NORTH BETHESDA, Maryland—Choice Hotels International, Inc. reported its second-quarter 2025 results.
Highlights include:
- Net income was $81.7 million for the second quarter of 2025, compared to $87.1 million in the same period of 2024, representing diluted earnings per share (EPS) of $1.75, compared to $1.80 in the second quarter of 2024.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the second quarter of 2025 grew to $165.0 million, a second-quarter record and a 2 percent increase compared to the same period of 2024. Excluding the impact of a $2 million operating guarantee payment for a portfolio of managed hotels, which was acquired in connection with the company’s purchase of Radisson Hotels Americas, second-quarter 2025 adjusted EBITDA was $167.0 million.
- Adjusted diluted EPS for the second quarter of 2025 grew to $1.92, a second-quarter record and a 4 percent increase compared to the same period of 2024.
- Increased net global rooms system size by 2.1 percent, including 3.0 percent growth for global upscale, extended stay, and midscale rooms portfolio, compared to June 30, 2024.
- Increased net international rooms system size by 5.0 percent, highlighted by a 15 percent increase in openings, compared to June 30, 2024.
- Accelerated international expansion, including strengthening the company’s presence in Brazil by extending a master franchise agreement for over 10,000 rooms with Atlantica Hospitality International by 20 years, nearly tripling the room count in France through a direct franchise agreement with Zenitude Hotel-Residences, and signing strategic agreements with SSAW Hotels & Resorts in China, including a distribution agreement which is expected to add over 9,500 rooms in 2025 and a master franchising agreement, which is expected to add approximately 10,000 rooms over the next five years.
- Acquired the remaining 50 percent interest in Choice Hotels Canada in July for approximately $112 million, subject to customary adjustments for working capital and cash, funded through available cash and existing credit facilities. The transaction paves the way for the company’s accelerated growth in Canada by expanding the product offering from eight to 22 Choice brands. The portfolio includes 327 units and over 26,000 rooms, already reflected in the company’s system count. Management expects the total Choice Hotels Canada business to generate approximately $18 million in EBITDA for the full year of 2025.
- Global pipeline exceeded 93,000 rooms as of June 30, 2025, including nearly 77,000 domestic rooms.
- Increased net rooms portfolio for the domestic extended stay segment by 10.5 percent compared to June 30, 2024, and the segment’s pipeline reached nearly 43,000 rooms as of June 30, 2025.
“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,” said Patrick Pacious, president and chief executive officer. “We are especially pleased with our strong international performance, where we have achieved significant growth and accelerated global expansion through a recent strategic acquisition, the signing of key partnerships, and entry into new markets. With more diversified growth avenues, enhanced product quality and value proposition driving stronger customer engagement, and a leading position in the cycle-resilient extended-stay segment, we remain well-positioned to deliver long-term returns for all our stakeholders.”
Financial Performance
- Partnership services and fees rose 7 percent to $27.1 million in the second quarter of 2025, compared to the same period of 2024, and increased 16 percent to $52.4 million in the first half of 2025, compared to the same period of 2024.
- Adjusted selling, general, and administrative expenses (SG&A) declined 4 percent to $77.6 million in the second quarter of 2025, compared to the same period of 2024. Excluding the impact of a $2 million operating guarantee payment for a portfolio of managed hotels, which was acquired in connection with the company’s acquisition of Radisson Hotels Americas, second-quarter 2025 adjusted SG&A was $75.6 million, 6 percent lower than the same period of 2024.
- The domestic effective royalty rate increased by 8 basis points to 5.12 percent for the second quarter of 2025, compared to the same period of 2024.
- Domestic revenue per available room (RevPAR) decreased by 2.9 percent for the second quarter of 2025, compared to the same period of 2024, reflecting macroeconomic uncertainty and previously disclosed difficult comparisons due to the timing of Easter and eclipse-related travel in 2024. Excluding the Easter and eclipse impacts, domestic RevPAR declined approximately 1.6 percent forthe second quarter of 2025, compared to the same period of 2024.
- The domestic RevPAR for the extended stay portfolio outperformed the total lodging industry by 40 basis points, and the economy transient portfolio outperformed the economy chain scale by 320 basis points in domestic RevPAR for the second quarter of 2025, compared to the same period of 2024.
System Size and Development
- Domestic upscale, extended stay, and midscale net rooms portfolio grew by 2.3 percent compared to June 30, 2024.
- The company’s WoodSpring Suites brand grew by 9.7 percent to nearly 33,000 rooms since June 30, 2024
- For the upscale brands, global net rooms grew by 14.7 percent from June 30, 2024, and global pipeline increased by 7 percent from March 31, 2025, reaching nearly 29,000 rooms.
- Increased the domestic economy transient pipeline by 8 percent to over 1,700 rooms as of June 30, 2025, compared to June 30, 2024.
Balance Sheet and Liquidity
As of June 30, 2025, the company had total available liquidity of $587.5 million, including available borrowing capacity and cash and equivalents. The company’s net debt leverage ratio was 3.0 times as of June 30, 2025.
During the first half of 2025, the company increased cash flows from operating activities by 2 percent to $116.1 million, compared to the same period of 2024. The amount included $95.6 million generated in the second quarter.
Outlook
The company is adjusting its RevPAR outlook to reflect a more moderate domestic expectation amidst a changing macroeconomic backdrop. The company’s adjusted EBITDA outlook reflects an incremental contribution of approximately $6 million for the remainder of 2025 from the acquisition of Choice Hotels Canada. The outlook information below includes forward-looking non-GAAP financial measures, which management uses in forecasting performance. The adjusted numbers in the company’s outlook below exclude the net surplus or deficit generated from reimbursable revenue from franchised and managed properties, due diligence and transition costs, additional repurchases of company stock, and other items. These figures include the $2 million impact from the operating guarantee payment related to managed hotels incurred during the second quarter of 2025.
