Ladies and gentlemen, thank you for standing by. Good morning and welcome to the Choice Hotels International Third Quarter 2014 Earnings Conference Call. At this time, all lines are in a listen-only mode. Later, there will be a question-and-answer session and further instructions will be given at the time. 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 results, 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 phrases such as Choice's or its management's believes, expects, anticipates, foresees, forecasts, estimates or other words or phrases of similar import. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Please consult the company's Form 10-K for the year ended December 31, 2013 and other SEC filings for information about important risk factors affecting the company that you should consider. 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 part of our third quarter 2014 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 Incorporated. Please go ahead, sir. Thank you.

Thanks very much. Good morning. Welcome to Choice Hotels' earnings conference call. Joining me this morning as always is David White, our Chief Financial Officer. This morning we are going to update you on our performance for the third quarter of 2014. I’ll give a brief overview of the business results and highlights and then Dave will cover the financial results in a little bit more detail. But I’ve got to say I’m pleased to say that our results were very strong for the third quarter, exceeding our own expectations in a number of key areas. Our core lodging business continued to expand this quarter, driven by domestic franchise system unit growth of 1.6% and impressive RevPAR growth. On the RevPAR front, domestic system wide revenue per available room increased 9% in the third quarter of 2014, with RevPAR for several of our brands achieving double digit percentage growth. Our performance with respect to these two key metrics were the primary drivers of 9% growth in domestic royalties and 8% growth in franchising revenues. Our strong revenue performance, combined with continued cost management discipline resulted in expansion of our franchising margins and 8% growth in franchising EBITDA. We are very pleased with the overall operating performance of the core hotel franchising business. Based on our performance during the quarter and the trends that we have seen continue into October, we expect to continue in the fourth quarter and we’ve raised our full year outlook for the business. On the development front, we executed 133 new domestic hotel franchise contracts for the third quarter. It is particularly promising that many of these franchise contracts are new construction agreements. Our new construction pipeline has been strengthening consistently for each of the past several quarters and in the third quarter we saw executed…

Thanks Steve. As you may have read in this morning’s press release, we reported diluted earnings per share from continuing operations of $0.67 for the third quarter of 2014, compared to %0.65 per share in the prior year. EBITDA from franchising activities for the third quarter increased 8% over the same period of the prior year due to an 8% increase in franchising revenues and a 40 basis point expansion of our franchise margins. The increase in our franchising revenues for the quarters was driven primarily by continued growth of the franchise system and strong domestic RevPAR performance. Nearly 80 % of the top line franchising revenue growth, which was $7.5 million, flowed through the franchising EBITDA. As a result, our franchising margin expanded from 71.9 % in the third quarter of 2013 to 72.3% in the current quarter. Our domestic royalty revenues increased by approximately 9% to $79.5 million due to a combination of increase in RevPAR and in our system size, partially offset by a four basis point decline in our effective royalty rate. Our RevPAR growth of 8.8% for the third quarter was driven by a combination of a 320 basis point increase in system wide occupancy and a 3.4% increase in our average daily rates. We attribute the increase in occupancy rates and our overall RevPAR improvement to both increased leisure travel which we believe reflects the improving U.S economy as well as our efforts and initiatives to improve business delivery and hotel revenue yield to our franchisees. As a result of the trends we are seeing in the business, and our year to date RevPAR performance month to date through October, we now expect full year RevPAR to range between 8% and 8.5%. On the supply front, we were able to grow the number of…

Thanks Dave. So the results have been strong. We are obviously optimistic about the rest of the year and we are also very optimistic about heading into next year. The domestic economy continues to gain strength which we believe should be a positive for the lodging industry. There have been solid gains recently in household employment in September and some improvements in the labor participation rate. Blue chip forecasts indicate job and wage growth is predicted to accelerate modestly, which we see as good indicators for hotel demand in our segments Based on our optimism for the core hotel lodging business, based on our recent results and a heightened expectations for the reminder of the year and our pursuit of new growth strategies like SkyTouch, we believe we are very well positioned for future growth. So with that, let me open up the call and answer any question you might have.

(Operator instructions). Your fist question comes from the line of Steven Kent from Goldman Sachs. Please proceed. Steven Kent – Goldman Sachs: A couple of questions and look, frankly this was a great quarter, so it's hard to find anything to ask too many questions about, but –

Or you could just go with that. Steven Kent – Goldman Sachs: Okay, Steve. But we have another 40 minutes to kill. So, on the Ascend Collection, the RevPAR was a little weak. It's a small part of your business, but what's going on there? Is there any read across? And then Comfort Inn, there's been lots of investment into that brand; hotels moving out of the system yet the RevPAR maybe not showing as much improvement as we would have thought. So, when do you start to see that -- the benefit of the repositioning? And I'm not sure if you mentioned, one final question, when SkyTouch would become EBITDA-positive?

Let me start with SkyTouch. So obviously we are very happy with where we are in the sales process and the potential. We think we need probably at least one more quarter to feel like we can give you a serious revenue projection which then will get us to what breakeven is. So I’ll ask you to be patient with us till probably next quarter. We think we can give you some indication. And we’ll let you know one way or the other, but it’s -- we think we are going be in a position relatively soon, whether it’s one quarter or two quarters to give you any idea of hey, we are pretty comfortable we are going to predict this kind of revenue growth and therefore we can tell you based on that what that means in terms of profitability for that division. So we feel pretty good about that. On Comfort, you are right the number of units has gone down because we had terminated a lot of hotels that don’t fit -- meet the standards and the design and look that we are moving forward to. And as a result we are getting lots of better customer response and we are getting renewed interest from the developers. Where we have seen the improvement is in a scenario where they have done the renovation that was designed by Gensler. We are seeing significant lift from those few hotels that are done and remember we incented 300 hotels. Most of them are just coming online, but the early returns looks like we are driving about a 6% RevPAR increase over the market increase. So we are pretty convinced it’s going to work like Sleep worked which where is in Sleep -- I don’t know where we are now, but originally it was about a 10% RevPAR lift. .:

Sure. Thanks Steve for the question on Ascend. And yeah, you did highlight how Ascend stands out in the midst of the other brands. All the other brads that we have demonstrated RevPAR growth in the high single digit percentage, if not low double digit percentage area for the quarter whereas Ascend was actually down. The key thing there, the key takeaway on Ascend is that that brand is obviously a rapidly growing brand. I think we’re up about 15% year-over-year in terms of the size of the system. And given that it’s got about 100 plus units, given that size, the absolute RevPAR levels are getting impacted by two things. One, the ramp up of hotels that are coming online as that system grows rapidly. And number two, probably more important is just the mix of where the new hotels are being added relative to the existing portfolio. For example, obviously the Ascend hotels that we have in New York City have higher absolute RevPAR levels than the ones that we had in markets that are not New York City, not the top lodging market. So you’re really just seeing a mix of geography coming into that brand, ramp up of the brand as it rapidly grows in scale.

Your next question comes from the line of Robin Farley. Please proceed.

Thanks for taking the question. I go with Steve Kent’s sentiment that it’s a good quarter and the RevPAR, increasing RevPAR guidance is very strong. I guess my question is that maybe it's not translating through to as much on the EPS line somewhere coming through EBITDA down to the EPS line as maybe one would have thought with that kind of 8% to 9% RevPAR growth for Q3 and the Q4 guidance. Is the any color on that you can give us? Farley – UBS: Thanks for taking the question. I go with Steve Kent’s sentiment that it’s a good quarter and the RevPAR, increasing RevPAR guidance is very strong. I guess my question is that maybe it's not translating through to as much on the EPS line somewhere coming through EBITDA down to the EPS line as maybe one would have thought with that kind of 8% to 9% RevPAR growth for Q3 and the Q4 guidance. Is the any color on that you can give us?

Robin, thanks for the question. What I would highlight is for the third quarter. Again about 80% of the growth, the absolute dollar growth in franchising revenues which was round $7.5 million flowed through to EBITDA which we think is a pretty good indicator of the strength of this business model. Having said that, if you were look at our third quarter franchising cost growth, it was around I think 7.5%, which is a bit higher than the full year number, year-to-date number which is trending right around 4%. I think for the balance of ‘14 we are expecting that number, the franchising cost growth to be more in that kind of mid-single digit percentage area. But in terms of the flow through, we felt pretty good about it in the third quarter. There were a couple of timing items on the expense side, a little bit on the foreign currency side as well as some of the impact of the restatements that we’re wrapping up had some impacts. When you think about the fourth quarter in the flow through, the one thing that is maybe not as noticeable from the outlook is that we are seeing a nice pickup in loyalties. It's kind of raising the RevPAR outlook. Just given the timing in some of these openings, some of our conversion properties that were under development incentives, the amount of initial fee revenue we are contemplating recognizing in the four quarter has kind of moved out probably a quarter or two and there’s been a corresponding reduction in the initial fee revenue and the forecast and the commissions related to that. So all in all we are pretty excited about raising our full year outlook by about $5 million at the mid-point on the EBITDA line, which about $2 million of that was driven by the SkyTouch, going to be a little bit less than we thought and the balance relating to the core franchise in business the beat is on the third quarter.

Is there -- could you quantify -- you mentioned it sounds like it's just a timing issue that if it's just some initial fee revenue moving into Q1 that originally you had thought might be in Q4. Is there kind of a ballpark you could give for that? Farley – UBS: Is there -- could you quantify -- you mentioned it sounds like it's just a timing issue that if it's just some initial fee revenue moving into Q1 that originally you had thought might be in Q4. Is there kind of a ballpark you could give for that?

I would think about it as like a couple of million dollars to the fourth quarter and then there’s the corresponding impact on commissions expense, normally about 45% to 50 %.

Your next question is from the line of Felicia Hendrix. Please proceed. Felicia Hendrix – Barclays Capital: Hi there or good morning. Steve, thanks for the color you gave us in you prepared remarks on the share repurchase activity. We saw that in the release. It definitely stood out because you haven’t repurchased shares since the second quarter of 2012. Previously those buybacks they were done more open market under your share repurchase program. So just wondering, is there a reason why you haven't been more active with that during the past two years? And going forward, how should we think about your share repurchase program, acknowledging that you said if another block comes up, you'll buy that, but just in terms of your current authorization?

Technically I said we will consider, but okay. So let’s talk about this. Look, in ‘12 I guess it’s always good to remind people, we paid out $600 million special dividend, okay? And in doing that we took advantage of we thought was an extraordinary financing market and the fact that our cash flows are so consistent and predictable that we were able to move into that, be very comfortable that we could return that value to shareholders and then at the same time rapidly delever. So we have been doing that since and actually we are getting pretty close to target levels. That has somewhat impacted our decision on share repurchase. Let me just reiterate this because I didn’t do this on the first call and I’ve done on I think every call since that I have been in this company. Our first priority always is return of capital to shareholders, always. And so we are always looking at what is the best way to do that. And so whether it’s a special dividend, whether it’s a regular dividend, whether it is share repurchase. The share repurchase activity was not as active in the last couple of years around this idea of de-levering. However, we had never ever said we wouldn’t and it always though is opportunistic. We don’t believe in programmatic share repurchase. We believe in opportunistic share repurchase and I’ll let Dave talk a little bit about those parameters. But we are -- we’ve clearly viewed this as an opportunity which we took advantage of as we will in other opportunities going forward. Let me let Dave talk about the factors that go into that decision.

And I think Steve actually touched on most of them. Obviously with the estate shares it was opportunistic in our view because frankly over the past 15 years that we’ve operated the share repurchase program we’ve never seen a block of that size become available to us for repurchase, which to your point Felicia why we normally executed through the other market mechanism. But I think Steve hit the main concept which is two years ago we did this levered recap, took the leverage levels up beyond four, beyond our long range dated objective which is more in the 3 to 3.5 range. And as we said we are getting closer to that range. I think trailing ‘12 to September on leverage we are right around 3.7 times debt to EBITDA. As we continue to migrate the balance sheet towards our optimal leverage levels, we’ll continue to look for opportunities to return excess capital to shareholders as well as make investments in things that make sense like SkyTouch and Cambria and Comfort. Felicia Hendrix – Barclays Capital: Great. That's helpful. Thank you. And just while you mentioned SkyTouch, I'll hit on that question. So the revenues for the nine months of the year so far have hit $200,000. You've been consistent saying that the $1 million in revenues, just it's a big jump in the fourth quarter. So can you just help us bridge that?

I think it’s just a reflection of the ramp up. Really as we’ve built up the sales and marketing team during the course of the year, I’d say that our view is that they are starting to hit the stride and that you see the ramp up of hotels coming online is what’s driving the change from the third quarter year to date to the $1 million estimate we have in the outlook. Felicia Hendrix – Barclays Capital: But assuming that your visibility on that is pretty good.

Yes. Felicia Hendrix – Barclays Capital: Okay, great. And then just finally, just on the convert (inaudible) it's slowed. And we are just wondering, is that due to tough comps or is there just something else going on with your conversions or maybe unbranded hotels finding -- is this not the point in the cycle where unbranded hotels are really jumping to execute conversions?

I don’t think I’d read too much into it. I think if you look back our history of convergent franchise sales executions quarter over quarter, you will see quite a lot of choppiness over the course of the cycle. It’s not always up, up, up every quarter. We are not really reading too much into what the convergent contract executions were for the quarter. I don’t think it’s anything that I would say is secular related to the value of our brands which we totally believe are the best brands in the convergent front for hotel owners. And nothing I would say in the industry that’s causing us to think that we don’t have a great conversion opportunity going forward. But I think the quarter results are really just more of a timing issue that we’ve seen from time to time in various fair shares.

And I think the way to think about it is we monitor this obviously very closely. We are the premier conversion company out there. So we get a much higher percentage of the conversion opportunities available than any of the other companies that we are competing with depending on the hotel. And so it’s -- And we think though that the overall environment for conversion is going to continue to improve. And the primary reason for that is as the hotels do better, they can afford to invest and put the dollars into their hotel that is required in order to convert to our hotels and be one of our brands. So that’s a positive sign on the independent front. And the other front that really hasn’t been around for several years is the opportunity of other hotel companies as their construction pipelines begin to add new product, they will eventually start terminating some of those hotels which they haven’t done in several years. That’s obviously a strong opportunity for us because we’re the next best choice once that brand says we no longer want you as part of our system. And so that part has been relatively slow to recover because the other brand companies have not been terminating hotels as they’ve been waiting for new product to come online. We believe that’s going to start happening next year and then that will build that conversion opportunity. And we monitor very closely, but we will continue to lead and be the top converter of hotels in our space.

The only other thing I’ll add to Steve’s remarks as well, Felicia s that if you look at the full year numbers, keep in mind that last year we had a multi pack transaction of Ascends that was about 25 hotels that are in the nine month numbers for September. And then also the other thing I’d point out is kind of ties into the Comfort strategy is on the convergent front on Comforts, I would say we are being a lot choosier about the conversions that we’re bringing to that brand which really corresponds with everything we are trying to do to strategically drive that flagship brand further up the food chain.

Sir, you have no questions at this time. (Operator instructions). You have no further questions that have come through. So I would now like to turn that call over to Steve Joyce for closing remarks. Thank you.

Great, thank you. So, that concludes our call. As always thank you for joining us. We are very excited about next quarter and what's going to happen in 2015 and we continue to thank you for your interest in Choice. Have a great day.