Choice Hotels International executives touted the continued growth of the company's international portfolio during the company's third-quarter earnings call.
President and CEO Pat Pacious said on the call Choice's international business is the company's highest growth opportunity.
International revenue per available room was up 9.5% year over year in the quarter, according to the company's earnings release. RevPAR was up 11% year over year at its Europe, Middle East and Africa hotels, and RevPAR was up 5% in Asia-Pacific and the Americas, excluding the United States.
Choice announced in August that it had acquired the remaining 50% stake in Choice Hotels Canada for $112 million from InnVest Hotels, shifting its portfolio in the region from a master franchising model to a direct franchising model. This deal was one of the driving forces behind Choice raising its full-year 2025 net income outlook from a range of $261 million to $276 million to a range of $353 million to $371 million.
Choice also raised the floor of its full-year adjusted EBITDA outlook slightly from $615 million to $620 million, but lowered the ceiling from $635 million to $632 million. Pacious credited Choice's expanding international business, a surge in revenue from business travelers and group demand from small- to medium-sized companies, and momentum across partnership revenue streams for the company's updated outlook.
"The strength in these earnings drivers allows us to raise the midpoint of our full-year earnings outlook and tighten the range, reinforcing our confidence in the growth of our global business going forward," he said.
Global unit growth was also driven by Choice's international portfolio.
Compared to the third quarter last year, Choice's international hotel room count is up 8.3% and its U.S. hotel room count is up 0.6%. On the whole, its global room count saw 2.3% growth, with 3.3% growth across its upscale, extended stay and midscale hotel segments, which Pacious called its "higher revenue segments."
In Choice's current global hotel development pipeline, 98% of the rooms are in one of those three segments.
"These hotels are expected to be 1.7-times more accretive than our current portfolio, driven by their RevPAR premium, higher effective royalty rates and larger average room counts," Pacious said.
Choice achieved a 66% year-over-year increase in international hotel openings in the quarter, including its first property in Argentina, the 80-room Radisson Blu Bariloche. The brand also plans to add more than 4,800 midscale rooms in France by the end of the year through direct franchise agreements, which would double its portfolio in the country.
By 2027, Choice is expecting to generate more than $50 million in international adjusted EBITDA, doubling its 2024 baseline, Pacious said. In the third quarter, adjusted international EBITDA grew 35% year over year.
Future of US travel
Pacious said Choice's U.S. hotel portfolio is well-positioned for sustained growth and suits its core base of travelers — retirees, road trippers and blue- and gray-collar workers.
Retirees and future retirees represent 30% of Choice's revenue, and the demographic is only growing. More than 4 million Americans are reaching retirement, the largest number in U.S. history, he said.
Low hotel supply growth and events such as the 2026 FIFA World Cup, U.S. Semiquincentennial and Route 66 Centennial will drive additional U.S. demand next year, he said.
"As we look ahead, we're optimistic about the next phase of the U.S. lodging cycle and its impact on new construction openings in the U.S.," Pacious said. "We expect last week's lowering of interest rates, continued investments in the build-out of [artificial intelligence] infrastructure and a constructive regulatory environment will drive stronger demand, especially for our travelers."
There are two indicators that bode well for the next cycle of travel in the U.S., Pacious said. Hotel occupancy among Choice's economy transient segment has grown year over year during the past two quarters, and occupancy indexed across its entire portfolio is slightly up year to date.
Third-quarter performance
In the U.S., Choice's hotel revenue per available room decreased 3.2% to $60.33 in the third quarter from 2024 levels, according to its earnings report. Average daily rate at U.S. hotels was $100.03, down 2% year over year, while occupancy decreased 80 basis points to 60.3%.
Global RevPAR was up 0.2% in the third quarter compared to last year, driven by a 9.5% increase of international RevPAR growth.
Choice's adjusted EBITDA was $190.1 million in the third quarter, up 7% from $177.6 million in 2024. Its total revenues for the quarter were $447.3 million, a 5% increase from $428 million in the third quarter last year.
The company's net income for the third quarter was $180 million, from $105.7 million in the third quarter of 2024.
As of publication time, Choice's stock price was trading at $96.97 per share, a 31.7% decrease year to date. The NYSE Composite Index was up 11.9% for the same time period.