Choice Hotels' Room for Growth: It's Not Just About Beds Anymore

Choice Hotels International is moving further toward an asset-light business model, using franchise growth and property sales to reshape its position in the hospitality industry. The company reported $58 million in net income for the third quarter of 2026, down 68% from the same period last year. Adjusted EBITDA, however, increased 1% to $193 million, reflecting higher U.S. royalty revenue, partly offset by lower liquidated damages revenue and increased adjusted selling, general and administrative expenses. The decline in net income was largely influenced by a $100 million gain from a joint venture acquisition recorded in the prior-year quarter, as well as current-year charges related to a contract termination and hotel impairments.

Despite the mixed financial results, Choice reported improvements in several operating indicators. U.S. RevPAR, or revenue per available room, increased 3.8% year over year, supported by improvements in both occupancy and room rates. The U.S. net rooms growth rate also improved for the third consecutive quarter, with the room count approximately flat compared with September 2025. Meanwhile, U.S. franchise agreements awarded rose 24%, representing 6,900 rooms in development. The U.S. conversion pipeline reached 25,500 rooms, up 29% from a year earlier, reflecting continued interest in converting existing properties to Choice brands.

The company also raised its full-year RevPAR outlook, now projecting global and U.S. growth of 1.5% to 2.5% compared with 2025. Its adjusted EBITDA guidance increased to a range of $641 million to $651 million. These improvements come alongside a more deliberate approach to capital allocation. After the quarter ended, Choice completed the sale of two owned hotels, generating approximately $34 million in estimated net cash proceeds while retaining franchise agreements for both properties. The transactions advance its plan to reduce direct property ownership while maintaining relationships with hotels operating under its brands.

Chief Executive Officer Dom Dragisich described the company's priorities as a return to the fundamentals that have supported its business over several decades. Alongside its asset-light strategy, Choice is investing in commercial and technology capabilities intended to help franchisees attract demand and improve performance. The company also expanded its reach beyond traditional lodging through its October 1 acquisition of Harvest Hosts, an asset-light RV travel subscription platform, in a transaction valued at approximately $130 million. As of November 2, Choice owned 17 operating hotels, with another property under construction.

For hotel franchise networks, this combination of expansion, financial discipline, and operational investment underscores the importance of having reliable performance information across locations. The Financial Reporting feature available through Gorilla Dash can help franchisors organize financial information and monitor business performance across their networks. Choice Hotels' latest results demonstrate that asset-light growth involves more than selling properties: it requires maintaining strong franchise relationships, supporting operators, and investing in the systems needed to compete in a changing hospitality market.