Financial Analysis

"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. Choice Hotels Canada now has 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 …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

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 Companys VIEs in order to support its efforts to develop and own hotels that are franchised under the Companys 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 December 31, 2025, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $38.5 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 December 31, 2025: As part of …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Debt Debt consisted of the following: December 31, 2025 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 $2.4 million and $3.0 million at December 31, 2025 and December 31, 2024, respectively $ 397,643 $ 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 $3.1 million and $3.7 million at December 31, 2025 and December 31, 2024, respectively 446,910 446,300 $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 $10.1 million and $11.2 million at December 31, 2025 and December 31, 2024, respectively 589,936 588,764 $1 billion senior unsecured revolving credit facility with an effective interest rate of 5.22%, less deferred issuance costs of $2.8 million and $3.6 million at December 31, 2025 and December 31, 2024, respectively 469,783 336,420 Economic development loans with an effective interest rate of 3.00% at December 31, 2025 1,850 Total long-term debt $ 1,906,122 $ 1,768,526 As of December 31, 2025, the scheduled principal maturities of debt, net of unamortized discounts, premiums, and deferred issuance costs, were as follows: (in thousands) Senior Notes Revolving Credit Facility Other Notes Payable Total 2026 $ $ $ $ 2027 2028 2029 …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Share-Based Compensation and Capital Stock Share-Based Compensation The Company has stock compensation plans pursuant to which it is authorized to grant share-based awards, including restricted stock, stock options, stock appreciation rights, and performance-based share awards, to officers, key employees, and non-employee directors with contractual terms that are set by the Compensation and Management Development Committee of the Board of Directors. Approximately 1.9 million shares of the Company's common stock remain available for grant as of December 31, 2025. The Companys policy allows the issuance of new common stock shares or treasury shares to satisfy the share-based awards. For the year ended December 31, 2025, the following table presents a summary of the share-based award activity: 2025 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 65,223 132.64 148,709 150.77 Performance-based leveraging* (41,012) 125.90 Exercised/vested (62,025) 107.71 (65,961) 129.32 (116,107) 151.76 Expired (12,850) 135.92 Forfeited (1,683) 137.55 (11,502) 125.14 (14,300) 146.55 Outstanding as of December 31, 2025 695,083 $ 110.98 5.2 years 343,165 $ 138.02 444,811 $ 138.89 Options exercisable as of Decemb …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

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 Companys 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 Companys 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 years ended December 31, 2025 and 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) …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Income Taxes The Company's income before income taxes, classified by source of income, was as follows: Year Ended December 31, (in thousands) 2025 2024 2023 U.S. $ 324,611 $ 370,395 $ 303,337 Outside the U.S. 132,280 25,250 33,619 Income before income taxes $ 456,891 $ 395,645 $ 336,956 The provision for income taxes, classified by the timing and the location of payment, was as follows: Year Ended December 31, (in thousands) 2025 2024 2023 Current tax expense Federal $ 45,262 $ 89,716 $ 60,493 State 10,890 21,518 16,890 Foreign 4,568 2,609 1,593 Deferred tax expense (benefit) Federal 17,330 (18,378) (2,022) State 4,343 (2,908) (1,874) Foreign 4,552 3,423 3,369 Income tax expense $ 86,945 $ 95,980 $ 78,449 The net deferred tax assets were as follows: December 31, (in thousands) 2025 2024 Deferred tax assets: Accrued compensation $ 21,571 $ 20,958 Deferred revenue 36,209 40,946 Receivable, net 13,888 12,345 Tax credits 34,615 24,663 Operating lease liabilities 27,872 28,455 Partnership interests 2,896 5,130 Capitalized research and experimental expenditures 35,253 44,946 Foreign net operating losses 7,651 7,870 Non-U.S. intellectual property 7,555 11,333 Other 5,015 7,235 Total gross deferred tax assets 192,525 203,881 Less: Valuation allowance (33,542) (29,660) Deferred tax assets $ 158,983 $ 174,221 Deferred tax liabilities: Property, equipment and intangible assets $ (87,465) $ (42,895) Operating lease ROU assets (18,601) (20,016) Other (2,849) (3,002) Deferred tax liabilit …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases The Company has operating leases for office spaces, buildings, and equipment. The Company's leases, excluding the assumed ground lease discussed below, have remaining lease terms of two to nine years, some of which include options to extend the lease for up to ten years. Additionally, the Company has a ground lease on an owned hotel with a remaining lease term of 86.3 years. The Company's lease costs were as follows: Year Ended December 31, (in thousands) 2025 2024 Operating lease cost $ 12,130 $ 11,979 Sublease income (937) (789) Total lease cost $ 11,193 $ 11,190 Other information related to the Company's lease arrangements were as follows: Year Ended December 31, (in thousands) 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,602 $ 6,637 ROU assets obtained in exchange for lease liabilities in non-cash transactions: Operating lease assets obtained in exchange for operating lease liabilities $ 427 $ 4,585 Weighted-average remaining lease term 31.6 years 31.7 years Weighted-average discount rate 5.09 % 5.07 % As of December 31, 2025, the future minimum lease payments were as follows: (in thousands) 2026 $ 13,071 2027 13,697 2028 13,594 2029 13,586 2030 13,642 Thereafter 297,944 Total minimum lease payments $ 365,534 Less: imputed interest 249,207 Present value of the minimum lease payments $ 116,327

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"Recently Adopted & 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 regards 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. The Company adopted ASU 2023-09 on a prospective basis effective December 31, 2025. The adoption of this standard did not have an impact on the Company's consolidated financial statements, but it did require enhanced income tax disclosures in the notes to the consolidated financial statements. Refer to Note 11 for more information. 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 eval …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"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 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. As of December 31, 2025 and 2024, deferred revenues from initial franchise fees were $103.0 million and $111.2 million, respectively. Loyalty points are typically redeemed within three years of issuance. As of December 31, 2025 and 2024, deferred revenues from the loyalty program were $114.9 million and $110.4 million, respectively. The following table summarizes the significant changes in the contract liabilities balances during the year ended December 31, 2025: (in thousands) Balance as of December 31, 2024 $ 216,697 Increases to the contract liability balance due to cash received 153,031 Revenue recognized in the period (149,388) Balance as of December 31, 2025 $ 220,340 Remai …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"Reportable Segment Information 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. The Company evaluates its Hotel Franchising & Management reportable segment based primarily on the operating income of the segment w …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"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 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. Choice Hotels Canada now has 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 …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

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 Companys VIEs in order to support it's efforts to develop and own hotels that are franchised under the Companys 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 March 31, 2026, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $40.4 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 March 31, 2026: As part of the …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Debt Debt consisted of the following: March 31, 2026 December 31, 2025 (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 $2.2 million and $2.4 million at March 31, 2026 and December 31, 2025, respectively $ 397,794 $ 397,643 $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 $2.9 million and $3.1 million at March 31, 2026 and December 31, 2025, respectively 447,062 446,910 $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 $9.8 million and $10.1 million at March 31, 2026 and December 31, 2025, respectively 590,229 589,936 $1 billion senior unsecured revolving credit facility with an effective interest rate of 4.93%, less deferred issuance costs of $2.6 million and $2.8 million at March 31, 2026 and December 31, 2025, respectively 566,301 469,783 Economic development loans with an effective interest rate of 3.00% at March 31, 2026 and December 31, 2025 1,850 1,850 Total long-term debt $ 2,003,236 $ 1,906,122"

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Share-Based Compensation The components of the Companys share-based compensation expense were as follows: Three Months Ended March 31, (in thousands) 2026 2025 Stock options $ 557 $ 1,519 Restricted stock 3,422 3,327 Performance vested restricted stock units 4,313 5,569 Total share-based compensation expense $ 8,292 $ 10,415 A summary of the share-based award activity during the three months ended March 31, 2026 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, 2026 695,083 $ 110.98 343,165 $ 138.02 444,811 $ 138.89 Granted 129,303 107.01 133,689 151.51 Performance-based leveraging (1) (8,796) 131.53 Exercised/vested (77,737) 81.80 (78,106) 139.77 (115,378) 128.93 Expired Forfeited (752) 136.14 (6,235) 123.36 (22,031) 161.60 Outstanding as of March 31, 2026 616,594 $ 114.62 5.6 years 388,127 $ 127.84 432,295 $ 144.29 Options exercisable as of March 31, 2026 553,953 $ 114.48 5.4 years (1) Any revisions to the outstanding PVRSUs during the three months ended March 31, 2026 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 three months ended March 31, 2026 was equal …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

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 Companys 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 Companys 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 three months ended March 31, 2026 and during the year ended December 31, 2025. The Company recognized the following assets at fair value on a recurring basis in the consolidated balance sheets: Fair Value Measurements …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes The Company's effective income tax rates were 33.0% and 25.5% for the three months ended March 31, 2026 and 2025, respectively. The effective income tax rate for the three months ended March 31, 2026 was higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes and tax expense related to compensation. The effective income tax rate for the three months ended March 31, 2025 was higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes.

IncomeTaxDisclosureTextBlock

"Recently Issued Accounting Standards In November 2024, the Financial Accounting Standards Board (""FASB"") issued Accounting Standards Update (""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. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (""ASU 2025-11""). ASU 2025-11 provides a comprehensive list of required interim disclosures and requires entities to disclose events that have a material impact on the entity since the end of the last annual reporting period. ASU 2025-11 is effective for the annual reporting period beginning after December 15, 2027, including the interim periods within that annual reporting period. Early adoption is permitted. The Company is currently evaluating the potential impact that ASU 2025-11 will have on the Company's consolidated financial statements."

NewAccountingPronouncementsPolicyPolicyTextBlock

"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, 2025 to March 31, 2026: (in thousands) Balance as of December 31, 2025 $ 220,340 Increases to the contract liability balance due to cash received 29,125 Revenue recognized in the period (27,705) Balance as of March 31, 2026 $ 221,760 Remaining Performance Obligations The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $221.8 million as of March 31, 2026. This amount represen …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

"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. The Company evaluates its Hotel Franchising & Management reportable segment based primarily on the operating income of the segment without all …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing