Nov 2, 2026 earnings call — Net rooms growth and asset-light shift
Company raised full-year adjusted EBITDA outlook to $641 million to $651 million.
Revenue $0.5B (est $0.4B) · EPS $2.33 (est $2.29)
Key quotes
"expect a more meaningful acceleration in US net rooms growth in the fourth quarter to approximately 1% year over year."
"Since the relaunch earlier this year, new members who have stayed with us generated 12% more revenue per member than comparable new members last year."
"We now expect full-year 2026 net capital outlays for hotel development related activities to be approximately $20 million compared with a $103 million in 2025."
Analyst Q&A 14
U.S. room growth drivers
Q (Lizzie Dove · Goldman Sachs): The analyst asked about confidence in the big acceleration in U.S. net rooms growth in Q4 and about the conversion environment and sustainability into 2027. Also asked about timing on commercial initiatives and when they will help RevPAR versus peers.
A: Management said net rooms growth is their top operating priority and that they see strong improvements across openings, exits, and development agreements. They highlighted that 90% of openings this year are conversions, giving good visibility into Q4, and they expect the conversion-led model to be sustainable into 2027.
"So as I had mentioned, obviously, in the prepared remarks, the net rooms growth is certainly my number 1 operating prior." — Dominic E. Dragisich (CEO)
Owned hotels available to sell
Q (David Katz · Jefferies): The analyst wanted a qualitative sense of how many owned hotels are available to be sold and the capital tied to those assets.
A: Management said they own 17 hotels adjusted for 2 sold in Q4 and are focused on selling Cambrias first because they are more mature. They said about $455 million of owned assets were available coming into the quarter, reduced by the $38 million of assets sold, and about $330 million of that is Cambria.
"So, you know, as we as we highlighted in our supplemental materials, we do have several hotels that are on the owned side that would be able to sold." — Scott E. Oaksmith (CFO)
Free cash flow and capital returns
Q (Daniel Politzer · JPMorgan): The analyst asked how free cash flow conversion should evolve, given more capital recycling into 2027, and whether management will return capital to shareholders as recycling ramps.
A: Management said they see a meaningful opportunity to strengthen free cash flow by moving back to an asset-light model, with lower development capital, asset dispositions, and a step down in marketing and reservation reimbursements. They said top-line growth (net rooms, RevPAR, royalty rates) will drive cash flow, and they expect to prioritize shareholder returns including share repurchases as capital intensity declines.
"we absolutely see a meaningful opportunity to really strengthen, you know, free cash flow generation in 2020 a lot of that is really what we talked about, returning to that asset light franchising roots, a much more efficient capital model." — Dominic E. Dragisich (CEO)
M&A uses of sale proceeds
Q (Michael Bellisario · Baird): The analyst asked whether real estate sale proceeds would be used to fund asset-light M&A like Harvest Hosts, and asked about appetite for larger hotel-brand M&A versus smaller tuck-ins.
A: Management said Harvest Hosts was opportunistic and aligned with their asset-light strategy, that they prioritize organic growth but will consider small tuck-ins that benefit owners and shareholders. They also noted they view the stock as cheap and are using share repurchases, but would generally not take on lease exposure or large legacy deals that conflict with asset-light priorities.
"And I think, you know, to Scott's point, there is a reason why we gave share repurchase guidance this year." — Dominic E. Dragisich (CEO)
Clarify termination payment timing
Q (Michael Bellisario): The analyst asked whether the termination payment discussed was for a legacy deal or a recent one.
A: The operator/host clarified that the termination was for a legacy deal.
Where Harvest Hosts shows in P&L; O&L headwind
Q (Shaun Kelley · BofA): The analyst asked where Harvest Hosts will appear in the P&L and how much owned-and-leased (O&L) revenues and EBITDA will decline next year after property sales.
A: Management said Harvest Hosts will likely show in other revenue and flow through SG&A as a subscription business with tech and customer-acquisition costs. They said the three sold assets produced roughly $18 million to $19 million of revenue and about $3 million of EBITDA in total.
"So total, revenue is somewhere between $18 million and $19 million with an EBITDA impact of about $3 million Perfect." — Scott E. Oaksmith (CFO)
Distribution costs and channel mix
Q (Stephen Grambling · Morgan Stanley): The analyst asked what management is seeing on distribution costs, the current distribution mix, and what tools they use to change it.
A: Management said proprietary distribution is about 60% today and they aim to increase that to protect owner profitability. They cited improvements from the new loyalty program and AI accessibility for choicehotels.com as ways to shift traffic away from OTAs over time.
"Overall, what we have talked about historically is proprietary is about 60% of our distribution into our owners." — Dominic E. Dragisich (CEO)
Earnings sensitivity per metric
Q (Patrick Scholes · Truist): The analyst asked for sensitivities: EBITDA impact of 1 point RevPAR growth, 1 point net rooms growth, and 1 bp royalty rate.
A: Management gave high-level building blocks and said every 1% on U.S. net rooms growth and every 1% RevPAR each equals about $5 million, and 1 basis point of effective royalty rate equals about $1 million. They also said SG&A should step down to low- to mid-single digits and that official guidance will come in February.
"So every 1% on both net rooms growth in the U.S. and RevPAR is about $5 million each." — Dominic E. Dragisich (CEO)
Audio/connection check
Q (Robin Farley): This exchange was an operator check to confirm the analyst could be heard.
A: The operator asked whether Robin could be heard while attempting to restore the Q&A audio.
Sustainability of Q4 unit growth
Q (Robin Farley · UBS): The analyst asked if Q4 acceleration in domestic unit growth is mostly due to lower exits and what that implies for growth next year and beyond.
A: Management said it is a both-and: openings are strong (openings up 17% YTD) and exits are improving, and they expect both increases in openings and reduced terminations to continue into 2027. They reiterated the goal to return to 2%–4% net rooms growth long term, with 1%+ this year and conversion-led growth helping sustainability.
"I do think it is what you are seeing right now, Q4 into Q1 of next year is absolutely sustainable." — Dominic E. Dragisich (CEO)
Asset-sale pricing and multiples
Q (Trey Bowers · Wells Fargo): The analyst asked about pricing and implied valuation metrics from recent owned hotel sales and asked for color on remaining asset sale expectations.
A: Management said valuations vary by market and asset; some assets trade around an 8% cap rate, and they noted the Columbia hotel sold at about an 11x EBITDA multiple while one downtown asset skewed results due to poor performance. They said pricing will vary across secondary and top-50 markets.
"The Columbia hotel sold at about an 11x multiple of its EBITDA." — Scott E. Oaksmith (CFO)
AI-driven web traffic impact
Q (Brandt Montour · Barclays): The analyst asked about the tenfold increase in web traffic from AI, how meaningful that is now, and what it might be next year as a percent of mix.
A: Management said AI referrals are still small — direct visits via LLMs are about 1% of volume — and it is too early to project growth. They emphasized making choicehotels.com accessible to AI so bookings can be completed end-to-end and said this could help grow their proprietary channel over time.
"But to put it in perspective, when you think about direct visits, that is about 1% of our volume." — Dominic E. Dragisich (CEO)
International growth and SG&A
Q (Meredith Prichard Jensen · HSBC): The analyst asked about growth excluding Canada, whether SG&A for international was building development infrastructure, and the mix of direct franchising versus master franchise agreements (MFAs).
A: Management said international remains part of growth, with The Americas prioritized and Canada a positive tailwind; international revenue was up around 7% in Q3 and rooms up 7%, with international EBITDA on track to be a little over $50 million this year and mid-single-digit growth expected. They said about 45% of rooms are direct and 55% MFA after the Canada consolidation, and SG&A growth mainly reflects the Canada acquisition which already has scale.
"International, obviously, is gonna continue to be part of our growth strategy going forward." — Dominic E. Dragisich (CEO)
Why lower-chain RevPAR gap closed
Q (Alex Brignall · Rothschild and Co): The analyst asked why the RevPAR gap between high-end and lower chain scales in the U.S. has closed recently and for reasoning behind it.
A: Management said the environment has become more constructive for midscale consumers, noting October RevPAR was 7% and that leisure and project-driven business travel remain resilient. They said macro factors like employment and consumer spending holding up support a rebound in occupancy and RevPAR in their segments.
"So when you take a look at the broader macro obviously, a nice setup for us." — Dominic E. Dragisich (CEO)