Good morning and welcome to the Choice Hotels International Fourth Quarter and Full Year 2011 Earnings Conference Call. (Operator Instructions) As a reminder, today's call is being recorded. During the course of this conference call, certain predictive or forward-looking statements will be used to assist you in understanding the company and its result, which constitute forward-looking statements under the Safe Harbor provision of the Securities Reform Act of 1995. These forward-looking statements generally can be identified by such phrases at Choice or its management believes, expects, anticipates, foresees, forecasts, estimates or other words or phrases of similar import. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such statements. Please consult the company's Form 10-K of the year ended December 31, 2010, and its other SEC filings for about information risk factors that about the company that should be considered. Although, we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We caution you, do not place undue reliance on forward-looking statements, which reflect our analysis only, and speak only as of today's date. We undertake no obligation to publicly update our forward-looking statements to reflect subsequent events or circumstances. You can find a reconciliation of our non-GAAP financial measures referred to in our remarks as a fourth quarter 2011 earnings press release, which is posted on our website at choicehotels.com, under the Investor Information section. With that being said, I would now like to introduce Steve Joyce, President and Chief Executive Officer of Choice Hotels International, Inc. Please go ahead, sir.

Thank you very much. Good morning, and welcome to Choice Hotels Fourth Quarter 2011 Earnings Conference Call. With me this morning as always is Dave White, our Chief Financial Officer. I am very pleased to report a strong fourth quarter and another strong year for Choice Hotels in 2011. We wrapped up the year on a high note with excellent results on many fronts and we are well positioned to improve on those results in 2012. Our franchising revenues increased by 9% last year with notable acceleration in the fourth quarter of 2011 when franchising revenues increased by 10% compared to the fourth quarter of 2010. Our adjusted earnings before interest, taxes, depreciation and amortization increased by 8% in 2011 and as we highlighted in our outlook for 2012 we are positioned to grow EBITDA between 8% and 10% this year compared to our 2011 adjusted EBITDA result. During 2011, we generated nearly 135 million of operating cash flows and we built on our long history of exceptional capital stewardship by returning nearly a 100 million to shareholder through dividends and share repurchases during the year. We are pleased that our financial performance exceeded our expectations and our previously published fourth quarter and full year 2011 outlooks on all fronts. These results were achieved despite a tough economy and I would emphasize that we continue to grow our market share during a period where overall industry supply was actually contracting. I’ll talk in a minute about some other exciting achievements last year in our operations, but I want to briefly touch on our take on the economic backdrop we are expecting this coming year. The global economy remains challenging with the recovery that is predicted to be slow, prolonged and uncertain and our industry still faces significant headwinds including flat-to-slow…

Thanks Steve. As you read in last night’s press release we reported adjusted diluted earnings per share for the fourth quarter is $0.46 which exceeded our previously published outlook of $0.43 per share by $0.03. Compared to our outlook about half of our performance is a result of better than expected operating and EBITDA performance driven by both topline revenue performance and cost management. Our domestic royalty revenues were better than we had expected primarily on account of domestic RevPAR growth for the quarter of 7.8% exceeding our forecasted outlook of 6.5% growth. Similarly, our international royalty revenues for the quarter were stronger than we had anticipated primarily on account of better than expected RevPAR performance and foreign exchange rates. Those two factors combined with the results of other revenue categories resulted in our franchising revenues exceeding the expectations contemplated in our guidance by approximately $1.6 million for the quarter. The remainder of our adjusted earnings per share our performance was primarily related to below-the-line gains and investments in employee retirement plans. We were very pleased with the RevPAR of our franchisees during the quarter and as a reminder our RevPAR results for the fourth quarter reflect our franchisees gross room revenue performance for the months of September, October and November. Domestic system wide occupancy increased by 260 basis points compared to last year with all of our brands seeing improvements in occupancy. We also achieved nearly a 3% gain in overall domestic system wide average daily rate. On unit growth front in a difficult supply environment in fact according to Smith Travel Research, the total number of hotels opened and operating in the US declined slightly in 2011. We grew our US franchise system slightly which compares favorably to the net unit loss experienced in the overall US lodging…

Thanks Dave. Overall I am very proud of what we have accomplished in 2011 as a system particularly considering where we stood in the summer. Our talented and committed owner, operators and employees continued working together to make every experience great for our guests. We continue to gain market share, attract more customers to our brand and fortify our financial strength. Our continued focus on creating value for our franchisees has been a proven strategy in any environment and this approach will continue to service well in 2012 and beyond. Our number one priority remains creating value for our shareholders, driving cash flows efficiently and continuing to effectively allocate the capital generated by the business including dividends and opportunistic share repurchases. With that I am going to open up the call to answer any questions you might have.

Thank you. (Operator Instructions) And our first question will come from the line of Sule Sauvigne from Barclays Capital. Please proceed.

Hi, I was wondering if you could clarify how much you have invested in the incentive program in the fourth quarter? Was it the entire $8 million delta in that notes receivable line?

I don't have it in the fourth quarter right here in front of me but on the cash flow statement you can see that during the course of 2011 we issued about $13 million of notes receivable, which includes kind of our normal conversion incentive program, kind of the forgivable prom note program, as well as we have made about $8 million of investments in the Cambria financial program.

Okay, that was going to be my next question, alright. So that line item issuance of notes receivable is mostly the incentive management program including Cambria?

That's right.

Okay.

And then there was one significant repayment of the incentive program for $5 million that occurred in December.

Which was on a separate line on the cash flow statement.

Okay. I see that. And then just wondering -- I noticed the Ascend Collection seem to underperform your other brands in the quarter. If you could provide any color on that?

In terms of the rates [ph]?

RevPAR. Yes, rates [ph].

Yes. I think that brand at this point, as Steve mentioned, the size of the brand and the scale of the brand while it is growing rapidly and we're excited about that it’s still a fairly small brand. So sometimes the RevPAR statistics can get a little impacted by just relatively small changes in the system. So I don't think this is really anything to read into that other than just the size of the system can sometimes move that number a little more.

And we have significant exposure in New York and New York was a little slower the quarter.

Okay, thank you.

And our next question will come from the line of Shaun Kelley with Bank of America. Please proceed. Andrew – Bank of America: Hi good morning, this is actually Andrew for Shaun. Just a question on the SG&A reduction, just curious as to what sparked the need to reduce it at this point in time? If you can give a few more specific measures as to what you are implementing in order to increase productivity?

Good morning Andrew. I think basically our approach was this. We looked out at the next two to three years and have kind of concluded that we were going to be in a relatively uncertain environment. We could get a significant upswing in unit growth or not. So as a result we thought it was prudent to reduce our cost base in a way that does not prohibit us from providing any of the systems that our franchisees need or any investments that we require on the technology side. By the way, we have been investing very heavily through the last three years to really move our platform forward, which has been very successful. So with us – the cost of our payroll, so it was a reduction of folks working with us. We felt we were able to do it in a way that created -- actually incremental focus on the areas that were important. We reduced some activities that we didn't think were driving as much value. We chose to do it in a way that raised the responsibility of a number of folks here that we thought were ready and we felt that net net would put us in a better position. Obviously from a cost standpoint it lowers our run rate, gives us the ability to provide further growth to the market. Andrew – Bank of America: Okay. That’s great. And then a question for David, just in terms of the balance sheet, just seeing now, with net net below one time 2012 EBITDA, kind of how do you think about your leverage going forward and you think there is an opportunity to increase this leverage this year and perhaps maybe return a bit more cash to shareholders?

Yes. I guess the way I would handle that is the balance sheet as you pointed out is in great shape. So we have a great balance sheet, in working with our board, I mean, we are highly focused on how we utilized that strong position in terms of allocating capital. Certainly, we have a dividend program in place and we from time to time revisit that, our conversation with our Board of Directors and assess what the right level of dividend is. On the share repurchase side of things, as you saw in the fourth quarter we were, I would say, relatively more aggressive than we had been in the past 12 to 18 months or so. So we were much more aggressive on the share repurchase side of things. Of course, our strategy there has always been around opportunistic share repurchases and that will continue to be our approach. So depending upon how things go, you will see us continue to use that lever. We don’t really think about our leverage level in terms of a one-year target. From our perspective we definitely believe this business can support more leverage on the balance sheet and we have regularly talked about having leverage that’s closer to 3 to 3.5 times debt-to-EBITDA. So we certainly view that as a long range target but it is not a target that we feel like we have to be at the end of a given year per se, it’s more of a longer term target that we expect to be able to get back to over time. Andrew – Bank of America: Okay, great. Thanks. That’s all for me.

Thanks.

And our next question will come from the line of Patrick Scholes with FBR Markets. Please proceed.

Hi, good morning gentlemen.

Good morning.

Good morning, Patrick.

Just a question here on your RevPAR outlook, you guided to 8% for the first quarter but then New York seems to decelerate for the rest of 2012, which was a bit different from what I asked Marriott on their conference call where they thought first quarter was going to be a little bit relatively slower but then picks up. Was that just cautiousness on your part being that you have less visibility with group bookings and then say, a company like Marriott does, or is there something else in there? Thanks.

There is two things that go into that. Our visibility is not very much forward looking. It’s a relatively short term book pattern. I think your guidance that we are getting and we are sort of in between some of the experts. If you look at where the forecasters were putting our segments was really 3 to 5, and so we move that up to 4 to 6. As we have said, we had a very strong December, January, February. We will have to see as the year progresses what the slowdown in GDP growth and what employment does as a picture that will give us an idea. But right now we have moved our guidance a little bit above where the forecast -- the experts were putting our segments given that first quarter results and we are sort of in a wait-and-see mode. I think the encouraging thing over the fall period and into through today is that sort of in spite of all the noise and all the concern and all of the news that’s being broadcast is not necessarily positive. The business has remained not only fairly robust but it’s actually increased. We are obviously hoping that that continues and we also pay very close attention to where the experts are forecasting and we are sort of blended in first quarter results with those forecasts.

Great, I really appreciate the color. And then just secondly on the refreshing of the Comfort Inns, you had put out a press release mid quarter, have you provided sort of a timeline of when – how long that refreshing will last? You mentioned in the press release up to 10% loss of room count.

Yes. Obviously a very large brand, so it’s a long term program. I think our expectation is we will be able to see results in a couple of years but the program will probably take to have a real impact and get to the bulk of the system, really a three to five year window. And so while we are looking for things early on in the system it is designed specifically to sort of time with the recovery of the markets and then with assistance from us to help the franchisees move. We have targeted a number of hotels to be terminated, our hope is that we can improve a number of those, but we want to make sure that everybody understands that this is a program that we believe is required to keep Comfort Inn in the premier position that it is in and actually add to it. With the system of 2,100 some hotels domestically, as we move that forward it’s obviously going to be a major undertaking. We think you will see results in the first couple of years, but then long term three to five is where we expect the program to be in full course.

And Patrick, the other thing I would add is that, some of these Comforts that will be leaving the system, they are leaving the system because they don’t meet the current prototype. And so they are going to continue to be – we think opportunities for those hotels to maintain and then some of our other brands where they sort of do meet our brand standards, they meet the prototype standards, like (inaudible) type product, for example. The adjustment to the Comfort system will obviously give us some opportunity to reposition some of those hotels in to our other brands like we have done in the past.

Great, thanks David. That actually was going to be my next question. So it doesn’t sound like 10% is just drawn out the door but there is definitely an opportunity to maintain those and maybe the more economy focused brands.

Yes and that’s the great thing about our system. We have a history up through today of retaining a fairly high percentage of hotels that we move out of one brand but are able to find a home for them that works for the franchise and for us.

Okay. Thank you.

And our next question will come from the line of Tim Wengerd with Deutsche Bank. Please proceed.

Good morning. I just wanted to touch on the incentive program a little bit. Compare to three months ago, do you think -- how your expectations change for the incentive program and do you think that might allocate more or less capital to the program in 2012?

Well, I think the answer is when we saw the results in the fourth quarter we have felt the need to provide a more aggressive program to target the right hotels that we were after. We are seeing results from that early in these years. The net results of the programs which may include some capital for multiunit deals, we don’t believe would be a material amount overall and would include things in addition as we have done in the past like royalty fee discounts and some incentive capital. It’s not anything that is dramatically different than the way we have gone about business before. Although, we believe that we are going to be more aggressive in offering to a wider range of properties. We may use some capital on some specific circumstances but it would be for that special type of properties that would drive much higher revenues either multiunit deals or urban locations or those type of properties.

And then on the Cambria program and we have talked in the past about for Cambria specifically $20 to $40 million per year is kind of as a reasonable range to think about modeling. I think our sense at this point is we still feel like for 2012 that’s probably in the ballpark of where we would hope to land assuming that the deal environment cooperates.

Okay. You touched on a little bit in the call just on your expectations for sales in ’12. I know your guidance for ’12 is flat and that sort of reflects the Comfort redesign, but how do you expect the size of the pipeline to evolve throughout 2012?

Yes, my reaction of that would be the conversion pipeline, as we have said in the remarks, is relatively flat on a year-over-year basis. So my expectation would be that we should be able to move in a more positive direction from here. On the new construction side of things that pipeline obviously has a much longer time horizon for when those properties will come online. We are continuously kind of looking at that pipeline and making assessments around which of those projects we should essentially terminate. The new construction pipeline and I think you could still see some volatility in that over the next year. On the conversion side, which as I mentioned is conversions are 90% of our business in terms of gross openings, that pipeline feels relatively flat at this point and given what we are seeing on franchise sales and we are optimistic that it should move in the right direction from here.

And I think, you can tell us what you think about the new construction financing environment, we have not forecasted any material improvement in it throughout the year. I will tell you in some recent conversations it feels like maybe things are moving a little but we are not counting on that occurring.

Okay. You mentioned Brazil on the call as well, do you have a decent pipeline in Brazil, or is this something that you expect might grow to the point where it really moves the needle?

Yes. So two things, one is we do have actually a very strong system of hotels that represents us well. It’s 60 properties today. The pipeline is very strong and there are a number of hotels that will add to the system under construction. In terms of the actual revenue results that we get from that it’s still relatively small. It would not materially move the needle.

Perfect. Thanks guys.

Ladies and gentlemen, this concludes the question-and-answer portion of our conference. I will now turn the call back to President and Chief Executive Officer, Steve Joyce for closing remarks.

Well, thank you for joining us on our call. As we have suggested, we are very encouraged by results that we have experienced over the fourth quarter and to date. We are looking forward to a 2012 that includes a continued growing RevPAR environment and we are also expecting an improvement in the deal environment but as we have suggested mostly on the conversion side and we are hoping at some point to see something more positive on the new construction side. We continue to be very optimistic about our opportunities internationally and we will begin expanding on that, we will talk about that in future calls. But for 2012 we are very encouraged about where we are and where we will end up for the year. So we thank you for your attention and hope you have a good day.

Thank you for your participation in today’s conference. This concludes your presentation. You may now disconnect.