Choice Hotels International (NYSE: CHH) Reports Q1 2026 Results: Marked by System Growth, Strong Pipeline, and Capital Efficiency

North Bethesda, MD, April 30, 2026 — Choice Hotels International, Inc. (NYSE: CHH), one of the world’s largest lodging franchisors, has released its financial and operational results for the first quarter ended March 31, 2026. The company delivered a quarter marked by record revenues, robust franchise development momentum, and accelerated pipeline growth—despite some headwinds affecting net income.

Key Highlights of Q1 2026 Results

• Record revenues: Total revenues reached an all-time company high of \$340.6 million, up from \$332.2 million in Q1 2025.
• Net income: \$20.3 million, down from \$44.5 million the previous year. Diluted EPS was \$0.44 (vs. \$0.94). Adjusted net income was \$49.6 million, with adjusted diluted EPS at \$1.07 (vs. \$1.34).
• Adjusted EBITDA: \$125.7 million, compared to \$129.6 million in Q1 2025. The decrease was attributed to timing-related factors and a temporarily higher tax rate.
• U.S. royalty rate: Expanded 11 basis points to 5.22% (vs. 5.11% in Q1 2025).
• Global net rooms growth: Up 1.7% YoY, with notable 2.5% growth in higher-revenue extended stay, midscale, and upscale segments.
• U.S. net room openings: Rose 32% YoY, the highest Q1 since 2023; U.S. hotel exits declined to the lowest quarterly level since 2023, supporting sequential net rooms growth.
• Franchise agreements awarded: Global agreements up 72% YoY, with the U.S. up 65% and international up 113%, reflecting robust development momentum.
• U.S. development pipeline: Reached ~71,500 rooms, with conversion rooms pipeline up 17% YoY and 3% sequentially from December 31, 2025.
• Capital recycling: Generated \$24.6 million in proceeds, with hotel development and lending shifting from net outflows last year to net inflows this quarter.
• Shareholder returns: \$75.2 million returned in Q1 (dividends of \$13.1 million and share repurchases of \$62.1 million). 2.3 million shares remain under the current repurchase authorization.

Operational and System Growth Metrics

• System size: As of March 31, 2026, Choice had 658,348 rooms globally (up from 647,587), with U.S. rooms at 497,881 and international rooms at approximately 160,500 (up 13%).
• Segment momentum: Extended stay net rooms in the U.S. grew 11.8% YoY, midscale room openings surged 57%, and upscale room openings increased 112% YoY, driven by strong demand for brands such as Radisson Individuals, Ascend Collection, and Radisson.
• Pipeline strength: Global pipeline exceeded 77,700 rooms (97% in extended stay, midscale, and upscale), reinforcing a more accretive future revenue and earnings profile.
• International expansion: International net rooms grew 13%, with a 59% increase in room openings, especially in Canada and EMEA.
• U.S. economy segment: Sequential pipeline growth of 26% from year-end 2025, supported by a 13% increase in franchise agreements awarded in Q1 2026.

RevPAR and Revenue Trends

• U.S. RevPAR: Down 2.3% YoY on a currency-neutral basis, but excluding the prior year’s hurricane impact, increased by 1.8%.
• International RevPAR: Up 2.6% YoY (currency-neutral), reflecting ongoing international momentum.
• Global RevPAR: Slight decline of 0.8% YoY.
• Revenue excluding reimbursable costs: Up 3% to \$216.7 million (from \$209.4 million).

Balance Sheet, Liquidity, and Capital Deployment

• Available liquidity: Stood at \$474 million as of March 31, 2026, including cash and borrowing capacity.
• Net debt-to-Adjusted EBITDA ratio: 3.2x for the trailing twelve months.
• Net cash used in operations: \$23.2 million outflow, due to working capital timing and higher franchise agreement acquisition costs amid growth in room openings.
• Capital recycling: Proceeds of \$24.6 million; major improvement from net outflows of \$41.3 million a year ago to net inflows of \$3.7 million.

Outlook for Full Year 2026

Management maintained its full-year 2026 outlook, with significant implications for investors:

• Net income: Projected between \$265 million and \$275 million.
• Adjusted net income: \$320 million to \$330 million.
• Adjusted EBITDA: \$632 million to \$647 million.
• Adjusted diluted EPS: \$6.92 to \$7.14.
• Global RevPAR growth: Expected between -2% and +1% YoY; U.S. RevPAR growth in the same range.
• U.S. royalty rate growth: Mid-single digits anticipated.
• Global net system rooms growth: Approximately 1%.
• Net capital outlays for hotel development: Expected to decline substantially, from \$103.4 million in 2025 to \$20–\$45 million in 2026, highlighting the transition to a capital-light model.
• Effective tax rate: Anticipated at 25% for the full year.

CEO Commentary

“Choice Hotels delivered first-quarter financial results in line with expectations, with key operating indicators signaling an inflection point in underlying trends. We are driving sequentially improving U.S. net rooms growth, supported by our conversion-led model and more accretive pipeline, achieving faster, more capital-efficient expansion. Franchisee unit economics continue to strengthen and capital intensity is declining. This positions Choice to deliver more consistent earnings growth and enhances our ability to return capital to shareholders.”
— Patrick Pacious, President & CEO

Key Points for Shareholders & Potential Price-Sensitive Items

• Accelerated franchise development (72% global growth in agreements) and robust pipeline expansion signal sustained future earnings and revenue growth.
• Capital efficiency improvements (major drop in net capital outlays) suggest increased free cash flow and greater capacity for shareholder returns.
• Significant share repurchases and ongoing dividend payments are clear commitments to returning value to shareholders.
• U.S. RevPAR impacted by prior-year hurricane, but underlying growth is positive when adjusting for this—an important nuance for investors focused on core trends.
• International growth is accelerating, with 13% net rooms growth and a 59% surge in openings, diversifying revenue streams and reducing U.S. dependence.
• Adjusted EBITDA and EPS guidance suggest solid profitability, supporting the current valuation and outlook.
• Risks disclosed: The company highlighted macroeconomic, regulatory, and geopolitical risks, as well as operational issues such as franchisee relationships, technology, and labor.

Conclusion

Choice Hotels International’s Q1 2026 results present a compelling narrative of operational momentum, strong pipeline growth, and a clear focus on capital efficiency and shareholder returns. While GAAP net income was down on timing and tax factors, core business metrics and the company’s outlook remain robust—factors that could positively influence investor sentiment and potentially the share price. The company’s strategic pivot toward a more capital-light, franchise-driven model, and its enhanced focus on high-growth segments and international markets, are likely to support shareholder value over the medium and long term.

Disclaimer: This article is based on the Q1 2026 earnings release and related materials from Choice Hotels International, Inc. The information provided is for informational purposes only and does not constitute investment advice. Investors are advised to review all official filings and consult with their financial advisors before making investment decisions. Forward-looking statements are subject to risks and uncertainties; actual results may differ from projections.

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