Quick Takeaways:

  • Choice Hotels International reported earnings on Thursday,with U.S. RevPAR up 1.8% year-over-year in Q1 2026, in line with expectations.
  • U.S. room openings grew 32% year-over-year, the highest Q1 level since 2023. CEO Patrick Pacious said on the earnings call that the U.S. development pipeline grew to 71,500 rooms, with the conversion project pipeline up 17% year-over-year.
  • Pacious said Q1 results marked a "turning point in underlying trends such as room growth, RevPAR improvement, and lower capital intensity." The company maintained its 2026 outlook of approximately 1% net global room growth.

Deep Dive:

Growth, especially in the U.S., is being driven primarily by a conversion-led development model. Pacious revealed that U.S. conversion room openings grew 59% year-over-year in Q1. Global net room growth was 1.7%.

"The work we've done over the past several years has positioned us as a more value-add, asset-light growth model with significantly lower capital intensity and stronger unit economics," Pacious said.

He added that Choice's Q1 hotel openings hit a five-year high, and growth in the international portfolio provides "greater visibility into future growth." Meanwhile, exits were at their lowest level since 2023. This comes after the company experiencedthree consecutive quarters of U.S. RevPAR declines, including Q4 2025, and the company is now focused on enhancing its value proposition in international markets.

The extended-stay segment remains a "key growth driver," accounting for more than 40% of Choice's U.S. development pipeline and posting double-digit room growth for 11 consecutive quarters. Pacious said demand in the segment remains stable, with employees in healthcare, construction, and utilities leading bookings, along with road travelers and "increasing repeat stays from a growing retiree base."

"We're also seeing guest expectations shift towardmore home-like accommodations, which supports the strong demand for the extended-stay portfolio," Pacious said. "Importantly, these aren't future tailwinds—these are trends we're seeing in the business today, contributing to a stable and diversified demand base across cycles."

He added that Choice's loyalty program is driving repeat stays and customer demand, with Choice Privileges membership surpassing 75 million, up 7% year-over-year.

To improve franchisee returns, Pacious said Choice has reduced the cost of building and renovating hotels, including cutting prototype costs for key midscale brands by up to 25% and simplifying property improvement requirements.

Similar to some competitors, Choice is investing heavily in artificial intelligence. The companyrecently partnered with Amazon Web Services (AWS)to advance enterprise-wide AI deployment, which will impact booking, franchisee management, and distribution ecosystems.

Pacious said the AI deployment and AWS partnership will enable Choice to rapidly experiment with new technologies and drive continuous improvement.

"We see an opportunity to enhance the productivity of our existing workforce in a more efficient way, which will bring about fairly significant changes to the franchisee operating model," Pacious said on the call.