Charles A. Ledsinger, Jr.
President and Chief Executive Officer

A web-based support desk in Choice’s London office (below) serves European hotels, featuring assistance in seven languages. Available 24 hours a day via the Internet, the site will be expanded to serve the remaining international hotels in 2000.

We enjoyed a terrific year in 1998, and our company continued its strong performance in 1999. Recurring net income increased 23 percent to $57.2 million, with recurring diluted earnings per share growing 32 percent to $1.03.

As pleased as I am with this strong performance, I recognize that we still have not tapped our full potential. Given the scope of our franchise operations - more than 4,200 branded hotels open in 35 countries --we have additional growth opportunities in terms of available room nights and the services we can offer consumers. Put another way, we will help our franchisees sell more existing rooms even as we add new units to our overall system. And, we will continue to develop new distribution channels that will allow us to take full advantage of the Internet and e-commerce in dealing with franchisees and guests.

The good news is that much of the infrastructure needed is in place. The challenge that lies ahead is Unlocking the Power of Choice. To achieve our true potential, and realize more shareholder value, we have to reach and serve more consumers, deliver exceptional services to our franchisees and our guests, and continue to build strong brands.

Choice’s senior management team has spent considerable time in the past few months addressing this challenge. We now are implementing a new strategic plan to carry out a host of initiatives that will support future growth. Let me share with you just a few of the highlights:

Reaching More Consumers

As a franchise company, we focus on two levels of customers: our franchisees and our hotel guests. It’s critical that we continue to provide our franchisees with a broad range of services and support to help them market and operate their properties. At the same time, we will continue to interact with the hotel guests through our reservations system and through the various travel sales distribution channels, including travel agents, tour operators, the Internet and the global distribution systems run by airlines and other travel outlets.

A key ingredient in providing these different levels of service is technology. As a worldwide lodging leader, we deliver proprietary technology to manage reservations and help properties improve their yield management and room inventory control.