Choice Hotels International (CHH) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 2026 revenues of $340.6 million, up 2.3% year-over-year, driven by higher international royalty fees and program revenues, with U.S. net rooms growth and global franchise agreements awarded up 72% year-over-year.

• Net income declined to $20.3 million from $44.5 million year-over-year, mainly due to higher operating expenses, increased equity losses from affiliates, and higher interest expense; adjusted net income was $49.6 million and adjusted diluted EPS $1.07.

• U.S. net rooms growth improved sequentially, with gross openings up 32% year-over-year and exits at their lowest since 2023; global net rooms up 1.7% year-over-year.

• The acquisition of the remaining 50% of Choice Hotels Canada was completed in July 2025, adding over 26,000 rooms and contributing $8.9 million in revenue and $3.2 million in net income in Q1 2026.

• Franchisee unit economics improved, supported by higher revenue delivery and lower costs.

Financial highlights

• Revenue excluding reimbursable costs rose 3% to $216.7 million, with international revenues up 63% year-over-year.

• Adjusted EBITDA was $125.7 million (down from $129.6 million), and adjusted EPS was $1.07 (down from $1.34), reflecting timing of SG&A and tax rate adjustments.

• U.S. royalty rate increased 11 basis points to 5.22%.

• U.S. RevPAR declined 2.3% year-over-year, but excluding prior-year hurricane impact, increased 1.8%; international RevPAR grew 2.6% on a currency-neutral basis.

• Dividend of $0.2875 per share declared and paid; annualized dividend rate projected at $1.15 per share.

Outlook and guidance

• Maintains full-year 2026 guidance: adjusted EBITDA of $632–$647 million, adjusted EPS of $6.92–$7.14, net income $265–$275 million, and adjusted net income $320–$330 million.

• Guidance reflects continued growth in higher revenue hotels, royalty rate expansion, international momentum, and cost discipline.

• Net capital outlays for hotel development expected at $20–$45 million, about 70% lower than 2025.

• Expecting $175–$225 million in share repurchases in 2026.

• Free cash flow conversion targeted at 60–65% over the next several years.