Choice Hotels | 8-K: FY2026 Q2 Revenue: USD 440.76 M

Revenue: As of FY2026 Q2, the actual value is USD 440.76 M.

EPS: As of FY2026 Q2, the actual value is USD 1.41, missing the estimate of USD 1.7726.

EBIT: As of FY2026 Q2, the actual value is USD 109.05 M.

Financial Performance (Three Months Ended June 30, 2026)

• Net Income: Choice Hotels International, Inc. reported net income of $64 million, marking a 21% decline compared to the same period in 2025, primarily due to a higher net reimbursable deficit from franchised and managed properties, timing of SG&A expenses, and increased depreciation and amortization, partially offset by higher franchise and management fees.
• Adjusted EBITDA: Adjusted EBITDA increased 6% to $175 million compared to the same period in 2025.
• Operating Income: Operating income was $104,138 thousand, down from $124,597 thousand in Q2 2025.
• Operating Expenses: Total operating expenses were $336,624 thousand in Q2 2026, an increase from $301,846 thousand in Q2 2025.
  • Selling, general and administrative expenses were $96,153 thousand.
  • Business combination, diligence and transition costs were $536 thousand.
  • Depreciation and amortization totaled $16,813 thousand.
  • Owned hotels expenses were $25,457 thousand.
  • Reimbursable expenses from franchised and managed properties were $197,665 thousand.
• Franchise and Management Fees: These fees increased 6% to $188 million compared to the same period in 2025.
• Partnership Services and Fees: These fees increased 6% to $29 million compared to the same period in 2025.

Financial Performance (Six Months Ended June 30, 2026)

• Net Income: Net income was $85 million, down from $126 million in the prior-year period.
• Adjusted EBITDA: Adjusted EBITDA was $301 million, up from $295 million in the prior-year period.
• Operating Income: Operating income was $164,172 thousand, down from $204,529 thousand in H1 2025.
• Operating Expenses: Total operating expenses were $617,165 thousand in H1 2026, up from $554,774 thousand in H1 2025.
  • Selling, general and administrative expenses were $174,199 thousand.
  • Business combination, diligence and transition costs were $772 thousand.
  • Depreciation and amortization totaled $33,634 thousand.
  • Owned hotels expenses were $49,108 thousand.
  • Reimbursable expenses from franchised and managed properties were $359,452 thousand.

Cash Flow and Liquidity

• Cash Flow from Operating Activities: For the six months ended June 30, 2026, Choice Hotels International, Inc. generated $67 million in cash flow from operating activities, compared to $116 million in the prior-year period, reflecting higher franchise agreement acquisition costs and increased marketing and reservation system reimbursable expenses.
• Net Capital Outlays for Hotel Development and Lending Activities: These outlays declined 80% to $15 million for the six months ended June 30, 2026, from $76 million in the prior-year period.
• Total Available Liquidity: As of June 30, 2026, total available liquidity was $475 million, comprising cash and cash equivalents and available borrowing capacity.
• Net Debt-to-Adjusted EBITDA Ratio: The ratio for the trailing twelve months ended June 30, 2026, was 3.1x, which is within the target range of 3.0x to 4.0x.

Operational Metrics

• Global Net Rooms Growth: Global net rooms grew 2.6% compared to June 30, 2025, driven by 3.6% growth in extended stay, midscale, and upscale brands.
• U.S. Room Openings: U.S. room openings increased 27% compared to the same period of 2025, with approximately 6,400 U.S. rooms opened in the second quarter of 2026.
• U.S. RevPAR Growth: U.S. RevPAR increased 1.3% in the second quarter of 2026 compared to the same period of 2025, due to a 0.7% increase in rate and a 40-basis-point increase in occupancy.
• International RevPAR Growth: International RevPAR increased 2.1% on a currency-neutral basis in the second quarter of 2026.
• U.S. Franchise Agreements Awarded: These agreements increased 30% in the second quarter of 2026 compared to the same period of 2025, representing approximately 9,400 new U.S. rooms for development.
• U.S. Conversion Rooms Pipeline Growth: The U.S. conversion rooms pipeline grew 24% to 24,100 rooms compared to June 30, 2025.
• U.S. Royalty Rate: The U.S. royalty rate expanded 11 basis points to 5.2% in the second quarter of 2026 compared to the same period of 2025.
• Global Room Openings: Global room openings increased 16% in the second quarter of 2026 compared to the same period of 2025, with approximately 8,300 global rooms opened.
• U.S. Extended Stay Net Rooms Growth: U.S. extended stay net rooms grew 13.0% compared to June 30, 2025, marking the 12th consecutive quarter of double-digit growth.
• International Net Rooms Growth: International net rooms grew 12.5% compared to June 30, 2025.
• Global Franchise Agreements Awarded: These agreements increased 20% in the second quarter of 2026 compared to the same period of 2025, representing 11,200 new global rooms for development.
• Global Pipeline: As of June 30, 2026, the global pipeline totaled approximately 77,300 rooms, with 96% concentrated in extended stay, midscale, and upscale brands, including 29,900 extended stay rooms.
• System Size: As of June 30, 2026, Choice Hotels International, Inc. operated 6,195 U.S. hotels with 499,226 rooms and 1,413 international hotels with 161,863 rooms, for a total of 7,608 hotels and 661,089 rooms globally.

Shareholder Returns

• Total Shareholder Returns: Year-to-date through June 30, 2026, Choice Hotels International, Inc. returned $139 million to shareholders through dividends and share repurchases.
  • Dividends paid totaled $26 million.
  • Share repurchases amounted to $113 million.
• Share Repurchase Authorization: As of June 30, 2026, 1.8 million shares of common stock remained available for repurchase.

Outlook

Choice Hotels International, Inc. has updated its full-year 2026 guidance, projecting net income between $230 million and $241 million and adjusted EBITDA ranging from $635 million to $650 million. Global RevPAR growth is anticipated to be 0% to 1%, with global net system rooms growth expected at approximately 1.5%. The company also expects net capital outlays for hotel development-related activities to decline to a range of $20 million to $45 million in 2026 and plans for the first asset sales from its owned hotel portfolio during the first half of 2027.