Guest satisfaction: To help drive improvement in guest satisfaction, we are instituting a system for direct guest feedback to help us identify those hotels where satisfaction can be better and to give us more guidance on the amenities and standards that guests value in their travel.

     Building brand equity: We aim to bring more innovation and creativity to our brands in order to build greater guest loyalty and, in turn, greater value and equity for the hotel owner. Our introduction of Cambria Suites and the re-imaging of Comfort Inn are two solid examples of how we are addressing this issue.

     System growth: We continue to build our sales capability through experienced, dedicated sales forces to support each brand. Our success in recent years in driving more rapid franchise development has strengthened our brands and made them more desirable to hotel developers.

     Owner profitability: Through our franchise services support team in the field, we work with owners at the hotel level to identify specific actions they can take to build occupancy, improve rates, enhance guest satisfaction and maintain their properties through cost-effective renovations and scheduled maintenance.

     We are extremely proud of the great progress Choice has made in growing its system of franchised hotels, improving hotel performance for its owners, delivering enhanced value to shareholders and providing better opportunities for our associates.

     Through both the creation of a cash dividend and targeted share repurchases, we have delivered real value to our shareholders. In turn, our strong financial condition has enabled us to offer more opportunity to our associates and to deliver on our promise to partner with them to make Choice a great place to work.

     In the past year, we have invested significant time in emphasizing core values for our associates and fran-chisees to emulate: These include: demonstrating personal character and integrity; leading through serving; embracing diversity; and building trust and value.

     In my business career, I have learned that these values, when demonstrated and reinforced, can positively influence and shape an organization. Already they have received great acceptance from associates and fran-chisees alike. Going forward, we expect them to provide the ethical framework for all we do.

     I am honored to have the support of a very talented Board of Directors who have given me and our senior management team wise counsel in our strategy. All of us would like to particularly thank both Dr. Jerry Robertson and William Jews for their valued service. They are leaving the Board in May with our very best wishes.

     We fully expect another strong year in 2005. The economy is moving ahead briskly, travel demand is growing with many experts predicting a very heavy summer season and demand for our hotel products remains high in the development community.

     With a great sense of optimism about the future, I believe Choice Hotels has tremendous prospects for growth and success in the years ahead.

Charles A. Ledsinger, Jr.
President and Chief Executive Officer
March 22, 2005