Choice Hotels’ fourth quarter saw a positive market reaction as the company outpaced Wall Street’s expectations on both revenue and non-GAAP earnings per share, despite flat top-line growth compared to last year. Management credited higher-revenue brand momentum, robust international expansion, and strong growth in extended stay segments for supporting results. CEO Patrick Pacious pointed to “record U.S. extended stay hotel openings” and a deliberate strategy to exit underperforming properties, which improved the portfolio’s earnings profile and guest satisfaction scores.
Is now the time to buy CHH? Find out in our full research report (it’s free for active Edge members).
Choice Hotels (CHH) Q4 CY2025 Highlights:
- Revenue: $390.2 million vs analyst estimates of $370.2 million (flat year on year, 5.4% beat)
- Adjusted EPS: $1.60 vs analyst estimates of $1.54 (3.7% beat)
- Adjusted EBITDA: $140.9 million vs analyst estimates of $140.6 million (36.1% margin, in line)
- Adjusted EPS guidance for the upcoming financial year 2026 is $7.03 at the midpoint, missing analyst estimates by 1.4%
- EBITDA guidance for the upcoming financial year 2026 is $639.5 million at the midpoint, above analyst estimates of $633.1 million
- Operating Margin: 26%, down from 30.6% in the same quarter last year
- RevPAR: $49.82 at quarter end, down 1.4% year on year
- Market Capitalization: $4.90 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Choice Hotels’s Q4 Earnings Call
- Michael Joseph Bellisario (Baird) asked about expectations for key money, capital expenditures, and joint venture investments in 2026. CFO Scott Oaksmith explained that key money outlays are expected to increase with more hotel openings, while overall development-related capital outlays should taper as brands mature.
- Elizabeth Dove (Goldman Sachs) sought clarification on what will drive U.S. rooms growth back to positive territory. CEO Patrick Pacious highlighted increased franchise awards in midscale and economy brands, alongside improved guest satisfaction, as the foundation for growth.
- Elizabeth Dove (Goldman Sachs) also questioned how much potential demand catalysts, such as tax relief and the World Cup, are factored into RevPAR guidance. Pacious noted that while these factors are positive, their impact is difficult to quantify and not fully embedded in guidance.
- Daniel Brian Politzer (JPMorgan) queried the cadence of RevPAR improvement throughout the year. Pacious and Oaksmith said that Q1 will be pressured by hurricane-related comps, but they expect sequential improvement as the year progresses and macro tailwinds materialize.
- Meredith Prichard Jensen (HSBC) asked about conversion activity and whether structurally higher conversion rates are expected. Pacious emphasized that high-interest rates and limited new construction favor conversions, with most new signings coming from independent hotels seeking brand support.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of positive U.S. net rooms growth, particularly from conversion-driven brands, (2) the sustainability of international portfolio expansion and direct franchising economics, and (3) the effectiveness of the revamped Choice Privileges loyalty program in driving direct bookings and repeat stays. Additional focus will be placed on management’s ability to maintain margin discipline as development outlays decline and partnership revenue streams diversify.
Choice Hotels currently trades at $107.48, down from $109.40 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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