As a result, we have embarked on a program to use our strong financial position, in combination with our well-known brands, wide distribution and established infrastructure, to more aggressively drive our core franchising business:

• With our enhanced capital base, we will use selective equity investments to penetrate profitable markets with new partners;
• We will continue to build our brands and increase consumer visibility for them; and,
• We will create new franchisee bases through selective use of capital and aggressive recruitment of partners who value our brands and development expertise.

Last year I told you about our new strategic vision: Unlocking the Power of Choice through Reaching More Consumers, Delivering Exceptional Services and Building Strong Brands.

In each of these three key areas, we made significant progress in 2000. And these three keys will continue to serve as the underlying focus of our operating plan. Looking ahead, we plan to carry out the following:

Reaching More Consumers. Said another way, we have to get more people staying in rooms we already have available. Even as we continue to aggressively grow our system, we must do a much better job of serving the system we already have.

To that end, we are embarking on a brand new marketing campaign, created by our new advertising agency, Arnold Worldwide/ Washington. Set to launch in the spring, this exciting new creative voice will help us break through the clutter in the marketplace and provide our brands with a fresh energy that will drive more business to the hotels.

In 2001, we aim to capture a bigger share of business travelers through targeted marketing programs. A key element in this objective is our Guest Privileges frequent traveler program, which recently topped one million members. We will announce enhancements to the program shortly, which will include linkage with major airlines for mileage rewards.

Delivering Exceptional Services – to our franchisees, guests, vendors and associates. At the forefront is our world-class reservations system, which provides a multitude of voice and electronic channels to book reservations. Reservations through our Internet site, choicehotels. com, continue to grow rapidly as do bookings through GDS and alternate distribution systems.

Technology gives us the opportunity to do more in other areas as well. Among the tools that can help us raise the bar on service are:

• ChoiceBuys.com, our proprietary on-line procurement system;
• Profit Manager, our state-of-the-art property management system; and,
• The Learning Center, our central training center at our Silver Spring headquarters for franchisee and associate education.

These tools enhance both the desirability and value of a Choice franchise. Stop and consider the progress made in the past two years in providing more value-added services that in turn provide a richer investment for our franchisees – not only our technology-based initiatives but also new hotel sales support and enhanced training in the field. The effective and timely delivery of these needed services will play a key role in the company’s future growth.

Building Strong Brands. Choice has made substantial progress to date to bring better standards and quality to the properties under our brands. But we are not satisfied. We need to do much more to differentiate these brands, which in turn will build more value in franchisees’ investments and attract new franchisees.

During the past two years, we conducted extensive consumer and competitive research on how we can improve our brands. This research showed that some brands may benefit from re-imaging – specifically Comfort Suites, Quality and Sleep. After many months of developing new images, testing them with franchisees and consumers, and regional meetings with franchisees across the country, we hope to launch this program this year.