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1. Company Snapshot

1.a. Company Description

Choice Hotels International, Inc., together with its subsidiaries, operates as a hotel franchisor worldwide.The company operates in Hotel Franchising and Corporate & Other segments.It franchises lodging properties under the brand names of Comfort Inn, Comfort Suites, Quality, Clarion, Clarion Pointe, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Extended Stay Hotel, WoodSpring Suites, Everhome Suites, Cambria Hotels, and Ascend Hotel Collection.


The company also develops and markets cloud-based property management software to non-franchised hoteliers.As of March 31, 2022, it had approximately 7,000 hotels with approximately 600,000 rooms in 35 countries and territories.Choice Hotels International, Inc.


was founded in 1939 and is headquartered in Rockville, Maryland.

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1.b. Last Insights on CHH

The recent 3-month performance of Choice Hotels International, Inc. was negatively impacted by its Q3 earnings miss, with quarterly earnings of $2.1 per share, falling short of the Zacks Consensus Estimate of $2.18 per share. Additionally, technical analysis suggests a bearish signal, as the stock has broken its Cakra formation. Despite a 2.3% global net room growth and 54% increase in global franchise agreements awarded, investors are cautious due to soft domestic demand and downgraded 2025 guidance.

1.c. Company Highlights

2. Choice Hotels' Q3 2025 Earnings: A Strong Performance

Choice Hotels International reported a robust third-quarter 2025 adjusted EBITDA of $190 million, representing a 7% year-over-year increase, driven by a higher revenue brand mix, growth in small and medium business traveler and group revenue, and a surge in international business earnings. The company's adjusted earnings per share (EPS) were $2.10, slightly below the estimated $2.18. Revenue growth was supported by a 2.5% increase in net global rooms, with higher revenue segments growing by 3.5%. The company's U.S. extended-stay portfolio has grown by over 20% in the past 5 years, with 55,000 rooms.

Publication Date: Nov -15

📋 Highlights
  • EBITDA Growth: Adjusted EBITDA rose 7% to $190M in Q3 2025, driven by higher revenue brand mix and international expansion.
  • International Momentum: Achieved 35% growth in adjusted international EBITDA, expanding the portfolio by 8% to +150,000 rooms, with a 2027 target of doubling to $50M+ EBITDA.
  • Extended-Stay Growth: U.S. extended-stay room system grew 12% YoY (14% openings), with 55,000 rooms in portfolio, reflecting 20% growth over five years.
  • Technology Investment: Allocated $60M to develop an AI-driven intelligent ecosystem, enhancing franchisee operations and revenue optimization.
  • Loyalty Program Impact: Loyalty members stay nearly twice as many nights and spend more per stay, with next-gen enhancements targeting co-brand card revenue growth and direct bookings.

Revenue Growth Drivers

The company's revenue growth was driven by various factors, including a 35% growth in adjusted international EBITDA and an 8% year-over-year expansion in its international portfolio to over 150,000 rooms. The global RevPAR was flat compared to the prior year, but international markets drove growth, with a 9.5% year-over-year increase. The EMEA region delivered an 11% year-over-year increase, while the Americas and Asia Pacific regions posted 5% year-over-year RevPAR growth.

Business Mix and Growth Prospects

The company's business mix continues to shift towards a more balanced leisure-business mix, with a focus on small business travelers who are more resilient. The total available market for small and medium business travel is $13 billion annually, and the company aims to capture more of this share. The group business revenue is up 35% this year, driven by a 20% increase in sellers. International business is expected to continue growing, with plans to double EBITDA contribution by 2027.

Valuation and Growth Expectations

With a P/E Ratio of 11.46 and an EV/EBITDA of 11.89, the company's valuation appears reasonable considering its growth prospects. The company's ROE is exceptionally high at 10664.1%, indicating efficient use of equity. Analysts estimate next year's revenue growth at 2.6%. The company's focus on international growth, technology investments, and loyalty program enhancements positions it for long-term success.

Operational Efficiency and Cost Management

The company aims to maintain SG&A growth at a low single-digit rate, citing the benefits of AI-driven efficiencies. The implementation of new tools and an ERP system is reducing manual processes and driving productivity gains. The company's investment in technology is expected to evolve its platform into an intelligent ecosystem that helps franchisees optimize revenue and streamline operations.

3. NewsRoom

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Rock Creek Group Dumps 70,000 Choice Hotels International Shares

Dec -03

Source: fool.com

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Choice Hotels International Announces 2025 Grant Recipients of "Your Community, Your Choice" Program, Donates Over $85,000 to Support Local Communities

Dec -02

Source: prnewswire.com

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Is the Options Market Predicting a Spike in Choice Hotels Stock?

Dec -01

Source: zacks.com

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3 Hotel Stocks Worth Watching Despite Industry Pressure

Nov -24

Source: zacks.com

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Choice Hotels International to Make Landmark Entry into Africa Starting with Three Hotels in Kenya

Nov -19

Source: prnewswire.com

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Why Investing In Choice Hotels Isn't The Smartest Choice Right Now

Nov -19

Source: benzinga.com

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Baron Asset Fund Q3 2025 Performance Review

Nov -13

Source: seekingalpha.com

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Choice Hotels International, Inc. (CHH) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Hotel Franchising & Management

Expected Growth: 4.83%

Choice Hotels International, Inc.'s 4.83% growth in Hotel Franchising & Management is driven by increasing demand for mid-scale hotels, strategic partnerships, and expansion into new markets. Additionally, the company's focus on digital transformation, loyalty programs, and cost savings initiatives have contributed to its growth.

Corporate & Other

Expected Growth: 4.83%

The 4.83% growth in Corporate & Other segment of Choice Hotels International, Inc. is driven by increased demand for corporate travel, expansion of loyalty programs, and strategic partnerships. Additionally, the company's efforts to enhance its digital presence and improve customer experience have contributed to the growth.

Intersegment Eliminations

Expected Growth: 4.83%

The 4.83% growth in Intersegment Eliminations at Choice Hotels International, Inc. is driven by increased royalty fees from franchise agreements, higher software licensing revenue, and a rise in procurement services fees. Additionally, the company's strategic initiatives, such as the expansion of its loyalty program and growth in international markets, have contributed to the segment's growth.

7. Detailed Products

Econo Lodge

A budget-friendly hotel brand offering comfortable rooms and essential amenities for travelers on a budget.

Comfort Inn

A mid-range hotel brand providing comfortable rooms, free breakfast, and amenities like pools and fitness centers.

Quality Inn

A mid-range hotel brand offering comfortable rooms, free breakfast, and amenities like pools and fitness centers.

Clarion

An upscale hotel brand providing luxurious rooms, fine dining, and premium amenities like spas and fitness centers.

Ascend Hotel Collection

A soft brand of unique, independent hotels offering luxurious rooms and personalized service.

Suburban Extended Stay Hotel

A long-stay hotel brand providing spacious rooms with kitchenettes and amenities like laundry facilities.

WoodSpring Suites

An extended-stay hotel brand offering spacious rooms with kitchenettes and amenities like laundry facilities.

MainStay Suites

An extended-stay hotel brand providing spacious rooms with kitchenettes and amenities like laundry facilities.

8. Choice Hotels International, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Choice Hotels International, Inc. faces moderate threat from substitutes, as customers have various options for accommodations, including Airbnb, vacation rentals, and other hotel chains.

Bargaining Power Of Customers

Customers have significant bargaining power due to the high level of competition in the hospitality industry, allowing them to negotiate prices and amenities.

Bargaining Power Of Suppliers

Suppliers, such as food and beverage providers, have limited bargaining power due to the large number of suppliers available and the company's significant purchasing power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new companies to enter the market.

Intensity Of Rivalry

The hospitality industry is highly competitive, with many established players, leading to intense rivalry among companies, including Choice Hotels International, Inc.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 97.93%
Debt Cost 4.94%
Equity Weight 2.07%
Equity Cost 10.02%
WACC 5.05%
Leverage 4724.25%

11. Quality Control: Choice Hotels International, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Sonoco

A-Score: 5.9/10

Value: 7.2

Growth: 5.0

Quality: 5.6

Yield: 8.0

Momentum: 1.5

Volatility: 8.3

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Red Rock Resorts

A-Score: 5.8/10

Value: 4.7

Growth: 5.2

Quality: 5.5

Yield: 7.0

Momentum: 6.5

Volatility: 5.7

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Patrick Industries

A-Score: 5.3/10

Value: 4.6

Growth: 4.8

Quality: 5.5

Yield: 4.0

Momentum: 6.0

Volatility: 7.0

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Wyndham Hotels

A-Score: 5.3/10

Value: 3.1

Growth: 5.0

Quality: 6.9

Yield: 4.0

Momentum: 5.0

Volatility: 7.7

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Choice Hotels

A-Score: 5.1/10

Value: 5.8

Growth: 6.3

Quality: 6.4

Yield: 1.0

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

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Hyatt Hotels

A-Score: 4.0/10

Value: 1.5

Growth: 7.3

Quality: 4.2

Yield: 0.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

85.76$

Current Price

85.76$

Potential

-0.00%

Expected Cash-Flows