1. National Co-op Program Guidelines 2/11/03 final draft for review (revisions in green & underlined)

2. Purpose u The purpose of this document is twofold: 1. To provide documentation of the agreed upon process that the Co-op Advisory Committee will follow 2. To provide a comprehensive summary of the National Co-op Program Guidelines that will serve as a solid reference for all regions and/or states

3. Co-op Advisory Committee Guidelines

4. Co-op Advisory Committee u Steering Committee Members: LicenseesCHI Anil Chagan, ELFA President Cindy Heverling Joe DiNunzio, IOC PresidentMelissa Kinsley Bruce Faltin, ROC PresidentDarren Leo Kevin AkashScott Oaksmith Michael AllenAsa Williams Ken Blair Anil Maniklal Sandya Patel Jim Paquette Harold Solomon

5. u CAC to meet face-to-face two times a year F Conference calls and webcasts as needed u CAC to work constructively and proactively to enhance program u CHI co-op team to leverage expertise from other departments as needed u Meeting minutes to be taken by CHI staff and to be forwarded within 72 hours to all CAC members and key CHI support people as warranted Co-op Advisory Committee Process

6. CAC Mission Statement u The co-op advisory committee exists to establish methodology to share “best practices,” establish guidelines and to continually seek opportunities to improve and streamline the co-op program. The goal is to deliver a quality program that offers real value to the franchisees

7. CAC Key Initiatives u To establish methodology to share “best practices” u To streamline financial reporting and to establish solid financial procedures u To improve tracking in order to project accurate ROI u To develop benchmarks for evaluating regional advertising effectiveness u To provide constructive and timely feedback

8. CAC Key Initiatives u To continue to foster teamwork among key constituents u To ensure consistent and accurate communication between the CAC, ELFA, IOC, ROC, and co-op chairs, as well as, participating hotels

9. National Co-op Program Guidelines

10. u “Rules of the Road” F All national co-op funding (co-op marketing fund + licensee contributions) is to be used equally and to be managed to a zero budget annually Y Each co-op is to provide a marketing plan that utilizes all funds available (property contributions and national co-op allocation). If the unforeseen occurs and the co-op can not spend the money, the group must advise CHI and IOC, ELFA and/or ROC (as appropriate) to gain an exception by October 1 Y To effectively manage the production budget, each co-op is required to provide a detailed media plan that includes: media vehicle, insertion dates, specific media purchased (i.e. size, 4/c or b/w) Y Marketing Plan template is included in Advertising & Marketing Services section National Co-op Guidelines

11. u “Rules of the Road” u Annual budget (cont.) Y At year end, if a region’s annual expenses fall short of member contributions and the CHI allocation, 50% of the unexpended funds will be returned to CHI and 50% will roll over into the specific regions account for the next year’s spending Y The above policy assumes that member contributions and the CHI allocation are evenly split. If the member contributions or CHI allocation is larger, the group committing the most money will be allocated a proportional amount of the unexpended fund balance Y If a Co-op’s property collection exceeds the CHI allocation and the matched allocation was entirely spent, all property contributions in excess of the Co-op budget roll over into the specific Co-op’s account National Co-op Guidelines

12. u “Rules of the Road” F All advertising must be in campaign and must be produced and approved by CHI Co-op Team F All final marketing/media plans are to be forwarded to CHI by Dec. 31, 2002 (moving forward by Nov. 1 annually) Y CHI to forward all final marketing plans to Ross Almo, Tammie Matthews and Bruce Faltin Y Receipt of detailed Marketing Plans are required from each co- op by due date in order to receive national co-op allocation. F The co-op program will follow a December 1- November 30 fiscal year

13. u ELFA, IOC, ROC STATE CO-OP LEADERS F Operating Structure/Roles and Responsibilities Y State Co-op Leaders will be appointed by the ELFA, IOC or ROC Regional Director and shall serve on the Regional Co-op Advisory Board. Y Together, with the Regional Director and co-op members, set percentage of budget allocations and apprise CHI Rep and ELFA, IOC, and ROC Executive Directors (as appropriate) of agreed upon split ( by 9/30 annually) Y Develop and approve all media/marketing plans for the fiscal year with co-op members (by 10/31 annually) Y Submit approved media/marketing plan to Regional Chair for submission to CHI Advertising and Marketing Services and ELFA, IOC, and ROC Executive Directors (as appropriate) (by 11/01 annually) National Co-op Guidelines

14. u ELFA, IOC, ROC STATE CO-OP LEADERS F Operating Structure/Roles & Responsibilities Y Ensure all updates to the plan are forwarded to the Regional Chair throughout the year. A roster of participating properties for the co-op should be submitted with the marketing plan/updates. Y Ensure all co-op efforts follow all brand and campaign identity standards with Arnold Worldwide or CHI providing all graphics, design, creative. Y Co-sign all media contracts and forward to the Regional Chair, IOC Executive Director, ELFA Executive Director and CHI National Co-op Guidelines

15. u ELFA, IOC, ROC STATE CO-OP LEADERS F Operating Structure/Roles & Responsibilities Y To ensure accuracy, Regional Chairs/Directors fill out a Work Request form for every ad and ensure that all plans have a tracking mechanism Y As a quality control step and to capture any new additions, a co-op property list is to be included on the WRF. Y Ensure seamless communication with respective co-op group National Co-op Guidelines

16. u ELFA, IOC, ROC State Co-op Leaders F Financial Considerations Y All media contracts should include the State Co-op Chairs’ (or Regional Chairs’) address for invoice processing Y Approve invoice, attach to Regional Marketing Trust approval form, and forward to Regional Chair. Submission of expense form should include media contract and invoice. Y Ensure that financial guidelines and “rules of the road” are adhered to by all members of the co-op

17. National Co-op Guidelines u ELFA, IOC, ROC Regional Chairs F Operating Structure/Roles & Responsibilities Y Regional Chairs will oversee all aspects of their regional/state co-op marketing funds. Y The IOC Regional Chairs will oversee all activities of the regional marketing co-op for Regions 1-7 midscale. Y The ELFA Directors and ROC will oversee all activities of the regional marketing co-op for Regions 1-7 for EconoLodge and Rodeway. Y The IOC Regional Chairs, ELFA Directors and ROC will jointly oversee all activities of the regional marketing co-op for Regions 8-13 Y Regional Chairs/Directors and co-op members, set percentage of budget allocations and apprise CHI Rep and ELFA, IOC, and ROC Executive Directors (as appropriate) of agreed upon split (by 9/30 annually)

18. National Co-op Guidelines u ELFA, IOC, ROC Regional Chairs F Operating Structure/Roles & Responsibilities Y Develop and approve all media/marketing plans for the fiscal year with co-op members (by 10/31 annually) Y Submit approved media/marketing plan for Region and/or State to CHI Advertising and Marketing Services and ELFA, IOC, and ROC Executive Directors (as appropriate) (by 11/01 annually) Y Ensure all updates to the plan are forwarded to CHI and ELFA, IOC, and ROC Executive Directors (as appropriate) throughout the year for Regions and/or States. A roster of participating properties for the co- op should be submitted with the marketing plan/updates. Y Ensure all co-op efforts follow all brand and campaign identity standards with Arnold Worldwide or CHI providing all graphics, design, creative.

19. National Co-op Guidelines u ELFA, IOC, ROC Regional Chairs F Operating Structure/Roles & Responsibilities Y Ensure seamless communication with respective co-op group Y To ensure accuracy, Regional Chairs/Directors fill out a Work Request form for every ad and ensure that all plans have a tracking mechanism Y As a quality control step and to capture any new additions, a co-op property list is to be included on the WRF.

20. National Co-op Guidelines u ELFA, IOC, ROC Regional Chairs F Operating Structure/Roles & Responsibilities Y IOC Regional Chair and ELFA Regional Director approve all travel of CHI staff to attend meetings. The following travel will be covered out of the National Marketing Fund: Y 2 Regional or State Meetings – 2 people Y Regional Meetings – 2 people Y Annual Convention Y Additional state or regional trips that are above and beyond what is listed above, will be taken out of the allocated production funds.

21. National Co-op Guidelines u ELFA, IOC, ROC Regional Chairs F Financial Considerations/Responsibilities PAYMENTS Y Ensure all media contracts include Regional Chair/Director (or State Chairs’) address for invoice processing. Y Regional Chairs/Directors (Regions 1-7) approve and sign all media contracts Y IOC Regional Chair & ELFA Director (Regions 8-13) co-sign all media contracts Y Regional Chairs/Directors approve invoice, attach to Regional Marketing Trust approval form, and forward to IOC Executive Director for payment. Submission of expense must include media contract and invoice.

22. National Co-op Guidelines u ELFA, IOC, ROC Regional Chairs F Financial Considerations/Responsibilities COLLECTIONS-MEMBER Y For those regions who collect their membership contributions, the following applies: Y Provide the IOC Executive Director with a complete list of properties billed by December 31. Y Checks collected and submitted to the IOC Executive Director must be accompanied by a spreadsheet including this information: Property Code, Check No., and Amount Paid. Y For those regions for which Choice collects their membership contributions: Y Provide CHI (Mike Parlett) by the 3 rd business day of January, April, July and October, a list of properties to be billed.

23. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial MARKETING PLANS Y Assist CHI in Chairs/Directors adhering to deadlines, including marketing plan submissions. Y Ensure all marketing plan updates are submitted to CHI no less than quarterly.

24. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial PAYMENTS Y Provide to all Regional Chairs/Directors and State Leaders, the Regional Marketing Expense Form. Y Ensure that the Marketing Expense Form is accompanied by proper documentation to include signed media contract and invoice prior to payment. Y Initiate payment of invoice, recording the following information: Y Date invoice received Y Date invoice paid Y Expense by Region or State Y Amount of payment Y Description of expense (type of media, event date, etc.).

25. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial COLLECTIONS Y For those Regions collecting their own member contributions: Y Receive collections and ensure that they are accompanied by the required spreadsheet. Y Make copies of checks received, prepare deposit slip and make deposit Y Log deposit under “Member Contributions”, by Region/State, in accounting system. Y For those Regions that Choice collects member contributions: Y Receive collections and ensure they are accompanied by the required property list (those who have been billed and those who have paid) Y Make copy of check, prepare deposit slip and make deposit. Y Log deposit under “Member Contributions” by Region/State, in accounting system.

26. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial COLLECTIONS Y For Choice matching contributions: Y Receive payment and ensure it is accompanied by the breakdown by region. Y Make copies of checks received, prepare deposit slip and make deposit Y Log deposit under “Choice Co-op Contribution”, by Region/State, in accounting system.

27. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial REPORTING Y On a quarterly basis (5 th of January, April, July and October) the IOC Executive Director will provide the following to CHI: Y For those regions collecting their own member contributions, an accounting of collections received by property. Y Full accounting of funds received and funds expended, including fund balance, by region and state. Y Other reports that may be required from time to time.

28. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial REPORTING Y On a quarterly basis (15 th of January, April, July, October), the IOC Executive Director will provide the following to Regional Chairs/Directors, ELFA & ROC Executive Directors: Y For those regions collecting their own member contributions, an accounting of collections received by property. Y For those regions which Choice handles member contribution collections, an accounting, as provided by and received from CHI, of member contributions by Region, State and Property: Other reports that may be required from time to time.

29. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial REPORTING Y Full accounting of funds received and funds expended, including fund balance, by region and state. Y Other reports that may be required from time to time.

30. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial Policy and Procedures Y The IOC Executive Director is to maintain details of expenses using an accounting software package or in spreadsheet form including: Y Region for which expense was paid Y State for which expense was paid Y Date invoice was received Y Date invoice was paid Y Amount of payment Y Description of expense (issue date, event date, etc.)

31. National Co-op Guidelines u IOC EXECUTIVE DIRECTOR F Roles & Responsibilities/Financial Policy and Procedures Y By the 15 th of each month, the IOC Executive Director will forward to CHI the expense detail described above for the previous month. The expense detail should also be accompanied by the appropriate support for each expense (copy of invoice and ads that ran) Y By the 15 th of each month, the IOC Executive Director will also forward to CHI copies of each regions’ bank account statement accompanied by properly prepared bank reconciliation. Y IOC will maintain separate accounts for each Co-op to be used for co-op purposes only Y IOC Executive Director to maintain bonded status

32. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial PAYMENTS – Co-op Allocation from CHI Y CHI will remit the Co-op Allocation ($1,700,000 for 2003) to the IOC on a quarterly basis ($425,000 per quarter) by the 15 th of January, April, July and October. The Co-op Allocation will be accompanied by a spreadsheet breaking down the disbursement by Region, Midscale or Economy, and State (if appropriate). Y The Co-op Allocation will be made timely provided CHI receives the monthly reports from the IOC Executive Director of funds collected and expended.

33. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial PAYMENTS – Co-op Allocation from CHI Y CHI will take into consideration region’s seasonality as each co-op manages to budget and expends funds collected Y CHI will manage the Production Expense Allocation in order to pay Arnold Worldwide and other production related expenses incurred by the Co-op fund Y CHI will pay all media invoices for Arnold Worldwide and will forward a monthly statement of expenses by state and/or region (as appropriate)

34. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial COLLECTIONS/PAYMENTS – Co-op Member Contributions Y Licensees (excluding Midscale Regions 4, 5, 6, and 9 and Midscale/Economy Region 9) will be billed quarterly for their member contributions by CHI. Y Quarterly billings will take place on the 15 th of every January, April, July and October Y CHI will bill based on receipt from Co-op Chairperson of the list of properties to be billed if received the 3 rd business day of January, April, July and October. Any property billings after this date will be held and billed in the next quarter.

35. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial COLLECTIONS/PAYMENTS – Co-op Member Contributions Y CHI will provide cash collection services only and will not provide past due collection services. Licensees (excluding Midscale Regions 4, 5, 6, and 9 and Midscale/Economy Region 9) will be billed quarterly for their member contributions by CHI.

36. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial COLLECTIONS/PAYMENTS – Co-op Member Contributions Y If member contributions are not received after 90 days of the billing date, CHI will remove the accounts receivable from its books and collection of the outstanding amount will become the responsibility of the Co-op Chairperson.

37. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial COLLECTIONS/PAYMENTS – Co-op Member Contributions Y By the 15 th of January, April, July and October, CHI will provide the IOC Executive Director with a report detailing the following YTD collection activity by Region, State and Property: Y Year to Date billings for the current month Y Year to Date cash collections Y Year to Date receivable write offs for the current month Y Ending Accounts Receivable balance

38. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial COLLECTIONS/PAYMENTS – Co-op Member Contributions Y By the 15 th of January, April, July and October, CHI will provide the IOC Executive Director CHI member contribution collections. Y Check will be accompanied by a breakdown by region, state and property of collections for that quarter.

39. National Co-op Guidelines u CHI FINANCE F Roles & Responsibilities/Financial REPORTING Y CHI will deliver quarterly financial reports to the IOC by the 30 th of January, April, July and October. This report will provide detail by Region, State and Midscale/Economy (if appropriate) as follows: Y Beginning cash balance Y Member contributions received Y CHI Allocation Paid Y Production expenses paid Y Ending cash balance Y ROI analysis will also be provided to track the effectiveness of co-op programs

40. National Co-op Guidelines u Co-op Advertising & Marketing Services F Roles & Responsibilities Y Assist co-ops in developing all media plans and reviewing all marketing plans Y Marketing Plan Template: Publication Material Specifications Who will Purchase Media? Timing Magazine Y March, April, May, June FP4C Field? Arnold? # of insertions 4 Cost $XX

41. National Co-op Guidelines u Co-op Advertising & Marketing Services F Roles & Responsibilities Y Facilitate clear and timely communication to the ELFA Directors, IOC Regional Chairs, ROC President, RVPs, FSDs: Y the annual National Co-op Allocation Y campaign updates Y National Promotions and media calendar Y promotion creative and templates Y Provide assistance in implementing all co-op marketing efforts Y Ensure all creative is produced within campaign and brand identity standards and within production budget Y Engage other resources as warranted for co-op marketing activities, i.e. sales blitzes, telemarketing, fulfillment

42. u Co-op Advertising & Marketing Services F Creative Production Timeline Y Template Ad: Y Receipt of Work Request Form—creative process begins Y Creative Development—5-7 business days Y Internal Review/Proofing—24 hours Y Field Review—4 business days Y Revisions—2 business days Y Field Approval—24 hours Y Build mechanicals/proof/prep materials—4 business days Y TOTAL TIME: 3-5 Weeks National Co-op Guidelines

43. u Co-op Advertising & Marketing Services F Creative Production Timeline Y New Ad (not based on a template): Y Receipt of Work Request Form—creative process begins Y Creative Development—10-12 business days Y Internal Review/Proofing—2 business days Y Field Review—10 business days Y Revisions—2 business days Y Field Approval—24 hours Y Build mechanicals/proof/prep materials—4 business days Y TOTAL TIME: 6-7 Weeks National Co-op Guidelines

44. u Franchise Services u Roles & Responsibilities Y FSDs serve as “advisors” and do not vote or approve creative or marketing programs. Y FSDs do not sign media contracts Y FSDs help to ensure all co-op efforts follow all brand identity and campaign standards

45. u Annual Budget Y $2,000,000 National Co-op Matching Fund allocated on a “rooms pro rata” basis by state Y $2,000,000 is split into Marketing Expenses ($1.7M) and Production Expenses ($300,000) Y Property contributions are set and collected equally by their respective co-op groups. Projected to be $2,000,000 in 2003. Y Regional and State programs determine allocation split between two (historically 60/40 split respectively—split to be conveyed to CHI, IOC Executive Director, ELFA Executive Director) Y Uncommitted National Co-op Matching funds return to the National Advertising Fund by November 1 st Y Fund (MF +PC) must be managed equally to a zero balance annually (see “Rules of Road” for full detail) National Co-op Guidelines

46. u Production Budget National Co-op Marketing FundProperty Contributions Total Funds: $2,000,000 $2,000,000 Marketing Allocation: $1,700,000 $2,000,000 Production allocation: $300,000 TOTAL MEDIA: $1,700,000 PRODUCTION: $300,000* *$300,000 to be deducted from the National Co-op Marketing Fund to facilitate production process *Unused production dollars to be reallocated towards additional media or marketing efforts by 10/30 National Co-op Guidelines

47. u CHI Contact List