Choice Hotels International (CHH) Q2 2026 earnings summary

Executive summary

• Adjusted EBITDA rose 6% year-over-year to $175 million, with U.S. net rooms growth improving for the second consecutive quarter and U.S. room openings up 27% year-over-year; global net rooms grew 2.6%.

• Revenue for Q2 2026 was $440.8 million, up 3.4% year-over-year, driven by higher franchise and management fees, but net income declined 21.3% to $64.3 million due to increased expenses and a larger reimbursable deficit.

• Franchise agreements awarded in the U.S. increased 30% year-over-year, with 75% of new agreements expected to open in-year; global pipeline reached 77,300 rooms, with 96% in extended stay, midscale, and upscale brands.

• U.S. RevPAR increased 1.3% year-over-year, aided by strengthening demand and major events, while international RevPAR rose 2.1%.

• Technology and AI investments, including the CHARLIE platform and EasyBid, are driving operational efficiencies and franchisee value.

Financial highlights

• Adjusted EBITDA up 6% to $175 million; adjusted EPS up 5% to $2.02; Q2 2026 revenue: $440.8 million (+3.4% year-over-year); net income: $64.3 million (-21.3% year-over-year).

• Revenues (excluding reimbursable revenue) increased 7% year-over-year to $277 million.

• Franchise and management fees grew 6% to $188 million, and partnership services and fees rose 6% to $29 million.

• Adjusted SG&A increased 7%, mainly due to transition to direct franchising in Canada and higher account receivable reserves.

• Operating cash flow for the first six months was $67 million, down from $116 million last year, due to higher franchise agreement acquisition costs and increased investment in franchisee-facing tools.

Outlook and guidance

• Full-year 2026 adjusted EBITDA guidance raised to $635–$650 million; adjusted diluted EPS guidance updated to $6.86–$7.10.

• Net income guidance lowered to $230–$241 million, reflecting higher marketing, reservation system expenses, interest expense, and tax rate.

• U.S. RevPAR growth expected at 0%–1.25%; global RevPAR at 0%–1%; global net system rooms growth at approximately 1.5%.

• U.S. average royalty rate expansion of 7–9 basis points; global net rooms growth expected at ~1.5%.

• Net capital outlays for hotel development expected to decline to $20–$45 million in 2026.