Choice Hotels: A Global Powerhouse with Resilient EBITDA in a Challenging Market

In a hospitality landscape marked by soft domestic RevPAR and macroeconomic headwinds, Choice Hotels International (CHH) has emerged as a standout performer. The company's strategic focus on international diversification, brand strength, and extended-stay leadership has not only insulated it from domestic volatility but also positioned it as a long-term value creator. Let's break down how these pillars are driving resilient EBITDA growth and why investors should take notice.

International Diversification: Fueling Growth Beyond Borders

Choice Hotels' international expansion has been nothing short of transformative. From 2023 to 2025, the company's global net rooms system grew by 5.0%, with a 15% surge in openings. Key markets like Canada, Brazil, France, and China are now central to its growth story.

The acquisition of the remaining 50% stake in Choice Hotels Canada for $112 million in July 2025 was a masterstroke. This move transitioned Canada from a master franchising model to a direct franchise model, expanding the owner success system from 8 to 22 brands. The Canadian portfolio now includes 350 hotels with 30,000 rooms, and the acquisition is projected to add $18 million in EBITDA for 2025. With over 2,500 rooms in the pipeline, Canada alone could become a $6 million EBITDA contributor for the remainder of the year.

Meanwhile, Brazil's master franchise agreement with Atlantica Hospitality International is set to add over 10,000 rooms through 2045. In France, a direct franchise deal with Zenitude Hotel-Residences nearly tripled the room count, while China's strategic partnerships with SSAW Hotels & Resorts are expected to add 19,000 rooms over five years. These moves have pushed the global pipeline to 93,000 rooms, with 77,000 in the U.S.

Brand Strength and Extended-Stay Leadership: A Shield Against Soft RevPAR

While domestic RevPAR dipped 2.9% in Q2 2025, Choice's extended-stay segment outperformed the industry by 40 basis points. This resilience is driven by the WoodSpring Suites brand, which grew by 9.7% to 33,000 rooms and topped J.D. Power's guest satisfaction rankings for the third consecutive year.

The extended-stay segment's appeal lies in its cycle-resilience—catering to both business travelers and cost-conscious leisure guests. With a pipeline of 43,000 rooms and a 10.5% year-over-year growth in domestic net rooms, this segment is a critical buffer against macroeconomic uncertainty.

Moreover, upscale and extended-stay brands saw a 14.7% increase in global net rooms since 2024, with a 7% pipeline growth to nearly 29,000 rooms. These brands are not just about scale—they're about quality. High guest satisfaction scores and strategic brand expansions (e.g., 22 brands in Canada) reinforce Choice's ability to command premium pricing and occupancy.

Financial Resilience: EBITDA Growth Amid Cost Discipline

Choice's Q2 2025 adjusted EBITDA hit a record $165 million, up 2% year-over-year. Even after excluding a $2 million operating guarantee payment, EBITDA reached $167 million, showcasing operational leverage.

The company's cost discipline is equally impressive. Adjusted SG&A expenses fell 4% to $77.6 million, with a 6% decline when excluding the guarantee payment. This efficiency, combined with a $587.5 million liquidity buffer and a manageable net debt leverage ratio of 3.0x, provides flexibility for strategic investments and shareholder returns.

The Long-Term Play: Why This Matters for Investors

Choice Hotels is not just surviving the current environment—it's thriving. By diversifying geographically, doubling down on high-performing segments, and maintaining financial discipline, the company is building a moat against cyclical downturns.

For investors, the key takeaway is clear: Choice is a long-term value creator. Its international pipeline, brand strength, and extended-stay leadership position it to outperform peers in both up and down cycles. With EBITDA resilience and a balance sheet that supports continued growth, this is a stock worth watching.

Final Verdict: In a market where RevPAR volatility is the norm, Choice Hotels offers a compelling mix of growth and stability. For those seeking exposure to a resilient hospitality play with global ambitions, CHH is a name to keep on your radar.