Summary:
- Choice Q3 net income rose to $180 million from $105.7 million.
- Weaker government and international demand slowed U.S. growth.
- Full-year U.S. RevPAR forecast lowered to -2 to -3 percent.
Choice Hotels International reported third-quarter net income of $180 million, up from $105.7 million a year earlier, driven by international business growth. Global RevPAR rose 0.2 percent year over year, with 9.5 percent growth internationally offsetting a 3.2 percent decline in U.S. RevPAR.
The U.S. decline was due to weaker government and international inbound demand, Choice said. The company lowered its full-year U.S. RevPAR forecast to -2 to -3 percent, from the previous 0 to -3 percent.
“Choice Hotels International delivered another quarter of record profitability, underscoring the strength of our portfolio’s continued shift toward higher-value brand segments and multiple growth avenues beyond U.S. RevPAR,” said Patrick Pacious, Choice president and CEO. “We are especially excited by the accelerating momentum in our international business, where we are on track to double profitability by 2027. With an accretive pipeline that rapidly converts signings into openings and a value proposition that is attracting a growing base of higher-value guests, Choice is well-positioned to deliver long-term growth and create meaningful value for all stakeholders.”
Global net rooms increased 2.3 percent as of Sept. 30, driven by 3.3 percent growth in upscale, extended-stay and midscale segments. International net rooms rose 8.3 percent year over year, with openings up 66 percent and a 5.2 percent increase from June 30. The global pipeline totaled 86,000 rooms, 98 percent in upscale, extended-stay and midscale segments.
In the U.S., extended-stay net rooms grew 12 percent, with openings up 14 percent. The extended-stay portfolio’s RevPAR exceeded the broader lodging industry by 20 basis points, while the economy transient portfolio exceeded its chain scale by 180 basis points. The U.S. upscale, extended-stay and midscale portfolio grew 1.6 percent and global upscale rooms rose 20.8 percent, with openings more than quadrupling from the prior year.
U.S. franchise agreements rose 7 percent in the quarter, with conversions up 7 percent and new-construction hotels up 10 percent. The global midscale pipeline grew 5 percent to nearly 30,000 rooms, including a 15 percent increase in the U.S. pipeline for Country Inn & Suites by Radisson. The U.S. economy transient brands pipeline expanded 35 percent and franchise agreements increased 27 percent from the same period in 2024.
The company revised its full-year net income guidance to include a $100 million gain in the third quarter from the fair value remeasurement of its 50 percent equity stake in Choice Hotels Canada.
For the year, Choice expects net income of $353 to $371 million, adjusted net income of $320 to $331 million and adjusted EBITDA of $620 million to $632 million. It projects U.S. RevPAR growth of -3 percent to -2 percent, mid-single-digit growth in the U.S. average royalty rate and about 1 percent growth in global net system rooms.
In August, Choice reported second-quarter net income of $81.7 million, down from $87.1 million a year earlier.
