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Choice Hotels International Reports Second Quarter 2025 Financial Results

Choice Hotels International, Inc. (NYSE: CHH), a major player in the global lodging franchising sector, recently disclosed its financial results for the second quarter of 2025. During this period, the company saw notable revenue growth, expanded its global reach, and reinforced its presence in key markets. Here are the key highlights:

Financial Highlights

In the second quarter of 2025, Choice Hotels posted a net income of $81.7 million, down from $87.1 million in the previous year. This translates to diluted earnings per share (EPS) of $1.75, compared to $1.80 in 2024. Adjusted EBITDA reached $165.0 million, marking a 2% increase from the same time last year. Excluding certain adjustments related to hotel management acquisitions, the adjusted EBITDA was $167.0 million.

Moreover, the adjusted diluted EPS for Q2 2025 grew to $1.92, a 4% rise against Q2 2024. The company also expanded its room inventory, increasing the global net rooms system size by 2.1% and the international portion by 5.0%, with 15% more hotels opening compared to June 30, 2024.

Strategic Expansion Initiatives

Choice Hotels continues to broaden its international footprint, notably reinforcing its operations in Brazil through a 20-year master franchise agreement with Atlantica Hospitality International that oversees over 10,000 rooms. In France, a direct franchise agreement with Zenitude Hotel-Residences aims to nearly triple the room count. Additionally, strategic partnerships in China are expected to yield approximately 19,500 new rooms in the coming years.

In a significant move, the company acquired the remaining 50% interest in Choice Hotels Canada for around $112 million, enhancing its growth opportunities within the Canadian market. This initiative will expand their product offering significantly and is anticipated to generate approximately $18 million in EBITDA for the year.

The overall global pipeline now exceeds 93,000 rooms, with nearly 77,000 of these rooms earmarked for domestic US markets. The company also reported a remarkable 10.5% increase in the domestic extended stay segment, which reflects the growing preference for longer accommodations during travel.

Financial Performance Insights

Choice Hotels sustained a solid financial performance, with total revenues recorded at $426 million, slightly decreased compared to $435 million in 2024. Excluding revenues for reimbursable costs, the core revenue remained constant at approximately $259 million.

In operational efficiency, partnership services and fees rose by 7%, indicating strong collaboration with hotel operators. Remarkably, the domestic effective royalty rate increased to 5.12%, reflecting better franchise performance despite challenging economic conditions.

Domestic revenue per available room (RevPAR) saw a slight reduction of 2.9%, attributed to macroeconomic factors and previous comparisons linked to seasonal travel patterns.

Conclusion

Patrick Pacious, President and CEO of Choice Hotels, remarked, "Choice Hotels delivered another quarter of record financial performance despite a softer domestic RevPAR environment, underscoring the successful execution and diversification of our growth strategy." With an expanding portfolio and significant international partnerships, the company is poised for sustained growth and long-term success in the hospitality sector. The strategic acquisitions and market expansions underline Choice Hotels' commitment to providing travelers with quality accommodations across the globe.