Choice Hotels Raises RevPAR Outlook to 2.5% on Q3 Gains
Choice lifted full-year RevPAR expectations after a 3.8% third-quarter boost driven by occupancy and data center demand.
The short answer
Choice Hotels increased its 2026 RevPAR guidance to 1.5%–2.5% after third-quarter domestic RevPAR grew 3.8%. The company cited strength in extended-stay assets, data center corridor demand, and asset-light recycling.
“Approximately 30% of our U.S. hotels are located within 10 miles of a major data center, and those hotels delivered more than 400 basis points higher RevPAR growth than the rest of our system during the quarter.”
The short version
- U.S. properties within 10 miles of data centers produced over 400 basis points higher RevPAR growth than system norms.
- Extended-stay net rooms grew 10.7% year over year, marking 13 consecutive quarters of double-digit expansion.
- Harvest Hosts was acquired on October 1 for $130 million to incorporate recurring subscription revenue.
Choice Hotels International raised its full-year 2026 RevPAR growth forecast to a range of 1.5% to 2.5% after third-quarter U.S. RevPAR increased 3.8% [1][3]. The upward revision follows previous full-year guidance of 0% to 1.25% in the U.S. and 0% to 1% globally, as reported by Asian Hospitality [1]. Demand acceleration during the quarter stemmed from both business travel and improving leisure travel, supported by summer events such as the World Cup, Hotel Dive reported [3]. Domestic performance reflected a 160-basis-point occupancy lift and a 1% gain in average daily rate, with notable geographic performance across the Midwest and West South Central regions [1][4].
Infrastructure projects provided specific momentum across the domestic network. Chief Executive Dom Dragisich noted during an earnings call that roughly 30% of Choice’s domestic properties sit within 10 miles of major data centers, according to Hotel Dive [3]. Those specific assets generated more than 400 basis points higher RevPAR growth than the wider system during the quarter [3]. Extended-stay rooms grew 10.7% year over year, marking the 13th consecutive quarter of double-digit expansion in the segment, while the group reached its 600th extended-stay property [1][4].
Financial performance diverged between operating earnings and net income. Third-quarter revenue rose 2.5% to $458 million, and franchise and management fees grew 5% to $204 million as the domestic average royalty rate expanded 8 basis points to 5.23%, according to Lodging Magazine [1][4]. Adjusted EBITDA climbed 1% to $193 million, or 5% excluding liquidated damages [1][4]. Choice lifted its full-year adjusted EBITDA guidance to between $641 million and $651 million, Asian Hospitality reported [1]. Conversely, reported third-quarter net income fell 68% to $58 million, heavily affected by the absence of a $100 million joint venture gain logged a year earlier, alongside a $24 million European lease option contract termination charge and $6 million in property impairments [1][4].
Choice advanced its asset-light transition by offloading two owned hotels after the quarter closed, securing approximately $34 million in net cash proceeds while retaining long-term franchise agreements for both locations [1][4]. The company owned 17 operating hotels as of November 2, with full-year development-related capital outlays projected to drop to roughly $20 million from $103.4 million in 2025 [1]. Outside traditional lodging, Choice closed a $130 million deal on October 1 to buy RV subscription platform Harvest Hosts, adding recurring subscription fees [1][3].
For hotel owners, Choice’s results indicate that positioning select-service and extended-stay properties near data center and infrastructure corridors delivers clear pricing power that outpaces broader market averages.
Sources
This article was written from the following reporting. Follow the links for the original coverage.
- 1Choice Hotels Raises Full-Year RevPAR Outlook on Q3 Gains · asianhospitality.com
- 2Choice Hotels Raises Full-Year RevPAR Outlook · asianhospitality.com
- 3
- 4Choice Hotels Lifts Outlook as Q3 RevPAR Rises 3.8% · Lodging Magazine
Frequently asked
+What drove the upward revision in Choice's full-year RevPAR forecast?
Choice increased its full-year RevPAR expectations to 1.5%–2.5% following a 3.8% third-quarter U.S. RevPAR lift. The acceleration was supported by a 160-basis-point occupancy increase, a 1% rise in average daily rate, and heightened demand from business travelers and infrastructure projects.
+How did data centers impact Choice Hotels' RevPAR performance?
Approximately 30% of Choice's U.S. hotels are situated within 10 miles of a major data center. These locations achieved more than 400 basis points higher RevPAR growth during the third quarter compared to the rest of the company's domestic system.
+Why did Choice Hotels report a 68% drop in Q3 net income?
Reported net income declined to $58 million primarily because the prior-year period included a $100 million joint venture acquisition gain. Q3 2026 also included a $24 million contract termination charge for a European lease-based business option and $6 million in non-cash property impairments.
+What is Choice's current development pipeline size?
Choice's global pipeline reached 78,200 rooms at the end of the third quarter, with 71,700 of those located in the U.S. Extended-stay projects represented 30,300 rooms, or 39% of the overall pipeline, while 96% is focused across extended-stay, midscale, and upscale tiers.
+How is Choice advancing its asset-light business model?
Choice sold two owned hotels after the quarter for around $34 million while keeping franchise agreements. Net development outlays are expected to drop from $103.4 million in 2025 to $20 million in 2026, while the group acquired subscription platform Harvest Hosts for $130 million.
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