Choice Hotels (CHH) AI Stock Analysis

Compare

284 Followers

Top Page

Choice Hotels

(NYSE:CHH)

Select Model

Neutral 67 (OpenAI - 5.2)

Rating:67Neutral

Price Target:

$120.00

▲(11.13% Upside)

Action:ReiteratedDate:02/20/26

The score is held back primarily by balance-sheet leverage and historically thin/volatile equity despite strong profitability and positive free cash flow. Technicals are supportive and valuation is reasonable, while the latest call was constructive on strategy and liquidity but tempered by near-term RevPAR softness in 2026 guidance.

Positive Factors

Asset-light franchise model

Choice's asset-light franchising generates recurring royalty and fee revenue tied to underlying hotel performance, requiring minimal property capex. This scalably leverages brand/distribution investments, supports margin resilience and faster geographic/product expansion over multiple quarters.

Strong cash generation

Consistent operating cash flow and a 2025 free cash flow rebound provide durable internal funding for marketing, loyalty and selective development. Reliable cash conversion underpins liquidity, supports disciplined capital allocation and cushions earnings through near-term lodging cycles.

High-quality pipeline & rapid conversions

A conversion-led pipeline concentrated in higher-revenue brands accelerates room growth with lower capital intensity than new builds. Faster openings and an accretive brand mix should lift the royalty base and average rates, sustaining revenue and margin expansion across quarters.

Negative Factors

Elevated leverage

High absolute debt and an elevated debt-to-equity profile materially constrain financial flexibility. In a lodging slowdown higher leverage raises refinancing, interest coverage and covenant risk, limiting capacity for opportunistic M&A, buybacks or meaningful incremental investment.

Near-term RevPAR pressure

Royalty fees scale with room revenue, so multi-quarter RevPAR softness directly compresses the fee base and operating leverage. Prolonged RevPAR weakness can reduce franchisee economics and slow conversion/new openings, pressuring revenue and cash flow durability.

Selective exits weigh on unit growth

Removing underperforming assets improves long-term portfolio quality but reduces near-term scale and royalties. Such exits temporarily slow net room growth and delay earnings accretion from higher-rev brands, creating a multi-quarter drag while management backfills with higher-quality conversions.

Choice Hotels (CHH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.01B

Dividend Yield1.32%

Average Volume (3M)641.72K

Price to Earnings (P/E)13.8

Beta (1Y)0.56

Revenue Growth2.76%

EPS Growth56.02%

CountryUS

Employees1,695

SectorConsumer Cyclical

Sector Strength84

IndustryTravel Lodging

Share Statistics

EPS (TTM)1.60

Shares Outstanding45,971,394

10 Day Avg. Volume562,527

30 Day Avg. Volume641,716

Financial Highlights & Ratios

PEG Ratio0.42

Price to Book (P/B)24.21

Price to Sales (P/S)2.75

P/FCF Ratio35.19

Enterprise Value/Market Cap1.39

Enterprise Value/Revenue4.35

Enterprise Value/Gross Profit8.54

Enterprise Value/Ebitda10.55

Forecast

1Y Price Target

$106.86

Price Target Upside-1.04% Downside

Rating ConsensusHold

Number of Analyst Covering9

EPS Forecast (FY)7.16

Revenue Forecast (FY)$1.62B

Choice Hotels Business Overview & Revenue Model

Company DescriptionChoice 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.

How the Company Makes MoneyChoice Hotels generates revenue primarily through franchise fees paid by hotel owners who operate under its brands. These fees typically include an initial franchise fee, ongoing royalties based on a percentage of room revenue, and additional fees for marketing and reservation services. The company also earns income from ancillary services, such as training, technology solutions, and property management support. Significant partnerships with online travel agencies and global distribution systems enhance its market presence and drive bookings, contributing to its overall earnings. Moreover, Choice Hotels' loyalty program, Choice Privileges, encourages repeat business and customer retention, further bolstering its revenue stream.

Choice Hotels Key Performance Indicators (KPIs)

Any

Average Daily Rate Breakdown

Average Daily Rate Breakdown
Reveals the average income earned per occupied room, providing insight into pricing strategy effectiveness and market positioning.

Chart InsightsUpscale and Midscale ADRs show consistent seasonal summer peaks and a modest upward bias, while Extended Stay and Economy have converged to a steadier, resilient floor—an ADR mix that benefits margin stability. Management’s call confirms the strategy: the pipeline is overwhelmingly skewed to higher‑revenue brands and international franchising, which should lift blended ADR and EBITDA over time. That upside, however, may be muted near term by softer U.S. RevPAR and weak government/inbound demand unless occupancy recovers.

Data provided by:

The Fly

Choice Hotels Earnings Call Summary

Earnings Call Date:Feb 19, 2026

(Q4-2025)

% Change Since: |

Next Earnings Date:May 12, 2026

Earnings Call Sentiment Positive

The call presented multiple clear operational and strategic wins: adjusted EBITDA and EPS in line with guidance, robust international revenue and openings, strong momentum in extended stay and conversion pipelines, membership and partnership revenue growth, and solid liquidity and cash generation. These positives were tempered by near-term RevPAR weakness (notably a 4.6% global Q4 decline and U.S. pressure after lapping hurricane benefits), some working capital timing impacts, and short-term unit growth headwinds from selective exits and higher key money expectations for 2026. Management characterized much of the RevPAR weakness as transitory and highlighted offsetting strength internationally and in higher-revenue segments, which, together with disciplined capital allocation, supports confidence in returning to positive U.S. net room growth and durable earnings expansion.

Q4-2025 Updates

Positive Updates

Adjusted EBITDA and EPS In Line with Guidance

Full-year adjusted EBITDA of $626,000,000, up 4% year-over-year; full-year adjusted EPS of $6.94 per share, both consistent with midpoint of guidance. Fourth-quarter adjusted EBITDA of $141,000,000 and adjusted EPS up ~3% year-over-year to ~$1.6.

Strong International Revenue and System Expansion

International revenues grew 37% in 2025; international system rooms expanded ~13% year-over-year to ~160,000 rooms, with an 82% increase in hotel openings. Directly franchised rooms now represent >40% of the international portfolio (up >20 percentage points over three years).

High-Quality Development Pipeline and Rapid Conversions

97% of rooms in the global pipeline are in higher-revenue brands and projects expected to be ~1.7x more accretive than the current portfolio. The conversion-led model enables faster openings (about five times faster than new construction); U.S. conversion pipeline increased 12% sequentially (from 09/30/2025) and conversion franchise agreements rose ~12% year-over-year in Q4.

Leadership in Extended Stay Segment

Tenth consecutive quarter of double-digit system growth in U.S. extended stay. Extended stay represents >40% of the U.S. pipeline; record U.S. extended stay openings up 8% year-over-year in 2025; ~57,000 extended stay rooms in the U.S. at year-end.

Average Royalty Rate Expansion

U.S. average royalty rate increased 8 basis points for full-year 2025 and 10 basis points in the fourth quarter year-over-year, reflecting shift to higher-revenue brands and improved franchisee economics.

Partnership Revenue and Loyalty Growth

Partnership revenues grew 14% year-over-year for 2025 (16% in Q4), driven by co-brand fees and supplier/strategic partnerships. Choice Privileges membership exceeded 74,000,000 members, up 7% year-over-year, with international enrollment up 11% in 2025.

Developer Interest and Franchise Agreement Momentum

Global franchise agreements awarded up 22% year-over-year (company-disclosed metric); U.S. midscale and economy franchise agreements up ~5% year-over-year; midscale global franchise agreements awarded up 14%, and Country Inn & Suites U.S. franchise agreements increased ~50% in 2025.

Healthy Liquidity and Cash Generation

Total liquidity of $571,000,000; net debt to trailing twelve-month EBITDA at 3.0x (within 3.0x–4.0x target range). Generated >$270,000,000 of operating cash flow for 2025, including nearly $86,000,000 in Q4, supporting disciplined capital allocation and a smaller net use of capital guidance for 2026 (~$20,000,000–$45,000,000).

Negative Updates

Fourth-Quarter Global and U.S. RevPAR Declines

Global RevPAR declined 4.6% year-over-year in Q4 on a currency-neutral basis. U.S. RevPAR (excluding a prior-year hurricane benefit) declined ~2.2% year-over-year, with notable region-specific pressure and tougher comps from the prior-year hurricane impact.

Near-Term RevPAR Guidance and Q1 Pressure

2026 guidance calls for global and U.S. RevPAR in a range of -2% to +1% (constant currency); management expects Q1 RevPAR to be negative as the company laps prior-year hurricane-related benefits, with an anticipated inflection into Q2.

Operational Headwinds: Government Shutdown and International Inbound Softness

Results were impacted by a government shutdown and continued softness in international inbound travel, which pressured occupancy and RevPAR in certain U.S. markets during 2025.

Working Capital Drag in 2025

Working capital and other items were a notable drag (~$98,000,000) in 2025; management indicated most of this is timing-related and expected to reverse in 2026, but it was a near-term cash flow headwind.

Selective Hotel Exits Caused Short-Term Unit Growth Headwind

Company accelerated selective exits of underperforming hotels (about 20 hotels called out in Q4), which generated royalties well below the portfolio average and amounted to roughly 30–40 basis points of net unit growth impact in the short term while management seeks to backfill with higher-quality hotels.

Key Money and Capital Outlay Trends

Net key money was ~$83,000,000 in 2025 (gross outlays ~ $92,000,000) and management expects key money to increase to approximately $105,000,000–$110,000,000 in 2026 due to accelerating openings; 2025 net capital outlays for development were ~$103,000,000 but are expected to taper significantly going forward.

Modest Global Rooms Growth

Global rooms grew only ~0.5% year-over-year in Q4, reflecting the combination of exits, slower new construction industry-wide, and timing of conversions/openings.

Capital Return Visibility Limited by Prior M&A

Share repurchases paused earlier in the year following a ~ $100,000,000 acquisition of the remaining Canadian JV; while repurchases resumed in Q4, management did not provide a specific buyback guidance range, limiting near-term clarity on cadence of capital returns to shareholders.

Company Guidance

Choice guided FY2026 global RevPAR of -2% to +1% (constant currency) with U.S. RevPAR in the same -2% to +1% range, noting Q1 should remain negative with an inflection in Q2; average royalty rates are expected to grow in the mid‑single digits and adjusted SG&A to rise in the mid‑single digits. Management expects key‑money gross outlays of roughly $105–$110 million, net hotel development capital outlays to decline to about $20–$45 million, and reiterated a strong balance sheet with $571 million of liquidity and net debt/TTM EBITDA of 3.0x (within its 3.0x–4.0x target). The outlook excludes any incremental M&A or share repurchases after 12/31, and the company said U.S. net rooms growth should return to positive in 2026 driven by conversion activity and a higher‑royalty, more accretive pipeline.

Choice Hotels Financial Statement Overview

Summary

Strong profitability and improving 2025 margins plus consistently positive free cash flow support the score, but balance-sheet risk is a major constraint: debt has risen to ~$2.0B and equity has been thin/volatile (debt-to-equity ~11x in 2025), reducing flexibility if lodging demand weakens.

Income Statement

Positive

Revenue has grown from $774M (2020) to $1.597B (2025), but growth has clearly moderated recently (about 2–3% in 2024–2025 vs. double-digit gains in 2022–2023). Profitability is a key strength: net margin remains strong (about 23% in 2025), improving versus 2023–2024, and gross margin expanded meaningfully in 2025. A watch item is that operating profitability appears more volatile across years (with 2025 operating margin not provided while prior years were solid), suggesting earnings quality should be monitored even though bottom-line results are strong.

Balance Sheet

Neutral

Leverage is the main weakness. Total debt increased to ~$2.01B in 2025 (from ~$1.11B in 2021), and the debt-to-equity profile is aggressive and unstable due to very low/negative equity in some years (equity was negative in 2024 and near-zero in 2023). While equity improved to ~$181M in 2025, the debt-to-equity ratio remains elevated (~11x), leaving less balance-sheet flexibility if the lodging cycle softens. Returns on equity are distorted by the small equity base (very high in 2025 and negative in 2024), reinforcing that leverage is driving much of the equity math.

Cash Flow

Positive

Cash generation is generally solid, with operating cash flow consistently positive and free cash flow positive each year. Free cash flow rebounded sharply in 2025 to ~$270M (up strongly vs. 2024), and 2025 free cash flow matched reported net income (a supportive signal for earnings cash conversion that year). However, cash flow coverage of debt is only moderate (operating cash flow running at roughly 31%–84% of total debt historically, and ~58% in 2025), and free cash flow has been somewhat uneven (declines in 2022–2024 before the 2025 rebound).

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.60B	1.58B	1.54B	1.40B	1.07B
Gross Profit	980.59M	744.17M	690.28M	700.05M	599.60M
EBITDA	659.27M	553.64M	440.39M	544.52M	473.67M
Net Income	369.95M	299.67M	258.51M	332.15M	288.96M
Balance Sheet
Total Assets	2.92B	2.53B	2.39B	2.10B	1.93B
Cash, Cash Equivalents and Short-Term Investments	45.00M	40.18M	26.75M	41.57M	511.61M
Total Debt	2.13B	1.89B	1.68B	1.29B	1.11B
Total Liabilities	2.74B	2.58B	2.36B	1.95B	1.67B
Stockholders Equity	181.23M	-45.27M	35.60M	154.66M	265.88M
Cash Flow
Free Cash Flow	124.65M	173.55M	178.26M	277.11M	305.83M
Operating Cash Flow	270.45M	319.40M	296.55M	367.06M	383.70M
Investing Cash Flow	-218.26M	-84.57M	-265.63M	-442.43M	-78.93M
Financing Cash Flow	-50.10M	-221.71M	-45.94M	-394.15M	-27.72M

Choice Hotels Technical Analysis

Technical Analysis Sentiment

Positive

Last Price107.98

Price Trends

50DMA

103.51

Positive

100DMA

99.00

Positive

200DMA

110.87

Negative

Market Momentum

MACD

1.47

Positive

RSI

53.02

Neutral

STOCH

32.46

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHH, the sentiment is Positive. The current price of 107.98 is above the 20-day moving average (MA) of 107.43, above the 50-day MA of 103.51, and below the 200-day MA of 110.87, indicating a neutral trend. The MACD of 1.47 indicates Positive momentum. The RSI at 53.02 is Neutral, neither overbought nor oversold. The STOCH value of 32.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CHH.

Choice Hotels Risk Analysis

Choice Hotels disclosed 33 risk factors in its most recent earnings report. Choice Hotels reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Choice Hotels Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATAT	75 Outperform	$5.51B	27.34	45.85%	1.76%	36.17%	25.41%
HTHT	74 Outperform	$16.30B	31.58	32.28%	3.60%	5.70%	9.53%
IHG	71 Outperform	$20.88B	28.72	―	1.21%	8.89%	23.20%
H	68 Neutral	$15.50B	-305.08	-1.51%	0.36%	2.61%	-106.74%
CHH	67 Neutral	$5.01B	13.79	541.60%	1.32%	2.76%	56.02%
WH	62 Neutral	$6.34B	33.75	34.53%	2.13%	3.38%	38.04%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

* Consumer Cyclical Sector Average

Performance Comparison

CHH

Choice Hotels

105.35

-36.49

-25.73%

HTHT

H World Group

54.80

20.74

60.89%

Hyatt Hotels

161.50

20.99

14.94%

IHG

Intercontinental Hotels Group

139.04

14.13

11.31%

Wyndham Hotels & Resorts

81.80

-24.41

-22.98%

ATAT

Atour Lifestyle Holdings

39.27

9.18

30.51%

Choice Hotels Corporate Events

Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance

Choice Hotels standardizes and updates executive severance framework

Neutral

Jan 6, 2026

On December 31, 2025, Choice Hotels International, Inc. updated its executive non-competition, non-solicitation and severance framework by entering into a new Non-Competition, Non-Solicitation and Severance Benefit Agreement with Chief Segment and International Operations Officer Raul Ramirez and designating this revised 2025 agreement as the template for future executive officers, subject to board committee approval. The 2025 agreement shifts severance to single lump-sum payments, refines key definitions such as change in control and good reason, adds cooperation requirements, clarifies tax withholding, reinforces employees’ rights to communicate with government agencies and protections under labor and trade secrets laws, and includes more detailed provisions to address Section 409A of the Internal Revenue Code. On the same date, Choice amended existing severance agreements with executives Dominic Dragisich, David Pepper, Scott Oaksmith and Simone Wu to align severance timing, tax withholding and protected-rights language with Section 409A and the updated 2025 template, signaling a broader standardization and compliance-focused tightening of its executive compensation and post-employment protections framework.

The most recent analyst rating on (CHH) stock is a Sell with a $99.00 price target. To see the full list of analyst forecasts on Choice Hotels stock, see the CHH Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 20, 2026