bankruptcy or anything close to that? This quarter. David L. White: In any time period you can have credit terminations for a number of reasons, including bankruptcy, those types of things. But just to give you some quantitative information that we look at and monitor pretty closely—as Steve said, DSOs at the end of March of this year held up really well and was actually down. DSO was down a little bit compared to last year at the same time. It was about 20 days relative to franchise bills. The number of pure credit terminations increased a little bit in the first quarter compared to last year but in absolute terms remains very low. And our net receivables write offs were up slightly but continue to be less than 1% of our billings. So in terms of the credit metrics that we can monitor and that we know are reliable, absent having balance sheets on the 5,000+ franchises in our system, which isn't cost-effective to do, we feel pretty good about the health of the franchisees based upon those metrics. But we have to continue to monitor the environment going forward because certainly the RevPAR environment is still going to be challenged in here for a period. Steve Kent – Goldman Sachs: Any comment on international? David L. White: On international, I think the way to think about it is that over the past couple of years, if you recall, we reacquired the franchising rights from a master franchising partner in Europe. As a result of that reacquisition we have seen the terminations increase a little bit in the international system, and a big piece of that is our decision to kind of clean up the brands in those areas. And the other thing that is happening and actually happened in the first quarter of this year, was that former master franchising partner essentially declared bankruptcy and went into receivership and they owned 20 or so of our branded hotels in Europe. Those hotels came out of the system. So that's what you're seeing in the first quarter on a sequential basis against last year. Going forward, what we're doing and continue to do and think we can be successful at over the long haul, is improving the value proposition for franchisees out of the U.S. by, frankly, figuring out ways to improve the amount of business we deliver to them. One of the things we are rolling out now an real excited about is globalization of Choice Privileges, which a strong loyalty program is something that we haven't had applied to our international system but we think that that is something that will help us and there's a number of other things that are underway in other markets that we're looking at on the development side of things that we think can help us in that regard going forward. Stephen P. Joyce: And I think we've said this to you folks before, one of the commitments that I made to the Board coming in was we would do an evaluation of our international operations and growth pipeline, we would come to them with a set of suggestions as to where we think we should focus and where we want to put resources. We are in the process of delivering the first stage of that to the Board in the next week or two, and then we will be putting more meat to that overall strategy and hopefully, sort of as planned, by the end of the year be able to talk about exactly where we're looking at attacking. But it's not going to surprise you, India is obviously a big target for us. China is a significant target although the franchising model in China is a little more challenging. And some other areas that we believe have good focus for us. You know, we've got a good basis to start from and I have been spending a fair amount of time traveling to see the product as well as the franchisees and sort of listening to them. But even the existing markets, for example in Europe, we think there's opportunity there as it relates to incremental, both conversion opportunities which is sort of the core stuff that's available in Europe itself, but then also some new build opportunities, albeit based on some recovering economies. And so I am actually very encouraged by what I think the opportunities that we've got and now we've got a sort of go-from concept to where we're actually going to put resources. But in any case, when we do that, as I've also said before, it takes a while to get that done. When you put your resources in place, particularly where you haven't been significant, start looking at creating those relationships, hoping those relationships turn into deals, then hoping those results then result in a pipeline in those areas. That, depending on the market, can take quite a bit of time to do. We're not really expecting immediate results that will be back but I think what we will be able to do is talk about overall strategy and then report back to you as to how that strategy is progressing and how we're evaluating and changing that over the next several years to try to build to a much more significant pipeline internationally as a number of our brands really should be significantly represented across the globe. We've got great representation in a number of specific markets and we think and believe that there is clear opportunity to expand that as well as Dave mentioned, expanding the value proposition for the brands, which when we do that will allow us to increase the value that we receive from the franchisees.

Your next question comes from Jeff Donnelly – Wachovia Securities. Jeff Donnelly – Wachovia Securities: Steve, do you see opportunities presenting themselves over the next 12 to 24 months where Choice could maybe pick up additional brands to the extent it so chooses, or even move further upscale? Stephen P. Joyce: I sure hope so. We are obviously in a position that is good from the standpoint that we've got capacity and we've got money and we are hoping to see, as a result of sort of the conditions, some buying opportunities either for collections of hotels that can go under existing brands, or other brands to help add to the portfolio. You know, we're very interested in having an upscale conversion brand and continue to look for opportunities there. And we are evaluating almost everything else that comes up. We haven't seen anything at this point that was particularly interesting and a good fit with our portfolio but that is clearly a target for us and we are hopeful that this environment, particularly as it stretches out, might create some buying opportunities for those folks that have some capacity like we do and are long-term believers in sort of where the business is going and the fact that we will recover and the fact that there are going to be significant amount of conversions opportunities out there. I don't really see us going much past the sort of upper upscale full service business. I don't think you'll see us in luxury but the full service conversion business to us, I think would be a great compliment to our leisure-oriented set of brands because of the business transient component of that. That's why we're putting so much energy behind Cambria as well, because we love the business mix that comes with that hotel. I've also said before that I like upscale extended stay business a lot and so all of those are potential opportunities for us to look to see if, as things elongate and people are struggling with liquidity, the fact that we're in a good position from that standpoint, should and hopefully will create some opportunity for us to do some things that will help accelerate our growth. Jeff Donnelly – Wachovia Securities: Does that mean that you are thinking of brands that are along the lines of—I know not these specifically, but more of the ilk of like Courtyard, Hilton, Garden Inn, or Four Points, than necessarily of the ilk of say Marriott or Sheraton? Stephen P. Joyce: No, I would say, you know Cambria's price point and product line and customer base is very much along the lines of Hilton, Garden, and Courtyard. So our interest is actually more in sort of the Sheraton, Doubletree mode. Not those brands in particular but sort of that sort of relative price point of where you are kind of running 3.5 to 4 star full service hotels. And for us, that would offer a conversion opportunity because I think the full service new-build business is probably going to be pretty tough for a long time. So that conversion aspect is important. And we also think, with our distribution channel and the number of customers that we've got that are looking for more major markets and more urban products, that we can add real value in those conversion scenarios but the issue will be finding the right brand at the right price. Jeff Donnelly – Wachovia Securities: Are these ones where you would hope to find them in a distress situation or is it more likely that you have a more optimistic view of the future and a good capital structure and it just comes down to pricing as opposed to being able to pick it off as a distress situation. Stephen P. Joyce: Obviously a distress situation, depending on the brand, could be very attractive but we're actually thinking more along lines of this company has looked at a number of opportunities over the last several years and in my position here and my previous position I have looked at a number of brands over the years, and in the last five or six years the pricing of brands really wasn't all that attractive in terms of value created for the shareholders versus what you were paying and the growth opportunity. I think that pricing in this environment, like the pricing of real estate and hotels, is most likely to moderate and therefore creating more real opportunities where you can convince yourselves that the output of that capital is a good thing for your shareholders. We are a company that believes strongly in the model and we can do our business hotel by hotel, brick by brick. It would be great to pick up an additional brand but we don't need that to be successful. So what we want to do is find the right brand at the right pricing. That doesn't necessarily mean distressed but one where the price point versus the growth opportunity gives the right return to the shareholders. And as you know the value proposition for our shareholders and the return requirements that they're accustomed to are high so we've got to make sure that we match those. Jeff Donnelly – Wachovia Securities: Would you ever consider, if it necessitated it, entering the management side of the business. Stephen P. Joyce: I get asked that a lot, obviously because of my background. I love the pure play franchise model. Our intent is to stay with that. If there were situations that were incredibly valuable to the company that required us to go into management, I'm not afraid of doing that but I really like the pure play. It eliminates so much confusion and conflict. All we do is work to benefit the franchisees. I've done the other businesses, combined with franchising, but I would say that barring an extraordinary opportunity, we're going to stick to the pure play model because we think that makes us special. Jeff Donnelly – Wachovia Securities: And to switch gears really quickly, on the deals that you have done in the most recent quarter, any trends that were visible to you, either like deals that fell out of the pipeline, were they more the one-off developer and conversely any business that you're picking up, does it tend to be more along the lines with your multi-unit better relationships. Any themes that you can see? Stephen P. Joyce: The first theme is obviously in the new-built business which isn't started and doesn't have financing is at risk. So everybody is sort of talking about their pipeline. The reality is the financing markets are really not functioning for new builds. And so we are evaluating our pipeline and it's not just the smaller guys, it's small, medium, and large guys. I've heard from everybody and I haven't heard anybody saying anything positive about the financing environment. So the one thing that happens is we still get deals done and the reason that we will still move along, particularly on the conversion side—and we'll get some new builds but not a lot—is because our average transaction is significantly smaller than everybody else's. And so we're doing a lot of deals in the $3.0 million to $5.0 million category. There is still some funding that is available to that. And so we have seen that and so we do believe that on the conversion side we will be probably first to see that because I think as that market recovers that will be the first thing to have activity, sort of that lower end conversion stuff. But I'm not seeing big, small, large—I'm just not seeing anything that people view as positive in the financing markets today. There is a sense that it's coming but no one has a firm conclusion as to when. So I think we probably need to move to the next cal but thank you for the questions.

Your next question comes from William Truelove – UBS. William Truelove – UBS: I saw that the Comfort Suites brand's RevPAR change was about 500 basis points worse than the just general Comfort Suites. Is that evidence of potential trade down as people are not willing to pay for suites as much but would basically go to an almost very similar brand? Is that something or is there more sinister going on? David L. White: I think what you're seeing there is more a function of the growth in the supply in the Comfort Suites brand which is up by I want to say close to 15% in the last 12 months. So you are just seeing the ramp up of those hotels. Are RevPAR results we report are not comparable same store sales so you are just seeing some of that in the RevPAR result there. I wouldn't read into that it's a trade down impact.

Your next question comes from Felicia Hendrix – Barclays Capital. Felicia Hendrix – Barclays Capital: Steve, you sounded a little bit more bearish than a lot of the other lodging companies that we cover. No one is really talking about anything extremely positive but some people have been using the term stabilization or kind of saying that have seen the steep declines decrease. You certainly came in better than expectations. Just wondering if you're seeing anything different than the others or if you just feel like you're giving more of a realistic perspective of what's going on. Stephen P. Joyce: Well, that must be my maturation because everybody else has been calling me Pollyanna so thank you for that question. Actually, my view is relatively unchanged. I think the issue was if you look at Smith Travel and the performance of the industry and our performance that we've had in the last two months, I had hoped to see a little more uptick in that, that we didn't get. But we're still relatively along the same lines that we thought we were going to be. We talked long and hard about whether or not we should go with 10 or 11 and I think in the end we decided that 11 was the appropriate number, given what we were seeing today. But I'm still a firm believer that come the summer, when the comparisons get easier—if you recall, we dropped negative after Memorial Day, in large part due to the gas prices. So we are benefiting a little bit today by our highway locations but last summer it hurt us. And so we're going to get some favorable comparisons there. And so I'm still fairly optimistic that as we get into the third quarter and the fourth quarter, both from the standpoint of the comparisons, and also the pressure begins to ease on, hopefully you see a lessening of the drop of jobs and a lessening—you're still going to have a drop—but a lessening the drop of GDP and an increase in some of the consumer confidence, that we're going to start seeing that improvement. I didn't mean to be more bearish. I've been very accused about being too optimistic but I'm still probably in the same place I was and that is, it's coming, it's just a question of we haven't seen it yet. It does feel like, we get into the summer that we're going to get those better comparisons and get better results. But it is still, I would call, a very fluid environment and you can look for some positives and see them but you can also see some risks out there.

Your next question comes from Joseph Greff – JP Morgan. Joseph Greff – JP Morgan: If you were to calendarize the Q1 2009, take out December and put in March, for RevPAR, what was the Q1 2009 calendar RevPAR result? And my second question, Steve, touches on your earlier prepared comments about trade down. How are you measuring that? And what brands are you seeing that in? Relating to just market franchising terms, are you seeing any of your competitors compete or start to meaningfully relax that and what are you doing, if anything, on that front? David L. White: On the RevPAR side of things I don't have a calendarization of RevPAR but I think what you can read into what we said in the prepared announcement is our RevPAR results are on a one-month lag so basically we're sitting her on May 1, we have a pretty good handle about on the April and March actual RevPAR performance for our system, so that's baked into our 16% estimate for the second quarter. I would say, off the top of my head, for Q1 it's probably 12% on a calendarized basis would be a good way to think about it. And then on the second question around trade down, what we're seeing there is on the business side of things, you look at the data that comes through our central reservation channels, it's declined at a faster pace than our non-business travel demand. That's the business that comes through the central channels. Obviously there's a piece of our business travel that goes directly to the hotels and we have less visibility into. And I guess what we've seen is that corporate business demand, which is a relatively small piece of our business, it's about a third of our travel base compared to two-thirds leisure, which we think is a pretty good comp compared to the other lodging chains out there. That business travel demand has been down in the 20% to 25% range with the larger accounts. And kind of anecdotally, from what we hear from other industry participants, the GDS providers, other lodging companies, the owner operators themselves from these corporate hotels, you know, corporate travel is off anywhere from 25% to 50% so we feel like we're down probably less on the business side than some of the other higher-end lodging companies. So that's what we're seeing on the trade down side of things, from what we can measure out of our CRS. Stephen P. Joyce: And then obviously the bigger picture numbers are, if you look at our RevPAR declines versus others, we are getting significantly less and we think that's the combination of trade down being offset somewhat by people trading out. So particularly in the economy tier we've got some pretty good performance relative for those brands but we think that's the combination of both people moving downscale but also people stopping, which is the offset of that. But in general, based on the sort of the overall performance versus both Smith Travel, the segment conditions and what we're hearing from others, we believe that the value proposition that we're marketing and sort of the image of our brands, is helping us to pick up additional business that may have been in other brands previously. David L. White: What was the third part of your question? I didn't catch it. Joseph Greff – JP Morgan: Relaxing franchising terms, either your competitors or you. Stephen P. Joyce: I think in general, deal flow is down. Everybody might be a little more aggressive. We haven't seen anything significant in terms of people out buying deals. And so we are not, our view is we have approached how we've done it and we give ranges to the sales guys. For the most part the deals that are getting done are well within those ranges. And there is some typical stuff that everybody does, which is ramping fees and some other stuff like that. And we haven't seen significant changes in that. And in our view, even if we did, we would tend to resist that because our view is we are going to get the deals whether it's now or six months from now. Nobody has the conversion brands that we've got and the value that we drive through conversion brands so in a way now is our time. When the transactions pick up we're going to see a lot of deals because we've got the best brands available for folks to convert to, that provide real value with real business. And as a result we're going to get that big swing up, so we're not going to discount early in the process to try to improve the number of transactions be the transactions are going to come from liquidity in the market, not from discounting.

Your next question comes from [Mariah Slaven] - Oppenheimer & Co. [Mariah Slaven] - Oppenheimer & Co.: We just wanted to know if you've had any changes in your strategy regarding share repurchases. Stephen P. Joyce: No, we are continuing to have that as a strong priority in our capital allocation strategy. We have an approach that we do not buy programmatically, we buy based on what we perceive to be a discount to the value of the shares. We will aggressively buy shares as we see that as an opportunity. That's obviously impacted by capital availability and pricing and where we think things are going and the general movement of the lodging industry. But no, it is our first priority. It is most valued by our shareholders and you can expect to see us continue with the pattern that we have had over the last several years, that we will be an aggressive buyer of the stock when we think that the market is undervaluing what we're doing.

Your next question comes from Michael Millman – Millman Research Associates. Michael Millman – Millman Research Associates: I wanted to ask a question related to the competitive sets, something that Marriott is always talking about how they are receiving premiums on the competitive sets, and maybe you can talk about how your pricing is relative to the competitive set. And related to that, what kind of differentiated selling points do you make to potential independents or potential brand switching related to the competitive sets. David L. White: I'll take the first part of that question. Each brand is different in terms of the competitive set that we compare it against to on a RevPAR basis, obviously, and its relative performance against that competitive set for each of our brands is a little bit different. But on a holistic basis one of the things we look at closely is how our annual RevPAR growth rate indexes against the chain scale results, the broader industry chain scale results you see from Smith Travel Research. And if you look at the last five years the gap between our RevPAR performance and STR has averaged about 150 basis points, but it's a pretty broad range in each of the years as to the gap. It's been as high as 50 basis points positive and negative 300 basis points, so it's kind of had some volatility to it. Most recently, as Steve talked about in the prepared remarks, our RevPAR for the first quarter and continuing through March and April, actually was doing better on a holistic basis relative to those STR chain scales. So on a holistic basis, that's the trend that we're seeing recently and we're hopeful that we can continue to that trend but obviously in the past we've seen volatility in that regard.

Your final question comes from Joe Gagan - Atlanta Equity Research. Joe Gagan - Atlanta Equity Research: As to receivables and cash, on the cash flow last year it was $104.0 million and the previous year was $145.0 million so it was 28% less and the net income was 10% less. This quarter the cash flow was $10.0 million and the revenues were $114.0 million. The revenues in 2007 when your revenues were around the same as this quarter were $116.0 million and the cash flow was double at $20.0 million. Do you know why the cash flow seems to be so much weaker than the revenues and the net income? David L. White: Obviously you've got to figure in the working capital items so you can look back at the cash flow trends over a pretty long period of time and there is some variability from period to period in the working capital type items. Also in the level of marketing and reservation advances that we make every time. So I think if you looked at it over an extended period of time and compared our free cash flows to net income you would see that it is a pretty strong yield over an extended period of time. Joe Gagan - Atlanta Equity Research: Actually I did do that and in 2003, 2004, 2005, 2006, 2007 the operating cash was like 30% to 40% more than net income. So it changed in 2008 obviously, right. And as far as the receivables go, in this quarter if you add together the regular receivables and the receivables from marketing and reservations, they were up 7.4% and yet the sales was down 10%. My question in all this is that— David L. White: The big reason for all that is basically the way the marketing and reservations fees work, which is essentially a cost reimbursement approach. So in years where we collect more marketing and reservation fees than we extend on those activities then there is no impact on net income. We treat it as essentially no impact on EBITDA, EPS, or net income. But on our balance sheet any increase or decrease goes against the receivable on the tail. So I think what you're seeing from 2007 to 2008, you can see that in 2007 the marketing and reservations were a source of cash of around $12.0 million and in 2008 they were a use of $8.0 million and that's something that there will be volatility in that number depending on what's going on with our level of investment in marketing and reservation activities. Joe Gagan - Atlanta Equity Research: But the weak cash has nothing to do with the franchisees not being able to pay you? David L. White: No, the franchisee helped, as we talked about earlier on the call, and our DSO numbers were actually better at the end of March of this year than they were a year ago, down to about 20 days. Write offs remain still very low, below 1% of our franchisee billings. So no, we haven't at this point seen any major concerns there. Joe Gagan - Atlanta Equity Research: And on the pricing and RevPAR, I just want to understand what was said earlier. So as far as your analysis of the RevPAR, that's only through February, is that correct? David L. White: Well, it's actually really through March and April as well. We're seeing that same trend in March and April, we've been slightly ahead of the STR chain scale results when you work it out using our blend of room supply. Joe Gagan - Atlanta Equity Research: So in other words, the figures you are giving here for RevPAR and pricing, that's for February, March, and April, is that right? David L. White: For the Q1 results that was December 2008 plus January and February of this year and we talked about in the prepared remarks how we had seen some RevPAR results in March and April that had that same trend. And then when I answered Mike's question the point was, we've seen broad ranges over time and the differential between our RevPAR performance and Smith Travel Research's results, but in the more recent data the gap, we've been ahead of the STR chain scale results and we're hopeful that we can continue to do the things we're doing to make that continue. Joe Gagan - Atlanta Equity Research: Here's my question on it. It says here that your pricing only went down 1.1% year-over-year. Is that right? David L. White: Average daily rate? Joe Gagan - Atlanta Equity Research: Yes. David L. White: Yes. The ADR, right. Went down 1.2%. For the quarter. Joe Gagan - Atlanta Equity Research: I'm just trying to understand how that works based on, you know, you cite Smith Travel and what the other public hotel companies are saying about the pricing environment, so how are you only down 1.1% given what everybody else in the world is saying about pricing? David L. White: Well, I think that the function of—you look at our business mix, we tend to skew more towards leisure travel and kind of priced smaller and mid-tier business markets and less larger corporate travel. So our franchisees actually set the price for their hotel rooms so they control the average daily rate that they sell the room at. But my sense is that just from the composition of our business that the rate has held better. Also, locationally, our hotels tend to skew a little more towards small metro, highway locations than some of the other major lodging chains, and if you look at the STR data for interstate locations, small metro areas, it has actually held up a little better than the city center locations, where I think that big, corporate traveler is spending time. Stephen P. Joyce: And you're getting trade down. So when you think about that pricing, what we have been out preaching to the franchisees and the franchise leadership has been preaching to them as well is, look, you're not going to induce any demand by lowering your prices, you are going to have lower occupancy, hold your price, live with what's there. You've got to be competitive on your street corner. But what we're seeing in our segments, which is not necessarily true in the upper segments, is that there has been more discipline around price discounting this time around than last. If you look in the upper segments were, particularly in the group area, things have fallen off pretty significantly, you are seeing a lot more dropping in pricing than you are seeing in the segments we operate. Joe Gagan - Atlanta Equity Research: So basically you're just saying that your pricing is pretty much the same even though there's like 5% or 6% GDP declines this quarter? David L. White: Yes, but where you see that is in the occupancy.

There are no further questions in the queue. Stephen P. Joyce: Once again, we appreciate your time and attention during the call. We remain optimistic about the eventual uptick and what that will bring for our company. We are we think well positioned to weather the current economic conditions even if they extend themselves but we are hopefully optimistic about a beginning improvement coming this summer and towards the end of the year, as we've discussed, and what that will then mean for our company. We continue to believe in our model as being one of the strongest in the industry. We are not departing from any mission-critical initiatives as a result and look forward to an upturn and the good things that will come.

This concludes today’s conference call.