Choice Hotels International Reports Third Quarter 2026 Results

U.S. Net Rooms Growth Rate Improves for Third Consecutive Quarter

Owned Hotel Sales Advance Asset-Light Strategy

Full-Year 2026 RevPAR Outlook Raised

NORTH BETHESDA, Md., Nov. 2, 2026 /PRNewswire/ -- Choice Hotels International, Inc. ("Choice" or "the Company") (NYSE: CHH), a leading global lodging franchisor with an asset-light model, today reported results for the third quarter ended September 30, 2026.

Highlights include:

- Net income was $58 million, or $1.28 per diluted share, for the third quarter.

- Adjusted EBITDA totaled $193 million and adjusted diluted EPS was $2.33 for the third quarter.

- The U.S. year-over-year net rooms growth rate continued to improve, with U.S. rooms approximately flat compared to September 30, 2025, as third-quarter room exits declined 23% compared to the same period of 2025.

- Global net rooms grew 1.7% compared to September 30, 2025, led by 2.5% growth across the higher-revenue extended stay, midscale, and upscale brands.

- U.S. RevPAR increased 3.8% in the third quarter compared to the same period of 2025, reflecting improvements in both occupancy and rate.

- U.S. franchise agreements awarded increased 24% in the third quarter compared to the same period of 2025, representing 6,900 new rooms for development.

- The U.S. conversion pipeline grew to 25,500 rooms, an increase of 6% from June 30, 2026, and 29% from September 30, 2025, driving sequential growth in the total U.S. pipeline.

- The U.S. average royalty rate expanded 8 basis points to 5.23% in the third quarter compared to the same period of 2025.

- Subsequent to quarter-end, the Company completed the sale of two owned hotels for estimated net cash proceeds of approximately $34 million, while retaining franchise agreements for both properties.

- The Company returned $211 million to shareholders through dividends and share repurchases during the first nine months of 2026.

- The Company raised its full-year U.S. and global RevPAR outlooks, revised its net income guidance, and raised its adjusted EBITDA guidance range.

"Our third-quarter results reflect continued progress against our key priorities: the U.S. net rooms growth rate improved for the third consecutive quarter, U.S. RevPAR growth strengthened, and capital recycling is underway," said Dom Dragisich, President and Chief Executive Officer. "Our focus is on returning to the fundamentals that have driven our success for decades, while continuing to invest in commercial and technology capabilities that help franchisees capture more demand. We expect U.S. net rooms growth to accelerate to approximately 1% by year-end, and stronger demand trends support our increased full-year RevPAR outlook. These improvements position us to deliver more consistent financial performance and stronger long-term free cash flow for shareholders."

Financial Performance

- Net income was $58 million for the third quarter, a 68% decline compared to the same period of 2025. The decline primarily reflected a $100 million gain from the acquisition of a joint venture recognized in the prior-year quarter. Current-year results included a $24 million charge related to the termination of an arrangement involving an option to acquire a European hospitality business operating primarily under a lease-based model and a $6 million non-cash impairment charge related to two owned hotels. These impacts were partially offset by higher franchise and management fees. The prior-year gain and both current-year charges are excluded from adjusted results.

- Adjusted EBITDA increased 1% to $193 million for the third quarter compared to the same period of 2025, primarily driven by higher U.S. royalties, partially offset by lower liquidated damages revenue and higher adjusted SG&A expenses. Excluding liquidated damages revenue of $3.3 million and $9.5 million in the third quarters of 2026 and 2025, respectively, adjusted EBITDA increased 5% compared to the same period of 2025.

- Adjusted diluted EPS increased 11% for the third quarter compared to the same period of 2025, benefiting from higher franchise and management fees and share repurchases.

- Franchise and management fees increased 5% to $204 million for the third quarter compared to the same period of 2025, primarily reflecting higher U.S. royalties driven by RevPAR growth and royalty rate expansion, increased franchisee programs and services revenue, and higher international royalties.

RevPAR

- U.S. RevPAR increased 3.8% in the third quarter compared to the same period of 2025, driven by a 1.0% increase in rate and a 160-basis-point increase in occupancy, with strength in the West South Central and Midwest regions.

- International RevPAR increased 3.7% on a currency-neutral basis in the third quarter compared to the same period of 2025, reflecting growth across all regions, led by strength in the Caribbean and Latin America.

System Size and Development

- Global room openings totaled 6,000 in the third quarter, compared to 12,800 in the same period of 2025, which included a 7,400-room international portfolio conversion.

- U.S. room openings totaled 4,400 in the third quarter, compared to 4,800 in the same period of 2025. For the nine months ended September 30, 2026, U.S. room openings increased 17% compared to the same period of 2025.

- Global extended stay net rooms grew 10.7% compared to September 30, 2025, marking the 13th consecutive quarter of double-digit growth. During the quarter, the Company also opened its 600th extended stay hotel.

- International net rooms grew 7.3% compared to September 30, 2025, led by growth in EMEA, Asia-Pacific, and Canada.

- Global franchise agreements awarded represented 9,000 new rooms for development in the third quarter, compared to 11,800 rooms in the same period of 2025, which included a 4,900-room international portfolio signing. In the U.S., franchise agreements awarded represented 6,900 rooms, compared with 5,500 rooms in the same period of 2025.

- The Company's global pipeline totaled 78,200 rooms as of September 30, 2026, with 96% concentrated in extended stay, midscale, and upscale brands. The pipeline included:

- 71,700 U.S. rooms and 6,500 international rooms.

- 30,300 extended stay rooms, representing 39% of the total pipeline.

- 28,100 conversion rooms and 50,100 new-construction rooms.

Balance Sheet and Liquidity

As of September 30, 2026, the Company had total available liquidity of $928 million, consisting of cash and cash equivalents and available borrowing capacity. The Company's net debt-to-adjusted EBITDA ratio was 3.2x for the trailing twelve months ended September 30, 2026, within its target range of 3.0x to 4.0x. The quarter-end cash balance included borrowings made in advance of the October 1, 2026, acquisition of Harvest Hosts. Following the acquisition, net leverage remained within the Company's target range.

In August 2026, the Company completed a $500 million unsecured term loan financing, reducing the borrowing spread on the refinanced debt by 15 basis points and increasing available capacity under its $1 billion revolving credit facility. The term loan matures in August 2029.

During the nine months ended September 30, 2026, the Company generated $122 million in cash flows from operating activities, compared to $185 million in the prior-year period. The decrease primarily reflected the contract termination payment, higher franchise agreement acquisition costs associated with a 17% increase in U.S. room openings, and higher marketing and reservation system reimbursable expenses, partially offset by deferred tax and working capital timing effects.

Asset Recycling

During the nine months ended September 30, 2026, net capital outlays for hotel development and lending activities declined 56% to $36.3 million, compared to $82.0 million in the prior-year period.2

The Company advanced its return to an asset-light franchising model through sales from its owned hotel portfolio. Subsequent to quarter-end, the Company sold two owned hotels, generating estimated net cash proceeds of approximately $34 million while retaining franchise agreements for both properties. As of November 2, 2026, the Company owned 17 operating hotels, with one additional hotel under construction.

Acquisition

On October 1, 2026, the Company acquired Harvest Hosts, an asset-light RV travel subscription platform with recurring revenue, expanding Choice Hotels' offerings for value-minded travelers into the outdoor travel market. The approximately $130 million transaction was funded with available cash and borrowings under the Company's revolving credit facility.

Shareholder Returns

During the nine months ended September 30, 2026, the Company returned $39 million to shareholders through dividends and $172 million in share repurchases.3

As of September 30, 2026, 1.3 million shares of common stock remained available for repurchase under the Company's current share repurchase authorization.

Outlook

The Company is updating certain aspects of its full-year 2026 outlook. The outlook includes forward-looking non-GAAP measures used by management to assess expected performance. Adjusted metrics exclude the net surplus or deficit from reimbursable activities related to franchised and managed properties, due diligence and transition costs, and other items. The outlook includes Harvest Hosts' operating results from the October 1, 2026, acquisition date and reflects the impact of the Company's two recent hotel dispositions, except as otherwise noted.

The net income guidance range has been lowered from the Company's prior outlook primarily to reflect higher expected marketing and reservation system reimbursable expenses, driven by increased investment in franchisee-facing tools and guest delivery capabilities.