- Company name
- Choice Hotels International
- Sector
- Hotel franchising
- About
- Choice Hotels franchises hotels. Hotel owners pay Choice royalty and other fees, and Choice runs the reservation system, the loyalty program and marketing for them. Its brands serve midscale, extended stay, upscale and economy guests. At June 30, 2026, its global system had 661,089 rooms: 499,226 in the United States and 161,863 in other countries. The global pipeline had about 77,300 rooms. In 2025, Choice bought its Canadian master franchisee, Choice Hotels Canada. It owns 19 operating hotels and expects to start selling them in the first half of 2027. Dominic Dragisich became President and CEO on August 31, 2026.
- Thesis
- The market prices Choice Hotels for slow growth in U.S. hotel demand and for change at the top. Its 2026 guidance for U.S. RevPAR growth is 0% to 1.25%, and U.S. rooms fell 0.3% in the year to June 30, 2026. The long-time CEO stepped down in May 2026, and net income guidance fell because Choice spends more on tools and guest delivery for franchisees. Net debt was 3.1 times adjusted EBITDA at June 30, 2026. For the gap to close, three things must be true. U.S. net rooms must start to grow, as openings rise and exits fall. Extended stay and international rooms must keep growing at double-digit rates. The sale of owned hotels from the first half of 2027 must return capital and keep leverage within the target of 3.0 to 4.0 times. The Q3 2026 report on November 2, 2026 and the 2027 outlook in early 2027 are the next tests. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a weaker U.S. economy, which lowers travel by the midscale and economy guests that Choice serves.
- Risks
- Royalty fees depend on U.S. hotel revenue per room. Guidance for U.S. RevPAR growth in 2026 is only 0% to 1.25%. A weaker economy lowers travel by midscale and economy guests and reduces fees.
Choice spends more on franchisee tools and guest delivery than it collects for these programs. This deficit caused it to lower its 2026 net income guidance. If the spending does not raise franchisee revenue, profits stay lower.
Debt rose with borrowings under the revolving credit facility and the new $500 million term loan. Net debt was 3.1 times adjusted EBITDA at June 30, 2026, and higher debt leaves less room in a downturn.
Choice changed its CEO in 2026, and its Chief Human Resources Officer leaves that role at the end of 2026. Leadership changes can slow the execution of its plans.
- Balance sheet
- Cash: $43M
Debt: $2.0B
Net debt: $2.0B
Net debt / EBITDA: 3.1× (medium)
Interest cover: 3.4×
Undrawn credit line: $433M
Last debt due: 2034
Choice Hotels funds itself with senior notes, a revolving credit facility and, since August 2026, a term loan. At June 30, 2026, debt principal was about $2.02 billion: senior notes of $400 million due 2029, $450 million due 2031 and $600 million due 2034, plus $567 million drawn on the $1 billion revolving credit facility due 2029. Cash was $42.8 million, and total available liquidity was $475 million. Net debt was 3.1 times adjusted EBITDA for the 12 months to June 30, 2026, within the company's target range of 3.0 to 4.0 times. On August 28, 2026, Choice signed a $500 million unsecured term loan due 2029 for general purposes, including debt repayment. The term loan requires a leverage ratio of no more than 4.5 times and a fixed charge coverage ratio of at least 2.5 times. Interest cover is operating income divided by interest expense for the first half of 2026.
As of 2026-06-30.
- Checkpoints
- Nov 2, 2026: Q3 2026 earnings: U.S. rooms and RevPAR. Pending. Watch: U.S. RevPAR within the 0% to 1.25% guidance range and better U.S. net rooms growth pass; a cut to adjusted EBITDA guidance or falling U.S. rooms fail.
Q2 2027 (estimate): First sales of owned hotels. Pending. Watch: The first owned hotel sales close in the first half of 2027 near book value pass; no sales or sales at large losses fail.
- Recent events
- 2026-08-31: Choice named Dominic Dragisich as President and CEO and as a director. He had been Interim CEO since May 20, 2026, and was the company's Chief Financial Officer from 2017 to 2023. The former CEO, Patrick Pacious, left the board.
2026-08-28: Choice signed a $500 million unsecured term loan with a maturity of August 28, 2029, at SOFR plus 1.25%. It expects to use the money for general purposes, including debt repayment.
2026-08-05: Choice reported Q2 2026 results. Adjusted EBITDA rose 6% to $175 million, and adjusted EPS rose 5% to $2.02. U.S. RevPAR rose 1.3%, U.S. room openings rose 27%, and global net rooms grew 2.6%. Choice raised its 2026 adjusted EBITDA guidance to $635 million to $650 million but lowered its net income guidance to $230 million to $241 million.
2026-05-20: Patrick Pacious stepped down as President and CEO and stayed as an advisor until August 31, 2026. The board named Dominic Dragisich, Chief Growth & Strategy Officer, as Interim CEO and started a search for a permanent CEO.