Choice Hotels shares rise 6.6% after raising 2026 RevPAR forecast

Choice Hotels (CHH) said on Nov. 2 that third-quarter adjusted diluted earnings per share were $2.33, in line with the $2.32 consensus estimate compiled by Finnhub. Total revenues of $458.33 million came in above the $451.99 million estimate.

Shares rose 6.6% in regular trading as of 3:59 p.m. ET, from a previous close of $111.16.

The company is one of the largest lodging franchisors in the world, with over 7,500 hotels, representing more than 650,000 rooms, in 50 countries and territories, according to its results release.

Net income for the quarter was $57.91 million, or $1.28 per diluted share, down from $180.00 million a year earlier. The prior-year figure included a $100 million gain from the acquisition of a joint venture.

Adjusted EBITDA rose 1% to $193 million. Excluding liquidated damages revenue, adjusted EBITDA increased 5%, the company said.

Adjusted diluted EPS increased 11% from $2.10 a year earlier, which the company credited to higher franchise and management fees and share repurchases.

Here's how the company did:

• Total revenues: $458.33 million vs. $447.34 million a year earlier
• Adjusted diluted EPS: $2.33 vs. $2.32 expected, according to Finnhub
• Diluted EPS: $1.28 vs. $3.86 a year earlier
• Adjusted EBITDA: $192.53 million vs. $190.09 million a year earlier
• Net income: $57.91 million vs. $180.00 million a year earlier

Rooms and RevPAR

U.S. RevPAR rose 3.8% in the quarter, driven by a 1.0% increase in rate and a 160-basis-point increase in occupancy. International RevPAR rose 3.7% on a currency-neutral basis.

U.S. rooms were approximately flat compared with Sept. 30, 2025, while global net rooms grew 1.7%. Franchise and management fees increased 5% to $204 million.

The U.S. conversion pipeline reached 25,500 rooms, up 29% from Sept. 30, 2025. The global pipeline totaled 78,200 rooms.

2026 guidance

The company raised its full-year 2026 global RevPAR growth outlook to 1.5% to 2.5%, from 0% to 1%. Its U.S. RevPAR growth outlook rose to 1.5% to 2.5%, from 0% to 1.25%.

The company now expects net income of $178 million to $185 million, compared with the $230 million to $241 million range it gave on Aug. 5. The lower range reflects higher expected marketing and reservation system reimbursable expenses, a $24 million charge tied to ending an arrangement that included an option to acquire a European hospitality business, and $6 million in non-cash impairment charges.

The company raised the midpoint of its adjusted EBITDA range to $641 million to $651 million. It expects adjusted diluted EPS of $6.92 to $7.07.

Dom Dragisich, President and Chief Executive Officer, said: "Our third-quarter results reflect continued progress against our key priorities: the U.S. net rooms growth rate improved for the third consecutive quarter, U.S. RevPAR growth strengthened, and capital recycling is underway."

He added that the company expects U.S. net rooms growth to accelerate to approximately 1% by year-end.

Costs and one-off charges

The quarter included a $24 million contract termination charge and $6 million in non-cash impairment charges related to two owned hotels. Adjusted selling, general and administrative expenses rose to $71.68 million from $68.28 million a year earlier.

Acquisition, asset sales and capital returns

On Oct. 1, the company acquired Harvest Hosts, an asset-light RV travel subscription platform, for approximately $130 million. The deal was funded with available cash and borrowings under its revolving credit facility.

After quarter end, the company sold two owned hotels for estimated net cash proceeds of approximately $34 million, and it retained the franchise agreements for both properties. It owned 17 operating hotels as of Nov. 2, with one more under construction.

In August, the company completed a $500 million unsecured term loan that matures in August 2029. Total available liquidity was $928 million at quarter end, and its net debt-to-adjusted EBITDA ratio was 3.2x.

In the first nine months, the company returned $39 million to shareholders through dividends and $172 million through share repurchases. It had 1.3 million shares remaining under its current repurchase authorization as of Sept. 30.