Choice signs over UK franchising

Choice Hotels
International has announced the execution of a
definitive agreement transferring franchising operations from Real Hotel
Group plc to Choice for its Comfort, Quality, Sleep and Clarion brand
hotels in the United Kingdom on January 31, 2008.At that time, the master
franchise agreement between Choice and Real Hotel Group for the United
Kingdom will be terminated and the existing franchise agreements will be
assigned to a Choice subsidiary.

  As a result of the agreement, Choice will directly operate the
franchise in the United Kingdom now consisting of 78 properties from the
headquarters in London. This transaction follows Choice’s fourth quarter
2006 acquisition of the franchising operations for the European countries
of Austria, Belgium, France, Spain, Germany, Italy, the Czech Republic and
Switzerland.

  “The acquisition of the United Kingdom franchising operation is another
element of our strategy to maximize our growth opportunities across
Europe,” said Mark Pearce, vice president, international operations, Choice
Hotels International. “Choice is one of Europe’s leading lodging companies,
with over 500 hotels throughout the continent, and in the past year, we
have focused our efforts on developing and implementing a number of
pan-European marketing programs. The United Kingdom market will play a key
role in our efforts to enhance brand awareness across the continent while
providing our franchisees the centralized support and services that will
help them increase property-level performance and profitability.”

  This acquisition is not expected to have a material impact on the
Company’s results of operations, cash flows or financial condition. For
2008, incremental revenues expected as a result of transitioning from a
master franchising to direct franchising business model will be
substantially offset by direct franchising costs associated with the
acquired businesses. In addition, these acquisitions do not result in
incremental international franchise system units or rooms on-line.
——-