Choice Hotels International Inc
NYSE:CHH
Choice Hotels International Inc
Choice Hotels International Inc., a luminary in the hospitality sector, traces its roots back to 1939 when it first opened its doors in Maryland as Quality Courts United. Over the decades, it transformed from a modest cluster of motels into one of the world's largest and most diverse lodging franchisors. Choice Hotels boasts a portfolio that includes popular brands such as Comfort Inn, Quality Inn, and more upscale options like Cambria Hotels, serving a wide array of travelers from budget-conscious families to business professionals seeking luxury and convenience. The company's success hinges on its franchising model, which allows it to grow exponentially without the capital-intensive investments typical of owning and operating a large number of properties. By leveraging the expertise and resources of local franchise owners, Choice Hotels can maintain high standards and offer a consistent guest experience across its global network.
Revenue generation for Choice Hotels is intricately tied to its franchise-centric model; it derives the lion's share of its income from royalties and fees charged to its franchisees. These fees typically encompass initial franchise fees, ongoing royalties based on room revenues, and optional service fees for additional support such as marketing and reservations services. This structure not only provides a steady and scalable income stream but also aligns the interests of the company with those of its franchisees, ensuring mutual growth and resilience in a highly competitive market. By continuously adding new hotels under its umbrella and innovating its customer offerings, Choice Hotels remains a resilient player in the global hospitality industry, deftly navigating the ebbs and flows of economic cycles to secure its place as a leader in lodging solutions.
Choice Hotels International Inc., a luminary in the hospitality sector, traces its roots back to 1939 when it first opened its doors in Maryland as Quality Courts United. Over the decades, it transformed from a modest cluster of motels into one of the world's largest and most diverse lodging franchisors. Choice Hotels boasts a portfolio that includes popular brands such as Comfort Inn, Quality Inn, and more upscale options like Cambria Hotels, serving a wide array of travelers from budget-conscious families to business professionals seeking luxury and convenience. The company's success hinges on its franchising model, which allows it to grow exponentially without the capital-intensive investments typical of owning and operating a large number of properties. By leveraging the expertise and resources of local franchise owners, Choice Hotels can maintain high standards and offer a consistent guest experience across its global network.
Revenue generation for Choice Hotels is intricately tied to its franchise-centric model; it derives the lion's share of its income from royalties and fees charged to its franchisees. These fees typically encompass initial franchise fees, ongoing royalties based on room revenues, and optional service fees for additional support such as marketing and reservations services. This structure not only provides a steady and scalable income stream but also aligns the interests of the company with those of its franchisees, ensuring mutual growth and resilience in a highly competitive market. By continuously adding new hotels under its umbrella and innovating its customer offerings, Choice Hotels remains a resilient player in the global hospitality industry, deftly navigating the ebbs and flows of economic cycles to secure its place as a leader in lodging solutions.
Steady Financials: Choice Hotels reported 2025 adjusted EBITDA of $626 million, up 4% year-over-year and in line with guidance, with adjusted EPS of $6.94, also matching expectations.
Development Pipeline: Global hotel openings grew 14% year-over-year, with international expansion and U.S. extended stay segments hitting record levels; global franchise agreements awarded rose 22%.
Royalty Rate Growth: U.S. average royalty rate increased by 8 basis points in 2025 and 10 basis points in Q4, surpassing guidance.
Portfolio Optimization: The company accelerated the removal of underperforming hotels in Q4, aiming to backfill with higher-quality properties, which is expected to support positive U.S. net rooms growth in 2026.
International Momentum: International revenues grew 37%, rooms expanded 13%, and hotel openings in those regions jumped 82%. Direct franchising now represents over 40% of international rooms.
Extended Stay Strength: U.S. extended stay segment achieved a record number of openings, up 8% year-over-year, and remains a focus for growth.
2026 Outlook: Guidance for 2026 includes adjusted EBITDA of $632–$647 million, adjusted EPS of $6.92–$7.14, global net rooms growth of about 1%, and global RevPAR change between -2% to +1%.
Capital Allocation: Over $189 million returned to shareholders in 2025 through dividends and share repurchases, with planned reduction in hotel development outlays for 2026.
