Choice Hotels International — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues were $458 million for the three months ended September 30, 2026, compared to $447 million in the prior-year period.
• Net income was $58 million ($1.28 diluted EPS) for the third quarter, a 68% decline from $180 million ($3.86 diluted EPS) in the same period of 2025, primarily due to a $100 million gain from a joint venture acquisition recognized in the prior year.
• Adjusted EBITDA was $193 million for the third quarter, a 1% increase from $190 million in the prior year; excluding liquidated damages revenue, adjusted EBITDA increased 5%.
• Adjusted diluted EPS was $2.33 for the third quarter, an 11% increase from $2.10 in the prior year.
• Franchise and management fees increased 5% to $204 million for the third quarter.
• Cash flows from operating activities were $122 million for the nine months ended September 30, 2026, compared to $185 million in the prior-year period.
• Net debt-to-adjusted EBITDA ratio was 3.2x for the trailing twelve months ended September 30, 2026.
• Total available liquidity was $928 million as of September 30, 2026.

Guidance and Future Outlook:

• The Company raised its full-year 2026 U.S. and global RevPAR outlooks to 1.5% to 2.5% growth, compared to a prior outlook of 0% to 1%.
• Full-year 2026 net income guidance was lowered to $178 million to $185 million (previously $230 million to $241 million).
• Full-year 2026 adjusted EBITDA guidance was raised to $641 million to $651 million (previously $635 million to $650 million).
• Full-year 2026 adjusted diluted EPS guidance was raised to $6.92 to $7.07 (previously $6.86 to $7.10).
• The Company expects U.S. net rooms growth to accelerate to approximately 1% by year-end.
• Net capital outlays for hotel development-related activities are expected to decline to approximately $20 million in 2026.

Business Segments and Product Lines:

• Global net rooms grew 1.7% year-over-year, led by 2.5% growth across extended stay, midscale, and upscale brands.
• U.S. RevPAR increased 3.8% in the third quarter, driven by a 1.0% increase in rate and a 160-basis-point increase in occupancy.
• International RevPAR increased 3.7% on a currency-neutral basis, led by strength in the Caribbean and Latin America.
• U.S. franchise agreements awarded increased 24% to 6,900 new rooms for development.
• The U.S. conversion pipeline grew to 25,500 rooms, a 29% increase from September 30, 2025.
• Global extended stay net rooms grew 10.7% year-over-year, marking the 13th consecutive quarter of double-digit growth; the Company opened its 600th extended stay hotel.
• The U.S. average royalty rate expanded 8 basis points to 5.23%.
• The Company acquired Harvest Hosts, an asset-light RV travel subscription platform, on October 1, 2026.

Market and Competitive Landscape:

• The U.S. net rooms growth rate improved for the third consecutive quarter, with U.S. rooms approximately flat compared to September 30, 2025, as third-quarter room exits declined 23%.
• Global system size totaled 660,614 rooms as of September 30, 2026.
• The global pipeline totaled 78,200 rooms, with 96% concentrated in extended stay, midscale, and upscale brands.
• Strength in the West South Central and Midwest regions contributed to U.S. RevPAR growth.

Risks and Challenges:

• Net income results were impacted by a $24 million charge related to the termination of an arrangement to acquire a European hospitality business and a $6 million non-cash impairment charge related to two owned hotels.
• The Company faces risks related to macroeconomic conditions, consumer demand, labor shortages, and potential impacts from epidemics or pandemics.
• Future results depend on the ability to grow the franchise system and manage indebtedness.

Management Commentary and Tone:

• Dom Dragisich, President and CEO, stated that results reflect continued progress on key priorities, including improved U.S. net rooms growth, strengthened RevPAR, and capital recycling.
• Management emphasized a focus on returning to fundamentals while investing in commercial and technology capabilities to help franchisees capture demand.
• The tone indicates confidence in delivering consistent financial performance and stronger long-term free cash flow.

Other Key Points:

• Subsequent to quarter-end, the Company sold two owned hotels for estimated net cash proceeds of approximately $34 million while retaining franchise agreements.
• The Company returned $211 million to shareholders through dividends and share repurchases during the first nine months of 2026.
• In August 2026, the Company completed a $500 million unsecured term loan financing, reducing the borrowing spread by 15 basis points.
• Net capital outlays for hotel development and lending activities declined 56% to $36.3 million for the nine months ended September 30, 2026.
• As of September 30, 2026, 1.3 million shares remained available for repurchase under the current authorization.