Choice Hotels International 2025 Q2 Earnings Sustained Profitability Amid Slight Revenue Decline

Choice Hotels International reported its fiscal 2025 Q2 earnings on Aug 07th, 2025, with a 2.5% year-over-year revenue decline to $401.73 million, missing expectations. The company’s earnings per share (EPS) fell 3.3% to $1.76, and net income dropped 6.2% to $81.73 million. Despite these declines, Choice maintained its over two-decade track record of profitability. The company adjusted its RevPAR outlook for 2025 due to macroeconomic challenges and provided an updated EBITDA outlook reflecting the $6 million expected contribution from the Choice Hotels Canada acquisition.

Revenue
Choice Hotels International’s total revenue for fiscal 2025 Q2 decreased by 2.5% to $401.73 million, compared to $411.85 million in the same period in 2024. The Hotel Franchising & Management segment remained the largest revenue contributor, bringing in $396.84 million. The Corporate & Other segment added $32.72 million, while the Intersegment Eliminations segment recorded a negative contribution of $3.12 million. Consolidated revenue, which includes all segments, totaled $426.44 million.

Earnings/Net Income
The company’s net income for the quarter declined to $81.73 million, representing a 6.2% drop year-over-year from $87.14 million in 2024 Q2. Earnings per share (EPS) also decreased slightly, falling to $1.76 in Q2 2025 compared to $1.82 in Q2 2024. While these figures reflect a modest decline, the company’s long-standing profitability is a testament to its operational resilience. The EPS result is a minor setback, though it aligns with a broader trend of moderate performance in a challenging macroeconomic climate.

Price Action
The stock price of Choice Hotels International has seen mixed performance in recent days. It rose 2.60% during the latest trading day but declined 4.68% for the week and 5.22% month-to-date, reflecting market uncertainty and investor caution following the earnings report.

Post-Earnings Price Action Review
The post-earnings trading strategy of purchasing CHH when the company reported a beat and holding for 30 days resulted in a 32.05% return, which outperformed the benchmark by a significant margin. However, the benchmark itself returned 84.77%, indicating that while the strategy was relatively successful, it still lagged behind the broader market. The Sharpe ratio of 0.20 suggests the strategy delivered reasonable risk-adjusted returns, but the absence of a maximum drawdown indicates that the strategy had no measurable downside risk, which may not align with the preferences of more risk-tolerant investors.

CEO Commentary
Patrick Pacious, President and Chief Executive Officer of Choice Hotels International, emphasized the company’s strong operational performance and franchise network resilience during the second quarter of 2025. He highlighted the continued demand across multiple segments of the lodging industry and attributed growth to a diverse brand portfolio and the expanding extended-stay and midscale markets. Pacious also underlined the importance of supporting franchise owners through digital innovation and enhanced loyalty programs, such as the award-winning Choice Privileges®. Looking ahead, he expressed cautious optimism, acknowledging the evolving economic landscape while reaffirming the company’s commitment to driving long-term value for shareholders.

Guidance
The company adjusted its RevPAR outlook for 2025 to reflect a more moderate domestic expectation due to the challenging macroeconomic environment. Additionally, the company’s adjusted EBITDA outlook includes an incremental $6 million contribution from the acquisition of Choice Hotels Canada for the remainder of 2025. Management provided updated non-GAAP financial measures, including revised expectations for net income, adjusted net income, and earnings per share. Full-year 2025 guidance now forecasts net income in the range of $261–$276 million, adjusted net income between $324–$339 million, and adjusted EBITDA between $615–$635 million.

Additional News
Choice Hotels International made significant strides in international expansion and strategic development during the quarter. The company acquired the remaining 50% interest in Choice Hotels Canada for approximately $112 million, significantly expanding its product offering from eight to 22 Choice brands in Canada, particularly in the extended-stay segment. Additionally, the company extended a master franchise agreement with Atlantica Hospitality International in Brazil for over 10,000 rooms and expanded its presence in France through a direct franchise agreement with Zenitude Hotel-Residences, nearly tripling the room count. Strategic agreements with SSAW Hotels & Resorts in China are expected to add over 9,500 rooms in 2025 and approximately 10,000 rooms over the next five years. In shareholder returns, the company repurchased 811,000 shares of common stock for $110.0 million during the first half of 2025 and paid cash dividends totaling $26.9 million. As of June 30, 2025, the company had 3.0 million shares of common stock remaining under its current share repurchase authorization.

Choice Hotels International is one of the largest lodging franchisors in the world, with nearly 7,500 hotels and over 640,000 rooms in 46 countries and territories. The company's extensive portfolio includes 22 hotel brands, ranging from full-service upper upscale properties to midscale, extended stay, and economy hotels. Choice Hotels is committed to driving value for franchise owners and shareholders through innovation, digital transformation, and strong brand performance.