CHH — Choice Hotels International, Inc.

Summary of Choice Hotels International Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Adjusted EBITDA: $626 million for the full year, up 4% year-over-year.
• Adjusted Earnings Per Share: $6.94 for the full year, also reflecting a 4% increase.
• Q4 Revenue: $234 million, a 2% increase year-over-year.
• Q4 Adjusted EBITDA: $141 million; adjusted EPS rose 3% to $1.60.
• Global Rooms Growth: 0.5% year-over-year; U.S. room openings exceeded 22,000 gross rooms in 2025.
• Royalty Rate: Increased by 8 basis points for the year, with a 10 basis point increase in Q4.

2. Strategic Updates and Business Highlights

• Hotel Openings: 14% year-over-year growth in global hotel openings; significant expansion in the extended-stay segment, which now represents over 40% of the U.S. pipeline.
• Conversion Strategy: Increased focus on converting underperforming hotels, with a 12% increase in U.S. conversion franchise agreements year-over-year.
• International Growth: 37% growth in international revenues, with a 13% increase in the international system size to approximately 160,000 rooms.
• Loyalty Program: The Choice Privileges loyalty program now has over 74 million members, with enhancements aimed at increasing engagement and repeat stays.

3. Forward Guidance and Outlook

• 2026 Adjusted EBITDA: Expected to be in the range of $632 million to $647 million.
• Adjusted EPS for 2026: Projected between $6.92 and $7.14.
• Net Global Rooms Growth: Anticipated to return to positive territory, with a focus on the latter part of the year.
• RevPAR Guidance: Expected to range from negative 2% to positive 1% year-over-year in constant currency, with U.S. RevPAR anticipated to follow a similar trend.

4. Bad News, Challenges, or Points of Concern

• RevPAR Decline: Global RevPAR decreased by 4.6% year-over-year in Q4, primarily due to hurricane-related impacts and a government shutdown affecting travel.
• International Inbound Travel: Continued softness in international inbound travel remains a concern.
• Portfolio Optimization: While the exit of underperforming hotels is beneficial, it may temporarily impact net room growth until backfilled with higher-quality properties.
• Economic Headwinds: Potential risks from fluctuating gas prices and macroeconomic factors affecting consumer spending and travel.

5. Notable Q&A Insights

• Key Money Spending: Expected to increase in 2026 to support anticipated hotel openings, with guidance of $105 million to $110 million.
• RevPAR Cadence: Q1 2026 is expected to remain negative due to prior year hurricane impacts, with an anticipated improvement in Q2.
• Conversion Opportunities: Primarily driven by independent hotels seeking brand affiliation during tougher economic conditions, with a noted increase in interest for brands like Ascend and Quality Inn.
• Balance Sheet and Buybacks: The company is focused on maintaining a balance between reinvestment in the business and returning capital to shareholders through dividends and share repurchases, with no specific guidance provided for future buybacks.

Overall, Choice Hotels International demonstrated solid financial performance in 2025, with strategic initiatives focused on growth in both domestic and international markets, despite facing challenges in RevPAR and economic conditions. The outlook for 2026 remains cautiously optimistic with expectations for improved performance and room growth.