Choice Hotels International recently reported 13% year-over-year growth in U.S. extended-stay net rooms during Q2 2026, marking the 12th consecutive quarter of double-digit growth, while the company prepares to begin selling owned hotels during the first half of 2027 as part of the next phase of its asset-light strategy.
Choice ended June with 598 U.S. extended-stay hotels representing 60,121 rooms. Extended-stay brands have become an increasingly important source of unit growth for the company, which cited both strong unit economics and continued developer demand.
The development pipeline suggests that extended stay could continue gaining share of Choice’s system. Of approximately 77,300 rooms in the company’s global pipeline, 29,900 are extended-stay rooms, representing 39% of the total.
Choice’s broader pipeline consisted of 71,100 U.S. rooms and 6,200 international rooms. It included 26,400 conversion rooms and 50,900 new-construction rooms, while 96% of the total pipeline was concentrated in extended-stay, midscale and upscale brands.
Global franchise agreements awarded increased 20% during Q2 and represented approximately 11,200 new rooms for development. Global room openings increased 16% to approximately 8,300 rooms.
U.S. development also accelerated. Choice opened approximately 6,400 U.S. rooms, up 27% year-over-year and representing its highest second-quarter opening total since 2019. At the same time, U.S. hotel exits declined to their lowest second-quarter level since 2020.
The U.S. conversion pipeline increased 24% year-over-year to 24,100 rooms and another 6% sequentially, providing another avenue for Choice to expand its system without owning the underlying real estate.
That franchise-led expansion is occurring as Choice reduces the capital tied up in owned properties and development activities. First-half net capital outlays for hotel development and lending activities fell 80% to $15 million from $76 million.
Choice expects 2026 development-related net capital outlays of $20 million-$45 million, compared with $103.4 million in 2025.
The next stage of the asset-light strategy involves recycling capital from the company’s owned-hotel portfolio. As of August 5, Choice owned 19 operating hotels and had one additional hotel under construction. Management expects the first asset sales to take place during the first half of 2027, subject to market conditions.
Choice’s global system totaled 7,608 hotels and 661,089 rooms at June 30. International rooms increased 12.5% to 161,863, helping global net rooms grow 2.6%, even as the U.S. system declined 0.3% to 499,226 rooms.
Financial performance remained positive on an adjusted basis. Q2 revenue increased to $441 million from $426 million, while Adjusted EBITDA increased 6% to $175 million and adjusted diluted EPS rose 5% to $2.02. GAAP net income declined 21% to $64 million.
U.S. RevPAR increased 1.3%, reflecting a 0.7% improvement in average rate and a 40-basis-point increase in occupancy. International RevPAR increased 2.1% on a currency-neutral basis.
Choice raised its 2026 Adjusted EBITDA guidance to $635 million-$650 million from $632 million-$647 million, citing improved U.S. RevPAR, global net rooms growth and U.S. royalty rates. Global net system rooms growth is now expected at approximately 1.5%, compared with the previous approximately 1% expectation.
The company had $475 million of available liquidity at quarter-end and a trailing net debt-to-Adjusted EBITDA ratio of 3.1 times, within its target range of 3 to 4 times. Choice also returned $139 million to shareholders during the first half through $113 million of share repurchases and $26 million of dividends.
The combination of sustained double-digit extended-stay growth, a development pipeline heavily weighted toward higher-revenue brand categories and planned hotel asset sales illustrates Choice’s effort to grow its franchise system while reducing the amount of capital committed to owning hotel real estate.
KEY QUOTE:
“Our second quarter results reflect encouraging progress across our key priorities, with U.S. net rooms growth improving for the second consecutive quarter to its strongest first-half performance since 2021 and U.S. RevPAR trends strengthening. Over the past several years, we’ve built a stronger commercial engine and technology platform, and we continue to invest in both. Our biggest opportunity now is sharpening execution—leveraging those capabilities to further enhance franchisee economics by increasing the number and quality of the guests we deliver while lowering operating costs. While we still have work to do, this business has significantly more potential, and I’m confident we can realize it. The progress we delivered this quarter reinforces that confidence.”
Dom Dragisich, Interim Chief Executive Officer of Choice Hotels International
