Choice Hotels Q3 Adjusted EPS Rises 11% as RevPAR Grows

Choice Hotels International (NYSE: CHH) reported higher third-quarter 2026 revenue, adjusted EBITDA and adjusted earnings per share, supported by RevPAR growth across its U.S. and international operations. U.S. net room growth remained flat year over year, but development indicators improved as the company focused on franchisee economics, conversions and a return to a more capital-efficient asset-light model.

Revenue increased 2% year over year to $458 million, while adjusted EBITDA rose 1% to $193 million. Adjusted EPS advanced 11% to $2.33. On a reported basis, Choice Hotels recorded net income of $58 million and diluted EPS of $1.28.

The company returned $211 million to shareholders through dividends and share repurchases during the first nine months of 2026.

RevPAR rises across the portfolio

Third-quarter U.S. RevPAR increased 3.8% from a year earlier. International RevPAR grew 3.7% on a currency-neutral basis, while global currency-neutral RevPAR rose 3.9%.

Choice Hotels identified demand from value-minded travelers, business and infrastructure-related activity, and the World Cup as contributors to the quarter’s performance. About 30% of its U.S. hotels are located within 10 miles of a major data center, and those properties recorded RevPAR growth 400 basis points higher than the rest of the U.S. portfolio during the quarter.

The company also pointed to progress in direct business and group bookings. Revenue from small and midsized businesses through its Business Direct platform increased 18%, with 75% of enrolled businesses new to Choice. Group revenue generated through the EasyBid AI platform rose 27%, while group request-for-proposal conversion improved by 210 basis points.

Choice Privileges membership reached 78 million, up 7% year over year. Revenue per new member who completed a stay increased 12% following the loyalty program’s relaunch, while loyalty contribution rose by more than 140 basis points. Choice also introduced point sharing to give members more flexibility in using rewards.

Development activity improves, led by conversions

Choice Hotels ended the quarter with about 661,000 rooms globally, representing 1.7% year-over-year growth. International rooms increased 7.3% to approximately 162,000, while the U.S. room count was broadly unchanged at about 498,000.

The U.S. net room growth rate improved for a third consecutive quarter. Through the first nine months of 2026, U.S. room openings increased 17% and room exits declined 44% from the prior-year period.

The U.S. conversion pipeline expanded 29% year over year, and the number of U.S. franchise agreements executed during the third quarter rose 24%. About 96% of the global pipeline was concentrated in higher-revenue upscale, midscale and extended-stay segments. Roughly two-thirds of U.S. conversion rooms opened within three months of signing.

Extended stay remained a significant development area. Choice opened its 600th extended-stay hotel and recorded a 13th consecutive quarter of double-digit net room growth in the segment. In Canada, net rooms grew 5.1%, supported by the transition to direct franchising.

Lower owner costs and reduced capital outlays

Management’s operating priorities include accelerating U.S. net room growth, improving commercial competitiveness and franchisee economics, and returning the business to a more capital-efficient asset-light structure.

Choice said hotel prototype costs have been reduced by as much as 25% across key midscale brands, while furniture, fixtures and equipment procurement costs declined by up to 20% in selected categories. Its AI-enabled Smart Response product lowered reputation-management fees by about 30%. The company is also deploying its Charlie AI tool to simplify routine hotel operations.

Development capital outlays totaled $15 million through September 30, down 56% from $36 million in the comparable 2025 period. Choice’s 2026 outlook calls for $20 million of development capital outlays, compared with $103 million in 2025, a reduction of about 80%.

The company is also monetizing owned hotels while retaining franchise agreements. Two owned hotels were sold after the quarter ended, with estimated net cash proceeds of approximately $34 million, and additional hotel sales were underway.

In October 2026, Choice acquired Harvest Hosts for $130 million in cash. The asset-light, recurring-revenue membership platform serves RV travelers and has about 300,000 active members. Choice said approximately 2 million Choice Privileges members participated in RV travel during the past year.

President and Chief Executive Officer Dom Dragisich said the company is concentrating on the operating fundamentals that have historically supported its business while continuing to invest in commercial and technology capabilities intended to help franchisees capture demand. Despite improving development activity, U.S. net room growth remained flat in the quarter, leaving the establishment of sustained domestic room growth as a central execution priority.