[Executive Summary & Q2 2025 Highlights](index=1&type=section&id=Item%201.%20Executive%20Summary%20%26%20Q2%202025%20Highlights) Choice Hotels International achieved record adjusted EBITDA and diluted EPS in Q2 2025, driven by strategic international expansion and robust operational growth, despite a slight decline in net income [Key Financial Highlights](index=1&type=section&id=Item%201.1.%20Key%20Financial%20Highlights) Choice Hotels International achieved record growth in adjusted EBITDA and adjusted diluted EPS in Q2 2025, despite a slight decrease in net income Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $81.7 Million | $87.1 Million | -6.2% | | Diluted EPS | $1.75 | $1.80 | -2.8% | | Adjusted EBITDA | $165.0 Million | $162.0 Million | +1.9% | | Adjusted Diluted EPS | $1.92 | $1.84 | +4.3% | [Key Operational & Strategic Highlights](index=1&type=section&id=Item%201.2.%20Key%20Operational%20%26%20Strategic%20Highlights) The company achieved significant growth in global and international room system size through strategic international expansion and the acquisition of the remaining stake in Choice Hotels Canada - Global net room system size grew by **2.1%**, with the upscale, extended stay, and midscale room portfolio increasing by **3.0%**[1](index=1&type=chunk) - International net room system size increased by **5.0%**, with new openings growing by **15%**[1](index=1&type=chunk) - Accelerated international expansion, including strategic agreements in Brazil, France, and China, and the acquisition of the remaining **50%** stake in Choice Hotels Canada, expected to contribute approximately **$18 million** in EBITDA in 2025[1](index=1&type=chunk)[2](index=2&type=chunk) - Global hotel pipeline exceeded **93,000 rooms** as of June 30, 2025, with nearly **77,000** domestic rooms[5](index=5&type=chunk) - Domestic extended stay segment net room portfolio grew by **10.5%**, with the segment's pipeline reaching nearly **43,000 rooms**[5](index=5&type=chunk) [CEO Commentary](index=2&type=section&id=Item%201.3.%20CEO%20Commentary) CEO Patrick Pacious highlighted record financial results despite a soft domestic RevPAR environment, attributing success to diversified growth, strong international performance, and leadership in the cyclically resilient extended stay segment, delivering long-term stakeholder returns - Choice Hotels achieved another quarter of record financial results despite a soft domestic RevPAR environment, underscoring the successful execution and diversification of our growth strategy[2](index=2&type=chunk) - We are particularly pleased with our strong international performance, achieving significant growth and accelerating global expansion through recent strategic acquisitions, key partnership signings, and new market entries[2](index=2&type=chunk) - With more diversified growth avenues, enhanced product quality and value propositions driving stronger customer engagement, and a leading position in the cyclically resilient extended stay segment, we remain well-positioned to deliver long-term returns for all stakeholders[2](index=2&type=chunk) [Financial Performance](index=2&type=section&id=Item%202.%20Financial%20Performance) The company reported a slight decrease in total revenues for Q2 2025, but demonstrated strong underlying profitability with growth in adjusted EBITDA and adjusted diluted EPS, while maintaining solid liquidity and positive operating cash flow [Consolidated Financial Results](index=2&type=section&id=Item%202.1.%20Consolidated%20Financial%20Results) Total revenues slightly decreased to $426 million in Q2 2025 from $435 million in Q2 2024, with year-to-date revenues also showing a minor decline, while net income and diluted EPS decreased quarterly but increased year-to-date Total Revenues | Period | 2025 (Million USD) | 2024 (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $426 | $435 | -2.1% | | Six Months Ended June 30 | $759 | $767 | -1.0% | Net Income | Period | 2025 (Million USD) | 2024 (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $82 | $87 | -5.7% | | Six Months Ended June 30 | $126 | $118 | +6.8% | Diluted Earnings Per Share | Period | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $1.75 | $1.80 | -2.8% | | Six Months Ended June 30 | $2.68 | $2.41 | +11.2% | [Key Profitability Metrics](index=1&type=section&id=Item%202.2.%20Key%20Profitability%20Metrics) Adjusted EBITDA and adjusted diluted EPS showed positive growth both quarterly and year-to-date, reflecting strong underlying operational performance despite a decrease in GAAP net income, with adjusted SG&A also declining Adjusted EBITDA | Period | 2025 (Million USD) | 2024 (Million USD) | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $165 | $162 | +1.9% | | Six Months Ended June 30 | $295 | $286 | +3.1% | Adjusted Diluted Earnings Per Share | Period | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $1.92 | $1.84 | +4.3% | | Six Months Ended June 30 | $3.25 | $3.11 | +4.5% | - Partner services and fees increased by **7%** to **$27.1 million** in Q2 2025 and by **16%** to **$52.4 million** in the first half of 2025[6](index=6&type=chunk) - Adjusted selling, general and administrative expenses (SG&A) decreased by **4%** to **$77.6 million** in Q2 2025 (or **6%** excluding **$2 million** in operating guarantee payments)[6](index=6&type=chunk)[7](index=7&type=chunk)[50](index=50&type=chunk) [Balance Sheet and Liquidity](index=4&type=section&id=Item%202.3.%20Balance%20Sheet%20and%20Liquidity) As of June 30, 2025, the company maintained strong liquidity with $587.5 million in available liquidity and a net debt leverage ratio of 3.0x, while total assets and liabilities both increased - Total available liquidity was **$587.5 million** as of June 30, 2025[11](index=11&type=chunk) - Net debt leverage ratio was **3.0x** as of June 30, 2025[11](index=11&type=chunk) Key Balance Sheet Metrics | Metric | June 30, 2025 (Thousand USD) | December 31, 2024 (Thousand USD) | | :--- | :--- | :--- | | Cash and Cash Equivalents | $58,610 | $40,177 | | Total Assets | $2,664,762 | $2,530,527 | | Total Liabilities | $2,691,000 | $2,575,798 | | Shareholders' Deficit | $(26,238) | $(45,271) | [Cash Flow Activities](index=4&type=section&id=Item%202.4.%20Cash%20Flow%20Activities) Cash flow from operating activities increased by 2% to $116.1 million in the first half of 2025, while net cash used in investing activities significantly increased and net cash used in financing activities decreased Key Cash Flow Metrics (Six Months Ended June 30, Thousand USD) | Metric | 2025 (Thousand USD) | 2024 (Thousand USD) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $116,070 | $113,595 | | Net Cash Used in Investing Activities | $(95,148) | $(62,032) | | Net Cash Used in Financing Activities | $(3,239) | $(18,564) | | Net Change in Cash and Cash Equivalents | $17,683 | $32,999 | [Operational Performance & System Growth](index=1&type=section&id=Item%203.%20Operational%20Performance%20%26%20System%20Growth) Choice Hotels achieved significant global and international room system growth, with strong performance in extended stay and upscale segments, alongside strategic international expansion and key brand highlights [Global System Size and Development](index=1&type=section&id=Item%203.1.%20Global%20System%20Size%20and%20Development) Choice Hotels' global net room system grew by 2.1% year-over-year, driven by strong international growth and significant expansion in upscale, extended stay, and midscale segments, with the global hotel pipeline exceeding 93,000 rooms Global Room System Size (As of June 30) | Category | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Domestic Rooms | 500,562 | 494,083 | 1.3% | | International Rooms | 143,838 | 136,980 | 5.0% | | Global Rooms | 644,400 | 631,063 | 2.1% | - Domestic upscale, extended stay, and midscale net room portfolio grew by **2.3%** year-over-year[10](index=10&type=chunk) - Global hotel pipeline exceeded **93,000 rooms** as of June 30, 2025, with nearly **77,000** domestic rooms[5](index=5&type=chunk) [Domestic Operating Metrics (RevPAR, ADR, Occupancy)](index=3&type=section&id=Item%203.2.%20Domestic%20Operating%20Metrics%20%28RevPAR%2C%20ADR%2C%20Occupancy%29) [Overall Domestic Performance](index=3&type=section&id=Item%203.2.1.%20Overall%20Domestic%20Performance) Domestic RevPAR decreased by 2.9% in Q2 2025, primarily due to macroeconomic uncertainties and a high comparison base from last year's Easter and eclipse-related travel, though the domestic effective royalty rate increased - Domestic RevPAR decreased by **2.9%** year-over-year in Q2 2025 (approximately **1.6%** excluding the impact of Easter and the eclipse)[9](index=9&type=chunk)[45](index=45&type=chunk) - Domestic effective royalty rate increased by **8 basis points** to **5.12%** in Q2 2025[9](index=9&type=chunk)[46](index=46&type=chunk) Domestic Hotel System Key Metrics (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Average Daily Rate (ADR) | $97.65 | $99.40 | (1.8)% | | Occupancy | 59.6% | 60.3% | (70) bps | | Revenue Per Available Room (RevPAR) | $58.22 | $59.95 | (2.9)% | [Performance by Segment](index=3&type=section&id=Item%203.2.2.%20Performance%20by%20Segment) The domestic extended stay portfolio outperformed the overall hotel industry in RevPAR, as did the economy temporary lodging portfolio within its segment, with WoodSpring Suites showing strong growth and high customer satisfaction - Domestic extended stay RevPAR outperformed the overall hotel industry by **40 basis points** in Q2 2025[9](index=9&type=chunk) - Economy temporary lodging portfolio RevPAR outperformed economy chain hotels by **320 basis points** in Q2 2025[9](index=9&type=chunk) - WoodSpring Suites brand grew by **9.7%** to nearly **33,000 rooms** and ranked 1 in the economy extended stay segment for the third consecutive year in the J.D. Power 2025 North America Hotel Guest Satisfaction Index Study[10](index=10&type=chunk) - Upscale brands' global net rooms grew by **14.7%** year-over-year, with global pipeline increasing by **7%**[10](index=10&type=chunk) [International Expansion & Acquisitions](index=1&type=section&id=Item%203.3.%20International%20Expansion%20%26%20Acquisitions) Choice Hotels accelerated international expansion through strategic agreements and acquisitions, significantly increasing its presence in key markets like Brazil, France, and China, and fully acquiring Choice Hotels Canada - In Brazil, the master franchise agreement with Atlantica Hospitality International was extended for **20 years**, adding over **10,000 rooms**[1](index=1&type=chunk) - In France, the number of rooms nearly quadrupled through a direct franchise agreement with Zenitude Hotel-Residences[1](index=1&type=chunk) - In China, a strategic agreement with SSAW Hotels & Resorts is expected to add over **9,500 rooms** in 2025 and approximately **10,000 rooms** over the next five years[1](index=1&type=chunk) - Acquired the remaining **50%** stake in Choice Hotels Canada for approximately **$112 million** in July, expanding the product line from **8** to **22 brands**[1](index=1&type=chunk)[2](index=2&type=chunk) [Brand Performance Highlights](index=3&type=section&id=Item%203.4.%20Brand%20Performance%20Highlights) While some brands like Radisson, Comfort, and Quality saw slight decreases in hotels or rooms, brands such as Ascend Hotel Collection, Cambria, Park Inn, WoodSpring, MainStay, Suburban, and Everhome Suites achieved growth in rooms or hotels, with Everhome Suites showing exceptional growth Key Brand Room Count Changes (As of June 30) | Brand | 2025 Rooms | 2024 Rooms | Change (%) | | :--- | :--- | :--- | :--- | | Ascend Hotel Collection | 38,537 | 23,109 | +66.8% | | Everhome Suites | 1,952 | 449 | +334.7% | | WoodSpring | 32,521 | 29,639 | +9.7% | | MainStay | 10,098 | 9,202 | +9.7% | | Radisson | 9,928 | 14,177 | -30.0% | | Econo Lodge | 36,149 | 38,602 | -6.4% | | Rodeway | 24,669 | 25,756 | -4.2% | [Shareholder Returns](index=4&type=section&id=Item%204.%20Shareholder%20Returns) In the first half of 2025, Choice Hotels returned capital to shareholders through cash dividends and significant share repurchases, retaining substantial authorization for future buybacks - Total cash dividends of **$26.9 million** paid in the first half of 2025[12](index=12&type=chunk) - **811,000 shares** of common stock repurchased for **$110 million** in the first half of 2025[12](index=12&type=chunk) - **3 million shares** of common stock remained under existing share repurchase authorization as of June 30, 2025[12](index=12&type=chunk) [Outlook](index=4&type=section&id=Item%205.%20Outlook) The company adjusted its RevPAR outlook to reflect more modest domestic market expectations but maintained its adjusted net income and adjusted EBITDA guidance, incorporating incremental contributions from recent acquisitions [Full-Year 2025 Financial Guidance](index=4&type=section&id=Item%205.1.%20Full-Year%202025%20Financial%20Guidance) The company adjusted its RevPAR outlook to reflect a more modest domestic market expectation but maintained its adjusted net income and adjusted EBITDA outlook, with the Choice Hotels Canada acquisition expected to provide incremental EBITDA contribution Full-Year 2025 Outlook | Metric | 2025 Full-Year (New Outlook) | Previous Outlook | | :--- | :--- | :--- | | Net Income | $261 – $276 Million | $275 – $290 Million | | Adjusted Net Income | $324 – $339 Million | $324 – $339 Million | | Adjusted EBITDA | $615 – $635 Million | $615 – $635 Million | | Diluted EPS | $5.54 – $5.86 | $5.86 – $6.18 | | Adjusted Diluted EPS | $6.88 – $7.20 | $6.90 – $7.22 | | Effective Income Tax Rate | 25% | 25% | - Domestic RevPAR growth (vs. FY2024): **-3% to 0%** (adjusted from -1% to 1%)[13](index=13&type=chunk) - Global net system room growth (vs. FY2024): approximately **1%** (unchanged)[13](index=13&type=chunk) [Key Outlook Adjustments](index=4&type=section&id=Item%205.2.%20Key%20Outlook%20Adjustments) The company's outlook reflects a more modest domestic RevPAR expectation due to macroeconomic changes and includes approximately $6 million in incremental EBITDA contribution from the Choice Hotels Canada acquisition for the remainder of 2025 - RevPAR outlook adjusted to reflect more modest domestic expectations amid changing macroeconomic conditions[13](index=13&type=chunk) - Adjusted EBITDA outlook includes approximately **$6 million** in incremental contribution from the Choice Hotels Canada acquisition for the remainder of 2025[13](index=13&type=chunk) - Adjusted data exclusions include net surplus or deficit from reimbursable revenue from franchised and managed properties, due diligence and transition costs, additional company stock repurchases, and other items[13](index=13&type=chunk) [Company Information](index=5&type=section&id=Item%206.%20Company%20Information) Choice Hotels International is a leading global hotel franchisor with a diverse brand portfolio, providing value to stakeholders, and the report includes forward-looking statements subject to various risks and uncertainties [About Choice Hotels](index=5&type=section&id=Item%206.1.%20About%20Choice%20Hotels) Choice Hotels International is a leading global hotel franchisor with nearly 7,500 hotels and over 640,000 rooms across 46 countries and territories, offering 22 brands to meet diverse traveler needs and create value for franchisees and shareholders - One of the largest hotel franchisors globally, with nearly **7,500 hotels** and over **640,000 rooms** across **46 countries and territories**[16](index=16&type=chunk) - Features a broad portfolio of **22 brands**, ranging from full-service upscale to midscale, extended stay, and economy hotels[16](index=16&type=chunk) - Offers the award-winning Choice Privileges® rewards program and co-branded credit card options[16](index=16&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Item%206.2.%20Forward-Looking%20Statements) The report contains forward-looking statements based on management's current beliefs and expectations, which involve known and unknown risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are identified by words such as “expect,” “estimate,” “believe,” and “forecast”[17](index=17&type=chunk) - Based on management's current beliefs, assumptions, and expectations about future events[17](index=17&type=chunk) - Do not guarantee future performance and involve known and unknown risks, uncertainties, and other factors, including economic conditions, consumer demand, regulatory changes, and operational risks[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[19](index=19&type=chunk) [Non-GAAP Financial Measures & Other Definitions](index=6&type=section&id=Item%207.%20Non-GAAP%20Financial%20Measures%20%26%20Other%20Definitions) The company uses non-GAAP financial measures like Adjusted EBITDA and Adjusted EPS to provide insight into core operational performance by excluding specific variable or infrequent items, alongside definitions of key operational metrics [Non-GAAP Measures Overview](index=6&type=section&id=Item%207.1.%20Non-GAAP%20Measures%20Overview) The company utilizes non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted SG&A, Adjusted Net Income, and Adjusted EPS to assess operations, providing insight into core performance by excluding certain variable or infrequent items - Non-GAAP measures used include EBITDA, Adjusted EBITDA, Adjusted Selling, General and Administrative Expenses (SG&A), Adjusted Net Income, and Adjusted EPS[20](index=20&type=chunk) - These metrics are used to evaluate operations and should not be considered substitutes for GAAP measures[20](index=20&type=chunk) - Exclusions include restructuring costs, acquisition costs related to business combinations, legal claim expenses, gains or losses on the sale of equity securities, global ERP system implementation costs, and other discrete and infrequent expenses[21](index=21&type=chunk) [Specific Non-GAAP Definitions](index=6&type=section&id=Item%207.2.%20Specific%20Non-GAAP%20Definitions) This section provides detailed definitions and adjustments for EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, and Adjusted SG&A, explaining the rationale for excluding specific items to better reflect ongoing operational performance - EBITDA: Net income excluding interest expense, interest income, provision for income taxes, depreciation and amortization, impairment and gains on asset disposals, other (gains) and losses, equity in net income (loss) of unconsolidated affiliates, and (gains) losses on extinguishment of debt[22](index=22&type=chunk) - Adjusted EBITDA: EBITDA further adjusted to exclude mark-to-market adjustments on non-qualified retirement plan investments, stock-based compensation expense (benefit), and the surplus or deficit generated from reimbursable revenue from franchised and managed properties[23](index=23&type=chunk) - Adjusted Net Income and Adjusted EPS: Exclude the surplus or deficit generated from reimbursable revenue from franchised and managed properties and gains on extinguishment of debt[25](index=25&type=chunk) - Adjusted SG&A: Excludes mark-to-market adjustments on non-qualified retirement plan investments and stock-based compensation expense[26](index=26&type=chunk) [Operational Definitions](index=8&type=section&id=Item%207.3.%20Operational%20Definitions) This section defines key operational metrics such as Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel Pipeline, explaining their calculation and significance in measuring hotel and company performance - Occupancy: Total room nights sold divided by total room nights available at a hotel during a given period, measuring the utilization of a hotel's available capacity[27](index=27&type=chunk) - ADR (Average Daily Rate): Hotel room revenue divided by total room nights sold during a given period, measuring the average room price achieved by a hotel[28](index=28&type=chunk) - RevPAR (Revenue Per Available Room): Hotel room revenue divided by total room nights available for guests during a given period, a key indicator of hotel performance and the company's royalty and system revenues[29](index=29&type=chunk) - Hotel Pipeline: Refers to hotels awaiting conversion, under construction, or approved for development, as well as master development agreements committing to future franchise development[30](index=30&type=chunk) [Financial Statements Update & Reclassifications](index=8&type=section&id=Item%208.%20Financial%20Statements%20Update%20%26%20Reclassifications) In Q1 2025, the consolidated statements of income were reclassified to categorize revenues and expenses based on the nature of underlying activities, without impacting previously reported total revenues, operating expenses, operating income, or net income, aiming to enhance comparability - Reclassification aims to categorize revenues and expenses based on the nature of underlying activities to enhance the comparability of financial statements[31](index=31&type=chunk) - The reclassification did not impact the company's previously reported total revenues, total operating expenses, operating income, or net income[31](index=31&type=chunk) - Specific reclassifications include: revising “royalties, licensing, and management fees” to “franchise and management fees”; revising “platform and procurement service fees” to “partner services and fees”; revising “other revenues from franchised and managed properties” to “reimbursable revenue from franchised and managed properties”; and reclassifying certain expenses from “other expenses from franchised and managed properties” to “selling, general and administrative expenses” and “depreciation and amortization”[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) [Supplemental Financial Data](index=10&type=section&id=Item%209.%20Supplemental%20Financial%20Data) This section provides comprehensive unaudited condensed financial statements, including income statements, balance sheets, and cash flow statements, along with detailed operating statistics and non-GAAP reconciliations for the periods presented [Condensed Consolidated Statements of Income](index=10&type=section&id=Item%209.1.%20Condensed%20Consolidated%20Statements%20of%20Income) This section presents the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2025, and 2024, detailing revenues, operating expenses, and other income/expenses, culminating in net income Condensed Consolidated Statements of Income Summary (Thousand USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $426,443 | $435,156 | $759,303 | $767,105 | | Total Operating Expenses | $301,846 | $302,534 | $554,774 | $574,334 | | Operating Income | $124,597 | $132,622 | $204,529 | $192,771 | | Net Income | $81,734 | $87,136 | $126,268 | $118,145 | [Condensed Consolidated Balance Sheets](index=11&type=section&id=Item%209.2.%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' deficit Condensed Consolidated Balance Sheets Summary (Thousand USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,664,762 | $2,530,527 | | Total Liabilities | $2,691,000 | $2,575,798 | | Shareholders' Deficit | $(26,238) | $(45,271) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Item%209.3.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section provides the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, outlining cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Summary (Six Months Ended June 30, Thousand USD) | Metric | 2025 (Thousand USD) | 2024 (Thousand USD) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $116,070 | $113,595 | | Net Cash Used in Investing Activities | $(95,148) | $(62,032) | | Net Cash Used in Financing Activities | $(3,239) | $(18,564) | | Net Change in Cash and Cash Equivalents | $17,683 | $32,999 | [Supplemental Operating Information - Domestic Hotel System](index=13&type=section&id=Item%209.4.%20Supplemental%20Operating%20Information%20-%20Domestic%20Hotel%20System) This section provides detailed domestic operating statistics, including Average Daily Rate (ADR), Occupancy, and RevPAR by hotel segment (Upscale & Above, Midscale & Upper Midscale, Extended Stay, Economy), and effective royalty rate, comparing Q2 and H1 2025 with 2024 Domestic RevPAR by Segment (Three Months Ended June 30) | Segment | 2025 RevPAR | 2024 RevPAR | Change (%) | | :--- | :--- | :--- | :--- | | Upscale & Above | $92.24 | $96.88 | (4.8)% | | Midscale & Upper Midscale | $60.64 | $62.71 | (3.3)% | | Extended Stay | $47.62 | $47.63 | — % | | Economy | $35.80 | $35.86 | (0.2)% | | Total | $58.22 | $59.95 | (2.9)% | - System-wide effective royalty rate: **5.12%** in Q2 2025, compared to **5.04%** in Q2 2024[46](index=46&type=chunk) [Supplemental Hotel and Room Supply Data](index=14&type=section&id=Item%209.5.%20Supplemental%20Hotel%20and%20Room%20Supply%20Data) This section provides detailed data on domestic and international franchised hotel and room supply by brand as of June 30, 2025, and 2024, highlighting changes in system size Total Franchised Room Count (As of June 30) | Category | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Domestic Franchised Rooms | 500,562 | 494,083 | 1.3% | | International Franchised Rooms | 143,838 | 136,980 | 5.0% | | Total Franchised Rooms | 644,400 | 631,063 | 2.1% | Key Brand Room Count Changes (As of June 30) | Brand | 2025 Rooms | 2024 Rooms | Change (%) | | :--- | :--- | :--- | :--- | | Ascend Hotel Collection | 38,537 | 23,109 | +66.8% | | Everhome Suites | 1,952 | 449 | +334.7% | | Radisson | 9,928 | 14,177 | -30.0% | [Supplemental Non-GAAP Financial Information Reconciliations](index=15&type=section&id=Item%209.6.%20Supplemental%20Non-GAAP%20Financial%20Information%20Reconciliations) This section provides detailed reconciliation tables for GAAP to non-GAAP financial measures, including Adjusted SG&A, EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, covering data for the three and six months ended June 30, 2025, and 2024 Adjusted SG&A Reconciliation Summary (Three Months Ended June 30, Thousand USD) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Selling, General and Administrative Expenses | $89,298 | $88,729 | | Total Adjustments | $(11,657) | $(8,229) | | Adjusted Selling, General and Administrative Expenses | $77,641 | $80,500 | Adjusted EBITDA Reconciliation Summary (Three Months Ended June 30, Thousand USD) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Income | $81,734 | $87,136 | | EBITDA | $138,021 | $145,459 | | Adjusted EBITDA | $164,975 | $161,741 | Adjusted Net Income and Adjusted Diluted EPS Reconciliation Summary (Three Months Ended June 30, Thousand USD) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Income | $81,734 | $87,136 | | Adjusted Net Income | $89,782 | $88,783 | | Diluted EPS | $1.75 | $1.80 | | Adjusted Diluted EPS | $1.92 | $1.84 | [Supplemental 2025 Outlook Details](index=16&type=section&id=Item%209.7.%20Supplemental%202025%20Outlook%20Details) This section provides a detailed breakdown of the company's full-year 2025 outlook for EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, including specific adjustments made to derive non-GAAP guidance Full-Year 2025 Adjusted EBITDA Outlook (Thousand USD) | Range | Lower | Upper | | :--- | :--- | :--- | | Adjusted EBITDA | $615,000 | $635,000 | Full-Year 2025 Adjusted Net Income and Diluted EPS Outlook | Range | Lower | Upper | | :--- | :--- | :--- | | Adjusted Net Income (Thousand USD) | $323,600 | $338,600 | | Adjusted Diluted EPS | $6.88 | $7.20 | - Guidance does not reflect depreciation and amortization of assets and liabilities related to the Choice Hotels Canada acquisition, as the preliminary accounting for the acquisition is not yet complete[55](index=55&type=chunk)

Core Insights - Choice Hotels International reported record financial performance in Q2 2025 despite a softer domestic RevPAR environment, highlighting successful execution and diversification of its growth strategy [3][6] - The company achieved significant international growth through strategic acquisitions and partnerships, enhancing its product quality and customer engagement [3][6] Financial Performance - Total revenues for Q2 2025 were $426 million, a decrease from $435 million in Q2 2024 [5] - Net income for Q2 2025 was $82 million, down from $87 million in the same period of 2024, with diluted EPS at $1.75 compared to $1.80 [6][42] - Adjusted EBITDA for Q2 2025 reached $165 million, a 2% increase from Q2 2024 [6] - The company’s adjusted diluted EPS grew to $1.92, a 4% increase compared to the same period in 2024 [6] System Size and Development - The net global rooms system size increased by 2.1% to 644,400 rooms as of June 30, 2025, with a 5.0% increase in international rooms [8][18] - The domestic extended stay segment's net rooms portfolio grew by 10.5% compared to June 30, 2024 [6] - The global pipeline exceeded 93,000 rooms as of June 30, 2025, including nearly 77,000 domestic rooms [6] International Expansion - The company strengthened its presence in Brazil with a 20-year master franchise agreement for over 10,000 rooms [6] - In France, the room count nearly tripled through a direct franchise agreement, while strategic agreements in China are expected to add over 19,500 rooms [6] Balance Sheet and Liquidity - As of June 30, 2025, the company had total available liquidity of $587.5 million, with a net debt leverage ratio of 3.0 times [10] - Cash flows from operating activities increased by 2% to $116.1 million in the first half of 2025 compared to the same period in 2024 [10] Shareholder Returns - The company paid cash dividends totaling $26.9 million and repurchased 811,000 shares for $110 million in the first half of 2025 [11] - As of June 30, 2025, there were 3.0 million shares remaining under the current share repurchase authorization [11] Outlook - The company adjusted its RevPAR outlook to reflect a more moderate domestic expectation, with net income projected between $261 million and $276 million for the full year 2025 [12][13] - The adjusted EBITDA outlook includes an incremental contribution of approximately $6 million from the acquisition of Choice Hotels Canada [12]

Core Insights - Choice Hotels Canada has a legacy since 1955 and the recent acquisition marks a significant milestone in its 70-year history, positioning the company for accelerated growth in Canada [1][2] - The acquisition, valued at approximately $112 million, was completed in July 2025 and is expected to generate around $23 million in fee revenue and $18 million in EBITDA for the full year 2025 [2][6] - The Canadian hospitality market is projected to grow at an average annual rate exceeding 5% through 2030, reaching over $50 billion, which presents a strong opportunity for Choice Hotels to expand its market share across its 22 brands [2] Company Operations - Brian Leon, CEO of Choice Hotels Canada, will continue to lead the Canadian operations, with InnVest Hotels remaining a key partner, owning and operating 50 Comfort hotels nationwide [3] - The company aims to expand its owner success system from 8 hotel brands to a full portfolio of 22 brands, creating remarkable opportunities for franchisees and guests [2] Global Expansion - The investment accelerates Choice Hotels' growth outside the United States, with a 5% increase in its net international rooms portfolio to over 140,000 rooms as of Q2 2025 [4] - Major developments include extending a master franchise agreement in Brazil for over 10,000 rooms, nearly tripling room count in France, and signing agreements in China expected to add over 19,500 rooms in the next five years [4] Company Overview - Choice Hotels International, Inc. is one of the largest lodging franchisors globally, with nearly 7,500 hotels and approximately 650,000 rooms across 46 countries and territories [5] - The company offers a diverse portfolio of 22 brands, catering to various traveler needs and driving value for franchise owners and shareholders [5]

Group 1 - Choice Hotels has partnered with Learfield to allow members to use Choice Privileges points to bid on 40 VIP packages during the 2025 college football season, including access to 15 teams such as Ohio State University and University of Michigan [1][3] - The Choice Privileges program has been recognized as the 1 hotel rewards program by U.S. News & World Report and WalletHub, enhancing its appeal to members [2] - Last season, members redeemed nearly 6 million points for gameday experiences, indicating strong engagement with the program [3] Group 2 - The Platinum VIP Experience includes a two-night hotel stay, pre-game hospitality and sideline passes, game tickets, a parking pass, and gift cards, providing significant value to members [6][7] - The Silver VIP Experience offers similar benefits but with fewer perks, catering to a broader range of fans [5][6] - Members can earn points through hotel stays and everyday purchases, with special promotions available for new Choice Privileges Mastercard holders [7][8] Group 3 - The Choice Privileges program allows members to earn and redeem points at over 7,000 hotels globally, with options to exchange points for airline miles or gift cards [9] - Choice Hotels International operates over 7,500 hotels across 46 countries, offering a diverse portfolio of brands to meet various traveler needs [10]

Core Viewpoint - The market anticipates that Choice Hotels (CHH) will report a year-over-year increase in earnings despite a decline in revenues when it releases its quarterly results for June 2025 [1][3]. Earnings Expectations - The upcoming earnings report is expected to show earnings of $1.90 per share, reflecting a +3.3% change year-over-year, while revenues are projected to be $427.08 million, down 1.9% from the previous year [3]. - The earnings report is scheduled for release on August 6, and better-than-expected results could lead to a stock price increase, whereas disappointing results may cause a decline [2]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 0.38%, indicating a reassessment by analysts regarding the company's earnings prospects [4]. - The Most Accurate Estimate for Choice Hotels is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.32% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with a strong predictive power for positive readings [9][10]. - Choice Hotels currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, Choice Hotels was expected to post earnings of $1.38 per share but delivered only $1.34, resulting in a surprise of -2.90% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [14]. Industry Comparison - Marriott International (MAR), another player in the hotel industry, is expected to report earnings of $2.64 per share for the same quarter, indicating a +5.6% year-over-year change, with revenues projected at $6.67 billion, up 3.5% [18][19].

Core Insights - Choice Hotels International has launched two innovative campaigns, "Stay in Your Rhythm" and "The WoodSpring Way," to promote its extended stay brands, emphasizing the importance of maintaining routines for guests during long-term stays [1][2][5] - The company operates over 550 extended stay locations, with 51 under construction and more than 350 in the pipeline, positioning itself as a leader in the long-term lodging market [1][5] Group 1: Campaign Details - "Stay in Your Rhythm" focuses on the amenities available at all extended stay brands, allowing guests to maintain their daily routines, such as cooking and exercising [2][5] - "The WoodSpring Way" highlights the exceptional hospitality provided by WoodSpring Suites staff, creating a home-like atmosphere for guests [3][5] Group 2: Brand Recognition - WoodSpring Suites was ranked the 1 economy extended stay brand in the J.D. Power 2025 North America Hotel Guest Satisfaction Index Study, achieving top rankings across six evaluated dimensions for four consecutive years [4][5] - The brand's commitment to guest service is reflected in its consistent recognition for guest satisfaction, including being the 1 overall economy hotel brand in 2022 [4] Group 3: Market Positioning - Choice Hotels aims to educate the growing population of extended stay travelers on the value offered by its brands, emphasizing efficiency, cleanliness, good value, and flexibility [5] - The campaigns will be promoted through various channels, including social media and digital platforms, throughout 2025 and into 2026 [5]

Group 1: Choice Privileges Program Overview - Choice Privileges is a rewards program that allows members to earn and redeem points for stays at over 7,000 hotels in 46 countries and territories, with additional earning opportunities through partners [7] - The program has been refreshed to provide greater value to its 70 million members, offering more ways to use points, including a sweepstakes for members [1][5] - Members can earn additional entries in the sweepstakes by staying qualifying nights during the promotion period, which runs until October 7, 2025 [1] Group 2: Travel Opportunities and Points Usage - Members can use their points for various travel experiences, including stays near national parks, cultural tours, and beach vacations in the Caribbean and Latin America [3][4] - Specific travel routes and the corresponding points required include a national park route starting at 375,000 points, a cultural tour starting at 425,000 points, and a beach vacation starting at 570,000 points [3][4] - A grand prize winner in the sweepstakes will receive 1 million Choice Privileges points, enabling luxury stays and experiences, along with additional prizes for other winners [5] Group 3: Company Background - Choice Hotels International, Inc. is one of the largest lodging franchisors globally, with over 7,500 hotels and nearly 650,000 rooms across 46 countries and territories [8] - The company operates a diverse portfolio of 22 brands, catering to various traveler needs and driving value for franchise owners and shareholders [8] - The Choice Privileges program and co-brand credit card options facilitate earning reward nights and personalized perks for members [8]

Group 1 - Choice Privileges has been recognized as the No. 1 Hotel Rewards Program by U.S. News & World Report, following a similar ranking by WalletHub, indicating its increasing popularity among travelers [1][2] - The program's evolution focuses on simplicity and clear value for members, making it easier to earn and redeem rewards, which has positively influenced customer response [2][3] - U.S. News highlighted that Choice Privileges allows members to quickly earn free nights and has expanded its offerings through the acquisition of Radisson and partnerships with Preferred Hotels & Resorts, catering to both budget and luxury segments [3] Group 2 - Choice Hotels International, Inc. operates over 7,500 hotels with nearly 650,000 rooms across 46 countries, offering a diverse portfolio of 22 brands to meet various traveler needs [4] - The Choice Privileges rewards program enables members to earn and redeem points at over 7,000 hotels and through partnerships with various distribution platforms, enhancing the value proposition for members [5]

Company Overview - WoodSpring Suites has been recognized as the 1 economy extended stay brand for four consecutive years in the J.D. Power North America Hotel Guest Satisfaction Index Study, ranking 1 in 2024 and 2023, and 1 overall economy hotel brand in 2022 [1][4] - The brand focuses on providing a welcoming environment with spacious suites featuring in-room kitchens at affordable weekly and monthly rates [1][4] - As of Q1 2025, WoodSpring Suites operates 265 locations across the U.S. and is one of four extended stay brands under Choice Hotels, which has surpassed 500 extended stay hotel properties [2] Industry Insights - The J.D. Power North America Hotel Guest Satisfaction Index Study measures customer satisfaction based on six factors: communications and connectivity, food and beverage, guest room, hotel facility, staff service, and value for price [3] - The 2025 study evaluated 102 brands across nine market segments, based on responses from 39,219 hotel guests for stays between May 2024 and May 2025 [3] Brand Strategy - WoodSpring Suites recently launched a new marketing campaign titled "The WoodSpring Way," emphasizing the exceptional hospitality provided by its staff [1] - The brand's offerings include fully equipped kitchens, on-site laundry facilities, free Wi-Fi, and flexible payment options, catering to longer-term guests [4] Parent Company Overview - Choice Hotels International, Inc. is one of the largest lodging franchisors globally, with over 7,500 hotels and nearly 650,000 rooms in 46 countries and territories [5] - The company has a diverse portfolio of 22 brands, including full-service, upper upscale, midscale, extended stay, and economy properties, aimed at meeting various traveler needs [5]

Group 1 - The hotel industry is experiencing a slowdown, with some companies being more adversely affected than others [1]