A leading global franchisor of budget and mid-scale hotels with strong recent earnings growth driven by operational leverage in the North American lodging sector.
Investors may favor CHH due to its compelling earnings growth trajectory, with net income rising from $332.2M in 2022 to $369.9M in 2025, indicating improving operational efficiency. The company's ability to generate strong operating cash flow of $270.4M while managing a massive asset base suggests potential for shareholder returns via dividends and buybacks.
The substantial long-term debt of $1.91B represents a significant financial burden that could limit flexibility during economic contractions or if interest rates remain elevated. With current liabilities reaching $467.3M against only $181.2M in shareholders' equity, the balance sheet leverage is high, potentially constraining growth opportunities and increasing default risk.
Choice Hotels International Inc. (CHH) operates as a global hospitality franchisee and owner providing lodging services primarily through its Quality Inn, Super 8 by Wyndham, Comfort Suites, and MainStay Suites brands. The company serves travelers and leisure guests across North America and international markets, generating revenue through room bookings and ancillary hotel services while managing a portfolio of over 1,500 properties.
The company demonstrated resilient financial performance with revenue reaching $1.60B and net income climbing to $369.9M in 2025, reflecting a successful recovery from previous years' volatility. Operating leverage was effectively utilized as fixed cost structures benefited from higher room rates and occupancy, resulting in a significant increase in cash flow from operations of $270.4M despite heavy investing outflows for acquisitions totaling $73.4M.
The global lodging industry is currently characterized by a recovery in travel demand, though it remains sensitive to macroeconomic conditions and consumer spending power. Franchising models dominate the budget segment, allowing operators to expand quickly without bearing the full burden of property-level debt and capital maintenance.
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $1.40B | $1.54B | $1.58B | $1.60B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $1.40B | $1.54B | $1.58B | $1.60B |
| Operating Expenses | $923.3M | $1.17B | $1.12B | $1.15B |
| Operating Income | $478.6M | $375.0M | $463.8M | $448.4M |
| G&A | $207.3M | $216.1M | $219.9M | $329.0M |
| Stock-Based Comp | $40.5M | $40.5M | $38.4M | $38.3M |
| D&A | $30.4M | $39.7M | $43.3M | $59.7M |
| Amortization | $35.1M | $42.5M | $50.9M | — |
| Other OpEx | $716.1M | $953.1M | $901.2M | $819.4M |
| Non-Operating Income | $-41.8M | $-38.1M | $-68.1M | $8.5M |
| Interest Expense | $43.8M | $63.8M | — | — |
| Interest Income | $7.3M | $7.8M | $8.6M | $6.2M |
| Pre-Tax Income | $436.8M | $337.0M | $395.6M | $456.9M |
| Income Tax | $104.7M | $78.4M | $96.0M | $86.9M |
| Continuing Ops | $332.2M | $258.5M | $299.7M | $369.9M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $332.2M | $258.5M | $299.7M | $369.9M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $332.2M | $258.5M | $299.7M | $369.9M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $347.9M | $296.5M | $339.1M | $406.0M |
| Cash & Equivalents | $41.6M | $26.8M | $40.2M | $45.0M |
| Accounts Receivable | $216.6M | $195.9M | $176.7M | $207.5M |
| Prepaid Expenses | $32.5M | $38.8M | $41.3M | $45.4M |
| Other Current Assets | $57.2M | $35.0M | $80.9M | $108.1M |
| Long-Term Assets | $1.75B | $2.10B | $2.19B | $2.51B |
| PP&E (Net) | $427.3M | $493.5M | $604.3M | $649.3M |
| Intangibles | $742.2M | $811.1M | $884.0M | $1.08B |
| Goodwill | $218.7M | $220.2M | $220.2M | $305.8M |
| Operating Leases | $69.0M | $85.1M | $83.5M | $77.7M |
| Other LT Assets | $297.1M | $488.4M | $399.4M | $397.0M |
| Total Assets | $2.10B | $2.39B | $2.53B | $2.92B |
| Current Liabilities | $435.9M | $942.7M | $462.7M | $467.3M |
| Accounts Payable | $118.9M | $131.3M | $134.9M | $156.3M |
| Current Debt | $3.0M | $499.3M | $0 | — |
| Current Leases | $10.7M | $4.2M | $5.4M | $8.4M |
| Deferred Revenue | $92.7M | $108.3M | $102.1M | $100.7M |
| Other Current Liab | $66.2M | $75.4M | $70.2M | $63.5M |
| Long-Term Liabilities | $1.51B | $1.42B | $2.11B | $2.27B |
| Long-Term Debt | $1.20B | $1.07B | $1.77B | $1.91B |
| LT Operating Leases | $71.0M | $109.5M | $113.3M | $108.0M |
| Other LT Liab | $90.4M | $96.2M | $99.0M | $125.1M |
| Total Liabilities | $1.95B | $2.36B | $2.58B | $2.74B |
| Shareholders' Equity | $154.7M | $35.6M | $-45.3M | $181.2M |
| Retained Earnings | $1.56B | $1.76B | $2.00B | $2.32B |
| AOCI | $-5.2M | $-5.7M | $-6.2M | $-5.3M |
| Total L&E | $2.10B | $2.39B | $2.53B | $2.92B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $332.2M | $258.5M | $299.7M | $369.9M |
| Non-Cash Adjustments | $20.6M | $29.7M | $-7.5M | $-79.7M |
| Working Capital Changes | $14.3M | $8.3M | $27.2M | $-19.8M |
| Cash from Operations | $367.1M | $296.6M | $319.4M | $270.4M |
| Cash from Investing | $-442.4M | $-265.6M | $-84.6M | $-218.3M |
| Share Buybacks | $434.8M | $362.8M | $380.7M | $138.3M |
| Dividends Paid | $52.5M | $56.5M | $55.5M | $53.5M |
| Cash from Financing | $-394.1M | $-45.9M | $-221.7M | $-50.1M |
| FX Effect | $-520.0K | $197.0K | $301.0K | $2.7M |
| Net Change in Cash | $-469.5M | $-15.0M | $13.1M | $2.1M |
| Beginning Cash | $511.6M | $41.6M | $26.8M | $40.2M |
| Ending Cash | $41.6M | $26.8M | $40.2M | $45.0M |
Franchise Fees and Royalties from its extensive network of Choice-branded hotels; Ownership Income from directly owned hotel properties; Ancillary Services Revenue including travel services, advertising, and technology solutions sold to franchisees.
High debt load with $1.91B in long-term debt creating vulnerability to rising interest rates and potential refinancing challenges; Exposure to economic downturns that disproportionately impact travel demand for budget lodging brands; Potential regulatory changes regarding franchise agreements or advertising practices; Supply chain volatility affecting operating costs.
Extensive brand portfolio offering diverse price points that capture various traveler segments; Strong economies of scale providing purchasing power for supplies and marketing; Robust franchise model allowing rapid expansion with lower capital expenditure compared to pure-play owners.
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.