Choice Hotels Raises EBITDA, Cuts Net Income Guidance

Choice Hotels International reported fiscal 2026 second-quarter results that highlighted a divergence between top-line growth and profitability. While the company beat analyst estimates on both revenue and non-GAAP earnings, it lowered its full-year net income guidance. This adjustment reflects higher reimbursable expenses, increased interest costs, and elevated tax rates, contrasting with the raised adjusted EBITDA outlook driven by improved RevPAR trends.

Revenue

Choice Hotels International’s total revenue for the second quarter of 2026 rose 3.2% year-over-year, reaching $414.43 million compared to $401.73 million in the same period of 2025. This performance exceeded market expectations, with reported revenue of $441 million beating estimates by approximately $9.89 million, representing a 3.4% annual increase.

Earnings/Net Income

The company’s earnings per share (EPS) declined significantly, dropping 19.3% to $1.42 in 2026 Q2 from $1.76 in the prior year period. Net income also fell by 21.3% to $64.34 million, down from $81.73 million reported in 2025 Q2. Despite this contraction, the firm has maintained profitability for over two decades in this fiscal quarter, demonstrating robust operational resilience. Non-GAAP EPS of $2.02 surpassed forecasts by $0.05, while adjusted EBITDA reached $175 million. The reported GAAP decline indicates that despite beating top-line and non-GAAP estimates, the core bottom-line profitability faced headwinds from higher operational and financial costs.

Price Action

Choice Hotels International’s stock price edged up 1.63% during the latest trading day, dropped 3.34% over the most recent full trading week, and climbed 3.83% month-to-date.

Post-Earnings Price Action Review

Following the earnings release, Choice Hotels International experienced mixed short-term price action. The stock closed with a modest 1.63% gain on the day of the report, yet it retreated by 3.34% over the subsequent full trading week, suggesting some profit-taking or hesitation among investors regarding the lowered net income guidance. However, the stock managed to recover ground, posting a 3.83% gain month-to-date, indicating underlying investor confidence in the company's long-term trajectory despite near-term profitability pressures.

CEO Commentary

Dom Dragisich, Interim Chief Executive Officer, highlighted encouraging progress in U.S. net rooms growth and strengthening RevPAR trends. He emphasized that the company has built a stronger commercial engine and technology platform, with current priorities focused on sharpening execution to enhance franchisee economics by increasing guest quality and lowering operating costs. While acknowledging remaining work, Dragisich expressed confidence in the business’s significant potential, stating that the quarter’s progress reinforces this outlook.

Guidance

The company raised its full-year 2026 adjusted EBITDA guidance to $635–$650 million, driven by improved U.S. RevPAR, global net rooms growth, and U.S. royalty rates. Conversely, net income guidance was lowered to $230–$241 million, reflecting higher reimbursable expenses, interest costs, and tax rates. Adjusted net income is guided to $312–$323 million, with adjusted diluted EPS at $6.86–$7.10. Global RevPAR growth is expected to be 0–1%, with U.S. RevPAR growth at 0–1.25%. Net capital outlays are projected to decline to $20–$45 million.

Additional News

Choice Hotels International continues to execute on its strategic initiatives while maintaining a strong balance sheet. The company announced a conference call on August 5, 2026, to discuss second-quarter 2026 results, with a live webcast available on its Investor Relations website. Participants can also dial in using the provided U.S. and international numbers. As one of the largest lodging franchisors globally, Choice Hotels operates over 7,500 hotels with more than 650,000 rooms across 49 countries. The portfolio includes 22 brands ranging from full-service upper upscale to economy properties. The award-winning Choice Privileges rewards program and co-brand credit card options continue to provide members with personalized perks. The company emphasized that all forward-looking statements are based on current management beliefs and assumptions, cautioning against undue reliance on projections regarding revenue, expenses, and strategic investments.