Choice Hotels International, Inc. (NYSE:CHH) shares gained 2.55% in pre-market trading on Monday after the hotel franchising company reported third-quarter 2026 earnings and revenue above analyst expectations and raised its full-year revenue per available room (RevPAR) guidance.
The company reported adjusted earnings of $2.33 per share, exceeding the consensus estimate of $2.28 by $0.05. Quarterly revenue increased 2.5% to $458 million, compared with $447 million in the corresponding period last year, and surpassed analysts’ forecast of $447.29 million.
Choice Hotels also raised its full-year adjusted EBITDA outlook and reported stronger US RevPAR growth, supported by improvements in room rates and occupancy.
However, the company reduced its annual net income guidance, citing a contract termination charge and increased marketing expenses.
Choice Hotels delivered adjusted earnings per share of $2.33 for the third quarter, approximately 2.2% above the analyst consensus of $2.28.
Revenue reached $458 million, exceeding expectations by approximately $10.71 million.
The result represented a 2.5% increase from the $447 million reported in the third quarter of 2025.
The earnings and revenue performance came alongside improvements in the company’s US hotel operating metrics and continued expansion of its global room portfolio.
Adjusted earnings exceeded market expectations despite additional expenses affecting the company’s revised full-year net income forecast.
The positive results contributed to the 2.55% increase in Choice Hotels shares during pre-market trading.
Revenue per available room in Choice Hotels’ US operations increased 3.8% compared with the same quarter last year.
RevPAR is a widely used hotel industry performance measure that reflects revenue generated per available room, incorporating both room rates and occupancy.
The company attributed the increase to a 1.0% improvement in room rates and a 160-basis-point rise in occupancy.
The higher occupancy rate indicates that a greater proportion of available rooms were filled during the quarter, while the increase in rates contributed additional revenue growth.
Together, these factors supported stronger RevPAR performance across the company’s US hotel portfolio.
The improvement was an important component of Choice Hotels’ decision to raise its full-year RevPAR guidance.
Following the stronger third-quarter performance, Choice Hotels increased its expectations for revenue per available room during 2026.
The company now forecasts US and global RevPAR growth of 1.5% to 2.5% for the full year.
The revised outlook represents an improvement from its previous US RevPAR guidance of 0% to 1.25% growth.
The midpoint of the new range is 2.0%, compared with 0.625% under the earlier US forecast.
The higher guidance reflects improved revenue performance within the company’s hotel portfolio, particularly in the United States.
Management’s updated expectations suggest that the stronger operating trends recorded during the third quarter will contribute to full-year performance.
However, the revised forecast remains dependent on hotel occupancy, room rates and trading conditions during the remainder of 2026.
Choice Hotels reported third-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $193 million.
This represented an increase of approximately 1% from the $190 million recorded in the same period last year.
The improvement accompanied higher revenue and stronger US RevPAR performance.
Adjusted EBITDA is a measure of operating profitability that excludes certain financing, tax, depreciation and other specified items.
The increase indicates that Choice Hotels generated higher adjusted operating earnings during the quarter, although growth was more modest than the rise in revenue.
The company also raised its adjusted EBITDA expectations for the full year.
Choice Hotels now expects adjusted EBITDA between $641 million and $651 million for 2026.
The updated forecast compares with its previous guidance range of $635 million to $650 million.
The midpoint of the revised range is $646 million, compared with $642.5 million under the earlier forecast.
The increase reflects management’s improved expectations for adjusted operating profitability following the third-quarter results.
The company raised the lower end of its guidance by $6 million and the upper end by $1 million.
The revised range indicates a narrower expected outcome for annual adjusted EBITDA as the company approaches the end of the financial year.
Despite raising its RevPAR and adjusted EBITDA forecasts, Choice Hotels lowered its full-year net income guidance.
The company now expects net income between $178 million and $185 million.
This compares with its previous forecast of $230 million to $241 million.
The midpoint of the revised range is $181.5 million, down from $235.5 million previously.
Choice Hotels attributed the reduction primarily to a $24 million contract termination charge and higher marketing expenses.
The lower net income forecast contrasts with the improved adjusted EBITDA outlook, reflecting the effect of expenses on reported profitability.
The company did not provide additional details about the contract termination in the information released.
The revision highlights the distinction between adjusted operating earnings and net income, which incorporates a broader range of costs and charges.
Choice Hotels continued expanding its international hotel portfolio during the third quarter.
Global net rooms increased 1.7% compared with September 30, 2025.
The growth reflects an increase in the company’s room base after accounting for additions and removals from its hotel system.
As a lodging franchisor, Choice Hotels generates revenue through its relationships with hotel owners and operators, making the size and performance of its franchised room portfolio important business indicators.
The expansion provides an additional source of potential revenue growth alongside improvements in room rates and occupancy.
Management also reported that the US net rooms growth rate improved for the third consecutive quarter.
This indicates continued progress in the company’s domestic portfolio expansion, although the announcement did not specify the latest US net rooms growth percentage.
President and Chief Executive Officer Dom Dragisich said the company’s quarterly performance reflected progress across several strategic priorities.
“Our third-quarter results reflect continued progress against our key priorities: the U.S. net rooms growth rate improved for the third consecutive quarter, U.S. RevPAR growth strengthened, and capital recycling is underway,” Dragisich said.
The comments highlighted three areas of management focus: improving the pace of US room expansion, strengthening revenue performance at existing hotels and progressing capital recycling initiatives.
The improvement in US net rooms growth suggests that the company’s domestic expansion strategy continued to develop during the quarter.
Meanwhile, stronger RevPAR performance reflected higher occupancy and room rates.
The company also confirmed that capital recycling activities were underway, although the announcement did not provide further financial details about those initiatives.
Choice Hotels expects adjusted diluted earnings per share between $6.92 and $7.07 for the full year.
The midpoint of the forecast is approximately $7.00, slightly below the analyst consensus estimate of $7.02.
The guidance indicates that the company’s annual adjusted earnings expectations remain close to market forecasts despite the stronger third-quarter results.
While Choice Hotels raised its RevPAR and adjusted EBITDA outlooks, the adjusted EPS range suggests a more measured earnings expectation for the full year.
Investors will be assessing the relationship between improving hotel operating performance, higher adjusted EBITDA and the additional expenses affecting reported net income.
Choice Hotels’ third-quarter results showed improving operating conditions across its US hotel portfolio, with RevPAR increasing 3.8% and global net rooms expanding 1.7%.
Adjusted earnings of $2.33 per share and revenue of $458 million both exceeded analyst expectations, contributing to a positive pre-market share price reaction.
The company also increased its full-year RevPAR growth forecast to 1.5%–2.5% and raised adjusted EBITDA guidance to $641 million–$651 million.
However, the reduction in net income guidance to $178 million–$185 million introduces a contrasting element to the company’s financial outlook.
The revised forecast reflects the impact of a $24 million contract termination charge and higher marketing expenses.
Looking ahead, investors will be monitoring US RevPAR trends, room portfolio expansion, capital recycling progress and the company’s ability to deliver its updated profitability targets.
The stronger third-quarter operating performance provides support for the raised RevPAR and adjusted EBITDA forecasts, while the lower net income outlook highlights the effect of additional costs on reported earnings.
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