Choice Hotels International, Inc.

Second-quarter adjusted EBITDA increased 6% year over year to $175 million. Adjusted earnings per share increased 5% to $2.02, and revenue excluding reimbursable revenue from franchised and managed properties increased 7% year over year to $277 million. U.S. RevPAR increased 1.3% year over year, and global RevPAR increased 1.7% year over year on a currency-neutral basis. Global rooms grew 2.6%, international net rooms increased 13%, and U.S. average royalty rate rose 11 basis points. The company ended the quarter with total liquidity of $475 million and net leverage of 3.1x adjusted EBITDA. For 2026, management raised full-year adjusted EBITDA guidance to $635 million to $650 million, adjusted diluted EPS to $6.86 to $7.10, U.S. RevPAR growth to 0% to 1.25%, global RevPAR growth to 0% to 1%, U.S. royalty rate expansion to 7 to 9 basis points, and global net rooms growth to about 1.5%. Management also said it expects to repurchase between $175 million and $225 million of shares in 2026.

Interim CEO Dom Dragisich framed the quarter as evidence that Choice’s franchise model is improving, with better rooms growth, stronger development activity and early benefits from commercial and technology investments. He repeatedly stressed execution, urgency and accountability, saying the business has more potential if it can better convert existing investments in the commercial engine, technology and AI into franchisee profitability and RevPAR growth. His tone was upbeat but disciplined, emphasizing that the company wants to win on both lower owner costs and stronger top-line performance.

CFO Scott Oaksmith said second-quarter results benefited from higher U.S. royalties, royalty-rate expansion, franchisee programs and services revenue, partnership revenue, and the Canada direct-franchising transition, partially offset by higher SG&A. He highlighted $67 million of operating cash flow in the first six months versus $116 million a year ago, with the decline driven by higher franchise agreement acquisition costs and higher reimbursable expenses tied to franchisee-facing tools and guest delivery capabilities. He also noted $475 million of liquidity, 3.1x net leverage, year-to-date shareholder returns of $172 million through July 31, and continued share repurchase plans of $175 million to $225 million for 2026.

Analysts pressed management on how Choice can raise royalty rates while also improving franchisee value; management said the increase is mainly mix-driven, reflects contractual legacy rates rolling off, and is paired with lower owner costs through reduced prototype costs, lower FF&E costs and other fee reductions. Questions also focused on U.S. rooms growth, with management saying the improvement is coming from both stronger openings and lower exits, especially in conversions, and that about 75% of U.S. agreements signed year to date are expected to open this year. Analysts asked about RevPAR lagging the chain-scale mix and about Q4 deceleration; management pointed to under-indexing in urban and business transient markets, World Cup timing, calendar shifts around Labor Day, and limited booking visibility for Q4. There were also questions about capital intensity and owned assets, where management said capital outlays for hotel development are dropping as Cambria and Everhome wind down and that the company expects to begin asset sales in the first half of 2027.