second quarter 2026
Filed Aug 5, 2026Choice Hotels International Reports Second Quarter 2026 Results; U.S. Net Rooms Growth Improved for the Second Consecutive Quarter, Supporting 2.6% Global Net Rooms Growth
Adjusted EBITDA and adjusted diluted EPS increased, U.S. RevPAR and global net rooms grew, and adjusted EBITDA guidance was raised. GAAP net income and diluted EPS declined, operating cash flow was lower in the first half, and full-year net income and adjusted net income outlooks were reduced.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Net income | $265 to $275 million | $64 million | n/a |
| Adjusted net income | $320 to $330 million | $92 million | n/a |
| Adjusted EBITDA | $632 to $647 million | $175 million | n/a |
| Diluted EPS | $5.72 to $5.94 | $1.41 | n/a |
| Adjusted diluted EPS | $6.92 to $7.14 | $2.02 | n/a |
| Effective tax rate | 25% | not reported for the second quarter | n/a |
| Global RevPAR growth | -2% to 1% | 1.7% | n/a |
| U.S. RevPAR growth | -2% to 1% | 1.3% | n/a |
| U.S. royalty rate growth | Mid-single digits | 11 basis points | n/a |
| Global net system rooms growth | Approximately 1% | 2.6% | n/a |
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenuesGAAP | $441 million | – | – |
| Revenue excluding reimbursable costs from franchised and managed propertiesother | $277 million | – | – |
| Net incomeGAAP | $64 million | – | 21% decline |
| Adjusted net incomenon-GAAP | $92 million | – | – |
| Diluted EPSGAAP | $1.41 | – | – |
| Adjusted diluted EPSnon-GAAP | $2.02 | – | 5% |
| Adjusted EBITDAnon-GAAP | $175 million | – | 6% |
| Franchise and management feesother | $188 million | – | 6% |
| Partnership services and feesother | $29 million | – | 6% |
| Reimbursable revenuesother | $163 million | – | – |
| U.S. RevPARother | 1.3% | – | 1.3% |
| International RevPARother | 2.1% | – | 2.1% |
| Global RevPARother | 1.7% | – | 1.7% |
| U.S. rateother | 0.7% increase | – | 0.7% increase |
| U.S. occupancyother | 40-basis-point increase | – | 40-basis-point increase |
| U.S. royalty rateother | 5.2% | – | 11 basis points |
| U.S. system roomsother | 499,226 | – | -0.3% |
| U.S. upscale, extended stay, and midscale system roomsother | 442,676 | – | 0.7% |
| International system roomsother | 161,863 | – | 12.5% |
| Global system roomsother | 661,089 | – | 2.6% |
| Global upscale, extended stay, and midscale system roomsother | 599,207 | – | 3.6% |
| U.S. extended stay net rooms growthother | 13.0% | – | 13.0% |
| Total revenuesGAAP | $781 million | – | – |
| Revenue excluding reimbursable costs from franchised and managed propertiesother | $494 million | – | – |
| Net incomeGAAP | $85 million | – | – |
| Adjusted net incomenon-GAAP | $142 million | – | – |
| Diluted EPSGAAP | $1.84 | – | – |
| Adjusted diluted EPSnon-GAAP | $3.09 | – | – |
| Adjusted EBITDAnon-GAAP | $301 million | – | – |
| Reimbursable revenuesother | $287 million | – | – |
| Cash flows from operating activitiesGAAP | $67 million | – | – |
| Net capital outlays for hotel development and lending activitiesother | $15 million | – | 80% decline |
Full-Year 2026 outlook
- Operating expensesAdjusted SG&A: Mid-single digits
- Tax rate26%
- NoteNet income: $230 to $241 million
- NoteAdjusted net income: $312 to $323 million
- NoteAdjusted EBITDA: $635 to $650 million
- NoteDiluted EPS: $5.07 to $5.31
- NoteAdjusted diluted EPS: $6.86 to $7.10
- NoteGlobal RevPAR growth: 0% to 1%
- NoteU.S. RevPAR growth: 0% to 1.25%
- NoteU.S. royalty rate growth: 7 bps to 9 bps
- NoteGlobal net system rooms growth: Approximately 1.5%
- NoteNet capital outlays for hotel development-related activities: $20 million to $45 million in 2026
Capital returns
- During the six months ended June 30, 2026, the Company returned $26 million to shareholders through dividends and $113 million in share repurchases.
- As of June 30, 2026, 1.8 million shares of common stock remained available under the Company’s current share repurchase authorization.
What drove it
- U.S. room openings increased 27% in the second quarter compared to the same period of 2025, as the Company opened approximately 6,400 U.S. rooms.
- Global room openings increased 16% in the second quarter of 2026 compared to the same period of 2025, as the Company opened approximately 8,300 global rooms.
- U.S. franchise agreements awarded increased 30% in the second quarter compared to the same period of 2025, representing approximately 9,400 new U.S. rooms for development.
- Global franchise agreements awarded increased 20% in the second quarter compared to the same period of 2025, representing 11,200 new global rooms for development.
- The Company's U.S. conversion rooms pipeline grew 24% to 24,100 rooms, compared to June 30, 2025, and 6% sequentially from March 31, 2026.
- The Company's global pipeline totaled approximately 77,300 rooms as of June 30, 2026, with 96% concentrated in extended stay, midscale, and upscale brands.
- Franchise and management fees reflected higher international royalty fees, higher franchisee programs and services revenue, along with U.S. RevPAR and U.S. royalty rate improvement.
- Partnership services and fees growth primarily reflected growth in procurement services revenue.
Concerns
- Net income was $64 million for the second quarter, a 21% decline compared to the same period of 2025.
- The net-income decrease primarily reflected a higher net reimbursable deficit from franchised and managed properties related to investments in franchisee-related tools and guest delivery capabilities, timing of SG&A expenses, and increased depreciation and amortization associated with owned hotels and the prior year acquisition of Choice Hotels Canada.
- Cash flows from operating activities were $67 million during the six months ended June 30, 2026, compared to $116 million in the prior-year period.
- The full-year net income and adjusted net income guidance ranges were revised from the prior outlook primarily due to higher expected interest expense and a higher effective tax rate.
- Net income guidance was also revised primarily to reflect higher expected marketing and reservation system reimbursable expenses.
What to watch
- Global pipeline composition: 29,900 extended stay rooms, 26,400 conversion rooms, and 50,900 new-construction rooms.
- The Company expects to recognize approximately $2.7 million of total post-employment benefits through August 31, 2026.
- Net capital outlays for hotel development-related activities are expected to decline from $103.4 million in 2025 to a range of $20 million to $45 million in 2026.
- The Company expects the first asset sales from its owned hotel portfolio to occur during the first half of 2027, subject to market conditions.
- Full-year U.S. RevPAR growth guidance is 0% to 1.25%, and global net system rooms growth guidance is approximately 1.5%.
Balance sheet and cash flow
- As of June 30, 2026, Choice had total available liquidity of $475 million, comprised of cash and cash equivalents and available borrowing capacity.
- The Company’s net debt-to-adjusted EBITDA ratio was 3.1x for the trailing twelve months ended June 30, 2026, within the Company's target range of 3.0x to 4.0x.
- During the six months ended June 30, 2026, the Company generated $67 million in cash flows from operating activities, compared to $116 million in the prior-year period.
- During the six months ended June 30, 2026, net capital outlays for hotel development and lending activities declined 80% to $15 million, from $76 million in the prior-year period.
- As of August 5, 2026, the Company owned 19 operating hotels, with one additional hotel under construction.
- The Company expects the first asset sales to occur during the first half of 2027, subject to market conditions.
Analysis
Choice reported second-quarter total revenues of $441 million, adjusted EBITDA of $175 million, and adjusted diluted EPS of $2.02. Adjusted EBITDA increased 6% and adjusted diluted EPS increased 5% compared with the same period of 2025. Revenue excluding reimbursable costs from franchised and managed properties was $277 million, while franchise and management fees increased 6% to $188 million and partnership services and fees increased 6% to $29 million.
GAAP profitability was weaker. Net income was $64 million, a 21% decline compared with the same period of 2025, and diluted EPS was $1.41. The company attributed the net-income decline primarily to a higher net reimbursable deficit related to franchisee tools and guest delivery investments, timing of SG&A expenses, and increased depreciation and amortization associated with owned hotels and the prior-year acquisition of Choice Hotels Canada. Higher franchise and management fees partially offset those items.
Demand and unit-growth indicators improved. U.S. RevPAR increased 1.3%, driven by a 0.7% increase in rate and a 40-basis-point increase in occupancy. International RevPAR increased 2.1% on a currency-neutral basis, and global RevPAR increased 1.7%. Global system rooms increased 2.6% to 661,089, while global upscale, extended stay, and midscale system rooms increased 3.6% to 599,207. Extended stay remained an important contributor, with U.S. extended stay net rooms growth of 13.0%.
Development metrics point to continued conversion and extended-stay opportunity. U.S. franchise agreements awarded increased 30%, representing approximately 9,400 new U.S. rooms for development. The global pipeline totaled approximately 77,300 rooms, including 29,900 extended stay rooms, 26,400 conversion rooms, and 50,900 new-construction rooms. The U.S. conversion rooms pipeline grew 24% to 24,100 rooms compared with June 30, 2025, and 6% sequentially from March 31, 2026.
Capital allocation included $26 million returned through dividends and $113 million in share repurchases during the first six months. Operating cash flow was $67 million, compared with $116 million in the prior-year period, while net capital outlays for hotel development and lending activities declined 80% to $15 million. Full-year adjusted EBITDA guidance was raised to $635 to $650 million, supported by improvement in U.S. RevPAR, global net rooms growth, and U.S. royalty rate. In contrast, full-year net income guidance was reduced to $230 to $241 million and adjusted net income guidance to $312 to $323 million.
Management, verbatim
Our second quarter results reflect encouraging progress across our key priorities, with U.S. net rooms growth improving for the second consecutive quarter to its strongest first-half performance since 2021 and U.S. RevPAR trends strengthening.
Dom Dragisich, Interim Chief Executive Officer
Not in the filing
stated, not guessed- GAAP gross profit and gross margin
- GAAP operating income and operating margin
- Non-GAAP operating income and operating margin
- Free cash flow
- Cash and cash equivalents amount
- Total debt amount
- Net debt amount
- Dividend per share
- Quarterly capital-return comparison with the prior-year period
- Prior-quarter financial metrics
- Comparable full-year 2026 actual results for assessment against prior full-year guidance
- Revenue guidance
- Gross-margin guidance
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.