Choice Hotels Q2 2026: US Room Openings Surge 27%

Choice Hotels expanded its United States footprint with a 27 percent increase in second-quarter room openings, adding approximately 6,400 domestic rooms to its system. The franchisor recorded $64 million in net income and raised several full-year guidance metrics, supported by higher franchise fees, improved RevPAR, and a growing pipeline of extended-stay and conversion properties. [1]

What drove the surge in second-quarter room openings?

The company achieved its highest second-quarter level for domestic room openings since 2019, while property exits fell to their lowest point for the quarter since 2020. [1] According to Hotel Business, global room openings rose 16 percent to approximately 8,300 rooms during the three months ending June 30, 2026. [1] Extended-stay properties fueled much of this expansion, with United States extended-stay net rooms growing 13 percent compared to the same date in 2025. [2] This marks the twelfth consecutive quarter of double-digit growth for the segment. [1] Franchise agreements awarded in the United States increased 30 percent year-over-year, representing roughly 9,400 new rooms for development. [2] Global net rooms grew 2.6 percent compared to June 30, 2025. [1] This expansion was driven by 3.6 percent growth in the higher-revenue extended-stay, midscale, and upscale brands. [2] International net rooms grew 12.5 percent compared to June 30, 2025, led by double-digit growth in the Asia-Pacific region and EMEA, alongside continued growth in Canada. [1]

How did financial performance hold up against the previous year?

Net income fell 21 percent to $64 million, translating to $1.41 per diluted share. [2] Lodging Magazine reported that this year-over-year decrease primarily stemmed from a higher net reimbursable deficit from franchised and managed properties. [2] The deficit related to investments in guest delivery capabilities and franchisee tools, alongside the timing of SG&A expenses and higher depreciation and amortization tied to owned hotels and the acquisition of Choice Hotels Canada. [1] Despite the drop in net income, adjusted EBITDA grew 6 percent to $175 million. [1] Adjusted diluted EPS increased 5 percent to $2.02. [2] Franchise and management fees climbed 6 percent to $188 million, reflecting higher international royalty fees and improvements in the United States royalty rate, which expanded 11 basis points to 5.2 percent. [1] Partnership services and fees also grew 6 percent to $29 million, driven by procurement services revenue. [2]

Where did RevPAR show the most improvement?

United States RevPAR increased 1.3 percent during the second quarter compared to the same period in 2025. [1] This domestic growth resulted from a 0.7 percent increase in average daily rate and a 40-basis-point rise in occupancy. [2] The East North Central, Middle Atlantic, and West South Central regions demonstrated the strongest performance domestically. [1] Outside the United States, international RevPAR increased 2.1 percent on a currency-neutral basis. [2] The Caribbean and Latin America led this international growth, with further support from sustained performance in Canada and the Asia-Pacific region. [1]

What is the current composition of the global development pipeline?

The total global pipeline reached approximately 77,300 rooms by the end of June 2026. [1] Extended-stay, midscale, and upscale brands account for 96 percent of this total. [2] The domestic conversion rooms pipeline alone grew 24 percent year-over-year to 24,100 rooms, which also represents a 6 percent sequential increase from March 31, 2026. [1] Global franchise agreements awarded increased 20 percent in the second quarter, adding 11,200 new global rooms for development. [2]

How does the company plan to transition its owned real estate?

Choice Hotels intends to recycle capital from its owned hotel portfolio as it enters the next phase of its asset-light strategy. [2] As of August 5, 2026, the North Bethesda, Maryland-based company owned 19 operating hotels and had one additional hotel under construction. [2] Subject to market conditions, the first asset sales will occur during the first half of 2027. [2] The company reported total available liquidity of $475 million as of June 30, 2026, comprising cash, cash equivalents, and available borrowing capacity. [2] The company’s net debt-to-adjusted EBITDA ratio stood at 3.1x for the trailing twelve months ended June 30, 2026, falling within the target range of 3.0x to 4.0x. [2] Operating cash flows for the first six months of the year totaled $67 million, down from $116 million in the prior-year period. [2] This decline reflected higher franchise agreement acquisition costs tied to the 27 percent increase in domestic room openings, as well as higher reimbursable expenses for marketing and reservation systems. [2] During the same six-month period, net capital outlays for hotel development and lending activities fell 80 percent to $15 million. [2]

What are the revised full-year expectations for 2026?

Leadership raised several full-year guidance ranges following the second-quarter results. [1] The company now expects adjusted EBITDA to land between $635 million and $650 million, up from the prior outlook of $632 million to $647 million. [1] Projected net income shifted to a range of $230 million to $241 million, adjusted downward from the previous estimate of $265 million to $275 million. [1] Adjusted net income is expected between $312 million and $323 million, compared to the prior outlook of $320 million to $330 million. [1] United States RevPAR growth expectations narrowed to between 0 percent and 1.25 percent, compared to the earlier forecast of negative 2 percent to positive 1 percent. [1] Global RevPAR growth is projected between 0 percent and 1 percent. [1] Global net system rooms growth is now projected at approximately 1.5 percent, an increase from the previous 1 percent estimate. [2] The company returned $139 million to shareholders through dividends and share repurchases year-to-date through June 30. [1]