Investments in Affiliates

12 Months Ended

Dec. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

The Company has equity method investments in affiliates primarily related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites in strategic markets.

As of December 31, 2024 and 2023, the Company had total investments in affiliates in the consolidated balance sheets of $117.0 million and $70.6 million, respectively, which included investments in affiliates that represent VIEs of $104.2 million and $59.4 million, respectively. The Company has determined that it is not the primary beneficiary of any of these VIEs, however the Company does exercise significant influence through its equity ownership and as a result, the investments in these affiliates are accounted for under the equity method of accounting. During the years ended December 31, 2024, 2023, and 2022, the Company recognized gains of $6.9 million, and losses of $3.4 million and $3.7 million, respectively, from these investments that represent VIEs. The Company's maximum exposure to losses related to its investments in the VIEs is limited to the total of its respective equity investment as well as certain limited payment guaranties, which are described in Note 23 to these consolidated financial statements.

During the years ended December 31, 2024 and 2023, the Company recognized no impairment charges related to its equity method investments. During the year ended December 31, 2022, the Company recognized impairment charges of $0.2 million related to certain equity method investments. The Company estimated the fair value of each investment on an individual basis and derived the fair value from a combination of observable prices from offers received for either the underlying collateral or the ownership interest of the unconsolidated affiliate, comparable market transactions, and DCF techniques to project the cash

flows for the investment based upon the underlying property. There are judgments and assumptions in each of these fair value determinations, including our selection of comparable market transactions, the amount and timing of the expected future cash flows, long-term growth rates, and sales capitalization rates. These nonrecurring fair value measurements are classified as level three in the fair value measurement hierarchy, as the Company utilized unobservable inputs which are significant to the overall fair value. Based on these analyses, in each case, the Company determined that the fair value declined below the carrying value and the decline is other-than-temporary. As a result, the Company recognized an impairment charge equal to the difference between the carrying value and the estimated fair value for each investment.

During the year ended December 31, 2024, the Company received distributions from the sale of affiliates of $15.9 million and recognized net gains of $7.2 million, which was recognized in equity in net gain of affiliates in the consolidated statements of income. During the year ended December 31, 2023, the Company received distributions of $0.9 million which resulted in no net gains (losses). During the year ended December 31, 2022, the Company received no distributions and therefore recognized no net gains (losses).

The Company's ownership interests in its affiliates were as follows:


	Ownership Interest
	December 31, 2024		December 31, 2023
Choice Hotels Canada, Inc. (1)	50	%	50	%
Main Street WP Hotel Associates, LLC	50	%	50	%
CS Hotel West Orange, LLC	50	%	50	%
City Market Hotel Development, LLC (2)	—	%	43	%

926 James M. Wood Boulevard, LLC	75	%	75	%
EH Glendale JV, LLC	80	%	80	%
CS Lakeside Santa Clara LLC	50	%	50	%
BL 219 Holdco, LP	50	%	50	%
Integrated 32 West Randolph, LLC	20	%	20	%
EH Nampa JV LLC	80	%	80	%
Radisson Hotel La Crosse (1)	14	%	14	%
EH Cheyenne JV, LLC	80	%	80	%
EH Waco JV, LLC	80	%	80	%
EH Amarillo JV, LLC	80	%	80	%
EH Yuma JV, LLC	80	%	80	%
EH El Paso JV, LLC	80	%	80	%
EH Brownsville JV, LLC	80	%	80	%
EH Wichita JV, LLC	80	%	—	%
CH East Avenue, LLC	65	%	—	%
EH Salem JV, LLC	80	%	—	%
EH Clarksville JV, LLC	80	%	—	%

(1) Non-VIE investments.

(2) During the year ended December 31, 2024, the Company received a liquidating distribution as a result of the affiliate selling its underlying assets.

The following tables present summarized financial information for all of the unconsolidated joint ventures in which the Company holds an investment in affiliate that is accounted for under the equity method of accounting:


	Year Ended December 31,
(in thousands)	2024		2023		2022
Revenues	$	65,732	$	65,634	$	58,821
Operating income	$	14,199	$	12,504	$	7,977
(Loss) income before income taxes	$	(1,203)	$	314	$	1,837
Net loss	$	(3,488)	$	(1,255)	$	(1,058)


	As of December 31,
(in thousands)	2024		2023
Current assets	$	71,737	$	63,397
Non-current assets	412,269		269,693
Total assets	$	484,006	$	333,090

Current liabilities	$	84,966	$	63,526
Non-current liabilities	257,130		177,451
Total liabilities	$	342,096	$	240,977