Profit Manager, our state-of-the-art property management system, now operates in almost 2,000 Choice brand hotels, with completion of deployment expected by the end of this year. Those hotels with the system in place enjoy the benefit of improved revenue per available room, on average about 7 percent. They also can operate more efficiently and deliver better service to guests.

In the past year alone, Choice invested $1.5 million in new computer systems and enhancements to our consumer Internet site. But even before these enhancements were developed, our Internet bookings increased 186 percent in 1999, resulting in revenues of $43.6 million. We anticipate even more dramatic growth in this reservations channel as more and more consumers log on to the Internet.

We also want to capitalize on the growth of the Internet by providing in-room technology at our hotels that will provide guests connectivity without having to bring their own computers. In a test at four locations, these in-room computers won overwhelming consumer acceptance, with average system usage of about 50 percent. This system allows guests to check their e-mail, access business services and enjoy a wide range of entertainment and shopping options.

The potential room rate premium for this technology is in the $5 to $10 range, and the system allows for an advertising capability to generate additional revenues. We are in the final stages of determining the proper model to roll out to our franchisees. Clearly this capability will help us attract greater market share of both business and leisure travelers.

Delivering Exceptional Services

Technology and innovation dominate today’s business world. But the real power in any business enterprise is its people. Technology is only as good as the people behind it and the integrity and pride they bring to their work. Choice’s 2,100 associates recognize that technology gives them merely the tools to do their jobs better - it is their inherent commitment to provide exceptional service that will make the difference in a competitive environment.

Part of that exceptional service is developing better products for customers. At Choice, we have created an on-line purchasing capability called ChoiceBuys.com for our franchisees. Through this portal, our franchisees have easy access to more than 150 vendors who can deliver 7,000 products needed to operate and market hotels. Using the advantage of our wide distribution, we have negotiated favorable rates with these vendors for our hotels. As a result, already 1,200 properties are using ChoiceBuys.com to purchase a wide array of goods and services at significant savings.

As a means of ingraining a higher level of service in our associates and our franchisees, Choice opened The Learning Center at its Silver Spring headquarters last fall. The curriculum at The Learning Center focuses on how franchisees can get the full value of Choice’s support services and how they can leverage the strength of our systems to deliver exceptional service to guests at the individual property level. At the same time, our associates receive training in a multitude of courses that reflect our drive to unlock the Power of Choice.

Building Strong Brands

Choice offers hotel developers established brands ranging from the economy to the lower upscale segments: Econo Lodge, Rodeway Inn, Sleep, Comfort, MainStay Suites, Quality and Clarion. Over time, these brands have achieved broad consumer acceptance and support, beginning with the opening of the first Quality properties more than 60 years ago.

As the industry becomes even more competitive, the need to bring better definition to our brands and greater focus to our marketing efforts has led to a tightening of quality standards, which will protect brand integrity and build franchise value. Our development focus in 2000 is to bring new properties into our system that will enhance the brands and drive more consumer acceptance.