Choice Hotels beats top-line and bottom-line estimates; raises FY26 outlook

• Choice Hotels press release (CHH): Q3 Non-GAAP EPS of $2.33 beats by $0.04.
• Revenue of $458M (+2.5% Y/Y) beats by $10.53M.
• Adjusted EBITDA totaled $193 million and adjusted diluted EPS was $2.33 for the third quarter.
• The U.S. year-over-year net rooms growth rate continued to improve, with U.S. rooms approximately flat compared to September 30, 2025, as third-quarter room exits declined 23% compared to the same period of 2025.
• Global net rooms grew 1.7% compared to September 30, 2025, led by 2.5% growth across the higher-revenue extended stay, midscale, and upscale brands.
• U.S. RevPAR increased 3.8% in the third quarter compared to the same period of 2025, reflecting improvements in both occupancy and rate.
• U.S. franchise agreements awarded increased 24% in the third quarter compared to the same period of 2025, representing 6,900 new rooms for development.
• The U.S. conversion pipeline grew to 25,500 rooms, an increase of 6% from June 30, 2026, and 29% from September 30, 2025, driving sequential growth in the total U.S. pipeline.
• The U.S. average royalty rate expanded 8 basis points to 5.23% in the third quarter compared to the same period of 2025.
• The Company raised its full-year U.S. and global RevPAR outlooks, revised its net income guidance, and raised its adjusted EBITDA guidance range.

• The Company raised the midpoint of its adjusted EBITDA guidance range, primarily reflecting stronger global RevPAR, higher U.S. royalty rate expansion, and an estimated $1 million net benefit from the Harvest Host acquisition and two recent hotel dispositions, partially offset by higher adjusted SG&A expenses. The revised adjusted SG&A outlook, excluding Harvest Host, reflects primarily non-recurring spending on certain strategic initiatives and artificial intelligence-enabled capabilities, as well as higher accounts receivable reserves.

  Net capital outlays for hotel development-related activities are expected to decline from $103.4 million in 2025 to approximately $20 million in 2026, assuming no additional hotel sales.²

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