Q2 2026 Choice Hotels International Inc Earnings Call Transcript

Aug 5, 2026 / 02:00 PM GMT

Release Date Price: $111.79 (+2.93%)

Transcript 10-Q8-K

Key Points

Positve

Adjusted EBITDA increased 6% year-over-year to $175 million, driven by higher US royalties, franchisee program revenues, and partnership revenues.
US net rooms growth improved sequentially for the second consecutive quarter, with gross openings up 27% and exits down 50% year-over-year, positioning the company for positive full-year growth.
Global franchise agreements increased 20% year-over-year, with US conversion agreements up 82%, reflecting strong demand for the company's conversion-led development model.
US RevPAR increased 1.3% year-over-year, supported by strengthening demand trends, including a 60 basis point contribution from the FIFA World Cup, and the company raised its full-year RevPAR guidance.
The company is leveraging AI and technology to enhance franchisee value, including a 360 basis point improvement in group RFP conversion and a 40% reduction in operational support requests through its AI-enabled 'Charlie' tool.
Capital allocation discipline is evident, with hotel development outlays down 80% year-over-year, and the company expects to begin monetizing its owned hotel portfolio in the first half of 2027.

Negative

US RevPAR growth of 1.3% lagged the industry, with the company under-indexed in urban markets and business transient travel, which saw a strong rebound in the quarter.
Adjusted SG&A expenses increased 7% year-over-year, driven by the transition to direct franchising in Canada and higher accounts receivable reserves, though growth is expected to moderate in the second half.
Operating cash flow declined to $67 million in the first half of 2026 from $116 million in the prior year period, due to higher franchise agreement acquisition costs and increased reimbursable expenses.
The company faces a tough comparison in Q3 2026, with approximately $9.5 million of liquidated damages recognized in the prior year quarter not expected to recur, impacting year-over-year EBITDA growth.
The US development pipeline is down year-over-year, reflecting muted new construction starts, though the company emphasizes its conversion pipeline is up 24% year-over-year.
The company expects Q4 RevPAR growth to moderate despite easier comparisons, citing short booking windows and calendar shifts, which adds uncertainty to the full-year outlook.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

CHH.N - Choice Hotels International, Inc.
Q2 2026 Choice Hotels International Inc Earnings Call
Aug 05, 2026 / 02:00PM GMT

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Presentation
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Unidentified_1 [1]
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Ladies and gentlemen, thank you for standing by.

Welcome to Choice Hotels International second quarter 2026 earnings call.

At this time, all participants are in a listen-only mode.

Following the prepared remarks, we will open the line for questions.

I will now turn the call over to Allie Summers, senior Director of Investor Relations.

Good morning and thank you for joining us.

Before we begin, please note that today's discussion includes forward-looking statements as defined under US securities laws.

These statements are subject to risks and uncertainties that could cause actual results to differ moderately from those expressed or implied.

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