CHH changes
Pick any two versions below to diff them.
- Price
- $108.41 → $120.01(+10.7%)
- Discount category
- Below intrinsic value → Close to intrinsic value
- Next earnings
- Nov 2, 2026 → Feb 2, 2027
- Next earnings is estimate
- No → Yes
- 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 removed: June added: September 30, 2026, its global system had removed: 661,089 added: 660,614 rooms: removed: 499,226 added: 498,215 in the United States and removed: 161,863 added: 162,399 in other countries. The global pipeline had about removed: 77,300 added: 78,200 rooms. In 2025, Choice bought its Canadian master franchisee, Choice Hotels Canada. removed: It owns 19 operating hotels and expects to start added: On October 1, 2026, it bought Harvest Hosts, a membership platform for RV travel. Choice is selling removed: them added: its owned hotels: after it sold two in removed: the first half of 2027. added: October 2026, it owned 17 operating hotels on November 2, 2026. 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. removed: Its 2026 guidance for U.S. removed: RevPAR growth is 0% to 1.25%, and U.S. rooms removed: fell 0.3% added: were about flat in the year to removed: June added: September 30, 2026. added: In November 2026, Choice raised its 2026 guidance for U.S. RevPAR growth to 1.5% to 2.5%, but from a low base. The long-time CEO stepped down in May 2026, and net income guidance fell added: twice in 2026, mainly because Choice spends more on tools and guest delivery for franchisees. Net debt was removed: 3.1 added: 3.2 times adjusted EBITDA at removed: June added: September 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 removed: fall. added: fall; Choice expects U.S. net rooms growth of about 1% by the end of 2026. Extended stay removed: and international rooms must keep growing at double-digit removed: rates. added: rates, and international rooms near the 7% of the year to September 30, 2026. The sale of owned removed: hotels from the first half of 2027 added: hotels, which started in October 2026, must return capital and keep leverage within the target of 3.0 to 4.0 times. The removed: Q3 added: Q4 2026 report removed: on November 2, 2026 and added: with the 2027 outlook in early 2027 removed: are added: is the next removed: tests. added: test. 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 removed: 0% added: 1.5% to removed: 1.25%. added: 2.5%, after 3.8% growth in Q3 2026. 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 removed: guidance. added: guidance in August and again in November 2026. If the spending does not raise franchisee revenue, profits stay lower. Debt rose with removed: borrowings under the removed: revolving credit facility and the new $500 million term removed: loan. added: loan and the borrowings for the Harvest Hosts purchase. Net debt was removed: 3.1 added: 3.2 times adjusted EBITDA at removed: June added: September 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: removed: $43M added: $171M Debt: removed: $2.0B added: $2.2B Net debt: $2.0B Net debt / EBITDA: removed: 3.1× added: 3.2× (medium) Interest cover: removed: 3.4× added: 3.7× Undrawn credit line: removed: $433M added: $757M Last debt due: 2034 Choice Hotels funds itself with senior notes, a revolving credit facility and, since August 2026, a term loan. At removed: June added: September 30, 2026, debt principal was about removed: $2.02 added: $2.19 billion: senior notes of $400 million due 2029, $450 million due 2031 and $600 million due 2034, removed: plus $567 added: the $500 million added: term loan due August 2029, and about $240 million drawn on the $1 billion revolving credit facility due added: June 2029. added: The term loan repaid part of the revolver in August 2026 and lowered the interest margin on that debt by 0.15%. Cash was removed: $42.8 million, and total added: $170.6 million at September 30, 2026, which included borrowings made before the purchase of Harvest Hosts for about $130 million on October 1, 2026. Total available liquidity was removed: $475 added: $927.5 million. Net debt was removed: 3.1 added: 3.2 times adjusted EBITDA for the 12 months to removed: June added: September 30, 2026, within the company's target range of 3.0 to 4.0 removed: times. On August 28, added: times, and Choice said that it stayed in that range after the purchase. In October 2026, Choice removed: signed a $500 million unsecured term loan due 2029 added: sold two owned hotels for removed: general purposes, including debt repayment. The term loan requires a leverage ratio added: about $34 million of removed: no more than 4.5 times and a fixed charge coverage ratio of at least 2.5 times. added: net cash. Interest cover is operating income divided by interest expense for the first removed: half added: nine months of 2026. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- added: Oct 2026: First sales of owned hotels. Passed. 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. Outcome: Choice sold two owned hotels in October 2026, earlier than planned, for about $34 million of net cash and kept their franchise agreements. Nov 2, 2026: Q3 2026 earnings: U.S. rooms and RevPAR. removed: Pending. added: Passed. 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. removed: Q2 added: Outcome: U.S. RevPAR rose 3.8%, U.S. rooms were about flat after a 0.3% fall in the year to June, and Choice raised its RevPAR and adjusted EBITDA guidance. Feb 2, 2027 (estimate): removed: First sales of owned hotels. added: Q4 2026 results and 2027 outlook. Pending. Watch: removed: The first owned hotel sales close in added: U.S. net rooms growth near 1% at the removed: first half added: end of added: 2026 and a 2027 removed: near book value added: outlook for higher adjusted EBITDA pass; removed: no sales added: falling U.S. rooms or removed: sales at large losses added: a 2027 outlook for lower adjusted EBITDA fail.
- Recent events
- added: Nov 2, 2026: Choice reported Q3 2026 results. Adjusted EBITDA rose 1% to $193 million, and adjusted diluted EPS rose 11% to $2.33. Net income fell 68% to $58 million, because Q3 2025 had a $100 million gain and Q3 2026 had a $24 million charge to end an option to buy a European hotel business and a $6 million impairment of two owned hotels. U.S. RevPAR rose 3.8%, U.S. rooms were about flat and global net rooms grew 1.7%. After the quarter, Choice sold two owned hotels for about $34 million of net cash and kept their franchise agreements. It raised its 2026 U.S. RevPAR growth guidance to 1.5% to 2.5% and its adjusted EBITDA guidance to $641 million to $651 million, but lowered its net income guidance to $178 million to $185 million. Oct 1, 2026: Choice completed its purchase of Harvest Hosts for about $130 million, funded with cash and borrowings under its revolving credit facility. Sep 30, 2026: Choice agreed to buy Harvest Hosts, a membership network for RV travel with more than 11,200 host locations, for an enterprise value of about $130 million in cash. Choice funds it with cash and its revolving credit facility. It expected the deal to close on October 1, 2026, and does not expect a material effect on its 2026 results or its share repurchase plans. Aug 31, 2026: 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. Aug 28, 2026: 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. Aug 5, 2026: 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. May 20, 2026: 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.