Choice Hotels sees FY global net system rooms growth ~1%

Choice Hotels sees FY global net system rooms growth ~1%

Choice Hotels International Reports Mixed Financial Results Amid Global Net Room Growth

Choice Hotels International (NYSE: CHH) reported third-quarter 2025 results on November 5, 2025, showing a 2.3% increase in global net system rooms year-to-date, driven by expansion in higher-revenue segments such as upscale, extended stay, and midscale properties. However, the company's full-year net income guidance for 2025 has been revised downward to $353–$371 million, reflecting adjustments tied to the acquisition of its 50% equity stake in Choice Hotels Canada.

Financial Performance Net income for the third quarter rose to $180.0 million, or $3.86 diluted EPS, compared to $105.7 million ($2.22 diluted EPS) in the same period of 2024. Adjusted EBITDA hit a quarterly record of $190.1 million, up 7% year-over-year. However, adjusted diluted EPS for the quarter fell to $2.10 from $2.23 in 2024, primarily due to higher amortization expenses from the Canada acquisition and temporary tax impacts. Excluding these items, adjusted EPS would have increased by 2%.

International Expansion International net rooms grew 8.3% year-to-date, with notable progress in France (4,800 new midscale rooms via direct franchise agreements), Argentina (new franchise agreements), and China (nearly 80% of a 9,500-room distribution deal with SSAW Hotels). The company also expanded its Mainstay Suites brand to Australia, marking its first international foray outside North America.

Pipeline and Outlook The global pipeline exceeded 86,000 rooms as of September 30, 2025, with 98% concentrated in higher-margin segments. U.S. extended stay net rooms grew 12%, while international RevPAR increased 9.5% year-to-date. CEO Patrick Pacious highlighted "accelerating momentum in international business", with plans to double profitability by 2027.

Challenges and Guidance Despite strong international growth, U.S. RevPAR declined 3.2% due to softer government and international inbound demand. The company's full-year 2025 adjusted EBITDA guidance remains at $620–$632 million, with net income and adjusted diluted EPS ranges revised downward.

Choice Hotels' balance sheet remains robust, with $564.2 million in liquidity as of September 30, 2025, and $150.4 million returned to shareholders through dividends and buybacks in the first nine months of 2025.