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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________
FORM 10-Q
_____________________________________________
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 001-13393
_____________________________________________
CHOICE HOTELS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________

Delaware |  | 52-1209792
(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
915 Meeting Street |  | 20852
Suite 600 |
North Bethesda, | Maryland |
(Address of Principal Executive Offices) |  | (Zip Code)

(Registrant’s telephone number, including area code): (301) 592-5000
(Former name, former address and former fiscal year, if changed since last report): N/A
________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class |  | Trading Symbol(s) |  | Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01 per share |  | CHH |  | New York Stock Exchange

_____________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 31, 2025, the number of shares outstanding of Choice Hotels International, Inc.'s common stoc k was 46,272,618.

Table of Contents
CHOICE HOTELS INTERNATIONAL, INC.
INDEX

| PAGE NO.
PART I. FINANCIAL INFORMATION |
Item 1 - Financial Statements (Unaudited) | 3
Consolidated Statements of Income - For the three and nine months ended September 30, 2025 and 2024 | 3
Consolidated Statements of Comprehensive Income - For the three and nine months ended S eptember 30, 2025 and 2024 | 4
Consolidated Balance Sheets - As of September 30, 2025 and December 31, 2024 | 5
Consolidated Statements of Cash Flows - For the nine months ended September 30, 2025 and 2024 | 6
Consolidated Statements of Shareholders' Equity (Deficit) - For the three and nine months ended September 30, 2025 and 2024 | 7
Notes to Consolidated Financial Statements | 9
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22
Item 3 - Quantitative and Qualitative Disclosures About Market Risk | 36
Item 4 - Controls and Procedures | 36
PART II. OTHER INFORMATION |
Item 1 - Legal Proceedings | 37
Item 1A - Risk Factors | 37
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds | 37
Item 3 - Defaults Upon Senior Securities | 37
Item 4 - Mine Safety Disclosures | 37
Item 5 - Other Information | 37
Item 6 - Exhibits | 39
SIGNATURES | 40

2

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
REVENUES |  |  |  |  |  |  |
Franchise and management fees | $ | 193,777 |  |  | $ | 188,237 |  |  | $ | 515,931 |  |  | $ | 511,450 |
Partnership services and fees | 28,868 |  |  | 24,320 |  |  | 81,313 |  |  | 71,527 |
Owned hotels | 33,167 |  |  | 31,936 |  |  | 91,255 |  |  | 85,345 |
Other | 22,094 |  |  | 11,647 |  |  | 57,937 |  |  | 49,671 |
Revenue for reimbursable costs from franchised and managed properties | 169,434 |  |  | 171,824 |  |  | 460,207 |  |  | 477,076 |
Total revenues | 447,340 |  |  | 427,964 |  |  | 1,206,643 |  |  | 1,195,069 |
OPERATING EXPENSES |  |  |  |  |  |  |
Selling, general and administrative | 79,610 |  |  | 69,022 |  |  | 243,118 |  |  | 230,020 |
Business combination, diligence and transition costs | 1,494 |  |  | 984 |  |  | 1,940 |  |  | 17,723 |
Depreciation and amortization | 15,760 |  |  | 12,893 |  |  | 42,932 |  |  | 38,545 |
Owned hotels | 23,792 |  |  | 22,343 |  |  | 67,271 |  |  | 62,370 |
Reimbursable expenses from franchised and managed properties | 184,268 |  |  | 170,939 |  |  | 504,437 |  |  | 501,857 |
Total operating expenses | 304,924 |  |  | 276,181 |  |  | 859,698 |  |  | 850,515 |
Operating income | 142,416 |  |  | 151,783 |  |  | 346,945 |  |  | 344,554 |
OTHER EXPENSES AND (INCOME), NET |  |  |  |  |  |  |
Interest expense | 23,490 |  |  | 22,038 |  |  | 67,468 |  |  | 66,064 |
Interest income | (1,435) |  |  | (2,411) |  |  | (4,450) |  |  | (6,557) |
Gain from an acquisition of a joint venture | (100,025) |  |  | — |  |  | (100,025) |  |  | — |
Gain on sale of assets | (713) |  |  | — |  |  | (713) |  |  | — |
Loss on extinguishment of debt | — |  |  | 331 |  |  | — |  |  | 331 |
Other gains, net | (721) |  |  | (4,013) |  |  | (5,659) |  |  | (133) |
Equity in net loss (gain) of affiliates | 10,904 |  |  | (1,310) |  |  | 11,035 |  |  | (9,088) |
Total other expenses and (income), net | (68,500) |  |  | 14,635 |  |  | (32,344) |  |  | 50,617 |
Income before income taxes | 210,916 |  |  | 137,148 |  |  | 379,289 |  |  | 293,937 |
Income tax expense | 30,920 |  |  | 31,432 |  |  | 73,025 |  |  | 70,076 |
Net income | $ | 179,996 |  |  | $ | 105,716 |  |  | $ | 306,264 |  |  | $ | 223,861 |
Basic earnings per share | $ | 3.89 |  |  | $ | 2.24 |  |  | $ | 6.59 |  |  | $ | 4.64 |
Diluted earnings per share | $ | 3.86 |  |  | $ | 2.22 |  |  | $ | 6.52 |  |  | $ | 4.61 |
Cash dividends declared per share | $ | 0.2875 |  |  | $ | 0.2875 |  |  | $ | 0.8625 |  |  | $ | 0.8625 |

The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
(UNAUDITED)

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Net income | $ | 179,996 |  |  | $ | 105,716 |  |  | $ | 306,264 |  |  | $ | 223,861 |
Other comprehensive (loss) income, net of tax: |  |  |  |  |  |  |
Foreign currency translation adjustment | (1,557) |  |  | 532 |  |  | 585 |  |  | 292 |
Other comprehensive (loss) income, net of tax | (1,557) |  |  | 532 |  |  | 585 |  |  | 292 |
Comprehensive income | $ | 178,439 |  |  | $ | 106,248 |  |  | $ | 306,849 |  |  | $ | 224,153 |

The accompanying notes are an integral part of these consolidated financial statements.
4

Table of Contents
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

| September 30, 2025 |  | December 31, 2024
ASSETS |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 52,583 |  |  | $ | 40,177 |
Accounts receivable (net of allowance for credit losses of $48,284 and $45,610, respectively) | 236,499 |  |  | 176,672 |
Income taxes receivable | 20,382 |  |  | 5,419 |
Notes receivable (net of allowance for credit losses of $6,523 and $5,805, respectively) | 95,509 |  |  | 75,501 |
Prepaid expenses and other current assets | 45,374 |  |  | 41,317 |
Total current assets | 450,347 |  |  | 339,086 |
Property and equipment (net of accumulated depreciation and amortization of $147,450 and $125,903, respectively) | 628,260 |  |  | 604,345 |
Operating lease right-of-use assets | 79,029 |  |  | 83,451 |
Goodwill | 304,511 |  |  | 220,187 |
Intangible assets (net of accumulated amortization of $242,136 and $209,037, respectively) | 1,045,510 |  |  | 884,013 |
Notes receivable (net of allowance for credit losses of $960 and $1,526, respectively) | 16,268 |  |  | 32,682 |
Investments for employee benefit plans, at fair value | 49,017 |  |  | 47,603 |
Investments in affiliates | 134,424 |  |  | 117,016 |
Deferred income taxes | 87,975 |  |  | 108,308 |
Other assets | 112,193 |  |  | 93,836 |
Total assets | $ | 2,907,534 |  |  | $ | 2,530,527 |
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |  |  |
Current liabilities |  |  |
Accounts payable | $ | 154,224 |  |  | $ | 134,865 |
Accrued expenses and other current liabilities | 114,902 |  |  | 136,729 |
Deferred revenue | 109,451 |  |  | 102,114 |
Liability for guest loyalty program | 89,965 |  |  | 89,013 |
Total current liabilities | 468,542 |  |  | 462,721 |
Long-term debt | 1,918,504 |  |  | 1,768,526 |
Long-term deferred revenue | 134,622 |  |  | 132,259 |
Deferred compensation and retirement plan obligations | 55,014 |  |  | 53,316 |
Deferred income taxes | 22,914 |  |  | — |
Operating lease liabilities | 109,782 |  |  | 113,255 |
Liability for guest loyalty program | 42,681 |  |  | 40,607 |
Other liabilities | 5,701 |  |  | 5,114 |
Total liabilities | 2,757,760 |  |  | 2,575,798 |
Commitments and contingencies (Note 12) |  |  |
Common stock, $0.01 par value; 160,000,000 shares authorized; 95,065,638 shares issued at September 30, 2025 and December 31, 2024; 46,271,815 and 46,856,567 shares outstanding at September 30, 2025 and December 31, 2024, respectively | 951 |  |  | 951 |
Additional paid-in-capital | 397,775 |  |  | 370,201 |
Accumulated other comprehensive loss | (5,608) |  |  | (6,193) |
Treasury stock, at cost; 48,793,823 and 48,209,071 shares at September 30, 2025 and December 31, 2024, respectively | (2,510,911) |  |  | (2,411,527) |
Retained earnings | 2,267,567 |  |  | 2,001,297 |
Total shareholders’ equity (deficit) | 149,774 |  |  | (45,271) |
Total liabilities and shareholders’ equity (deficit) | $ | 2,907,534 |  |  | $ | 2,530,527 |

The accompanying notes are an integral part of these consolidated financial statements.
5

Table of Contents
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

| Nine Months Ended
| September 30,
| 2025 |  | 2024
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
Net income | $ | 306,264 |  |  | $ | 223,861 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 42,932 |  |  | 38,545 |
Depreciation and amortization – reimbursable expenses from franchised and managed properties | 14,295 |  |  | 14,314 |
Franchise agreement acquisition cost amortization | 25,020 |  |  | 20,584 |
Gain from an acquisition of a joint venture | (100,025) |  |  | — |
Gain on sale of assets | (713) |  |  | — |
Non-cash share-based compensation and other charges | 27,439 |  |  | 32,445 |
Non-cash interest, investments, and affiliate income, net | (6,131) |  |  | (7,529) |
Deferred income taxes | (17,713) |  |  | (21,086) |
Equity in net loss of affiliates, less distributions received | 16,424 |  |  | 56 |
Franchise agreement acquisition costs, net of reimbursements | (62,359) |  |  | (84,085) |
Change in working capital and other | (60,676) |  |  | 19,435 |
Net cash provided by operating activities | 184,757 |  |  | 236,540 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
Investments in other property and equipment | (26,927) |  |  | (33,620) |
Investments in owned hotel properties | (85,307) |  |  | (81,239) |
Contributions to investments in affiliates | (90,005) |  |  | (47,695) |
Issuances of notes receivable | (6,351) |  |  | (24,405) |
Collections of notes receivable | 3,036 |  |  | 2,277 |
Business acquisition, net of cash acquired | (73,395) |  |  | — |
Proceeds from the sale of assets | 52,000 |  |  | — |
Proceeds from sales of equity securities | — |  |  | 108,149 |
Distributions from sales of affiliates | 44,617 |  |  | 15,850 |
Other items, net | 4,475 |  |  | (2,680) |
Net cash used in investing activities | (177,857) |  |  | (63,363) |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
Net borrowings pursuant to revolving credit facilities | 148,482 |  |  | 154,500 |
Proceeds from the issuance of long-term debt | — |  |  | 593,574 |
Proceeds from economic development loans | 250 |  |  | — |
Repayment of long-term debt | — |  |  | (500,000) |
Debt issuance costs | — |  |  | (8,069) |
Purchases of treasury stock | (112,958) |  |  | (348,964) |
Dividends paid | (40,194) |  |  | (42,488) |
Proceeds from the exercise of stock options | 7,488 |  |  | 9,279 |
Net cash provided by (used in) financing activities | 3,068 |  |  | (142,168) |
Net change in cash and cash equivalents | 9,968 |  |  | 31,009 |
Effect of foreign exchange rate changes on cash and cash equivalents | 2,438 |  |  | 802 |
Cash and cash equivalents, beginning of period | 40,177 |  |  | 26,754 |
Cash and cash equivalents, end of period | $ | 52,583 |  |  | $ | 58,565 |
Supplemental disclosure of cash flow information: |  |  |
Cash payments during the period for |  |  |
Income taxes, net of refunds and transferable tax credits | $ | 75,992 |  |  | $ | 64,734 |
Interest, net of capitalized interest | $ | 76,338 |  |  | $ | 56,202 |
Non-cash investing and financing activities |  |  |
Dividends declared but not paid | $ | 13,299 |  |  | $ | 13,499 |
Investments in property, equipment, and intangible assets recognized in accounts payable and accrued expense liabilities | $ | 20,441 |  |  | $ | 19,522 |

The accompanying notes are an integral part of these consolidated financial statements.
6

Table of Contents
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

| Common Stock - Shares Outstanding |  | Common Stock - Par Value |  | Additional Paid-in- Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Treasury Stock |  | Retained Earnings |  | Total
Balance as of December 31, 2023 | 49,526,245 |  |  | $ | 951 |  |  | $ | 330,750 |  |  | $ | (5,671) |  |  | $ | (2,046,791) |  |  | $ | 1,756,359 |  |  | $ | 35,598 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 31,009 |  |  | 31,009 |
Other comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | 454 |  |  | — |  |  | — |  |  | 454 |
Share-based payment activity(1) | 252,869 |  |  | — |  |  | 4,862 |  |  | — |  |  | 6,323 |  |  | — |  |  | 11,185 |
Dividends declared ($0.2875 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (14,147) |  |  | (14,147) |
Treasury purchases | (494,910) |  |  | — |  |  | — |  |  | — |  |  | (57,372) |  |  | — |  |  | (57,372) |
Balance as of March 31, 2024 | 49,284,204 |  |  | $ | 951 |  |  | $ | 335,612 |  |  | $ | (5,217) |  |  | $ | (2,097,840) |  |  | $ | 1,773,221 |  |  | $ | 6,727 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 87,136 |  |  | 87,136 |
Other comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | (694) |  |  | — |  |  | — |  |  | (694) |
Share-based payment activity(1) | 17,095 |  |  | — |  |  | 8,561 |  |  | — |  |  | 685 |  |  | — |  |  | 9,246 |
Dividends declared ($0.2875 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,613) |  |  | (13,613) |
Treasury purchases | (1,950,432) |  |  | — |  |  | — |  |  | — |  |  | (235,581) |  |  | — |  |  | (235,581) |
Balance as of June 30, 2024 | 47,350,867 |  |  | $ | 951 |  |  | $ | 344,173 |  |  | $ | (5,911) |  |  | $ | (2,332,736) |  |  | $ | 1,846,744 |  |  | $ | (146,779) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 105,716 |  |  | 105,716 |
Other comprehensive (loss), net of tax | — |  |  | — |  |  | — |  |  | 532 |  |  | — |  |  | — |  |  | 532 |
Share-based payment activity(1) | 63,559 |  |  | — |  |  | 12,035 |  |  | — |  |  | 2,534 |  |  | — |  |  | 14,569 |
Dividends declared ($0.2875 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,499) |  |  | (13,499) |
Treasury purchases | (455,387) |  |  | — |  |  | — |  |  | — |  |  | (56,691) |  |  | — |  |  | (56,691) |
Balance as of September 30, 2024 | 46,959,039 |  |  | $ | 951 |  |  | $ | 356,208 |  |  | $ | (5,379) |  |  | $ | (2,386,893) |  |  | $ | 1,938,961 |  |  | $ | (96,152) |

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| Common Stock - Shares Outstanding |  | Common Stock - Par Value |  | Additional Paid-in- Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Treasury Stock |  | Retained Earnings |  | Total
Balance as of December 31, 2024 | 46,856,567 |  |  | $ | 951 |  |  | $ | 370,201 |  |  | $ | (6,193) |  |  | $ | (2,411,527) |  |  | $ | 2,001,297 |  |  | $ | (45,271) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 44,534 |  |  | 44,534 |
Other comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | 63 |  |  | — |  |  | — |  |  | 63 |
Share-based payment activity(1) | 188,586 |  |  | — |  |  | 5,813 |  |  | — |  |  | 8,945 |  |  | — |  |  | 14,758 |
Dividends declared ($0.2875 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,391) |  |  | (13,391) |
Treasury purchases | (456,142) |  |  | — |  |  | — |  |  | — |  |  | (64,627) |  |  | — |  |  | (64,627) |
Balance as of March 31, 2025 | 46,589,011 |  |  | $ | 951 |  |  | $ | 376,014 |  |  | $ | (6,130) |  |  | $ | (2,467,209) |  |  | $ | 2,032,440 |  |  | $ | (63,934) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 81,734 |  |  | 81,734 |
Other comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | 2,079 |  |  | — |  |  | — |  |  | 2,079 |
Share-based payment activity(1) | 29,639 |  |  | — |  |  | 11,147 |  |  | — |  |  | 1,181 |  |  | — |  |  | 12,328 |
Dividends declared ($0.2875 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,304) |  |  | (13,304) |
Treasury purchases | (355,276) |  |  | — |  |  | — |  |  | — |  |  | (45,141) |  |  | — |  |  | (45,141) |
Balance as of June 30, 2025 | 46,263,374 |  |  | $ | 951 |  |  | $ | 387,161 |  |  | $ | (4,051) |  |  | $ | (2,511,169) |  |  | $ | 2,100,870 |  |  | $ | (26,238) |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 179,996 |  |  | 179,996 |
Other comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | (1,557) |  |  | — |  |  | — |  |  | (1,557) |
Share-based payment activity(1) | 10,060 |  |  | — |  |  | 10,614 |  |  | — |  |  | 451 |  |  | — |  |  | 11,065 |
Dividends declared ($0.2875 per share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,299) |  |  | (13,299) |
Treasury purchases | (1,619) |  |  | — |  |  | — |  |  | — |  |  | (193) |  |  | — |  |  | (193) |
Balance as of September 30, 2025 | 46,271,815 |  |  | $ | 951 |  |  | $ | 397,775 |  |  | $ | (5,608) |  |  | $ | (2,510,911) |  |  | $ | 2,267,567 |  |  | $ | 149,774 |

(1) During certain periods presented, accumulated dividends were paid to certain shareholders upon vesting of their performance vested restricted stock units ("PVRSU"), which are presented in Share-based payment activity.
The accompanying notes are an integral part of these consolidated financial statements.
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CHOICE HOTELS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements of Choice Hotels International, Inc. and subsidiaries (collectively, "Choice" or the "Company") have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are necessary to fairly present the Company's financial position and results of operations. Except as otherwise disclosed, all adjustments are of a normal recurring nature.
Certain information and footnote disclosures normally included in the consolidated financial statements presented in accordance with GAAP have been condensed or omitted. The Company believes the disclosures made are adequate to prevent the information presented from being misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2024 and the notes thereto included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on February 20, 2025. The interim results are not necessarily indicative of the entire year's results.
Certain prior year amounts in our consolidated financial statements have been reclassified in order to maintain comparability with the current year presentation. The reclassifications were not as a result of any error in our consolidated financial statements.
The Company reclassified certain prior year amounts in the consolidated statements of income in order to maintain comparability with the current year presentation.
•Royalty, licensing and management fees were revised to franchise and management fees in the consolidated statements of income, and now include the revenues previously presented in royalty, licensing and management fees, with the exception of partnership licensing revenues which are now presented in partnership services and fees in the consolidated statements of income, and the addition of the revenues generated from programs, platforms, and services associated with the Company's franchise operations which were previously presented in other revenues from franchised and managed properties in the consolidated statements of income.
•Initial franchise fees, which were previously presented as a standalone financial statement line item, are now presented within franchise and management fees in the consolidated statements of income.
•Platform and procurement services fees were revised to partnership services and fees in the consolidated statements of income, and now include the revenues previously presented in platform and procurement services fees, with the exception of the revenues from the Company’s annual franchisee convention which are now presented in other revenues, the addition of partnership licensing revenues which were previously presented in royalty, licensing and management fees, and the addition of the revenues generated from other non-franchising agreements which are primarily software as a service (“SaaS”) arrangements for non-franchised hoteliers which were previously presented in other revenues in the consolidated statements of income.
•Other revenues from franchised and managed properties were revised to revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income, and now include the revenues previously presented in other revenues from franchised and managed properties, with the exception of the revenues generated from programs, platforms, and services associated with the Company’s franchise operations which are now presented in franchise and management fees in the consolidated statements of income.
•Selling, general and administrative expenses were revised to include the expenses incurred related to programs, platforms, and services associated with the Company’s franchise operations, which were previously presented in other expenses from franchised and managed properties in the consolidated statements of income.
•Depreciation and amortization was revised to include amortization expense from information technology platforms, which was previously presented in other expenses from franchised and managed properties in the consolidated statements of income.
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•Other expenses from franchised and managed properties were revised to reimbursable expenses from franchised and managed properties in the consolidated statements of income, and now include the expenses previously presented in other expenses from franchised and managed properties, with the exception of the expenses incurred from programs, platforms, and services associated with the Company’s franchise operations which are now presented in selling, general and administrative expenses, and amortization expense from information technology platforms which is now presented in depreciation and amortization expense in the consolidated statements of income.
The reclassifications had no effect on the Company's previously reported total revenues, total operating expenses, operating income, or net income.
The following table presents the effect of the reclassifications on the three and nine months ended September 30, 2024 consolidated statements of income.

|  | Three Months Ended |  | Nine Months Ended
|  | September 30, 2024 |  | September 30, 2024
|  | As previously reported |  | Reclassification |  | As reclassified |  | As previously reported |  | Reclassification |  | As reclassified
REVENUES |  |  |  |  |  |  |  |  |  |  |  |
Franchise and management fees |  | $ | 147,151 |  |  | $ | 41,086 |  |  | $ | 188,237 |  |  | $ | 394,431 |  |  | $ | 117,019 |  |  | $ | 511,450 |
Initial franchise fees |  | 5,866 |  |  | (5,866) |  |  | — |  |  | 19,133 |  |  | (19,133) |  |  | — |
Partnership services and fees |  | 16,178 |  |  | 8,142 |  |  | 24,320 |  |  | 58,060 |  |  | 13,467 |  |  | 71,527 |
Owned hotels |  | 31,936 |  |  | — |  |  | 31,936 |  |  | 85,345 |  |  | — |  |  | 85,345 |
Other |  | 13,857 |  |  | (2,210) |  |  | 11,647 |  |  | 45,251 |  |  | 4,420 |  |  | 49,671 |
Revenue for reimbursable costs from franchised and managed properties |  | 212,976 |  |  | (41,152) |  |  | 171,824 |  |  | 592,849 |  |  | (115,773) |  |  | 477,076 |
Total revenues |  | 427,964 |  |  | — |  |  | 427,964 |  |  | 1,195,069 |  |  | — |  |  | 1,195,069 |
OPERATING EXPENSES |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative |  | 49,077 |  |  | 19,945 |  |  | 69,022 |  |  | 162,697 |  |  | 67,323 |  |  | 230,020 |
Business combination, diligence and transition costs |  | 984 |  |  | — |  |  | 984 |  |  | 17,723 |  |  | — |  |  | 17,723 |
Depreciation and amortization |  | 10,861 |  |  | 2,032 |  |  | 12,893 |  |  | 32,623 |  |  | 5,922 |  |  | 38,545 |
Owned hotels |  | 22,343 |  |  | — |  |  | 22,343 |  |  | 62,370 |  |  | — |  |  | 62,370 |
Reimbursable expenses from franchised and managed properties |  | 192,916 |  |  | (21,977) |  |  | 170,939 |  |  | 575,102 |  |  | (73,245) |  |  | 501,857 |
Total operating expenses |  | 276,181 |  |  | — |  |  | 276,181 |  |  | 850,515 |  |  | — |  |  | 850,515 |
Operating income |  | $ | 151,783 |  |  | $ | — |  |  | $ | 151,783 |  |  | $ | 344,554 |  |  | $ | — |  |  | $ | 344,554 |

The Company also reclassified certain prior year amounts in the consolidated statements of cash flows in order to maintain comparability with the current year presentation. Depreciation and amortization was revised to include amortization expense from information technology platforms, which was previously presented in depreciation and amortization - other expenses from franchised and managed properties in the consolidated statements of cash flows. Depreciation and amortization - other expenses from franchised and managed properties was revised to depreciation and amortization - reimbursable expenses from franchised and managed properties in the consolidated statements of cash flows. Investments in intangible assets, purchases of investments for employee benefits plans, and proceeds from sales of investments for employee benefits plans, which were previously presented in standalone financial statement line items, are now presented within other items, net in the consolidated statements of cash flows. The reclassifications had no effect on the Company's previously reported net cash provided by operating activities, the net cash used in investing activities, or the net change in cash and cash equivalents.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are included in the “Significant Accounting Policies” section of Note 1 in the Annual Report on Form 10-K for the year ended December 31, 2024.
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Recently Issued Accounting Standards
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 is designed to provide additional information to financial statement users in regard to how an entity's operations, risks, and planning affect its tax rate, opportunities, and future cash flows. ASU 2023-09 is effective for the annual reporting period beginning after December 15, 2024. Based on the Company's assessment, the adoption of this standard is not expected to have an impact on the Company's consolidated financial statements, but it will require enhanced income tax disclosures in the notes to the consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03"). ASU 2024-03 requires public entities to provide detailed disclosure of the income statement expenses in the footnotes to the consolidated financial statements. ASU 2024-03 does not require any changes to the expense captions on the face of the consolidated income statement. ASU 2024-03 is effective for the annual reporting period beginning after December 15, 2026 and for the interim periods within the annual reporting period beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that ASU 2024-03 will have on the Company's consolidated financial statements.
2. Revenue
Contract Liabilities
Contract liabilities relate to (i) advance consideration received related to services considered to be a part of the brand intellectual property performance obligation, such as initial franchise fees that are paid when a franchise agreement is executed and system implementation fees that are paid at the time of installation, and (ii) amounts received when loyalty points are issued but the associated revenue has not yet been recognized because the related loyalty points have not been redeemed.
Deferred revenues from initial franchise fees and system implementation fees are typically recognized over a ten-year period, unless the franchise agreement is terminated and the hotel exits the franchise system whereby the remaining deferred revenue amounts are recognized to revenue in the period of termination. Loyalty points are typically redeemed within three years of issuance.
The following table summarizes the significant changes in the contract liabilities balances during the period from December 31, 2024 to September 30, 2025:

(in thousands) |
Balance as of December 31, 2024 | $ | 216,697 |
Increases to the contract liability balance due to cash received | 110,450 |
Revenue recognized in the period | (92,947) |
Balance as of September 30, 2025 | $ | 234,200 |

Remaining Performance Obligations
The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $234.2 million as of September 30, 2025. This amount represents the fixed transaction price that will be recognized as revenue in future periods, which is presented as current and non-current deferred revenue in the consolidated balance sheets.
Based on the practical expedient elections permitted by ASU 2014-09, Revenue From Contracts with Customers (Topic 606) and subsequent amendments ("Topic 606"), the Company does not disclose the value of unsatisfied performance obligations for (i) variable consideration subject to the sales or usage-based royalty constraint or comprising a component of a series (including franchise, partnership, qualified vendor, and SaaS agreements), (ii) variable consideration for which the Company recognizes revenue at the amount to which it has the right to invoice for the services performed, or (iii) contracts with an expected original duration of one year or less.
The loyalty points represent a performance obligation attributable to the usage of the points, and thus the revenues are recognized at the point in time when the loyalty points are redeemed by the members for benefits (with both franchisees and third-party partners), net of the cost of redemptions. The loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $31.8 million and $23.7 million for the three months ended September 30, 2025 and 2024, respectively, and $88.5 million and $79.5 million for the nine months ended September 30, 2025 and 2024, respectively.
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3. Receivables and Allowance for Credit Losses
Notes Receivable
The Company has provided financing in the form of notes receivable loans to franchisees in order to support the development of hotel properties in strategic markets. The Company's credit quality indicator is the level of security in the note receivable.
The following table summarizes the composition of the notes receivable balances by credit quality indicator and the allowance for credit losses:

(in thousands) | September 30, 2025 |  | December 31, 2024
Senior | $ | 99,849 |  |  | $ | 94,963 |
Subordinated | 15,367 |  |  | 15,433 |
Unsecured | 4,044 |  |  | 5,118 |
Total notes receivable | $ | 119,260 |  |  | $ | 115,514 |
Less: allowance for credit losses | 7,483 |  |  | 7,331 |
Total notes receivable, net of allowance for credit losses | $ | 111,777 |  |  | $ | 108,183 |
Current portion, net of allowance for credit losses | $ | 95,509 |  |  | $ | 75,501 |
Long-term portion, net of allowance for credit losses | $ | 16,268 |  |  | $ | 32,682 |

The following table summarizes the amortized cost basis of the notes receivable by the year of origination and credit quality indicator:

(in thousands) | 2025 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | Prior |  | Total
Senior | $ | 1,684 |  |  | $ | 42,280 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 55,885 |  |  | $ | 99,849 |
Subordinated | 1,199 |  |  | — |  |  | 3,502 |  |  | — |  |  | — |  |  | 10,666 |  |  | 15,367 |
Unsecured | 236 |  |  | 124 |  |  | — |  |  | — |  |  | 748 |  |  | 2,936 |  |  | 4,044 |
Total notes receivable | $ | 3,119 |  |  | $ | 42,404 |  |  | $ | 3,502 |  |  | $ | — |  |  | $ | 748 |  |  | $ | 69,487 |  |  | $ | 119,260 |

The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses:

(in thousands) | September 30, 2025 |  | December 31, 2024
Beginning balance | $ | 7,331 |  |  | $ | 8,616 |
Provision (reversal) for credit losses | 152 |  |  | (609) |
Recoveries | — |  |  | (676) |
Ending balance | $ | 7,483 |  |  | $ | 7,331 |

During the year ended December 31, 2024, the recoveries were primarily associated with cash collections pursuant to a settlement agreement with a borrower.
As of September 30, 2025 and December 31, 2024, three and one note receivable loans, respectively, with senior credit quality indicators met the definition of collateral-dependent and are collateralized by the membership interests in the borrowing entities, the associated land parcel, or the operating hotel. The Company used both a market approach that uses quoted market prices and an income approach that uses discounted cash flows to value the underlying collateral. The Company reviewed the borrower's financial statements, economic trends, industry projections for the market, and comparable sales capitalization rates, which represent significant inputs to the cash flow projections. These nonrecurring fair value measurements are classified as Level 3 in the fair value measurement hierarchy because they are unobservable inputs which are significant to the overall fair value. Based on the Company's analysis, the fair value of the collateral secures substantially all of the carrying value of the respective note receivable loan. The allowance for credit losses attributable to the collateral-dependent note receivable loans was $3.2 million and $2.2 million as of September 30, 2025 and December 31, 2024, respectively.
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The following table summarizes the past due balances by credit quality indicator of the notes receivable:

(in thousands) | 1- 30 days Past Due |  | 31-89 days Past Due |  | > 90 days Past Due |  | Total Past Due |  | Current |  | Total Notes Receivable
As of September 30, 2025 |  |  |  |  |  |  |  |  |  |  |
Senior | $ | — |  |  | $ | — |  |  | $ | 42,900 |  |  | $ | 42,900 |  |  | $ | 56,949 |  |  | $ | 99,849 |
Subordinated | — |  |  | — |  |  | 2,264 |  |  | 2,264 |  |  | 13,103 |  |  | 15,367 |
Unsecured | — |  |  | — |  |  | 384 |  |  | 384 |  |  | 3,660 |  |  | 4,044 |
| $ | — |  |  | $ | — |  |  | $ | 45,548 |  |  | $ | 45,548 |  |  | $ | 73,712 |  |  | $ | 119,260 |
As of December 31, 2024 |  |  |  |  |  |  |  |  |  |  |
Senior | $ | — |  |  | $ | — |  |  | $ | 15,200 |  |  | $ | 15,200 |  |  | $ | 79,763 |  |  | $ | 94,963 |
Subordinated | — |  |  | — |  |  | 2,264 |  |  | 2,264 |  |  | 13,169 |  |  | 15,433 |
Unsecured | — |  |  | — |  |  | 784 |  |  | 784 |  |  | 4,334 |  |  | 5,118 |
| $ | — |  |  | $ | — |  |  | $ | 18,248 |  |  | $ | 18,248 |  |  | $ | 97,266 |  |  | $ | 115,514 |

The amortized cost basis of the notes receivable in a non-accrual status was $45.2 million and $17.5 million as of September 30, 2025 and December 31, 2024, respectively.
Variable Interest through Notes Receivable
The Company has issued notes receivable loans to certain entities that have created variable interests in the associated borrowers totaling $107.8 million and $103.1 million as of September 30, 2025 and December 31, 2024, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs"). For collateral-dependent loans, the Company has no exposure to the borrowing VIE beyond the respective note receivable and the limited commitments which are addressed in Note 12.
Transactions with Unconsolidated Affiliates
The Company has extended loans to various unconsolidated affiliates or members of our unconsolidated affiliates. The Company had a total principal balance on these loans of $65.6 million and $66.2 million as of September 30, 2025 and December 31, 2024, respectively. These loans mature at various dates and bear interest at fixed or variable rates.
Accounts Receivable
Accounts receivable consists primarily of franchise and related fees due from the hotel franchisees and are recorded at the invoiced amount.
During the nine months ended September 30, 2025, the Company recognized provisions for credit losses on accounts receivable of $12.4 million in selling, general and administrative expenses, and $8.7 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income. During the year ended December 31, 2024, the Company recognized provisions for credit losses on accounts receivable of $11.0 million in selling, general and administrative expenses, and $9.7 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income. During the nine months ended September 30, 2025, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $18.4 million. During the year ended December 31, 2024, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $14.4 million.
4. Investments in Affiliates
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 September 30, 2025 and December 31, 2024, the Company had total investments in affiliates in the consolidated balance sheets of $134.4 million and $117.0 million, respectively, which included investments in affiliates that represent VIEs of $134.0 million and $104.2 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 three months ended September 30, 2025 and 2024, the Company recognized losses totaling $10.9 million and $0.6 million, respectively, from these investments that represent VIEs. During the nine months ended September 30, 2025 and 2024, the Company recognized losses totaling $12.8 million and gains totaling $5.0 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 12 to these consolidated financial statements.
On July 10, 2025, the Company entered into a joint venture agreement to develop and operate Everhome Suites in certain strategic markets (the "Joint Venture"). The Company contributed $71.6 million in cash to the Joint Venture in exchange for an equity ownership interest. The Company concluded that the Joint Venture represents a VIE. The Company determined that it is not the primary beneficiary of the VIE, however, the Company does exercise significant influence through its equity ownership and as a result, the Company's investment in the Joint Venture is accounted for under the equity method of accounting and reported within investments in affiliates in the consolidated balance sheets.
Subsequent to the formation of the Joint Venture, the following transactions were completed:
•The Joint Venture entered into a loan facility for up to $500 million. In connection with the loan facility, the Company has provided a limited payment guarantee, which applies to all hotel projects funded by the loan facility, with the applicable guaranteed amount being determined on a hotel project by hotel project basis. The Company’s obligation under the limited payment guarantee with respect to any hotel project is effective upon the earlier of (a) the hotel's opening date or (b) 18 months after the date on which construction first started for the hotel. The maximum exposure to losses related to this limited payment guarantee is described in Note 12 to these consolidated financial statements.
•The Company sold four wholly-owned Everhome Suites hotels under construction to the Joint Venture for an aggregate sale price of $52.0 million, resulting in a gain of $0.7 million which is reported within gain on sale of assets in the consolidated statements of income. Prior to the sale, the four wholly-owned Everhome Suites hotels were reported within property and equipment in the consolidated balance sheets.
•Seven of the Company's unconsolidated affiliates, which the Company previously accounted for under the equity method of accounting, contributed their underlying assets to the Joint Venture. Prior to the transaction, the seven unconsolidated affiliates had an aggregate investment balance of $42.1 million, which was reported within investments in affiliates in the consolidated balance sheets.
On May 24, 2024, one of the Company's unconsolidated affiliates sold its underlying assets. The Company received a distribution from the unconsolidated affiliate and recognized a gain of $7.2 million, which was reported within equity in net gain of affiliates in the consolidated statements of income for the nine months ended September 30, 2024.
During the three and nine months ended September 30, 2025 and 2024, the Company recognized no impairment charges related to its equity method investments.
5. Debt
Debt consisted of the following:

| September 30, 2025 |  | December 31, 2024
| (in thousands)
$400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88%, less a discount and deferred issuance costs of $2.5 million and $3.0 million at September 30, 2025 and December 31, 2024, respectively | $ | 397,493 |  |  | $ | 397,042 |
$450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86%, less a discount and deferred issuance costs of $3.2 million and $3.7 million at September 30, 2025 and December 31, 2024, respectively | 446,757 |  |  | 446,300 |
$600 million senior unsecured notes due 2034 ("2024 Senior Notes") with an effective interest rate of 6.11%, less a discount and deferred issuance costs of $10.4 million and $11.2 million at September 30, 2025 and December 31, 2024, respectively | 589,643 |  |  | 588,764 |
$1 billion senior unsecured revolving credit facility with an effective interest rate of 5.65%, less deferred issuance costs of $3.0 million and $3.6 million at September 30, 2025 and December 31, 2024, respectively | 484,361 |  |  | 336,420 |
Economic development loans with an effective interest rate of 3.00% at September 30, 2025 | 250 |  |  | — |
Total long-term debt | $ | 1,918,504 |  |  | $ | 1,768,526 |

Refer to Note 12 and the Liquidity and Capital Resources section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information.
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6. Accumulated Other Comprehensive Loss
The changes in accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2025 and 2024 were as follows:

(in thousands) |  |  |
Balance as of December 31, 2024 |  |  | $ | (6,193) |
Other comprehensive income before reclassification |  |  | 585 |
Balance as of September 30, 2025 |  |  | $ | (5,608) |

(in thousands) |  |  |
Balance as of December 31, 2023 |  |  | $ | (5,671) |
Other comprehensive income before reclassification |  |  | 292 |
Balance as of September 30, 2024 |  |  | $ | (5,379) |

Other comprehensive loss, net of tax, for both the nine months ended September 30, 2025 and 2024 relates entirely to foreign currency items, and there were no amounts reclassified from accumulated other comprehensive loss during either period.
7. Fair Value Measurements
The Company estimates the fair value of its financial instruments utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The following summarizes the three levels of inputs, as well as the assets that the Company values using those levels of inputs on a recurring basis.
Level 1 - Quoted prices in active markets for identical assets and liabilities. The Company’s Level 1 assets consist of mutual funds held in the Company's Deferred Compensation Plan.
Level 2 - Observable inputs, other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable. The Company’s Level 2 assets consist of money market funds held in the Company's Deferred Compensation Plan.
Level 3 - Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument. The Company does not currently have any assets recorded at fair value on a recurring basis whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the nine months ended September 30, 2025 and during the year ended December 31, 2024.
The Company recognized the following assets at fair value on a recurring basis in the consolidated balance sheets:

| Fair Value Measurements at Reporting Date Using
(in thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
As of September 30, 2025 |  |  |  |  |  |  |
Mutual funds(1) | $ | 46,785 |  |  | $ | 46,785 |  |  | $ | — |  |  | $ | — |
Money market funds(1) | 4,006 |  |  | — |  |  | 4,006 |  |  | — |
Total | $ | 50,791 |  |  | $ | 46,785 |  |  | $ | 4,006 |  |  | $ | — |
As of December 31, 2024 |  |  |  |  |  |  |
Mutual funds(1) | $ | 43,887 |  |  | $ | 43,887 |  |  | $ | — |  |  | $ | — |
Money market funds(1) | 5,439 |  |  | — |  |  | 5,439 |  |  | — |
Total | $ | 49,326 |  |  | $ | 43,887 |  |  | $ | 5,439 |  |  | $ | — |

(1) The current assets at fair value noted above are presented in prepaid expenses and other current assets in the consolidated balance sheets. The long-term assets at fair value noted above are presented in investments for employee benefit plans, at fair value in the consolidated balance sheets.
Other Financial Instruments Disclosure
The Company believes that the fair values of its current assets and current liabilities approximate their reported carrying amounts due to the short-term nature of these items. In addition, the interest rate on the senior unsecured revolving credit facility adjusts frequently based on current market interest rates; therefore, the Company believes the carrying amount approximates the fair value.
The fair values of the Company's senior unsecured notes are classified as Level 2 because the significant inputs are observable in an active market. Refer to Note 5 for additional information on debt. As of September 30, 2025 and December 31, 2024, the carrying amounts and the fair values were as follows:

| September 30, 2025 |  | December 31, 2024
(in thousands) | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
2019 Senior Notes due 2029 | $ | 397,493 |  |  | $ | 382,324 |  |  | $ | 397,042 |  |  | $ | 371,600 |
2020 Senior Notes due 2031 | $ | 446,757 |  |  | $ | 421,322 |  |  | $ | 446,300 |  |  | $ | 405,351 |
2024 Senior Notes due 2034 | $ | 589,643 |  |  | $ | 614,064 |  |  | $ | 588,764 |  |  | $ | 601,836 |

The fair value estimates are determined at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. The settlement of such fair value amounts may not be possible or a prudent management decision.
8. Income Taxes
The Company's effective income tax rates were 14.7% and 22.9% for the three months ended September 30, 2025 and 2024, respectively. The Company's effective income tax rates were 19.3% and 23.8% for the nine months ended September 30, 2025 and 2024, respectively. The effective income tax rates for the three and nine months ended September 30, 2025 were lower than the U.S. federal income tax rate of 21.0% primarily due to the impact of a $100.0 million non-taxable gain from an acquisition of a joint venture and the purchase of transferable tax credits, which were partially offset by the impact of state income taxes. The effective income tax rates for the three and nine months ended September 30, 2024 were higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes.
9. Share-Based Compensation
The components of the Company’s share-based compensation expense were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Stock options | $ | 814 |  |  | $ | 1,319 |  |  | $ | 3,128 |  |  | $ | 3,957 |
Restricted stock | 3,318 |  |  | 3,246 |  |  | 9,648 |  |  | 9,959 |
Performance vested restricted stock units | 7,076 |  |  | 5,184 |  |  | 19,800 |  |  | 14,204 |
Total share-based compensation expense | $ | 11,208 |  |  | $ | 9,749 |  |  | $ | 32,576 |  |  | $ | 28,120 |

A summary of the share-based award activity during the nine months ended September 30, 2025 is presented below:

| Stock Options |  | Restricted Stock |  | Performance Vested Restricted Stock Units
| Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life |  | Shares |  | Weighted Average Grant Date Fair Value |  | Shares |  | Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2025 | 771,641 |  |  | $ | 111.15 |  |  |  |  | 355,405 |  |  | $ | 136.67 |  |  | 467,521 |  |  | $ | 137.74 |
Granted | — |  |  | — |  |  |  |  | 61,269 |  |  | 135.24 |  |  | 147,586 |  |  | 150.94 |
Performance-based leveraging (1) | — |  |  | — |  |  |  |  | — |  |  | — |  |  | 14,662 |  |  | 120.48 |
Exercised/vested | (62,025) |  |  | 107.71 |  |  |  |  | (62,976) |  |  | 129.44 |  |  | (116,107) |  |  | 151.76 |
Expired | (12,850) |  |  | 135.92 |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Forfeited | (613) |  |  | 134.58 |  |  |  |  | (11,381) |  |  | 125.15 |  |  | (22,904) |  |  | 136.71 |
Outstanding as of September 30, 2025 | 696,153 |  |  | $ | 111.02 |  |  | 5.5 years |  | 342,317 |  |  | $ | 138.43 |  |  | 490,758 |  |  | $ | 137.85 |
Options exercisable as of September 30, 2025 | 560,584 |  |  | $ | 107.86 |  |  | 5.0 years |  |  |  |  |  |  |  |

(1) Any revisions to the outstanding PVRSUs during the nine months ended September 30, 2025 is based on the Company's performance relative to the targeted performance conditions in the respective PVRSUs.
The fair value of the restricted stock and the PVRSUs with performance conditions that were granted during the nine months ended September 30, 2025 was equal to the market price of the Company’s common stock on the date of the grant. The fair value of the PVRSUs with market conditions that are based on the Company’s total shareholder return relative to a predetermined peer group was estimated using a Monte Carlo simulation method as of the date of the grant. The requisite service periods for the restricted stock and the PVRSUs was between 9 months and 48 months.
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10. Earnings Per Share
The Company’s shares of restricted stock contain rights to receive nonforfeitable dividends and thus are participating securities that require the computation of basic earnings per share using the two-class method. The shares of restricted stock are both potential shares of common stock and participating securities so the Company calculates diluted earnings per share by using the more dilutive of the treasury stock method or the two-class method. The calculation of earnings per share for the net income available to common shareholders excludes the distribution of dividends and the undistributed earnings attributable to the participating securities from the numerator. The diluted earnings per share includes stock options, PVRSUs, and RSUs in the calculation of the weighted average shares of common stock outstanding.
The computation of basic and diluted earnings per share was as follows:

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
(in thousands, except per share amounts) | 2025 |  | 2024 |  | 2025 |  | 2024
Numerator: |  |  |  |  |  |  |
Net income | $ | 179,996 |  |  | $ | 105,716 |  |  | $ | 306,264 |  |  | $ | 223,861 |
Income allocated to participating securities | (857) |  |  | (540) |  |  | (1,478) |  |  | (1,135) |
Net income available to common shareholders | $ | 179,139 |  |  | $ | 105,176 |  |  | $ | 304,786 |  |  | $ | 222,726 |
Denominator: |  |  |  |  |  |  |
Weighted average shares of common stock outstanding – basic | 46,050 |  |  | 46,904 |  |  | 46,226 |  |  | 47,979 |
Basic earnings per share | $ | 3.89 |  |  | $ | 2.24 |  |  | $ | 6.59 |  |  | $ | 4.64 |
Numerator: |  |  |  |  |  |  |
Net income | $ | 179,996 |  |  | $ | 105,716 |  |  | $ | 306,264 |  |  | $ | 223,861 |
Income allocated to participating securities | (857) |  |  | (540) |  |  | (1,478) |  |  | (1,135) |
Net income available to common shareholders | $ | 179,139 |  |  | $ | 105,176 |  |  | $ | 304,786 |  |  | $ | 222,726 |
Denominator: |  |  |  |  |  |  |
Weighted average shares of common stock outstanding – basic | 46,050 |  |  | 46,904 |  |  | 46,226 |  |  | 47,979 |
Dilutive effect of stock options, PVRSUs, and RSUs | 411 |  |  | 454 |  |  | 496 |  |  | 363 |
Weighted average shares of common stock outstanding – diluted | 46,461 |  |  | 47,358 |  |  | 46,722 |  |  | 48,342 |
Diluted earnings per share | $ | 3.86 |  |  | $ | 2.22 |  |  | $ | 6.52 |  |  | $ | 4.61 |

The following securities have been excluded from the calculation of the diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive effect:

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Stock options | 202 |  |  | 148 |  |  | 128 |  |  | 231 |
PVRSUs | 38 |  |  | 7 |  |  | 38 |  |  | 7 |

11. Reportable Segments
The Hotel Franchising & Management reportable segment includes the Company's hotel franchising operations, which consists of its 22 brands and brand extensions and the hotel management operations of 13 hotels (inclusive of four owned hotels). The 22 brands and brand extensions and hotel management operations are aggregated together within this reportable segment because they have similar economic characteristics, types of customers, distribution channels, and regulatory business environments. The revenues from the hotel franchising and management business include royalty fees, initial franchise fees and relicensing fees, cost reimbursement revenues, partnership services and fees, base and incentive management fees, and other hotel franchising and management-related revenue. The Company provides certain services under its franchise and management agreements which result in direct and indirect reimbursements. The cost reimbursement revenues received from the franchisees are included in Hotel Franchising & Management revenues and are offset by the related expenses in order to calculate Hotel Franchising & Management operating income. The equity in the earnings or losses from the hotel franchising-related investment in affiliates is allocated to the Hotel Franchising & Management reportable segment.
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The Company evaluates its Hotel Franchising & Management reportable segment based primarily on the operating income of the segment without allocating corporate expenses or indirect general and administrative expenses. The Corporate & Other column includes the operations of the Company's owned hotels.
Intersegment Eliminations to revenues is the elimination of Hotel Franchising & Management revenue which includes royalty fees, management and cost reimbursement fees charged to our owned hotels against the franchise and management fee expense that is recognized by our owned hotels in Corporate & Other operating income (loss).
Our President and Chief Executive Officer, who is our chief operating decision maker ("CODM"), utilizes budgeted and forecasted financial information as well as industry metrics, such as revenue per available room ("RevPar"), occupancy, and average daily room rate ("ADR"), to assess the performance and to make resource allocation decisions. The CODM does not use assets by operating segment when assessing the performance or when making operating segment resource allocation decisions and therefore, assets by segment are not disclosed below.
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The following tables present the financial information for the Company's segments:

| Three Months Ended September 30, 2025 |  | Three Months Ended September 30, 2024
(in thousands) | Hotel Franchising & Management |  | Corporate & Other |  | Intersegment Eliminations |  | Consolidated |  | Hotel Franchising & Management |  | Corporate & Other |  | Intersegment Eliminations |  | Consolidated
Revenues | $ | 413,237 |  |  | $ | 37,611 |  |  | $ | (3,508) |  |  | $ | 447,340 |  |  | $ | 395,795 |  |  | $ | 35,385 |  |  | $ | (3,216) |  |  | $ | 427,964 |
Other segment items (1) | 211,307 |  |  | 81,365 |  |  | (3,508) |  |  | 289,164 |  |  | 215,523 |  |  | 50,981 |  |  | (3,216) |  |  | 263,288 |
Depreciation and amortization | 8,723 |  |  | 7,037 |  |  | — |  |  | 15,760 |  |  | 6,670 |  |  | 6,223 |  |  | — |  |  | 12,893 |
Operating income (loss) | 193,207 |  |  | (50,791) |  |  | — |  |  | 142,416 |  |  | 173,602 |  |  | (21,819) |  |  | — |  |  | 151,783 |
Reconciliation of segment profit or loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  |  |  |  |  | 23,490 |  |  |  |  |  |  |  |  | 22,038 |
Interest income |  |  |  |  |  |  | (1,435) |  |  |  |  |  |  |  |  | (2,411) |
Gain from an acquisition of a joint venture |  |  |  |  |  |  | (100,025) |  |  |  |  |  |  |  |  | — |
Gain on sale of assets |  |  |  |  |  |  | (713) |  |  |  |  |  |  |  |  | — |
Loss on extinguishment of debt |  |  |  |  |  |  | — |  |  |  |  |  |  |  |  | 331 |
Other gains, net |  |  |  |  |  |  | (721) |  |  |  |  |  |  |  |  | (4,013) |
Equity in net loss (gain) of affiliates |  |  |  |  |  |  | 10,904 |  |  |  |  |  |  |  |  | (1,310) |
Income before income taxes |  |  |  |  |  |  | $ | 210,916 |  |  |  |  |  |  |  |  | $ | 137,148 |
| Nine Months Ended September 30, 2025 |  | Nine Months Ended September 30, 2024
(in thousands) | Hotel Franchising & Management |  | Corporate & Other |  | Intersegment Eliminations |  | Consolidated |  | Hotel Franchising & Management |  | Corporate & Other |  | Intersegment Eliminations |  | Consolidated
Revenues | $ | 1,113,262 |  |  | $ | 103,239 |  |  | $ | (9,858) |  |  | $ | 1,206,643 |  |  | $ | 1,109,173 |  |  | $ | 94,720 |  |  | $ | (8,824) |  |  | $ | 1,195,069 |
Other segment items (1) | 635,380 |  |  | 191,244 |  |  | (9,858) |  |  | 816,766 |  |  | 656,325 |  |  | 164,469 |  |  | (8,824) |  |  | 811,970 |
Depreciation and amortization | 23,424 |  |  | 19,508 |  |  | — |  |  | 42,932 |  |  | 19,155 |  |  | 19,390 |  |  | — |  |  | 38,545 |
Operating income (loss) | 454,458 |  |  | (107,513) |  |  | — |  |  | 346,945 |  |  | 433,693 |  |  | (89,139) |  |  | — |  |  | 344,554 |
Reconciliation of segment profit or loss: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  |  |  |  |  | 67,468 |  |  |  |  |  |  |  |  | 66,064 |
Interest income |  |  |  |  |  |  | (4,450) |  |  |  |  |  |  |  |  | (6,557) |
Gain from an acquisition of a joint venture |  |  |  |  |  |  | (100,025) |  |  |  |  |  |  |  |  | — |
Gain on sale of assets |  |  |  |  |  |  | (713) |  |  |  |  |  |  |  |  | — |
Loss on extinguishment of debt |  |  |  |  |  |  | — |  |  |  |  |  |  |  |  | 331 |
Other gains, net |  |  |  |  |  |  | (5,659) |  |  |  |  |  |  |  |  | (133) |
Equity in net loss (gain) of affiliates |  |  |  |  |  |  | 11,035 |  |  |  |  |  |  |  |  | (9,088) |
Income before income taxes |  |  |  |  |  |  | $ | 379,289 |  |  |  |  |  |  |  |  | $ | 293,937 |
(1) Other segment items for the reportable segment include selling, general and administrative expenses and reimbursable expenses from franchised and managed properties.

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12. Commitments and Contingencies
The Company is not a party to any litigation other than litigation in the ordinary course of business. The Company's management and legal counsel do not expect that the ultimate outcome of any of its current legal proceedings, individually or in the aggregate, will have a material adverse effect on the Company's financial position, results of operations, or cash flows.
Contingencies
The Company entered into various limited payment guaranties with regards to the Company’s VIEs in order to support it's efforts to develop and own hotels that are franchised under the Company’s brands. Under these limited payment guaranties, the Company has agreed to guarantee a portion of the outstanding debt until certain conditions are met, such as (a) the loan matures, (b) certain debt covenants are achieved, (c) the maximum amount guaranteed by the Company is paid in full, or (d) the Company, through its affiliates, ceases to be a member of the VIE. As of September 30, 2025, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $36.5 million, plus unpaid expenses and accrued but unpaid interest. The Company believes the likelihood of having to perform under these guaranties is remote. In the event of performance, the Company has recourse for certain of the guaranties in the form of partial guaranties from third parties.
Commitments
The Company had the following outstanding commitments as of September 30, 2025:
•As part of the acquisition of Radisson Hotels Americas in August 2022, the Company entered into a long-term management arrangement, with an expiration date of July 31, 2031, to manage hotels owned by a third-party. As of September 30, 2025, the Company managed seven hotels pursuant to the long-term management arrangement. In conjunction with the management arrangement, the Company entered into a guarantee with the third-party to fund any shortfalls in the payment of the third-party owner’s priority that is stipulated in the management agreement. As of September 30, 2025, no liability was recognized in the consolidated balance sheets. For the nine months ended September 30, 2025, the Company recognized guarantee payments of $2.0 million in selling, general and administrative expenses in the consolidated statements of income. As of September 30, 2025, the maximum unrecorded exposure of the guarantee was $20.0 million.
•The Company strategically deploys capital in the form of franchise agreement acquisition cost payments across our brands to incentivize franchise development. These payments are typically made at the commencement of construction or the hotel's opening, in accordance with agreed upon provisions in the individual franchise agreements. The timing and the amount of the franchise agreement acquisition cost payments are dependent on various factors, including the implementation of various development and brand incentive programs, the level of franchise sales, and the ability of our franchisees to complete construction or convert their hotels to one of the Company’s brands.
•The Company has committed to provide financing in the form of loans or credit facilities to franchisees for brand development efforts. As of September 30, 2025, the Company had remaining commitments of up to $2.3 million, if certain conditions are met.
•The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation system fees. In accordance with the terms of our franchise agreements, the Company is obligated to use the marketing and reservation system revenues it collects from the current franchisees to provide marketing and reservation services that are appropriate to support the operation of the overall system. To the extent the revenues collected exceed the expenditures incurred, the Company has a commitment to the franchisee system to make expenditures in future years. Conversely, to the extent the expenditures incurred exceed the revenues collected, the Company has the contractual enforceable right to assess and collect such amounts from the franchisees.
•The Company has committed to purchase transferable production tax credits generated by a qualified solar energy facility for an aggregate purchase price of approximately $125 million over a ten year period, from 2025 through 2035. The Company’s commitment is contingent upon the satisfaction of certain legal and contractual conditions from the seller, and the continued availability of the credits under federal tax laws. The Company expects to utilize these credits in the same quarter in which they are purchased, offsetting federal income tax estimated payments and reducing income tax expense each year.
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In the ordinary course of business, the Company enters into numerous agreements that contain standard indemnities whereby the Company indemnifies another party for breaches of representations and warranties. Such indemnifications are granted under various agreements, including those governing (i) purchases or sales of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) access to credit facilities, (v) issuances of debt or equity securities, and (vi) certain operating agreements. The indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) franchisees in licensing agreements, (iv) financial institutions in credit facility arrangements, (v) underwriters in debt or equity security issuances, and (vi) parties under certain operating agreements. In addition, these parties are also generally indemnified against any third-party claim resulting from the transaction that is contemplated in the underlying agreement. While some of these indemnities extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of the future payments that the Company could be required to make under these indemnities, nor is the Company able to develop an estimate of the maximum potential amount of the future payments that could be made under these indemnifications as the triggering events are not subject to predictability. With respect to certain of the aforementioned indemnities, such as the indemnifications of the landlords against third-party claims for the use of real estate property leased by the Company, the Company maintains insurance coverage that mitigates any potential liability.
13. Acquisitions
Choice Hotels Canada Acquisition
On July 2, 2025, the Company completed the acquisition (the “Transaction”) of the remaining 50% of the outstanding shares of Choice Hotels Canada, Inc. ("Choice Hotels Canada") and amended the existing master franchise agreement for a purchase price of approximately $114.5 million, inclusive of preliminary customary adjustments related to working capital and cash. The acquisition was funded with available cash and borrowings under the Company's senior unsecured revolving credit facility. Choice Hotels Canada franchises more than 26,000 rooms in Canada, which have historically been included in the Company's franchised hotel statistics as a result of the prior master franchise agreement. Following the completion of the Transaction, Choice Hotels Canada will have the ability to offer developers access to all of the Company's 22 hotel brands and brand extensions, including the Company's extended stay brands. Prior to the acquisition date, the Company owned 50% of the outstanding shares of Choice Hotels Canada, which was accounted for under the equity method of accounting and reported within investments in affiliates in the consolidated balance sheets. As a result of the Transaction, Choice Hotels Canada is now a wholly-owned and consolidated subsidiary of the Company, and the Transaction was accounted for as a business combination using the acquisition method.
In connection with the Transaction, the Company remeasured the value of its previously held 50% equity investment to its acquisition date fair value of $114.5 million, which resulted in a gain of approximately $100.0 million that is reported within gain from an acquisition of a joint venture in the consolidated statements of income. The fair value of the previously held equity investment was determined using a market approach based on the cash consideration exchanged for the newly acquired 50% equity interest.
The following is a summary of the purchase consideration transferred:

| Purchase Consideration
| (in thousands)
Cash consideration transferred for the newly acquired interest | $ | 114,470 |
Fair value of the previously held interest | 114,470 |
Effective settlement of intercompany payables | 3,280 |
Total consideration, including previously held interest | $ | 232,220 |

During both the three and nine months ended September 30, 2025, the Company recognized transaction and transition costs of $1.5 million in business combination, diligence and transition costs in the consolidated statements of income.
Preliminary Fair Values of the Assets Acquired and the Liabilities Assumed
The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets acquired and the liabilities assumed on July 2, 2025. The preliminary fair values are based on management’s estimates and assumptions, using the best information available at the time of this filing. The final valuation and related allocation of the purchase price will be completed no later than 12 months after the closing date of the acquisition. The final acquisition accounting adjustments could be materially different and may include (1) changes in the allocations to the intangible assets as well as goodwill, and (2) other changes to assets and liabilities, such as working capital. The preliminary allocation of the purchase price is as follows:
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(in thousands) | July 2, 2025
Assets acquired |
Cash and cash equivalents | $ | 44,356 |
Accounts receivable | 10,706 |
Income taxes receivable | 149 |
Prepaid expenses and other current assets | 335 |
Operating lease right-of-use assets | 358 |
Intangible assets | 150,665 |
Total assets acquired | $ | 206,569 |
Liabilities assumed |
Accounts payable | $ | 5,235 |
Accrued expenses and other current liabilities | 1,926 |
Deferred revenue - current | 333 |
Liability for guest loyalty program - current | 7,194 |
Deferred income taxes | 38,045 |
Long-term deferred revenue | 1,845 |
Operating lease liabilities | 358 |
Liability for guest loyalty program - noncurrent | 5,607 |
Total liabilities assumed | $ | 60,543 |
Fair value of net assets acquired | $ | 146,026 |
Goodwill | 86,194 |
Total consideration, including previously held interest | $ | 232,220 |

Identified Intangible Assets
The following table presents the estimated fair values of the acquired identified intangible assets and their estimated useful lives:

| Estimated Useful Life |  | Estimated Fair Value
| (in years) |  | (in thousands)
Reacquired territory rights | 38 |  | $ | 76,523 |
Franchise agreements | 12 |  | 74,142 |
Total intangible assets |  |  | $ | 150,665 |

The reacquired territory rights represent the reacquired rights for the use of certain Choice brands within Canada. The fair value of the reacquired territory rights and the franchise agreements was estimated using a multi-period excess earnings method, which is a variation of the income approach. This method uses the present value of the incremental after-tax cash flows attributable to the intangible asset in order to estimate the fair value. This valuation methodology utilizes Level 3 inputs, and the Company is continuing to assess the assumptions used in estimating these values as well as the respective useful lives, which could result in changes to the provisional values.
Income Taxes
As the Transaction is accounted for as a business combination, deferred tax assets and liabilities are generally recognized on the differences between the fair value of the assets acquired and the liabilities assumed and the tax bases of the assets acquired and the liabilities assumed in the business combination. The Transaction consists of a foreign entity, so the Company asserts an indefinite reinvestment and has not recorded a deferred tax liability on the outside basis difference in its investment.
Pro Forma Results of Operations
The following unaudited pro forma information presents the combined results of operations of Choice and Choice Hotels Canada as if the Company had completed the Transaction on January 1, 2024, but using the preliminary fair values of the assets acquired and the liabilities assumed as of the acquisition date. The unaudited pro forma information reflects adjustments relating to (i) the allocation of the purchase price and related adjustments, including the incremental amortization expense based on the preliminary fair values of the intangible assets acquired, (ii) the incremental impact of the senior unsecured revolving credit facility draw on interest expense, (iii) nonrecurring transaction costs, and (iv) the income tax impact of the aforementioned pro forma adjustments.
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As required by GAAP, these unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Transaction had occurred at the beginning of the period presented, nor are they indicative of the future results of operations.

| Nine Months Ended
(in thousands) | September 30, 2025 |  | September 30, 2024
Revenues | $ | 1,222,972 |  |  | $ | 1,225,458 |
Net income (1) | $ | 204,397 |  |  | $ | 222,300 |

(1) The gain on the previously held 50% equity interest in Choice Hotels Canada is excluded from the pro forma results of operations.
Choice Hotels Canada Results of Operations
The Company's consolidated statements of income include Choice Hotels Canada's results of operations since the July 2, 2025 acquisition date. Choice Hotels Canada contributed $13.2 million and $5.9 million in total revenues and net income, respectively, for both the three and nine months ended September 30, 2025.
Goodwill
The $86.2 million of goodwill recognized is primarily attributable to the value that the Company expects to realize from the existing customer base, cost synergies, and new agreements signed with new franchisees and developers. The goodwill for the Transaction is fully attributable to the Hotel Franchising & Management reportable segment and is not deductible for tax purposes.
The following table summarizes the carrying amount of the Company's goodwill, including the goodwill arising from the acquisition of Choice Hotels Canada, as of September 30, 2025.

(in thousands) |
Goodwill, excluding goodwill arising from the Choice Hotels Canada acquisition | $ | 227,765 |
Goodwill arising from the Choice Hotels Canada acquisition | 86,194 |
Effect of foreign currency translation | (1,870) |
Total goodwill, gross carrying amount | 312,089 |
Accumulated impairment losses | (7,578) |
Goodwill, net carrying amount | $ | 304,511 |

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the consolidated financial condition and the results of operations of Choice Hotels International, Inc. and its subsidiaries (collectively, "Choice" or the "Company", "we", "us", or "our") contained in this report. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes.
Overview
We are primarily a hotel franchisor operating in 49 states, the District of Columbia, and 47 countries and territories. As of September 30, 2025, we had 7,515 hotels with 649,677 rooms open and operating, and 897 hotels with 86,441 rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding master development agreements (collectively, "pipeline") in our global system. Our brand names include Radisson Blu®, Park Plaza®, Cambria® Hotels, Ascend Hotel Collection®, Radisson RED®, Radisson Individuals®, Radisson®, Radisson Collection®, Clarion®, Clarion Pointe™, Comfort Inn®, Comfort Suites®, Country Inn & Suites® by Radisson, Radisson Inn & Suites SM, Sleep Inn®, Quality®, Park Inn by Radisson®, Everhome Suites®, WoodSpring Suites®, MainStay Suites®, Suburban Studios™, Econo Lodge®, and Rodeway Inn®.
The hotel franchising business represents the Company's primary operations. The Company's domestic operations are conducted through direct franchising relationships, the ownership of 15 open and operating hotels, and the management of 13 hotels (inclusive of four owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships. Master franchising relationships are governed by master franchising agreements which generally provide the master franchisee with the right to use our brands and sub-license the use of our brands in a specific geographic region, usually for a fee. As a result of our master franchise relationships and international market conditions, our revenues are primarily concentrated in the United States. Therefore, our description of our business is primarily focused on the domestic franchising operations, which encompasses the United States.
Our Company generates revenues, income, and cash flows primarily from our hotel franchising operations. Revenues are also generated from partnerships with qualified vendors and travel partners that provide value-added solutions to our platform of guests and hotels, hotel ownership, and other ancillary sources. Historically, the hotel industry has been seasonal in nature. For most hotels, demand is typically lower in November through February than during the remainder of the year. Our principal source of revenue is franchise fees, which is primarily based on the gross room revenues or the number of rooms at our franchised properties. The Company’s franchise and managed fees, as well as its owned hotels' revenues, normally reflect the industry’s seasonality and historically have been lower in the first and fourth quarters than in the second and third quarters of the year.
Because our primary focus is hotel franchising, we benefit from the economies of scale inherent in the franchising business. The fee and cost structure of our franchising business provides opportunities to improve our operating results by increasing the number of franchised hotel rooms and the effective royalty rates in our franchise contracts resulting in increased royalty, licensing and other franchise related fees. In addition, our operating results can also be improved through our company-wide efforts related to improving property-level performance and expanding the number of partnerships with travel-related and other companies with products and services that appeal to our guests.
The primary factors that affect the Company’s results are: the number and relative mix of hotel rooms in the various hotel lodging price categories, growth in the number of hotel rooms owned and under franchise, occupancy and room rates achieved by the hotels in our system, the effective royalty rate achieved in our franchise agreements, the level of franchise sales and relicensing activity, the number of qualified vendor arrangements and partnerships and the level of engagement with these partners by our franchisees and guests, and our ability to manage costs. The number of rooms in our hotel system and the occupancy and room rates at those hotel properties significantly affect the Company’s results because our fees are based upon room revenues or the number of rooms at owned and franchised hotels. The key industry standard for measuring hotel-operating performance is revenue per available room ("RevPAR"), which is calculated by multiplying the percentage of occupied rooms by the average daily room rate ("ADR") realized. Our variable overhead costs associated with the franchise system growth of our established brands have historically been less than the incremental royalty fees generated from new franchises. Accordingly, over the long-term, the continued growth of our franchise business should enable us to realize the benefits from the operating leverage in place and improve our operating results.
We are required by our franchise agreements to use the marketing and reservation system fees we collect for system-wide marketing and reservation system activities. These expenditures, which include advertising costs and the costs to maintain our central reservations systems, enhance awareness and consumer preference for our brands and deliver guests to our franchisees.
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Greater awareness and preference promote long-term growth in business delivery to our franchisees and increases the desirability of our brands to hotel owners and developers, which ultimately increases the franchise fees earned by the Company. Additionally, the Company's management agreements include cost reimbursements, which is primarily related to payroll costs at the managed hotels where the Company is the employer.
Our Company articulates its mission as a commitment to our franchisees’ profitability by providing our franchisees with hotel franchises that strive to generate the highest return on investment of any hotel franchise. We have developed an operating system dedicated to our franchisees’ success that focuses on delivering guests to their hotels and reducing hotel operating costs.
We believe that executing on our strategic priorities creates value for our shareholders. Our Company focuses on the following strategic priorities:
Profitable Growth - Our success is dependent on improving the performance of our hotels, increasing the size of our system by selling additional hotel franchises with a focus on revenue-intense chain scales and markets, improving our effective royalty rate, expanding our qualified vendor and partnership platform programs and maintaining a disciplined cost structure. We attempt to improve our revenues and overall profitability by providing a variety of products and services designed to increase business delivery and/or reduce operating and development costs. These products and services include national marketing campaigns, a guest loyalty program, a central reservation system, property and yield management programs and systems, revenue management services, quality assurance standards, and qualified vendor relationships and partnerships with companies that provide products and services to our franchisees and guests. We believe that healthy brands, which deliver a compelling return on investment, will enable us to sell additional hotel franchises and raise royalty rates. We have multiple brands that meet the needs of many different types of guests, and can be developed at various price points and applied to both new and existing hotels. This ensures that we have brands suitable for creating growth in a variety of market conditions. Improving the performance of the hotels in our system, strategically growing the system through additional franchise sales, and improving franchise agreement pricing while maintaining a disciplined cost structure are the keys to profitable growth.
Maximizing Financial Returns and Creating Value for Shareholders - Our capital allocation decisions, including our capital structure and the uses of capital, are intended to maximize our return on invested capital and create value for our shareholders. Since our business has not historically required significant reinvestment of capital, we typically utilize cash in ways that management believes provides the greatest returns to our shareholders, which include acquisitions, share repurchases and dividends. Refer to the Liquidity and Capital Resources section in MD&A for more information regarding our capital returns to shareholders.
In addition to our hotel franchising business, we have also developed or acquired 15 open and operating hotels. We intend to continue to strategically develop hotels to increase the presence of our newly introduced brands in the United States, drive greater guest satisfaction and brand preference, and ultimately increase the number of franchise agreements awarded. When developing hotels, we seek key markets with strong growth potential that will deliver strong operating performance and improve the recognition of our brands. Our hotel development and ownership efforts currently focus on the Cambria Hotels and Everhome Suites brands. We believe our owned hotels provide us the opportunity to support and accelerate the growth of these brands. We do not anticipate owning hotels on a permanent basis and we expect to target dispositions to a franchisee encumbered with a long-term Choice franchise agreement in the future.
A key component of our strategy for owned hotels is to maximize revenues and manage costs. We strive to optimize revenues by focusing on revenue management, increasing guest loyalty, expanding brand awareness with targeted customer groupings, and providing superior guest service. Other than four owned hotels, we currently do not manage our owned hotels but utilize the services of third-party hotel management companies that provide their own employees. We manage costs by setting performance goals for our hotel management companies and optimizing distribution channels.
The Company also allocates capital to financing, investment and guaranty support to incentivize franchise development for certain brands in strategic markets. The timing and amount of these investments are subject to market and other conditions.
We believe our growth investments and strategic priorities, when properly implemented, will enhance our profitability, maximize our financial returns, and continue to generate value for our shareholders. The ultimate measure of our success will be reflected in the items below.
Results of Operations - Franchise and management fees, operating income, net income, and diluted earnings per share represent the key measures of our financial performance. These measures are primarily driven by the operations of our hotel franchise system and therefore, our analysis of the Company's results of operations is primarily focused on the size, performance, and the potential growth of the hotel franchise system as well as our variable overhead costs.
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Our discussion of our results of operations excludes reimbursable franchise marketing and reservation system revenues and expenses and the management agreement cost reimbursements and expenses included in the Company's revenue for reimbursable costs from franchised and managed properties and reimbursable expenses from franchised and managed properties. The Company's franchise agreements require the payment of marketing and reservation system fees to be used by the Company for the expenses associated with providing franchise services, such as national marketing, media advertising, and central reservation systems. The Company is obligated to expend the marketing and reservation system fees it collects from its franchisees in accordance with the franchise agreements. Furthermore, the franchisees are required to reimburse the Company for any deficits generated by these marketing and reservation system activities. Over time, the Company expects the cumulative revenues and expenses of reimbursable components to break even and, therefore, no income or loss will be generated from the reimbursable marketing and reservation system activities. Additionally, the Company's management agreements include cost reimbursements, which is primarily related to payroll costs at the managed hotels where the Company is the employer. As a result, the Company generally excludes the revenue for reimbursable costs from franchised and managed properties and reimbursable expenses from franchised and managed properties from the analysis of our results of operations.
Due to the seasonal nature of the Company’s hotel franchising and management business and the multi-year investments required to support the franchise operations, quarterly and/or annual surpluses or deficits may be generated. During the three months ended September 30, 2025, reimbursable expenses from franchised and managed properties exceeded revenue for reimbursable costs from franchised and managed properties by $14.8 million. During the three months ended September 30, 2024, revenue for reimbursable costs from franchised and managed properties exceeded reimbursable expenses from franchised and managed properties by $0.9 million. During the nine months ended September 30, 2025 and 2024, reimbursable expenses from franchised and managed properties exceeded revenue for reimbursable costs from franchised and managed properties by $44.2 million and $24.8 million, respectively.
Refer to the Operations Review section in MD&A for additional analysis of our results of operations.
Liquidity and Capital Resources - Historically, the Company has generated significant cash flows from operations. Since our business has not historically required a significant reinvestment of capital, we typically utilize cash in ways that management believes provide the greatest returns to our shareholders, which include acquisitions, share repurchases, and dividends.
We believe the Company’s cash on hand, available borrowing capacity under the senior unsecured revolving credit facility, cash flows from operations, and access to additional capital in the debt markets is sufficient to meet the expected future operating, investing, and financing needs of the business. Refer to the Liquidity and Capital Resources section in MD&A for additional analysis.
Inflation - We believe that moderate increases in the rate of inflation will generally result in comparable or greater increases in hotel room rates. We continue to monitor future inflation trends along with the corresponding impacts to our business.
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Operations Review
Comparison of the Operating Results for the Three Months Ended September 30, 2025 and 2024

| Three Months Ended |  |  |  |
| September 30, |  |  |  |
(in thousands) | 2025 |  | 2024 |  |  |  |
REVENUES |  |  |  |  |  |  |
Franchise and management fees | $ | 193,777 |  |  | $ | 188,237 |  |  |  |  |
Partnership services and fees | 28,868 |  |  | 24,320 |  |  |  |  |
Owned hotels | 33,167 |  |  | 31,936 |  |  |  |  |
Other | 22,094 |  |  | 11,647 |  |  |  |  |
Revenue for reimbursable costs from franchised and managed properties | 169,434 |  |  | 171,824 |  |  |  |  |
Total revenues | 447,340 |  |  | 427,964 |  |  |  |  |
OPERATING EXPENSES |  |  |  |  |  |  |
Selling, general and administrative | 79,610 |  |  | 69,022 |  |  |  |  |
Business combination, diligence and transition costs | 1,494 |  |  | 984 |  |  |  |  |
Depreciation and amortization | 15,760 |  |  | 12,893 |  |  |  |  |
Owned hotels | 23,792 |  |  | 22,343 |  |  |  |  |
Reimbursable expenses from franchised and managed properties | 184,268 |  |  | 170,939 |  |  |  |  |
Total operating expenses | 304,924 |  |  | 276,181 |  |  |  |  |
Operating income | 142,416 |  |  | 151,783 |  |  |  |  |
OTHER EXPENSES AND (INCOME), NET |  |  |  |  |  |  |
Interest expense | 23,490 |  |  | 22,038 |  |  |  |  |
Interest income | (1,435) |  |  | (2,411) |  |  |  |  |
Gain from an acquisition of a joint venture | (100,025) |  |  | — |  |  |  |  |
Gain on sale of assets | (713) |  |  | — |  |  |  |  |
Loss on extinguishment of debt | — |  |  | 331 |  |  |  |  |
Other gains, net | (721) |  |  | (4,013) |  |  |  |  |
Equity in net loss (gain) of affiliates | 10,904 |  |  | (1,310) |  |  |  |  |
Total other expenses and (income), net | (68,500) |  |  | 14,635 |  |  |  |  |
Income before income taxes | 210,916 |  |  | 137,148 |  |  |  |  |
Income tax expense | 30,920 |  |  | 31,432 |  |  |  |  |
Net income | $ | 179,996 |  |  | $ | 105,716 |  |  |  |  |

Results of Operations
For the three months ended September 30, 2025, the Company recognized income before income taxes of $210.9 million, which is a $73.8 million increase from the same period in the prior year. The increase in income before income taxes was primarily due to a $100.0 million gain from an acquisition of a joint venture in 2025, which was partially offset by a $12.2 million decrease in the equity in net loss (gain) of affiliates and a $9.4 million decrease in operating income.
Operating income decreased $9.4 million primarily due to a $15.7 million increase in the net reimbursable deficit from franchised and managed properties and a $10.6 million increase in selling, general and administrative expenses, all of which were partially offset by a $10.4 million increase in other revenues, a $5.5 million increase in franchise and management fees, and a $4.5 million increase in partnership services and fees.
The primary reasons for these fluctuations are described in more detail below.
Franchise and Management Fees
Domestic royalty fees decreased $4.9 million to $126.7 million for the three months ended September 30, 2025 from $131.6 million for the three months ended September 30, 2024. The decrease in domestic royalty fees was primarily due to a 3.2% decrease in domestic system-wide RevPAR as a result of a 2.0% decrease in average daily rates and an 80 basis points decrease in occupancy during the current period, which was partially offset by a system-wide 10 basis points increase in the effective
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royalty rate from 5.05% for the three months ended September 30, 2024 to 5.15% for the three months ended September 30, 2025.
A summary of the operating performance for the Company's domestic franchised hotels, organized by chain scale, was as follows:

| Three Months Ended |  | Three Months Ended |  | Change
| September 30, 2025 |  | September 30, 2024 |
| Average Daily Rate |  | Occupancy |  | RevPAR |  | Average Daily Rate |  | Occupancy |  | RevPAR |  | Average Daily Rate |  | Occupancy |  | RevPAR
Upscale & Above (1) | $ | 157.88 |  |  | 62.9 | % |  | $ | 99.33 |  |  | $ | 159.55 |  |  | 64.2 | % |  | $ | 102.50 |  |  | (1.0) | % |  | (130) |  | bps |  | (3.1) | %
Midscale & Upper Midscale (2) | 104.63 |  |  | 60.1 | % |  | 62.90 |  |  | 106.50 |  |  | 61.0 | % |  | 64.97 |  |  | (1.8) | % |  | (90) |  | bps |  | (3.2) | %
Extended Stay (3) | 66.78 |  |  | 71.0 | % |  | 47.39 |  |  | 65.44 |  |  | 73.3 | % |  | 47.95 |  |  | 2.0 | % |  | (230) |  | bps |  | (1.2) | %
Economy (4) | 73.61 |  |  | 50.1 | % |  | 36.89 |  |  | 75.66 |  |  | 50.4 | % |  | 38.13 |  |  | (2.7) | % |  | (30) |  | bps |  | (3.3) | %
Total | $ | 100.03 |  |  | 60.3 | % |  | $ | 60.33 |  |  | $ | 102.02 |  |  | 61.1 | % |  | $ | 62.32 |  |  | (2.0) | % |  | (80) |  | bps |  | (3.2) | %

(1) Includes Ascend Hotel Collection, Cambria, Park Plaza, Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands.
(2) Includes Clarion, Comfort Inn, Comfort Suites, Country Inn & Suites, Park Inn, Quality Inn, and Sleep Inn brands.
(3) Includes Everhome Suites, Mainstay Suites, Suburban Studios, and WoodSpring Suites brands.
(4) Includes Econo Lodge and Rodeway brands.
A summary of the domestic hotels and rooms by brand in our franchise system as of September 30, 2025 and 2024 was as follows:

| September 30, 2025 |  | September 30, 2024 |  | Variance
| Hotels |  | Rooms |  | Hotels |  | Rooms |  | Hotels |  | % |  | Rooms |  | %
Ascend Hotel Collection | 232 |  |  | 38,221 |  |  | 201 |  |  | 22,957 |  |  | 31 |  | 15.4 | % |  | 15,264 |  |  | 66.5 | %
Cambria Hotels | 77 |  |  | 10,520 |  |  | 75 |  |  | 10,226 |  |  | 2 |  | 2.7 | % |  | 294 |  |  | 2.9 | %
Radisson (1) | 51 |  |  | 9,694 |  |  | 61 |  |  | 14,296 |  |  | (10) |  | (16.4) | % |  | (4,602) |  |  | (32.2) | %
Comfort (2) | 1,659 |  |  | 130,014 |  |  | 1,669 |  |  | 131,205 |  |  | (10) |  | (0.6) | % |  | (1,191) |  |  | (0.9) | %
Quality Inn | 1,584 |  |  | 114,784 |  |  | 1,623 |  |  | 118,361 |  |  | (39) |  | (2.4) | % |  | (3,577) |  |  | (3.0) | %
Country | 404 |  |  | 32,435 |  |  | 418 |  |  | 33,327 |  |  | (14) |  | (3.3) | % |  | (892) |  |  | (2.7) | %
Sleep Inn | 409 |  |  | 28,588 |  |  | 421 |  |  | 29,610 |  |  | (12) |  | (2.9) | % |  | (1,022) |  |  | (3.5) | %
Clarion (3) | 181 |  |  | 18,368 |  |  | 188 |  |  | 19,763 |  |  | (7) |  | (3.7) | % |  | (1,395) |  |  | (7.1) | %
Park Inn | 10 |  | 1,000 |  |  | 25 |  |  | 2,818 |  |  | (15) |  | (60.0) | % |  | (1,818) |  |  | (64.5) | %
WoodSpring Suites | 275 |  |  | 33,130 |  |  | 249 |  |  | 29,989 |  |  | 26 |  | 10.4 | % |  | 3,141 |  |  | 10.5 | %
MainStay Suites | 139 |  |  | 10,049 |  |  | 132 |  |  | 9,459 |  |  | 7 |  | 5.3 | % |  | 590 |  |  | 6.2 | %
Suburban Studios | 115 |  |  | 9,536 |  |  | 110 |  |  | 9,178 |  |  | 5 |  | 4.5 | % |  | 358 |  |  | 3.9 | %
Everhome Suites | 22 |  |  | 2,526 |  |  | 6 |  |  | 685 |  |  | 16 |  | 266.7 | % |  | 1,841 |  |  | 268.8 | %
Econo Lodge | 610 |  |  | 35,477 |  |  | 650 |  |  | 37,955 |  |  | (40) |  | (6.2) | % |  | (2,478) |  |  | (6.5) | %
Rodeway | 433 |  |  | 23,965 |  |  | 450 |  |  | 25,365 |  |  | (17) |  | (3.8) | % |  | (1,400) |  |  | (5.5) | %
Total Domestic Franchises | 6,201 |  |  | 498,307 |  |  | 6,278 |  |  | 495,194 |  |  | (77) |  | (1.2) | % |  | 3,113 |  |  | 0.6 | %

(1) Includes the Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands.
(2) Includes the Comfort family of brand extensions, including Comfort Inn and Comfort Suites.
(3) Includes the Clarion family of brand extensions, including Clarion and Clarion Pointe.
International royalty fees increased $6.2 million to $14.6 million for the three months ended September 30, 2025 from $8.4 million for the three months ended September 30, 2024. The increase in international royalty fees was primarily due to an increase in the international franchise system size by 77 hotels (from 1,237 hotels as of September 30, 2024 to 1,314 hotels as of September 30, 2025) and 11,612 rooms (from 139,758 rooms as of September 30, 2024 to 151,370 rooms as of September 30, 2025), an increase in royalty fees as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada, and an increase in international RevPAR.
Partnership Services and Fees
Partnership services and fees increased $4.5 million due to an increase in the fees generated from the Company's co-branded credit card agreement and qualified vendors.
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Other Revenues
Other revenues increased $10.4 million primarily due to an increase in liquidated damages resulting from the early termination of franchise agreements and other franchising revenues.
Selling, General and Administrative
Selling, general and administrative expenses increased $10.6 million primarily due to $1.1 million of expenses to operate Choice Hotels Canada during the three months ended September 30, 2025, a $1.0 million increase in costs related to the global ERP system implementation, and increases in other general costs to operate the franchising business.
Gain from an Acquisition of a Joint Venture
During the three months ended September 30, 2025, the Company recognized a $100.0 million gain on the fair value remeasurement of its previously held 50% equity investment in Choice Hotels Canada as a result of acquiring the remaining 50% equity interest in Choice Hotels Canada in July 2025.
Equity in Net Loss (Gain) of Affiliates
Equity in net loss (gain) of affiliates decreased $12.2 million primarily due to $6.5 million of non-recurring joint venture formation transaction costs associated with the Company entering into a new joint venture agreement, and a new loan facility, to develop and operate Everhome Suites in certain strategic markets during the three months ended September 30, 2025 and a $1.9 million decrease in equity earnings as a result of acquiring the remaining 50% equity interest in Choice Hotels Canada during the three months ended September 30, 2025.
Income Tax Expense
The Company's effective income tax rates were 14.7% and 22.9% for the three months ended September 30, 2025 and 2024, respectively. The effective income tax rate for the three months ended September 30, 2025 was lower than the U.S. federal income tax rate of 21.0% primarily due to the impact of a $100.0 million non-taxable gain from an acquisition of a joint venture and the purchase of transferable tax credits, all of which were partially offset by the impact of state income taxes. The effective income tax rate for the three months ended September 30, 2024 was higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes.
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Comparison of the Operating Results for the Nine Months Ended September 30, 2025 and 2024

| Nine Months Ended
| September 30,
(in thousands) | 2025 |  | 2024
REVENUES |  |  |
Franchise and management fees | $ | 515,931 |  |  | $ | 511,450 |
Partnership services and fees | 81,313 |  |  | 71,527 |
Owned hotels | 91,255 |  |  | 85,345 |
Other | 57,937 |  |  | 49,671 |
Revenue for reimbursable costs from franchised and managed properties | 460,207 |  |  | 477,076 |
Total revenues | 1,206,643 |  |  | 1,195,069 |
OPERATING EXPENSES |  |  |
Selling, general and administrative | 243,118 |  |  | 230,020 |
Business combination, diligence and transition costs | 1,940 |  |  | 17,723 |
Depreciation and amortization | 42,932 |  |  | 38,545 |
Owned hotels | 67,271 |  |  | 62,370 |
Reimbursable expenses from franchised and managed properties | 504,437 |  |  | 501,857 |
Total operating expenses | 859,698 |  |  | 850,515 |
Operating income | 346,945 |  |  | 344,554 |
OTHER EXPENSES AND (INCOME), NET |  |  |
Interest expense | 67,468 |  |  | 66,064 |
Interest income | (4,450) |  |  | (6,557) |
Gain from an acquisition of a joint venture | (100,025) |  |  | — |
Gain on sale of assets | (713) |  |  | — |
Loss on extinguishment of debt | — |  |  | 331 |
Other gains, net | (5,659) |  |  | (133) |
Equity in net loss (gain) of affiliates | 11,035 |  |  | (9,088) |
Total other expenses and (income), net | (32,344) |  |  | 50,617 |
Income before income taxes | 379,289 |  |  | 293,937 |
Income tax expense | 73,025 |  |  | 70,076 |
Net income | $ | 306,264 |  |  | $ | 223,861 |

Results of Operations
For the nine months ended September 30, 2025, the Company recognized income before income taxes of $379.3 million, which is an $85.4 million increase from the same period in the prior year. The increase in income before income taxes was primarily due to a $100.0 million gain from an acquisition of a joint venture in 2025 and a $5.5 million increase in other gains, net, which was partially offset by a $20.1 million decrease in equity in net loss (gain) of affiliates.
Operating income increased $2.4 million primarily due to a $9.8 million increase in partnership services and fees, an $8.3 million increase in other revenues, and a $15.8 million decrease in business combination, diligence and transition costs, all of which were partially offset by a $19.4 million increase in the net reimbursable deficit from franchised and managed properties and a $13.1 million increase in selling, general and administrative expenses.
The primary reasons for these fluctuations are described in more detail below.
Franchise and Management Fees
Domestic royalty fees decreased $6.9 million to $342.5 million for the nine months ended September 30, 2025 from $349.4 million for the nine months ended September 30, 2024. The decrease in domestic royalty fees was primarily due to a 1.7% decrease in domestic system-wide RevPAR as a result of a 1.0% decrease in average daily rates and a 40 basis points decrease in occupancy, which was partially offset by a system-wide 7 basis points increase in the effective royalty rate from 5.05% for the nine months ended September 30, 2024 to 5.12% for the nine months ended September 30, 2025.
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A summary of the operating performance for the Company's domestic franchised hotels, organized by chain scale, was as follows:

| Nine Months Ended |  | Nine Months Ended |  | Change
| September 30, 2025 |  | September 30, 2024 |
| Average Daily Rate |  | Occupancy |  | RevPAR |  | Average Daily Rate |  | Occupancy |  | RevPAR |  | Average Daily Rate |  | Occupancy |  | RevPAR
Upscale & Above (1) | $ | 150.69 |  |  | 57.7 | % |  | $ | 87.01 |  |  | $ | 153.61 |  |  | 59.2 | % |  | $ | 90.87 |  |  | (1.9) | % |  | (150) |  | bps |  | (4.2) | %
Midscale & Upper Midscale (2) | 100.67 |  |  | 56.4 | % |  | 56.81 |  |  | 101.81 |  |  | 57.0 | % |  | 57.98 |  |  | (1.1) | % |  | (60) | bps |  | (2.0) | %
Extended Stay (3) | 66.66 |  |  | 70.0 | % |  | 46.68 |  |  | 63.83 |  |  | 72.1 | % |  | 46.03 |  |  | 4.4 | % |  | (210) |  | bps |  | 1.4 | %
Economy (4) | 71.71 |  |  | 48.0 | % |  | 34.42 |  |  | 71.77 |  |  | 47.6 | % |  | 34.16 |  |  | (0.1) | % |  | 40 | bps |  | 0.8 | %
Total | $ | 96.41 |  |  | 57.0 | % |  | $ | 54.94 |  |  | $ | 97.38 |  |  | 57.4 | % |  | $ | 55.87 |  |  | (1.0) | % |  | (40) | bps |  | (1.7) | %

(1) Includes Ascend Hotel Collection, Cambria, Park Plaza, Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands.
(2) Includes Clarion, Comfort Inn, Country Inn & Suites, Park Inn, Quality, and Sleep Inn brands.
(3) Includes Everhome Suites, Mainstay Suites, Suburban Studios, and WoodSpring Suites brands.
(4) Includes Econo Lodge and Rodeway brands.
International royalty fees increased $6.4 million to $29.0 million for the nine months ended September 30, 2025 from $22.6 million for the nine months ended September 30, 2024. The increase in international royalty fees was primarily due to an increase in the size of the international franchise system, an increase in royalty fees as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada, and an increase in international RevPAR.
Partnership Services and Fees
Partnership services and fees increased $9.8 million primarily due to an increase in the fees generated from the Company's co-branded credit card agreement and qualified vendors.
Other Revenues
Other revenues increased $8.3 million primarily due to an increase in liquidated damages resulting from the early termination of franchise agreements and other franchising revenues.
Selling, General and Administrative
Selling, general and administrative expenses increased $13.1 million primarily due to $1.1 million of expenses to operate Choice Hotels Canada during the nine months ended September 30, 2025, a $3.1 million increase in costs related to the global ERP system implementation, a $2.0 million increase in operating guarantee payments for a portfolio of managed hotels which was acquired in connection with the Company's purchase of Radisson Hotels Americas, and increases in other general costs to operate the franchising business, all of which were partially offset by a $2.4 million litigation settlement that was recognized during the nine months ended September 30, 2024.
Business Combination, Diligence and Transition Costs
Business combination, diligence and transition costs decreased $15.8 million primarily due to the termination of the Wyndham acquisition pursuit on March 8, 2024, which was partially offset by the transaction costs associated with the acquisition of Choice Hotels Canada that were recognized during the nine months ended September 30, 2025.
Gain from an Acquisition of a Joint Venture
During the nine months ended September 30, 2025, the Company recognized a $100.0 million gain on the fair value remeasurement of its previously held 50% equity investment in Choice Hotels Canada as a result of acquiring the remaining 50% equity interest in Choice Hotels Canada in July 2025.
Other Gains, net
Other gains, net increased $5.5 million primarily due to a net loss of $8.3 million on the sales of equity securities during the nine months ended September 30, 2024, which was partially offset by dividend income of $1.5 million that was recognized during the nine months ended September 30, 2024.
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Equity in Net Loss (Gain) of Affiliates
Equity in net loss (gain) of affiliates decreased $20.1 million primarily due to $6.5 million of non-recurring joint venture formation transaction costs that were associated with the Company entering into a new joint venture agreement, and a new loan facility, to develop and operate Everhome Suites in certain strategic markets during the nine months ended September 30, 2025, a $2.3 million decrease in equity earnings as a result of acquiring the remaining 50% equity interest in Choice Hotels Canada during the nine months ended September 30, 2025, and a distribution from an unconsolidated affiliate, which sold its underlying assets, resulting in the recognition of a $7.2 million gain during the nine months ended September 30, 2024.
Income Tax Expense
The Company's effective income tax rates were 19.3% and 23.8% for the nine months ended September 30, 2025 and 2024, respectively. The effective income tax rate for the nine months ended September 30, 2025 was lower than the U.S. federal income tax rate of 21.0% primarily due to the impact of a $100.0 million non-taxable gain from an acquisition of a joint venture and the purchase of transferable tax credits, all of which were partially offset by the impact of state income taxes. The effective income tax rate for the nine months ended September 30, 2024 was higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes.
Liquidity and Capital Resources
Our Company historically generates strong and predictable operating cash flows primarily from our hotel franchising operations. Our capital allocation decisions, including capital structure and our uses of capital, are intended to maximize our return on invested capital and create value for our shareholders, while maintaining a strong balance sheet and financial flexibility. The Company's short-term and long-term liquidity requirements primarily arise from working capital needs, debt obligations, income tax payments, dividend payments, share repurchases, capital expenditures, and investments in growth opportunities.
As of September 30, 2025, the Company's primary sources of liquidity consisted of $564.2 million in cash and cash equivalents and available borrowing capacity under the senior unsecured revolving credit facility. As of September 30, 2025, the Company was in compliance with all of its financial covenants under its credit agreements and the Company expects to remain in such compliance. The Company believes that its cash on hand, available borrowing capacity under the senior unsecured revolving credit facility, cash flows from operations, and access to additional capital in the debt markets will provide sufficient liquidity to meet the expected future operating, investing, and financing needs of the business.
Our board of directors authorized a program which permits us to offer financing, investment, and guaranty support to qualified franchisees, and to acquire or develop and then resell hotels to incentivize franchise development of our brands in strategic markets. We primarily engage in these financial support activities to encourage acceleration of the growth of our Cambria Hotels and Everhome Suites brands. With respect to these activities, the Company had approximately $662.8 million in financial support of the Cambria Hotels and Everhome Suites brands reflected in the consolidated balance sheet as of September 30, 2025. The Company is generally targeting to recycle these investments within a five year period, and expects our outstanding investments to not exceed $1.2 billion at any point in time based on the current board of directors' authorization. The deployment and annual pace of future financial support activities will depend upon market and other conditions, including among others, our franchise sales results, the environment for new construction hotel development, and the hotel lending environment.
The Company also strategically deploys capital in the form of franchise agreement acquisition costs across our brands to incentivize franchise development. The timing and the amount of the franchise agreement acquisition cost payments are dependent on various factors including the implementation of various development and brand incentive programs, the level of franchise sales, and the ability of our franchisees to complete construction or convert their hotels to one of the Company’s brands.
The Company has historically generated cash flows from operating activities that are in excess of the capital needed to invest in growth opportunities and to service debt obligations. As a result, the Company maintains a share repurchase program and typically pays a quarterly dividend. On March 11, 2024, the Company's board of directors approved an increase of 5 million shares in the number of shares authorized to be repurchased under its share repurchase program. As of September 30, 2025, the Company had 3.0 million shares remaining under the current share repurchase authorization. The projected 2025 annual dividend rate is $1.15 per share or approximately $53.5 million in aggregate dividend payments, which is subject to future declarations by our board of directors.
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Cash Flows from Operating Activities
During the nine months ended September 30, 2025 and 2024, the net cash provided by operating activities was $184.8 million and $236.5 million, respectively. Our operating cash flows decreased $51.8 million primarily due to the timing of working capital items, timing of cash paid for income taxes as a result of the purchase of transferrable production tax credits, all of which were partially offset by a decrease in business combination, diligence and transition costs associated with the timing of the termination of the Wyndham acquisition pursuit during the first quarter of 2024 and a decrease in the franchise agreement acquisition cost payments.
In conjunction with brand and development programs, we strategically make certain franchise agreement acquisition cost payments to franchisees as an incentive to enter into new franchise agreements or perform-designated improvements to properties under existing franchise agreements. If the franchisee remains in the franchise system in good standing over the term specified in the incentive agreement, then the Company forgives the incentive ratably. If the franchisee exits our franchise system or is not operating their franchise in accordance with our quality or credit standards and is terminated, then the franchisee must repay the unamortized franchise agreement acquisition cost payment plus interest to the Company. During the nine months ended September 30, 2025 and 2024, the Company's net franchise agreement acquisition costs were $62.4 million and $84.1 million, respectively.
The Company’s franchise agreements require the payment of marketing and reservation system fees to be used by the Company for the expenses associated with providing franchise services, such as national marketing, media advertising, and central reservation systems. Additionally, the Company's management agreements include cost reimbursements, primarily related to the payroll costs at the managed hotels where the Company is the employer. These activities are reflected in revenue for reimbursable costs from franchised and managed properties and reimbursable expenses from franchised and managed properties. During the nine months ended September 30, 2025 and 2024, reimbursable expenses from franchised and managed properties exceeded revenue for reimbursable costs from franchised and managed properties by $44.2 million and $24.8 million, respectively.
Cash Flows from Investing Activities
The net cash used in investing activities was $177.9 million and $63.4 million for the nine months ended September 30, 2025 and 2024, respectively.
During the nine months ended September 30, 2025 and 2024, investments in owned hotel properties totaled $85.3 million and $81.2 million, respectively. These investments related to the ongoing hotel development efforts to support the continued growth of the Cambria Hotels and Everhome Suites brands. During the nine months ended September 30, 2025 and 2024, investments in other property and equipment totaled $26.9 million and $33.6 million, respectively. These investments primarily related to leasehold improvements, office equipment, and capitalized software.
The Company has equity method investments in affiliates related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites branded-hotels in strategic markets. During the nine months ended September 30, 2025 and 2024, the Company invested $90.0 million and $47.7 million, respectively, to support these efforts. During the nine months ended September 30, 2025 and 2024, the Company received distributions from these affiliates totaling $44.6 million and $15.9 million, respectively. During the nine months ended September 30, 2025, the Company received net cash proceeds of $52.0 million from the sale of four wholly-owned Everhome Suites under construction to a joint venture. Refer to Note 4 for more information.
The Company provides financing to franchisees for hotel development efforts and other purposes in the form of notes receivable loans. The loans bear interest and are expected to be repaid in accordance with the terms of the loan agreements. During the nine months ended September 30, 2025, the Company issued $6.4 million in notes receivable loans and received $3.0 million in notes receivable loan repayments. During the nine months ended September 30, 2024, the Company issued $24.4 million in notes receivable loans and received $2.3 million in notes receivable loan repayments.
On July 2, 2025, the Company acquired the remaining 50% of the outstanding shares of Choice Hotels Canada for a purchase price, net of the cash acquired, of $73.4 million. The acquisition was funded with available cash and borrowings under the Company's senior unsecured revolving credit facility.
During the nine months ended September 30, 2024, the Company received cash proceeds of $108.1 million from the sale of equity securities.
Cash Flows from Financing Activities
Cash flows from financing activities primarily relate to the proceeds or payments on the Company's borrowings, treasury stock repurchases, acquisition of shares in connection with the exercise or vesting of equity awards, and the payment of dividends.
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Debt
Senior Unsecured Revolving Credit Facility
On June 28, 2024, the Company entered into a Second Amended and Restated Senior Unsecured Credit Agreement (the "Restated Credit Agreement"), which amended and restated the Company’s existing amended and restated senior unsecured credit agreement dated August 20, 2018 (the “Former Credit Agreement”). The Former Credit Agreement provided for an $850 million unsecured revolving credit facility (the “Revolver”) with a final maturity date of August 20, 2026. The Restated Credit Agreement increased the commitments under the Revolver to $1 billion and extended the final maturity date of the Revolver to June 28, 2029, subject to optional one-year extensions that can be requested by the Company prior to each of the third, fourth, and fifth anniversaries of the closing date of the Restated Credit Agreement.
The effectiveness of such extension is subject to the consent of the lenders under the Restated Credit Agreement and certain customary conditions. The Restated Credit Agreement also provides that up to $50 million of borrowings under the Revolver may be used for alternative currency loans, up to $10 million of capacity under the Revolver may be used for the issuance of letters of credit, and up to $25 million of borrowings under the Revolver may be used for swingline loans. The Company may from time to time designate one or more wholly-owned subsidiaries of the Company as additional borrowers under the Restated Credit Agreement, subject to the consent of the lenders and certain customary conditions.
At any time prior to the final maturity date, the Company may increase the amount of the Revolver or add one or more term loan facilities under the Restated Credit Agreement by up to an additional $500 million in the aggregate to the extent that any one or more lenders commit to being a lender for the additional amount of such increase or the term loan facility and certain other customary conditions are met.
The Restated Credit Agreement allows the Company to elect to have the Revolver bear interest at a rate equal to (i) the secured overnight financing rate (subject to a credit spread adjustment of 0.10% and a 0.00% floor) plus a margin ranging from 0.90% to 1.50% or (ii) a base rate plus a margin ranging from 0.00% to 0.50%. In each case, the margin is determined according to the Company’s senior unsecured long-term debt rating or under circumstances as set forth in the Restated Credit Agreement if the Company’s total leverage ratio is less than 2.5 to 1.0.
The Restated Credit Agreement requires the Company to pay a fee on the total commitments under the Revolver, calculated on the basis of the actual daily amount of the commitments under the Revolver (regardless of usage) times a percentage per annum ranging from 0.075% to 0.25% (depending on the Company’s senior unsecured long-term debt rating or under specific circumstances as set forth in the Restated Credit Agreement if the Company’s total leverage ratio is less than 2.5 to 1.0).
The Restated Credit Agreement requires that the Company and its restricted subsidiaries comply with various covenants, including with respect to restrictions on liens, incurring indebtedness, making dividends and stock repurchases, making investments and effecting mergers and/or asset sales. The Restated Credit Agreement imposes financial maintenance covenants requiring the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0 and a total leverage ratio of not more than 4.5 to 1.0, which may be increased up to two nonconsecutive occasions to 5.5 to 1.0 for up to four consecutive fiscal quarters commencing with the fiscal quarter in which certain material acquisitions are consummated. So long as the Company maintains an Investment Grade Rating, as defined in the Restated Credit Agreement, then the Company will not need to comply with the consolidated fixed charge coverage ratio covenant.
The Restated Credit Agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of the Company under the Restated Credit Agreement to be immediately due and payable. As of September 30, 2025, the Company maintained a total leverage ratio of 2.84x, including outstanding debt of approximately $484.4 million on the senior unsecured revolving credit facility. The Company was in compliance with all financial covenants under the Restated Credit Agreement.
Debt issuance costs incurred in connection with the Restated Credit Agreement are amortized on a straight-line basis, which is not materially different from the effective interest method, through the loan's maturity date. The amortization of the debt issuance costs is included in interest expense in the consolidated statements of income.
The proceeds of the Restated Credit Agreement are expected to be used for general corporate purposes, including working capital, debt repayment, stock repurchases, dividends, investments, and other permitted uses as set forth in the Restated Credit Agreement.
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2024 Senior Unsecured Notes Due 2034
On July 2, 2024, the Company issued unsecured senior notes with a principal amount of $600 million (the "2024 Senior Notes”) at a discount of $6.4 million, bearing a coupon of 5.85%, with an effective rate of 6.11%, and mature on August 1, 2034. Interest on the 2024 Senior Notes is payable semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2025. The interest rate payable on the 2024 Senior Notes will be subject to adjustment based on certain rating events.
The Company may redeem the 2024 Senior Notes, in whole or in part, at any time prior to their maturity at the redemption price, which includes a make-whole premium. If the 2024 Senior Notes are redeemed on or after May 1, 2034 (three months prior to the applicable maturity date), then the redemption price will be equal to 100% of the principal amount of the 2024 Senior Notes being redeemed plus accrued and unpaid interest thereon to the redemption date. Additionally, at the option of the holders of the 2024 Senior Notes, the Company may be required to repurchase all or a portion of the holder's 2024 Senior Notes upon the occurrence of a change of control event, at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
2023 Term Loan Due 2024
On December 18, 2023, the Company entered into a $500 million unsecured term loan with an effective interest rate of 6.83% and a maturity date of December 16, 2024 (the "2023 Term Loan"). The term loan agreement required that the Company comply with various covenants, including restrictions on liens, incurring indebtedness, making dividends, stock repurchases, investments, and completing mergers and/or asset sales. The term loan agreement had financial covenants which required the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0, and a total leverage ratio of not more than 4.5 to 1.0 which may have been increased to 5.5 to 1.0 for up to three consecutive fiscal quarters commencing with the fiscal quarter in which certain material acquisitions are consummated. As long as the Company maintained an Investment Grade Rating, as defined in the term loan agreement, then the Company would not need to comply with the consolidated fixed charge coverage ratio covenant. The Company was in compliance with all covenants upon the repayment in full of the 2023 Term Loan.
On July 2, 2024, the Company used a portion of the net proceeds from the sale of the 2024 Senior Notes, after deducting underwriting discounts and commissions and other offering expenses, to repay in full the 2023 Term Loan.
2020 Senior Unsecured Notes Due 2031
On July 23, 2020, the Company issued unsecured senior notes with a principal amount of $450 million (the "2020 Senior Notes") bearing a coupon of 3.70%. The 2020 Senior Notes will mature on January 15, 2031, with interest to be paid semi-annually on January 15 th and July 15 th of each year. The Company used the net proceeds of the 2020 Senior Notes, after deducting underwriting discounts, commissions, and offering expenses, to repay in full the $250 million term loan entered in April 2020 and to fund the purchase price of the 2012 Senior Notes.
The interest rate payable on the 2020 Senior Notes is subject to adjustment based on certain rating events. The Company may redeem the 2020 Senior Notes, in whole or in part, at its option at the applicable redemption price before the maturity date. If the Company redeems the 2020 Senior Notes prior to October 15, 2030 (three months prior to the maturity date) (the “2020 Notes Par Call Date”), the redemption price will be equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, or (b) the sum of the present values of the remaining scheduled principal and interest payments that would have been payable had the 2020 Senior Notes matured on the 2020 Notes Par Call Date, discounted to the redemption date on a semi-annual basis at the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest. If the Company redeems the 2020 Senior Notes on or after the 2020 Notes Par Call Date, the redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. Additionally, at the option of the holders of the 2020 Senior Notes, the Company may be required to repurchase all or a portion of the 2020 Senior Notes upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
2019 Senior Unsecured Notes Due 2029
On November 27, 2019, the Company issued unsecured senior notes with a principal amount of $400 million (the "2019 Senior Notes") at a discount of $2.4 million, bearing a coupon of 3.70% with an effective rate of 3.88%. The 2019 Senior Notes will mature on December 1, 2029, with interest to be paid semi-annually on December 1 st and June 1 st of each year. The Company used the net proceeds of this offering, after deducting underwriting discounts, commissions, and offering expenses, to repay the previously outstanding senior notes with a principal amount of $250 million due August 28, 2020, and for working capital and other general corporate purposes.
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The Company may redeem the 2019 Senior Notes, in whole or in part, at its option at the applicable redemption price before maturity. If the Company redeems the 2019 Senior Notes prior to September 1, 2029 (three months prior to the maturity date) (the “2019 Notes Par Call Date”), the redemption price will be equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, or (b) the sum of the present values of the remaining scheduled principal and interest payments that would have been payable had the 2019 Senior Notes matured on the 2019 Notes Par Call Date, discounted to the redemption date on a semi-annual basis at the applicable Treasury Rate plus 30 basis points, plus accrued and unpaid interest. If the Company redeems the 2019 Senior Notes on or after the 2019 Notes Par Call Date, the redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest. Additionally, at the option of the holders of the 2019 Senior Notes, the Company may be required to repurchase all or a portion of the 2019 Senior Notes upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
Economic Development Loans
The Company entered into certain economic development agreements with various governmental entities in conjunction with the relocation of its corporate headquarters in November 2023. In accordance with these agreements, as of September 30, 2025, the governmental entities advanced $0.3 million to the Company to offset a portion of the corporate headquarters relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees within the jurisdictions. These advances bear interest at a rate of 3% per annum.
Repayment of the advances is contingent upon the Company achieving certain performance conditions, which are measured annually on December 31st and primarily relate to maintaining certain levels of employment within the various jurisdictions. If the Company fails to meet an annual performance condition, then the Company may be required to repay a portion or all of the advances including accrued interest by April 1st following the measurement date. Any outstanding advances at the expiration of the Company's corporate headquarters lease in 2035 will be forgiven in full. The advances will be presented in debt in the Company's consolidated balance sheets until the Company determines that the future performance conditions have been met over the entire term of the agreement and the Company will not be required to repay the advances. The Company accrues interest on the portion of the advances that it expects to repay. The Company is in compliance with all applicable current performance conditions as of September 30, 2025.
Dividends
During the nine months ended September 30, 2025, the Company paid $40.2 million in cash dividends. Based on the current per share dividend amount and our outstanding share count, the aggregate annual dividends for the year ended December 31, 2025 is projected to be $1.15 per share or approximately $53.5 million in aggregate dividend payments.
We expect that cash dividends will continue to be paid in the future, subject to the declaration by our board of directors, future business performance, economic conditions, changes in tax regulations, and other matters. In accordance with the Restated Credit Agreement, the Company may not declare or make any dividend payments if there is an existing event of default or if the dividend payment would create an event of default.
Share Repurchases & Redemptions
The Company has a share repurchase program. Treasury stock activity is recorded at cost in the consolidated balance sheets. During the nine months ended September 30, 2025, the Company repurchased 0.7 million shares of its common stock under the share repurchase program at a total cost, including accrued excise tax, of $100.4 million. In total, the Company has repurchased 62.0 million shares of its common stock (including 33.0 million shares prior to the two-for-one stock split effected in October 2005) under the share repurchase program at a total cost of $2.7 billion. Considering the effect of the two-for-one stock split, the Company has repurchased 95.0 million shares at an average price of $28.81 per share. As of September 30, 2025, the Company had 3.0 million shares remaining under the current share repurchase authorization.
During the nine months ended September 30, 2025, the Company redeemed 0.1 million shares of common stock at a total cost of $9.8 million from employees to satisfy the option exercise price and the statutory minimum tax-withholding requirements related to the exercising of stock options and the vesting of PVRSUs and restricted stock grants. These redemptions were outside the share repurchase program. During the nine months ended September 30, 2025, the Company received proceeds of $7.5 million from stock options exercised by employees.
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Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, and the related disclosures in the consolidated financial statements and the accompanying footnotes. We have discussed the estimates that we believe are critical because they involve a higher degree of judgment in their application and are based on information that is inherently uncertain in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. During the nine months ended September 30, 2025, there were no material changes to the critical accounting estimates that were previously disclosed.
New Accounting Standards
Refer to the "Recently Issued Accounting Standards" section of Note 1 to the consolidated financial statements for information related to our evaluation of new accounting standards.
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this quarterly report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "expect," "estimate," "believe," "anticipate," "should," "will," "forecast," "plan," "project," "assume," or similar words of futurity. All statements other than historical facts are forward-looking statements. These forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which, in turn, are based on information currently available to management. Such statements may relate to projections of our revenue, expenses, earnings, debt levels, ability to repay outstanding indebtedness, payment of dividends, repurchases of common stock, and other financial and operational measures, including occupancy and open hotels, revenue per available room, and our liquidity, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.
Several factors could cause our actual results, performance or achievements to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions, including access to liquidity and capital; changes in consumer demand and confidence, including consumer discretionary spending and the demand for travel, transient and group business; the timing and amount of future dividends and share repurchases; future domestic or global outbreaks of epidemics, pandemics or contagious diseases or fear of such outbreaks, and the related impact on the global hospitality industry, particularly but not exclusively the U.S. travel market; changes in law and regulation applicable to the travel, lodging or franchising industries, including with respect to the status of our relationship with employees of our franchisees; foreign currency fluctuations; variability and unpredictability in trade relations, sanctions, tariffs or other trade controls; the United States federal government funding lapse and related government shutdown; impairments or declines in the value of our assets; operating risks common in the travel, lodging or franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees and our relationships with our franchisees; our ability to keep pace with improvements in technology utilized for our marketing and reservation systems and other operating systems; our ability to grow our franchise system; exposure to risks related to our hotel development, financing, franchise agreement acquisition costs and ownership activities; exposures to risks associated with our investments in new businesses; fluctuations in the supply and demand for hotel rooms; our ability to realize anticipated benefits from acquired businesses; impairments or losses relating to acquired businesses; the level of acceptance of alternative growth strategies we may implement; the impact of inflation; cyber security and data breach risks; climate change and sustainability related concerns; ownership and financing activities; hotel closures or financial difficulties of our franchisees; operating risks associated with our international operations; labor shortages; the outcome of litigation; and our ability to effectively manage our indebtedness and secure our indebtedness. These and other risk factors are discussed in detail in Item 1A. Risk Factors of this Quarterly Report on Form 10-Q and of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates and the impact of fluctuations in foreign currencies on the Company's foreign investments and operations. The Company manages its exposure to these market risks through the monitoring of its available financing alternatives, including in certain circumstances, the use of derivative financial instruments. We are also subject to risk from changes in debt and equity prices from our non-qualified retirement savings plan investments in debt securities and common stock, which have a carrying value of $50.8 million and $49.3 million as of September 30, 2025 and December 31, 2024, respectively, and are accounted for as trading securities. The Company will continue to monitor the exposure in these areas and make the appropriate adjustments as market conditions dictate.
As of September 30, 2025, the Company had $487.3 million of variable interest rate debt instruments outstanding at an effective interest rate of 5.65%. A hypothetical change of 10% in the Company’s effective interest rate from the September 30, 2025 levels would increase or decrease annual interest expense by $2.8 million. The Company generally expects to refinance its fixed and variable long-term debt obligations prior to their scheduled maturities.
The Company does not presently have any material derivative financial instruments.
ITEM 4.CONTROLS AND PROCEDURES
Management’s Evaluation of Disclosure Controls and Procedures
The Company has a disclosure review committee whose membership includes the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), among others. The disclosure review committee’s procedures are considered by the CEO and CFO in performing their evaluations of the Company’s disclosure controls and procedures and in assessing the accuracy and completeness of the Company’s disclosures.
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), as of the end of the period covered by this quarterly report as required by Rules 13a-15(b) or 15d-15(b) under the Exchange Act. Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
An evaluation was performed under the supervision and with the participation of the Company’s CEO and CFO, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025.
Changes in Internal Control over Financial Reporting
During the third quarter of 2025, the Company completed the implementation of a new enterprise resource planning (“ERP”) and enterprise performance management ("EPM") system. The implementation of the new ERP and EPM system resulted in changes to our processes and procedures. Although we expect that these changes will strengthen our internal controls over financial reporting by automating manual processes and standardizing business processes to meet our organization’s needs, there are inherent risks in implementing any ERP or EPM system, and we will continue to evaluate and test the internal control changes. The implementation of the new ERP and EPM system was not made in response to any deficiencies in our internal controls.
There were no other changes in the Company's internal control over financial reporting during the period ended September 30, 2025 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
The Company is not a party to any material litigation other than litigation in the ordinary course of business. The Company's management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or in the aggregate, will have a material adverse effect on the Company's financial position, results of operations, or cash flows.
ITEM 1A.RISK FACTORS
There have been no material changes to the risk factors that were disclosed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, all of which could materially affect our business, financial condition, or future operating results. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also materially adversely affect our business, financial condition, and/or operating results.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table sets forth the purchases and redemptions of Choice Hotels International, Inc. common stock made by the Company during the nine months ended September 30, 2025. Refer to the Liquidity and Capital Resources section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information.

Period |  | Total Number of Shares Purchased or Redeemed |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |  | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2025 through January 31, 2025 |  | 129,106 |  | $ | 143.45 |  |  | 129,106 |  |  | 3,648,021 |
February 1, 2025 through February 28, 2025 |  | 96,825 |  | 149.77 |  |  | 96,825 |  |  | 3,551,196 |
March 1, 2025 through March 31, 2025 |  | 230,211 |  | 137.68 |  |  | 162,828 |  |  | 3,388,368 |
April 1, 2025 through April 30, 2025 |  | 191,086 |  | 125.18 |  |  | 190,693 |  |  | 3,197,675 |
May 1, 2025 through May 31, 2025 |  | 163,110 |  | 129.86 |  |  | 162,851 |  |  | 3,034,824 |
June 1, 2025 through June 30, 2025 |  | 1,080 |  | 110.90 |  |  | 304 |  |  | 3,034,520 |
July 1, 2025 through July 31, 2025 |  | — |  | — |  |  | — |  |  | 3,034,520 |
August 1, 2025 through August 31, 2025 |  | 1,619 |  | 124.50 |  |  | — |  |  | 3,034,520 |
September 1, 2025 through September 30, 2025 |  | — |  | — |  |  | — |  |  | 3,034,520 |
Total |  | 813,037 |  |  | $ | 135.47 |  |  | 742,607 |  |  | 3,034,520 |

(1) During the nine months ended September 30, 2025, the Company redeemed 70,430 shares of common stock from employees to satisfy the option price and the minimum tax-withholding requirements related to the exercising of options and the vesting of performance vested restricted stock units and restricted stock grants. These redemptions were not part of the share repurchase program.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
None.
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ITEM 5.OTHER INFORMATION
Director and Officer Trading Arrangements
None of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this quarterly report.
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ITEM 6.EXHIBITS
Exhibit Number and Description

Exhibit Number |  | Description
3.01(a) |  | Restated Certificate of Incorporation of Choice Hotels Franchising, Inc. (renamed Choice Hotels International, Inc.)
3.02(b) |  | Amendment to the Restated Certificate of Incorporation of Choice Hotels International, Inc. dated April 26, 2013
3.03(c) |  | Amendment to the Restated Certificate of Incorporation of Choice Hotels International, Inc., dated May 16, 2024
3.04(c) |  | Second Amended and Restated Bylaws of Choice Hotels International, Inc., dated as of May 16, 2024
31.1* |  | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
31.2* |  | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32* |  | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS* |  | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* | Filed herewith

(a) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Registration Statement on Form S-4, filed August 31, 1998 (Reg. No. 333-62543).
(b) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K dated April 26, 2013, filed May 1, 2013.
(c) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K dated May 15, 2024, filed May 17, 2024.
(d) Incorporated by reference to the identical document filed as an exhibit to Choice Hotels International, Inc.'s Current Report on Form 8-K dated May 15, 2025, filed May 15, 2025.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| CHOICE HOTELS INTERNATIONAL, INC.
November 5, 2025 | By: | /s/ PATRICK S. PACIOUS
|  | Patrick S. Pacious
|  | President & Chief Executive Officer
| CHOICE HOTELS INTERNATIONAL, INC.
November 5, 2025 | By: | /s/ SCOTT E. OAKSMITH
|  | Scott E. Oaksmith
|  | Chief Financial Officer

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