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What changed in CHOICE HOTELS INTERNATIONAL INC /DE's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CHOICE HOTELS INTERNATIONAL INC /DE's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+354 added−498 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-20)

Top changes in CHOICE HOTELS INTERNATIONAL INC /DE's 2024 10-K

354 paragraphs added · 498 removed · 288 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

108 edited+23 added−33 removed160 unchanged
Biggest changeSince our franchising revenues are generated primarily as a percentage of the franchisees’ gross room revenues, our prospects for growth are largely dependent upon the ability of our franchisees to compete in the lodging market, our ability to retain existing franchisees, our ability to convert our competitor's franchisees and independent hotels to our brands, and the ability of existing and potential franchisees to obtain financing to construct new hotel properties. 17 Table of Contents The ability of a hotel to compete in the lodging industry may be affected by a number of factors, including the location and quality of the property, the abilities of the franchisee, the number and quality of competing lodging facilities nearby, its affiliation with a recognized name brand, and national and local economic conditions.
Biggest changeWe also believe that the hotel operators select a franchisor in part based on the franchisor’s reputation among other franchisees and the success of its existing franchisees. 16 Table of Contents Since our franchising revenues are generated primarily as a percentage of the franchisees’ gross room revenues, our prospects for growth are largely dependent upon the ability of our franchisees to compete in the lodging market, our ability to retain existing franchisees, our ability to convert our competitor's franchisees and independent hotels to our brands, and the ability of existing and potential franchisees to obtain financing to construct new hotel properties.
Our new hotel development brands, such as Cambria Hotels, Comfort, Sleep Inn, WoodSpring, Everhome Suites, and Country Inn & Suites, offer hotel developers an array of choices at various price points for transient and extended stay business during periods of supply growth in the various hotel chain scale categories.
Our new hotel development brands, such as Cambria Hotels, Comfort, Sleep Inn, WoodSpring Suites, Everhome Suites, and Country Inn & Suites, offer hotel developers an array of choices at various price points for transient and extended stay business during periods of supply growth in the various hotel chain scale categories.
(2) To enhance comparability for the year ended December 31, 2022, the effective royalty rate, average occupancy percentage, ADR, and RevPAR reflect the operating performance as if the legacy Radisson brands were acquired on January 1, 2022.
(2) To enhance the comparability for the year ended December 31, 2022, the effective royalty rate, average occupancy percentage, ADR, and RevPAR reflect the operating performance as if the legacy Radisson brands were acquired on January 1, 2022.
The lodging industry can be divided into chain scale categories of generally competitive brands as follows: Chain Scale Brand Examples Luxury Four Seasons, Ritz Carlton, W Hotel, JW Marriott Upper Upscale Radisson Blu, Marriott, Hilton, Hyatt, Sheraton Upscale Cambria Hotels, Radisson, Courtyard, Hyatt Place, Hilton Garden Inn Upper Midscale Comfort Inn, Country Inn & Suites, Holiday Inn Express, Hampton Inn, Fairfield Inn Midscale Quality Inn, Sleep Inn, Best Western, Baymont Economy Econo Lodge, Super 8, Red Roof Inn, Motel 6 The lodging industry consists of independent operators and those that have joined national hotel franchise chains.
The lodging industry can be divided into chain scale categories of generally competitive brands as follows: Chain Scale Brand Examples Luxury Four Seasons, Ritz Carlton, W Hotel, JW Marriott Upper Upscale Radisson Blu, Marriott, Hilton, Hyatt, Sheraton Upscale Cambria Hotels, Radisson, Courtyard, Hyatt Place, Hilton Garden Inn Upper Midscale Comfort Inn, Country Inn & Suites, Holiday Inn Express, Hampton by Hilton, Fairfield Inn Midscale Quality Inn, Sleep Inn, Best Western, Baymont Economy Econo Lodge, Super 8, Red Roof Inn, Motel 6 The lodging industry consists of independent operators and those that have joined national hotel franchise chains.
The hotels offer guests a convenient and affordable experience with elevated essentials in just the right places, including contemporary design touches, curated food and beverage options, and on-demand connectivity. The principal competitor brands include Best Western. Quality Inn - Quality helps both guests and owners "Get Your Money's Worth™" in the midscale chain scale category.
The hotels offer guests a convenient and affordable experience with elevated essentials in just the right places, including contemporary design touches, curated food and beverage options, and on-demand connectivity. The principal competitor brands include Best Western and Wingate. Quality Inn - Quality helps both guests and owners "Get Your Money's Worth™" in the midscale chain scale category.
Most hotels also feature a patio or porch with an outdoor fire pit, den, casual workspace, swimming pool, meeting space, and an “Inn Case Market.” Guests feel like they matter at Country Inn & Suites. The principal competitor brands include Holiday Inn Express, Best Western Plus, and Hampton Inn.
Most hotels also feature a patio or porch with an outdoor fire pit, den, casual workspace, swimming pool, meeting space, and an “Inn Case Market.” Guests feel like they matter at Country Inn & Suites. The principal competitor brands include Holiday Inn Express, Fairfield Inn & Suites, Best Western Plus, and Hampton Inn.
The operating statistics exclude the Everhome Suites brand since the operating statistics are not representative of a stabilized brand, which the Company defines as having at least 25 units open and operating for over a twelve month period. (3) The Company calculates RevPAR metrics based on information as reported by franchisees.
The operating statistics exclude the Everhome Suites brand since the operating statistics are not representative of a stabilized brand, which the Company defines as having at least 25 units open and operating for at least a twelve month period. (3) The Company calculates the RevPAR metrics based on information as reported by the franchisees.
We enjoy significant operating leverage since the variable operating costs associated with the franchise system growth of our established brands have historically been less than the incremental royalty fees generated from new franchises.
We enjoy significant operating leverage since the variable operating costs associated with the franchise system growth of our established brands have historically been less than the incremental fees generated from new franchises.
Ascend enables upscale hotels to retain their individual brand equity and identity, and yet have access to Choice Hotels' global distribution, technology, performance support services, training, and loyalty benefits. The Ascend Hotel Collection offers the best of both worlds, including an independence backed by a powerful platform for customer acquisition, delivery and distribution, volume purchasing benefits, and operational efficiency.
Ascend enables upscale hotels to retain their individual brand equity and identity, and yet have access to Choice Hotels' global distribution, technology, performance support services, training, and loyalty benefits. The Ascend Hotel Collection offers the best of both worlds, including an independence backed by a powerful platform for customer acquisition, delivery and distribution, volume purchasing benefits, and operational efficiencies.
Revenues are also generated from partnerships with qualified vendors and travel partners that provide value-added solutions to our platforms of guests and hotels, hotel ownership, and other ancillary sources. Historically, the hotel industry has been seasonal in nature. For most hotels, demand is typically lower in November through February than during the remainder of the year.
Revenues are also generated from partnerships with qualified vendors and travel partners that provide value-added solutions to our platform of guests and hotels, hotel ownership, and other ancillary sources. Historically, the hotel industry has been seasonal in nature. For most hotels, demand is typically lower in November through February than during the remainder of the year.
Maximizing Financial Returns and Creating Value for Shareholders - Our capital allocation decisions, including capital structure and uses of capital, are intended to maximize our return on invested capital and create value for our shareholders.
Maximizing Financial Returns and Creating Value for Shareholders - Our capital allocation decisions, including our capital structure and the uses of capital, are intended to maximize our return on invested capital and create value for our shareholders.
As a cloud-based solution, the choiceADVANTAGE system helps to reduce each hotel’s investment in on-site computer equipment, which typically results in a lower total cost of ownership for the property management systems as compared to the traditional on-site solutions. Quality Assurance Programs - Consistent quality standards are critical to the success of a hotel franchise.
ChoiceADVANTAGE, which is a cloud-based solution, helps to reduce each hotel’s investment in on-site computer equipment, which typically results in a lower total cost of ownership for the property management systems as compared to the traditional on-site solutions. Quality Assurance Programs - Consistent quality standards are critical to the success of a hotel franchise.
Service Marks and Other Intellectual Property The service marks Ascend Hotel Collection, Cambria, Choice Hotels, Choice Privileges, Clarion, Clarion Pointe, Comfort Inn, Comfort Suites, Country Inn & Suites, Econo Lodge, Everhome Suites, MainStay Suites, Park Inn, Park Plaza, Quality, Radisson, Radisson Blu, Radisson Collection, Radisson Red, Rodeway Inn, Sleep Inn, Suburban Studios, WoodSpring Suites, and related marks and logos are material to our business.
Service Marks and Other Intellectual Property The service marks Ascend Hotel Collection, Cambria, Choice Hotels, Choice Privileges, Clarion, Clarion Pointe, Comfort Inn, Comfort Suites, Country Inn & Suites by Radisson, Econo Lodge, Everhome Suites, MainStay Suites, Park Inn by Radisson, Park Plaza, Quality, Radisson, Radisson Blu, Radisson Collection, Radisson Individuals, Radisson Inn & Suites, Radisson Red, Rodeway Inn, Sleep Inn, Suburban Studios, WoodSpring Suites, and related marks and logos are material to our business.
When developing hotels, we seek key markets with strong growth potential that will deliver strong operating performance and improve the recognition of our brands. Our hotel development and ownership efforts currently focus on the Cambria Hotels and Everhome Suites brands. We believe our owned hotels provide us the opportunity to support and accelerate the growth of these brands.
When developing hotels, we seek key markets with strong growth potential that will deliver strong operating performance and improve the recognition of our brands. Our hotel development and ownership efforts primarily focus on the Cambria Hotels and Everhome Suites brands. We believe our owned hotels provide us the opportunity to support and accelerate the growth of these brands.
We generally believe the effect of local economic conditions on our results is substantially reduced by our range of products and room rates and the geographic diversity of our franchised properties, which are open and operating in 50 states, the District of Columbia, and 46 countries and territories outside the United States.
We generally believe the effect of local economic conditions on our results is substantially reduced by our range of products and room rates and the geographic diversity of our franchised properties, which are open and operating in 49 states, the District of Columbia, and 46 countries and territories outside the United States.
Profits from an ownership model increase at a greater rate from RevPAR growth that is attributable to ADR growth rather than from occupancy gains since there are more incremental costs associated with higher guest volumes as compared to higher pricing. • Franchisors license their brands to a hotel owner, giving the hotel owner the right to use the brand name, logo, operating practices, and reservations systems in exchange for a fee and an agreement to operate the hotel in accordance with the franchisor’s brand standards.
Profits from an ownership model increase at a greater rate from RevPAR growth that is attributable to ADR growth rather than from occupancy gains since there are more incremental costs associated with higher guest volumes as compared to higher pricing. 5 Table of Contents • Franchisors license their brands to a hotel owner, giving the hotel owner the right to use the brand name, logo, operating practices, and reservations systems in exchange for a fee and an agreement to operate the hotel in accordance with the franchisor’s brand standards.
We are focused on expanding our platform business through key partnerships, new technology, and other key franchisee resources, which is reflected in our procurement services revenues. The expansion of these relationships has enabled us to further drive our top-line revenue and deliver tangible value-added solutions to our hotel owners and customers.
We are focused on expanding our platform business through key partnerships, new technology, and other key franchisee resources, which is reflected in our procurement services revenues. The expansion of these relationships has enabled us to further drive our top-line revenue and deliver tangible value-added solutions 8 Table of Contents to our hotel owners and customers.
All guest rooms feature fully equipped kitchens as well as separate lounges and work areas. MainStay Suites offer free high-speed internet, an exercise room, 24/7 laundry facilities, weekly housekeeping, as well as breakfast options for guests. Each hotel also has a "MainStay Marketplace" where guests may purchase a variety of food and sundry items.
All guest rooms feature fully equipped kitchens as well as separate lounges and work areas. MainStay Suites offer free high-speed internet, an exercise room, 24/7 laundry facilities, and weekly housekeeping. Each hotel also has a "MainStay Marketplace" where guests may purchase a variety of food and sundry items.
As a result, we believe that brand name recognition and the strength of the brand reputation are important factors in influencing business and leisure traveler hotel accommodation choices. Our marketing and advertising programs are designed to heighten consumer awareness and preference for our brands as offering the greatest value and convenience in the lodging categories in which we compete.
As a result, we believe that brand name recognition and the strength of the brand reputation are important factors in influencing business and leisure traveler hotel accommodation choices. 14 Table of Contents Our marketing and advertising programs are designed to heighten consumer awareness and preference for our brands as offering the greatest value and convenience in the lodging categories in which we compete.
In addition, our development activities that involve financing, equity investments, and guaranty support to 5 Table of Contents hotel developers create limited additional exposure to the real estate markets. For additional information, refer to the Investing Activities caption in the Liquidity and Capital Resources section in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
In addition, our development activities that involve financing, equity investments, and guaranty support to hotel developers create limited additional exposure to the real estate markets. For additional information, refer to the Investing Activities caption in the Liquidity and Capital Resources section in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Prior to joining the Company, he was Head of Finance, XO Business Unit for Verizon Communications from February 2019 until August 2019 and was employed at XO Communications as Vice President, Financial Planning and Analysis and Corporate Development from September 2015 until January 2019. Noha Abdalla - Chief Marketing Officer since August 2022.
Prior to joining the Company, he was Head of Finance, XO Business Unit for Verizon Communications from February 2019 until August 2019 and was employed at XO Communications as Vice President, Financial Planning and Analysis and Corporate Development from September 2015 until January 2019. 20 Table of Contents Noha Abdalla - Chief Marketing Officer since August 2022.
The marketing and reservation system fees are used for the expenses associated with marketing, media, advertising, providing a central reservation system, and certain franchise services. 7 Table of Contents Our fees depend on the number of rooms in our system, the gross room revenues generated by our franchisees, and the effective royalty rates in our franchise contracts.
The marketing and reservation system fees are used for the expenses associated with marketing, media, advertising, providing a central reservation system, and certain franchise services. Our fees depend on the number of rooms in our system, the gross room revenues generated by our franchisees, and the effective royalty rates in our franchise contracts.
We believe that by focusing on these elements we can increase the gross room revenues generated by our franchisees by increasing the business delivered to existing franchisees and expanding our market share of franchised hotels in the chain scale categories in which we operate or seek to operate.
We believe that by focusing on these elements we can increase the gross room revenues generated by our franchisees by increasing the business delivered to existing franchisees and expanding our market share of franchised hotels in the chain scale categories in which we operate or 7 Table of Contents seek to operate.
Greater awareness and preference promote long-term growth in business delivery to our franchisees and increases the desirability of our brands to hotel owners and developers, which ultimately increases the franchise fees earned by the Company. Additionally, the legacy Radisson Hotels Americas management agreements include cost reimbursements, primarily related to payroll costs at managed hotels where the Company is the employer.
Greater awareness and preference promote long-term growth in business delivery to our franchisees and increases the desirability of our brands to hotel owners and developers, which ultimately increases the franchise fees earned by the Company. Additionally, the Company's management agreements include cost reimbursements, which is primarily related to payroll costs at the managed hotels where the Company is the employer.
Career Development We empower over 1,800 associates across the globe to advance their careers by providing a career framework that allows them to understand and proactively manage their career path potential. Guided by a personalized development plan, each associate is empowered to identify and develop the skills and competencies necessary to prepare for their next, and future, desired roles.
Career Development We empower approximately 1,700 associates across the globe to advance their careers by providing a career framework that allows them to understand and proactively manage their career path potential. Guided by a personalized development plan, each associate is empowered to identify and develop the skills and competencies necessary to prepare for their next, and future, desired roles.
Our domestic franchise agreements have terms ranging from 20 to 30 years, with certain rights for each of the franchisor and franchisee to terminate the agreement. Our franchisees operate domestically under one of 22 brands and brand extensions.
Our domestic franchise agreements generally have terms ranging from 10 to 30 years, with certain rights for each of the franchisor and franchisee to terminate the agreement. Our franchisees operate domestically under one of 22 brands and brand extensions.
Item 1. Business Overview We are primarily a hotel franchisor operating in 50 states, the District of Columbia, and 46 countries and territories.
Item 1. Business Overview We are primarily a hotel franchisor operating in 49 states, the District of Columbia, and 46 countries and territories.
When entering into master franchising relationships, we strive to select partners that have professional hotel and asset management capabilities together with the financial capacity to invest in building the Company's brands in their respective markets.
When entering into master franchising relationships, we strive to select partners that have both professional hotel and asset management capabilities along with the financial capacity to invest in building the Company's brands in their respective markets.
Additionally, through the Radisson Hotels Americas acquisition completed on August 11, 2022, our brands expanded to include Radisson Blu®, Radisson RED®, Radisson®, Park Plaza®, Country Inn & Suites® by Radisson, Radisson Inn & Suites SM , Park Inn by Radisson®, Radisson Individuals®, and Radisson Collection® (collectively, the "legacy Radisson brands"), which are located across the United States, Canada, the Caribbean and Latin America (the "Americas").
Additionally, through the Radisson Hotels Americas acquisition completed on August 11, 2022, our brands expanded to include Radisson Blu®, Radisson RED®, Radisson®, Park Plaza®, Country Inn & Suites® by 3 Table of Contents Radisson, Radisson Inn & Suites SM , Park Inn by Radisson®, Radisson Individuals®, and Radisson Collection® (collectively, the "legacy Radisson brands"), which are located across the United States, Canada, the Caribbean and Latin America (the "Americas").
We also actively 15 Table of Contents seek to reach travelers who are shopping for travel online by purchasing key search related terms and meta search ads from the various search engine providers to help ensure that our franchisees' hotels are prominently displayed to potential guests.
We also actively seek to reach travelers who are shopping for travel online by purchasing key search related terms and meta search ads from the various search engine providers to help ensure that our franchisees' hotels are prominently displayed to potential guests.
These services and products promote revenue gains for franchisees and improve guest satisfaction which translate into both higher royalties for the Company and improved returns for owners, leading to further room growth by making our 8 Table of Contents brands even more attractive to prospective franchisees.
These services and products promote revenue gains for franchisees and improve guest satisfaction which translate into both higher royalties for the Company and improved returns for owners, leading to further room growth by making our brands even more attractive to prospective franchisees.
Before that, she was employed by Hilton from July 2018 to November 2020 as the Global Vice President, Social Media, and Global Vice President, Digital and Content Marketing, and by Capital One from September 2011 to March 2018 in various roles, most recently as Vice President, Digital Brand Strategy and Social Media. 22 Table of Contents
Before that, she was employed by Hilton from July 2018 to November 2020 as the Global Vice President, Social Media, and Global Vice President, Digital and Content Marketing, and by Capital One from September 2011 to March 2018 in various roles, most recently as Vice President, Digital Brand Strategy and Social Media.
Prior to joining the Company, he was employed by BearingPoint Inc. as a Senior Manager from 2002 until 2005 and Arthur Andersen Business Consulting LLP as a Senior Manager from 1996 until 2002. 21 Table of Contents Scott E. Oaksmith - Chief Financial Officer since September 2023.
Prior to joining the Company, he was employed by BearingPoint Inc. as a Senior Manager from 2002 until 2005 and Arthur Andersen Business Consulting LLP as a Senior Manager from 1996 until 2002. Scott E. Oaksmith - Chief Financial Officer since September 2023.
We attempt to improve our revenues and overall profitability by providing a variety of products and services designed to increase business delivery and/or reduce operating and development costs.
We attempt to improve our revenues and overall profitability by providing a variety of products and services designed to increase 4 Table of Contents business delivery and/or reduce operating and development costs.
We generate revenue from the managed hotels from base and incentive management fees and cost reimbursements, which is primarily for payroll costs at the managed hotels where the Company is the employer.
We generate revenue from the owned hotels primarily from guest stays. We generate revenue from the managed hotels from base and incentive management fees and cost reimbursements, which is primarily for payroll costs at the managed hotels where the Company is the employer.
The principal competitor brands include Candlewood Suites, Home2 Suites, TownePlace Suites, and Extended Stay America Premier Suites, as well as new entrants to the extended stay segment such as StudioRes and LivSmart. Suburban Studios - Suburban Studios operate in the economy extended stay chain scale category, offering developers access to this category through flexible conversion options.
The principal competitor brands include Candlewood Suites, Home2 Suites, TownePlace Suites, and Extended Stay America Premier Suites, as well as new entrants to the extended stay segment such as StudioRes, LivSmart, and LivAway. 10 Table of Contents Suburban Studios - Suburban Studios operate in the economy extended stay chain scale category, offering developers access to this category through flexible conversion options.
Additionally, royalty fees include intersegment royalties assessed to the Company's owned hotels of $2.0 million for 2023, $2.2 million for 2022, $1.6 million for 2021, $0.8 million for 2020, and $0.9 million for 2019.
Additionally, royalty fees include intersegment royalties assessed to the Company's owned hotels of $2.4 million for 2024, $2.0 million for 2023, $2.2 million for 2022, $1.6 million for 2021, and $0.8 million for 2020.
The following chart summarizes our franchise system and operating results outside of the United States (1) : 2019 2020 2021 2022 2023 Number of properties, end of period 1,208 1,204 1,117 1,191 1,222 Number of rooms, end of period 129,223 141,449 121,716 133,395 136,021 Royalty fees (in thousands) (2) $ 21,680 $ 12,358 $ 14,958 $ 20,041 $ 28,859 (1) Reporting of operating statistics (i.e., average occupancy percentage, average daily room rate) of international franchisees is not required by all master franchise contracts, thus RevPAR metrics are not presented for our international franchisees.
The following chart summarizes our franchise system and operating results outside of the United States (1) : 2020 2021 2022 2023 2024 Number of properties, end of period 1,204 1,117 1,191 1,222 1,258 Number of rooms, end of period 141,449 121,716 133,395 136,021 142,071 Royalty fees (in thousands) (2) $ 12,358 $ 14,958 $ 20,041 $ 28,859 $ 29,822 (1) Reporting of operating statistics (i.e., average occupancy percentage, average daily room rate) of international franchisees is not required by all master franchise contracts, thus RevPAR metrics are not presented for our international franchisees.
(2) Includes the Country Inn and Park Plaza brands. (3) Includes the Clarion family of brand extensions, including Clarion and Clarion Pointe. (4) Includes the Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands. Franchise Sales Expansion of the number of hotels in our franchise system is important to our business model.
(2) Includes the Clarion family of brand extensions, including Clarion and Clarion Pointe. (3) Includes the Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands. Franchise Sales Expansion of the number of hotels in our franchise system is important to our business model.
Nearly 81% of our associates participated in the 2023 engagement survey and we achieved a very high 20 Table of Contents engagement score, five points above the benchmark, which means that our associates have a positive commitment to our organization and goals.
Nearly 81% of our associates participated in the 2024 engagement survey and we achieved a very high engagement score, five points above the benchmark, which means that our associates have a positive commitment to our organization and goals.
Franchise Agreements Our standard domestic franchise agreements grant franchisees the non-exclusive right to use certain of our trademarks and to receive the benefits from our franchise system in order to facilitate the operation of their franchised hotels in specified locations. Our domestic franchise agreements have terms ranging from 20 to 30 years.
Domestic Franchise System Our standard domestic franchise agreements grant franchisees the non-exclusive right to use certain of our trademarks and to receive the benefits from our franchise system in order to facilitate the operation of their franchised hotels in specified locations.
These expenditures, which include advertising costs and costs to maintain our 4 Table of Contents central reservations systems, enhance awareness and consumer preference for our brands and deliver guests to our franchisees.
These expenditures, which include advertising costs and the costs to maintain our central reservations systems, enhance awareness and consumer preference for our brands and deliver guests to our franchisees.
The following table presents key statistics related to our domestic franchise system for the five years ended December 31, 2023: 2019 2020 2021 2022 2023 Number of properties, end of period 5,945 5,943 5,913 6,296 6,305 Number of rooms, end of period 461,674 456,528 458,030 494,409 496,965 Royalty fees (in thousands) (1) $ 371,396 $ 258,151 $ 391,336 $ 443,313 $ 458,077 Effective royalty rate (2) 4.86 % 4.94 % 5.01 % 4.93 % 4.99 % Average occupancy percentage (2), (3) 57.6 % 45.6 % 57.2 % 58.0 % 57.0 % Average daily room rate (ADR) (2), (3) $ 81.86 $ 71.67 $ 84.06 $ 95.13 $ 96.93 Revenue per available room (RevPAR) (2), (3) $ 47.18 $ 32.69 $ 48.10 $ 55.16 $ 55.21 (1) Royalty fees exclude the impact of franchise agreement acquisition cost amortization.
The following table presents the key statistics related to our domestic franchise system for the five years ended December 31, 2024: 2020 2021 2022 2023 2024 Number of properties, end of period 5,943 5,913 6,296 6,305 6,328 Number of rooms, end of period 456,528 458,030 494,409 496,965 511,739 Royalty fees (in thousands) (1) $ 258,151 $ 391,336 $ 443,313 $ 458,077 $ 454,723 Effective royalty rate (2) 4.94 % 5.01 % 4.93 % 4.99 % 5.06 % Average occupancy percentage (2), (3) 45.6 % 57.2 % 58.0 % 56.9 % 56.4 % Average daily room rate (ADR) (2), (3) $ 71.67 $ 84.06 $ 95.13 $ 96.92 $ 96.67 Revenue per available room (RevPAR) (2), (3) $ 32.69 $ 48.10 $ 55.16 $ 55.19 $ 54.54 (1) Royalty fees exclude the impact of franchise agreement acquisition cost amortization.
Property Management Systems - ChoiceADVANTAGE, which is our proprietary property and yield management system, is designed to help franchisees maximize profitability and compete more effectively by assisting them in managing their room inventory, rates and reservations.
Property Management Systems - ChoiceADVANTAGE, which is our proprietary property and yield management system that the significant majority of our hotels utilize, is designed to help franchisees maximize profitability and compete more effectively by assisting them in managing their room inventory, rates, and reservations.
Radisson RED - An upscale, select service hotel brand, Radisson RED is characterized by a love of bold design, social connectedness, and playful twists on the conventional. These urban hotels inject new life into hospitality through informal services where anything goes.
The principal competitor brands include DoubleTree by Hilton, Delta Hotels, and Crowne Plaza. Radisson RED - An upscale, select service hotel brand, Radisson RED is characterized by a love of bold design, social connectedness, and playful twists on the conventional. These urban hotels inject new life into hospitality through informal services where anything goes.
As of December 31, 2023, the Company had 1,638 domestic and 198 international associates, excluding employees at our 14 managed hotels. Leadership development programs offer level specific career-building experiences, increasing the potential for broader levels of responsibility and leadership.
As of December 31, 2024, the Company had 1,570 domestic and 125 international associates, excluding employees at our 13 managed hotels. Leadership development programs offer level specific career-building experiences, increasing the potential for broader levels of responsibility and leadership.
We strive to optimize revenues by focusing on revenue management, increasing guest loyalty, expanding brand awareness with targeted customer groupings, and providing superior guest service. We presently manage four of our owned hotels and utilize the services of third-party management companies that provide their own employees for the balance.
We strive to optimize revenues by focusing on revenue management, increasing guest loyalty, expanding brand awareness with targeted customer groupings, and providing superior guest service. Other than four owned hotels, we currently do not manage our owned hotels but utilize the services of third-party hotel management companies that provide their own employees.
Further, we are also subject to various U.S. federal, state and international privacy and data protections laws, including the California Consumer Protection Act, the Virginia Consumer Data Protection Act, and the European Union General Data Protection Regulation, as well as privacy laws in Connecticut, Colorado and Utah that took effect in 2023 or will take effect in 2024.
Further, we are subject to various U.S. federal, state, and international privacy and data protections laws, including the California Consumer Protection Act, the Virginia Consumer Data Protection Act, and the European Union General Data Protection Regulation, as well as privacy laws in Connecticut, Colorado, and Utah.
Our field-based franchise services area directors work with our franchisees to help them maximize RevPAR and improve the efficiency of their hotel operations. The franchise services area directors advise the franchisees on topics such as marketing their hotels, improving quality and maximizing the benefits offered by the Choice reservations system.
Our field-based franchise services area directors work with our franchisees to profitably grow revenue, improve the efficiency of their hotel operations, and maintain and improve guest satisfaction. The franchise services area directors advise the franchisees on topics such as marketing their hotels, improving quality, and maximizing the benefits offered by the Choice reservations system.
Choice Culture and Inclusion At Choice, we strive to create an environment where every associate feels welcome, wanted, and respected.
Choice's Culture of Respect and Belonging At Choice, we strive to create an environment where every associate feels welcome, wanted, and respected.
Suburban Studios’ “longer stays made easy” philosophy provides value-conscious, long staying guests with clean, comfortable rooms, friendly service and the amenities they need. All guestrooms provide in-room kitchens. Guests have access to free high-speed internet, 24/7 laundry facilities, and bi-weekly housekeeping. The principal competitor brands include Extended Stay America, InTown Suites, HomeTowne Studios, and Studio 6.
Suburban Studios’ “longer stays made easy” philosophy provides value-conscious, long staying guests with clean, comfortable rooms, friendly service and the amenities they need. All guestrooms provide in-room kitchens. Guests have access to free high-speed internet, 24/7 laundry facilities, and bi-weekly housekeeping.
Every Sleep Inn hotel offers a simply stylish stay that's designed to help our guests " Dream Better Here ." Guests find fresh, nature-inspired design elements that are modern but timeless, that create a relaxed and serene environment, providing both business and leisure travelers with free Wi-Fi, free hot breakfast, lifestyle amenities to support a better night’s rest, and an exercise room and/or pool.
Every Sleep Inn hotel offers thoughtful touches designed to help enhance our guests well-being and " Dream Better Here ." Guests find a perfectly dreamy hotel environment, with nature-inspired design elements, that create a relaxed and serene stay, providing both business and leisure travelers with free Wi-Fi, free hot breakfast, lifestyle amenities to support a better night’s rest, and an exercise room and/or pool.
Hotel spaces kick-start the fun with vibrant designs, encourage social sharing, and easily switch from work to play and back. Connected, trend-savvy travelers will love this unique opportunity to tailor their stay to their style. The principal competitor brands include Hyatt Regency and Embassy Suites.
Hotel spaces kick-start the fun with vibrant designs, encourage social sharing, and easily switch from work to play and back. Connected, trend-savvy travelers will love this unique opportunity to tailor their stay to their style. The principal competitor brands include Tapestry Collection by Hilton, Citizen M, and Aloft Hotels.
The master franchisee collects the fees paid by the local franchisee and remits an agreed upon share to us. Our master franchise and similar multi-unit licensing agreements have expiration dates, which we actively manage and potentially renew as we deem beneficial. Certain of these agreements have expiration dates in 2024.
The master franchisee collects the fees paid by the local franchisee and remits an agreed upon share to us. Our master franchise and similar multi-unit licensing agreements have expiration dates, which we actively manage and potentially renew as we deem beneficial. In certain circumstances, the Company has and may continue to make equity investments in our master franchisees.
Our Diversity Framework, which supports all our diversity, equity, and belonging efforts, is shown below: Health, Wellbeing, and Engagement One of our highest priorities has been to safeguard the physical health and emotional well-being of our associates, all of whom show incredible dedication to the needs of our hotel owners, guests, and each other while caring for their own families.
Health, Wellbeing, and Engagement One of our highest priorities has been to support the physical health and emotional well-being of our associates, all of whom show incredible dedication to the needs of our hotel owners, guests, and each other while caring for their own families.
Management's Discussion and Analysis of Financial Condition and Results of Operations for more information regarding our capital returns to shareholders. In addition to our hotel franchising business, we have also developed or acquired seven Cambria and three legacy Radisson Hotels Americas open and operating hotels.
Management's Discussion and Analysis of Financial Condition and Results of Operations for more information regarding our capital returns to shareholders. In addition to our hotel franchising business, we have also developed or acquired eight Cambria, one Everhome Suites, one Radisson RED, one Radisson Blu, and one Country Inn & Suites open and operating hotels.
Further, twelve Choice Resource Groups (“CRGs”) allow groups of associates to come together based on shared demographics and affinities, life experiences, and/or interests. The CRGs are open to all associates to join. The CRGs provide support, contribute to personal and career development, provide networking opportunities, and enhance wellbeing and engagement.
Further, 12 Choice Resource Groups (“CRGs”) allow groups of associates to come together based on shared affinities, communities, life experiences, and/or interests. Each CRG is open for all associates to join and everyone is welcome at all CRG events. The CRGs provide support, contribute to personal and career development, provide networking opportunities, and enhance wellbeing and engagement.
Park Plaza - An upper upscale brand combines engaging service, contemporary elegance, and local flavor. At each hotel, team members warmly welcome guests and make it a point to foster genuine and meaningful interactions. Refined spaces incorporate the essence of each location and provide a vibrant social setting for guests and the local community alike.
At each hotel, team members warmly welcome guests and make it a point to foster genuine and meaningful interactions. Refined spaces incorporate the essence of each location and provide a vibrant social setting for guests and the local community alike.
(2) Royalty fees exclude the impact of franchise agreement acquisition cost amortization and impairment.
(2) Royalty fees include the impact of franchise agreement acquisition cost amortization.
Although we believe that increases in the rate of inflation will generally result in comparable increases in hotel room rates, severe inflation could contribute to a slowing of the economies in which we operate.
However, a prolonged decline in the demand for hotel rooms will negatively impact our business. Although we believe that increases in the rate of inflation will generally result in comparable increases in hotel room rates, severe inflation could contribute to a slowing of the economies in which we operate.
The principal competitor brands include Best Western and Ramada. 10 Table of Contents Sleep Inn - A new-construction brand, every Sleep Inn hotel is built with a specific vision in mind, which is to be a sanctuary for travelers as well as a cost-efficient property to build, operate, and maintain.
Sleep Inn - A new-construction brand, every Sleep Inn hotel is built with a specific vision in mind, which is to be a sanctuary for travelers as well as a cost-efficient property to build, operate, and maintain.
Dragisich 41 Executive Vice President, Operations and Chief Global Brand Officer David A. Pepper 56 Chief Development Officer Simone Wu 58 Senior Vice President, General Counsel, Corporate Secretary & External Affairs Robert McDowell 57 Chief Commercial Officer Patrick J.
Dragisich 42 Executive Vice President, Operations and Chief Global Brand Officer Simone Wu 59 Senior Vice President, General Counsel, Corporate Secretary & External Affairs Robert McDowell (1) 58 Chief Commercial Officer Patrick J.
Such a slowdown could result in reduced 18 Table of Contents travel by both business and leisure travelers, and potentially less demand for hotel rooms, which could result in a reduction in room rates and fewer room reservations, all of which could negatively impact our revenues.
Such a slowdown could result in reduced travel by both business and leisure travelers, and potentially less demand for hotel rooms, which could result in a reduction in room rates and fewer room reservations, all of which could negatively impact our revenues. A weak economy could also reduce the demand for new hotels, which negatively impacts our franchise fees revenues.
The increase in occupancy and room rates serves as a catalyst for increased hotel development. 6 Table of Contents As a franchisor with 7,527 opened hotels, including ownership of ten hotels and management of 14 hotels (inclusive of four owned hotels), we believe we are generally well positioned in any stage of the lodging cycle as our fee-for-service business model has historically delivered predictable and profitable, long-term growth in a variety of lodging and economic environments.
As a franchisor with 7,586 opened hotels, including ownership of 12 hotels and management of 13 hotels (inclusive of four owned hotels), we believe we are generally well positioned in any stage of the lodging cycle as our fee-for-service business model has historically delivered predictable and profitable, long-term growth in a variety of lodging and economic environments.
In addition, we have introduced programs such as our Lowest Price Guarantee program, which has significantly reduced the ability of the third-party travel intermediaries to undercut the published rates at our franchisees' hotels. Further, we selectively distribute our franchisees' inventory to key third-party travel intermediaries that we have established agreements with to help drive additional business to our franchisees' hotels.
In addition, we have introduced programs such as our Lowest Price Guarantee program, which has significantly reduced the ability of the third-party travel intermediaries to undercut the published rates at our franchisees' hotels.
Before that, he was Senior Director, IR Business Consultancy of Marriott International from October 2013 to September 2014, Global Director of FP&A of NII Holdings, Inc. from March 2012 to October 2013, and held various management positions at Deloitte Consulting from 2004 to 2012. David A. Pepper - Chief Development Officer since May 2015.
Before that, he was Senior Director, IR Business Consultancy of Marriott International from October 2013 to September 2014, Global Director of FP&A of NII Holdings, Inc. from March 2012 to October 2013, and held various management positions at Deloitte Consulting from 2004 to 2012. Simone Wu - Senior Vice President, General Counsel, Corporate Secretary & External Affairs since 2015.
Based on market conditions and other circumstances, we may offer certain incentives to developers to increase development of our brands, such as discounting various fees including the initial franchise fee, royalty fee and system fee, and providing franchise agreement acquisition cost payments to support development, property improvements, and other hotel expenditures.
Based on market conditions and other circumstances, we may offer certain incentives to developers to increase development of our brands, such as discounting various fees including the initial franchise fee, royalty fee, marketing and reservation system fee, and providing franchise agreement acquisition cost payments to support development, property improvements, and other hotel expenditures. 13 Table of Contents Because retention of our existing franchisees is important to our growth strategy, we have a formal impact policy.
We believe chain and franchise affiliation will increase in certain international markets as local economies grow and hotel owners seek the economies of scale in centralized reservations systems and marketing programs.
In some territories outside the United States, hotel franchising has less prevalence in favor of independent operators. We believe chain and franchise affiliation will increase in certain international markets as local economies grow and hotel owners seek the economies of scale in centralized reservations systems and marketing programs.
Bainum, Jr. - Director from 1977 to 1996 and since 1997, serving as Chairman of the Board from March 1987 to November 1996 and since October 1997; Managing Member of Artis Senior Living, LLC, a developer-owner-operator of assisted living residences, since 2012; Board of Advisors of UCLA's School of Management; Director of Realty Investment Company, Inc., a real estate management and investment company, from December 2005 through December 2016 and Chairman from December 2005 through June 2009; Director of Sunburst Hospitality Corporation, a real estate developer, owner and operator, from November 1996 through December 2016 and Chairman from November 1996 through June 2009.
Bainum, Jr. - Director from 1977 to 1996 and since 1997, serving as Chairman of the Board from March 1987 to November 1996 and since October 1997; Managing Member of Artis Senior Living, LLC, a developer-owner-operator of assisted living residences, since 2012; Board of Advisors of UCLA's School of Management; Director of White Oak Legacy, Inc.
In addition, the Company offers a generous benefits package, including a 401(k) matching program (we increased the match in 2022 to 100% on the first 5% of associates contributions), paid family leave, paid caregiver leave, wellbeing days, commuter benefits, a legal services plan, charitable gift matching, a LEED certified workspace, and paid volunteer leave.
In addition, the Company offers a generous benefits package, including a 401(k) matching program, paid family leave, paid caregiver leave, wellbeing days, a cultural day, commuter benefits, a legal services plan, charitable gift matching, a LEED certified workspace, and paid volunteer leave.
For example, owners may choose to reposition a hotel to a higher chain scale through capital investment or a lower chain scale to limit capital outlays depending on the individual requirements of the owner.
Hotel owners also generally have the flexibility to reposition hotels between the various chain scale categories to maximize profitability or for other reasons. For example, owners may choose to reposition a hotel to a higher chain scale through capital investment or a lower chain scale to limit capital outlays depending on the individual requirements of the owner.
The Company's domestic operations are conducted through direct franchising relationships, the ownership of seven Cambria and three legacy Radisson Hotels Americas open and operating hotels, and the management of 14 hotels (inclusive of four owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.
The Company's domestic operations are conducted through direct franchising relationships, the ownership of eight Cambria, one Everhome Suites, one Radisson RED, one Radisson Blu, and one Country Inn & Suites open and operating hotels, and the management of 13 hotels (inclusive of four owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.
We currently have agreements with many, but not all, of the major online third-party booking sites. We also continue to upgrade our technology to ensure that our CRS can effectively handle the current and future volume on digital channels and support the industry's shift toward accelerated digital communications and guest experience personalization.
We also continue to upgrade our technology to ensure that our CRS can effectively handle the current and future volume on digital channels and support the industry's shift toward accelerated digital communications and guest experience personalization.
The policy applies to most, but not all, of the Company's brands. 14 Table of Contents Investment, Financing, and Guaranty Support Our Board of Directors authorized a program which permits us to offer investment, financing, and guaranty support to qualified franchisees, and allows us to acquire or develop and resell hotels to incentivize franchise development of our brands in strategic markets.
Investment, Financing, and Guaranty Support Our Board of Directors authorized a program which permits us to offer investment, financing, and guaranty support to qualified franchisees, and allows us to acquire or develop and resell hotels to incentivize franchise development of our brands in strategic markets. We deploy capital pursuant to this program opportunistically to promote the growth of our brands.
Part of how we deliver on this promise is by weaving deliberate diversity, equity, and belonging initiatives throughout all levels of the enterprise, focusing on three core commitments: • Inclusion – Striving to build a workforce that is an authentic representation of the world we live in where associates from different backgrounds can thrive. • Equity – Committed to an equitable work environment, inclusive of fair and competitive pay regardless of gender, race, or other demographics. • Trust, Belonging, and Engagement – Fostering a culture where associates are inspired and engaged and feel like they belong.
Part of how we deliver on this promise is by weaving belonging-focused initiatives throughout all levels of the enterprise, focusing on three core commitments: • Inclusion – Striving to build a workforce where associates from all backgrounds can thrive. • Fair and Competitive Pay – Committed to promoting equal opportunity in all aspects of the talent lifecycle, inclusive of fair and competitive pay regardless of background. 18 Table of Contents • Trust, Belonging, and Engagement – Fostering a culture where associates are inspired and engaged and feel like they belong.
Our Board of Directors provides oversight on certain human capital matters through two committees. • Human Capital and Compensation Committee - Providing a broad scope of oversight on talent, including: (1) overall associate wellbeing, (2) succession planning for the top 30 leadership roles, (3) talent management and leadership development oversight for the top 105 leadership roles, (4) oversight of pay parity goals, and (5) overall organizational engagement. • Diversity Committee - Overseeing our diversity and representation goals and providing guidance to management and the Board of Directors in developing a workplace culture that values working with diverse groups of people and offering diversity of thought and perspective.
Our Board of Directors provides oversight on certain human capital matters through two committees. • Human Capital and Compensation Committee - Providing a broad scope of oversight on talent, including: (1) overall associate wellbeing, (2) succession planning for the top 60 leadership roles, (3) talent management and leadership development oversight for the top 100 leadership roles, (4) oversight of pay goals, and (5) overall organizational engagement. • Diversity Committee - Overseeing our efforts to develop and sustain a welcoming culture for all associates and promoting these efforts in our business.
Country Inn & Suites by Radisson - Country Inn & Suites exemplifies “modern country warmth”, offering a heartfelt experience to travelers through inviting design, premium touches, and genuine service.
The principal competitor brands include Hampton Inn, Holiday Inn Express, and Fairfield Inn & Suites. 9 Table of Contents Country Inn & Suites by Radisson - Country Inn & Suites exemplifies “modern country warmth”, offering a heartfelt experience to travelers through inviting design, premium touches, and genuine service.
Clarion Pointe - Launched in 2019, Clarion Pointe is a select service franchise that is ideal for owners who want to strategically reposition their limited-service property into a brand with strong awareness and a concept that satisfies the expectations of emerging travelers.
Amenities include free high-speed internet access, a pool or fitness center, and a business center. The principal competitor brands include Holiday Inn and Ramada. Clarion Pointe - Launched in 2019, Clarion Pointe is ideal for owners who want to strategically reposition their limited-service property into a brand with strong awareness and a concept that satisfies the expectations of emerging travelers.
This allows us the opportunity to strengthen our brand portfolio in various markets by replacing weaker performing hotels. We also have the right to terminate a franchise agreement if a franchisee fails to bring the property into compliance with contractual or quality standards within specific time periods.
We also have the right to terminate a franchise agreement if a franchisee fails to bring the property into compliance with contractual or quality standards within specific time periods.
These programs allow us to conduct lower cost, more targeted marketing campaigns to our consumers, help us to deliver business to our franchised hotels, and are an important selling point for our franchise sales personnel. In July 2023, we completed the integration of the Radisson Rewards Americas loyalty program into the Choice Privileges program.
These programs allow us to conduct lower cost, more targeted marketing campaigns to our consumers, help us to deliver business to our franchised hotels, and are an important selling point for our franchise sales personnel. As of December 31, 2024, the Choice Privileges program had approximately 69 million worldwide members.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs such, our business is subject, directly or through our franchisees, to the following risks common in the lodging and franchising industry, among others: • changes in the number of hotels operating under franchised brands; 24 Table of Contents • changes in the relative mix of franchised hotels in the various lodging industry price categories; • changes in occupancy and room rates achieved by hotels; • desirability of hotel geographic location; • changes in general and local economic and market conditions, which can adversely affect the level of business and leisure travel, and therefore the demand for lodging and related services; • inflationary conditions; • level of consumer unemployment; • increases in operating costs that may not be able to be offset by increases in room rates, such as through increases in minimum wage levels; • increases in corporate-level operating costs, including increases in employee compensation and benefits, resulting in lower operating margins; • over-building in one or more sectors of the hotel industry and/or in one or more geographic regions, could lead to excess supply compared to demand, and to decreases in hotel occupancy and/or room rates; • the availability and cost of capital to allow hotel owners and developers to build new hotels and fund investments; • changes in travel patterns; • travelers’ fears of exposure to contagious diseases, such as the recent coronavirus, or insect infestations in hotel rooms and certain geographic areas; • changes in governmental regulations that influence or determine wages, benefits, prices or increase operating, maintenance or construction costs of us and our franchisees; • changes by governmental agencies and within relevant legal systems of prevailing opinion and interpretation of new or existing rules, regulations and legal doctrine, particularly those limiting the liability of franchisors for employment and general liability claims involving franchisees; • the impact of any potential U.S. federal government shutdown; • security concerns or travel restrictions (whether security-related or otherwise) imposed by governmental authorities that have the effect of discouraging or limiting travel to and from certain jurisdictions; • the costs and administrative burdens associated with compliance with applicable laws and regulations, including, among others, franchising, lending, privacy, marketing and sales, licensing, labor, climate change, employment and regulations applicable under the Office of Foreign Asset Control and the Foreign Corrupt Practices Act; • the financial condition of franchisees and travel related companies; • franchisors’ ability to develop and maintain positive relations with current and potential franchisees; and • changes in exchange rates or economic weakness in the United States (affecting domestic travel) and internationally could also unfavorably impact future results.
Biggest changeAs such, our business is subject, directly or through our franchisees, to the following risks common in the lodging and franchising industry, among others: • changes in the number of hotels operating under franchised brands; • changes in the relative mix of franchised hotels in the various lodging industry price categories; • changes in occupancy and room rates achieved by hotels; • desirability of hotel geographic location; • changes in general and local economic and market conditions, which can adversely affect the level of business and leisure travel, and therefore the demand for lodging and related services; • inflationary conditions; • level of consumer unemployment; • increases in operating costs that may not be able to be offset by increases in room rates, such as through increases in minimum wage levels; • increases in corporate-level operating costs, including increases in employee compensation and benefits, resulting in lower operating margins; • the availability and cost of capital to allow hotel owners and developers to build new hotels and fund investments; • changes in travel patterns; • global health developments, public health crises, pandemics, or epidemics; • travelers’ fears of exposure to contagious diseases or to insect infestations in hotel rooms and certain geographic areas; • the impact of earthquakes, hurricanes, fires, floods, and other natural disasters; • changes in governmental regulations that influence or determine wages, benefits, prices or increase operating, maintenance or construction costs of us and our franchisees; • changes by governmental agencies and within relevant legal systems of prevailing opinion and interpretation of new or existing rules, regulations and legal doctrine, particularly those limiting the liability of franchisors for employment and general liability claims involving franchisees; • the impact of any potential U.S. federal government shutdown; • security concerns or travel restrictions (whether security-related or otherwise) imposed by governmental authorities that have the effect of discouraging or limiting travel to and from certain jurisdictions; • the costs and administrative burdens associated with compliance with applicable laws and regulations, including, among others, franchising, lending, privacy, marketing and sales, licensing, labor, climate change, employment and regulations applicable under the Office of Foreign Asset Control and the Foreign Corrupt Practices Act; • the financial condition of franchisees and travel related companies; 22 Table of Contents • franchisors’ ability to develop and maintain positive relations with current and potential franchisees; and • changes in exchange rates or economic weakness in the United States (affecting domestic travel) and internationally.
Our restated certificate of incorporation and the Delaware General Corporation Law each contain provisions that could have the effect of making it more difficult for a party to acquire, and may discourage a party from attempting to acquire, control of our Company without approval of our Board of Directors.
Our restated certificate of incorporation and the Delaware General Corporation Law each contain provisions that could have the effect of making it more difficult for a party to acquire, and may discourage a party from attempting to acquire, control of our Company without the approval of our Board of Directors.
As a result, acting together, they may be able to control or substantially influence the outcome of matters requiring approval by our shareholders, including the elections of directors and approval of significant corporate transactions, such as mergers, acquisitions and equity compensation plans.
As a result, acting together, they may be able to control or substantially influence the outcome of matters requiring approval by our shareholders, including the elections of directors and the approval of significant corporate transactions, such as mergers, acquisitions, and equity compensation plans.
Factors affecting the opening of new hotels, or the conversion of existing hotels to a Choice brand, include, among others: ▪ the availability of hotel management, staff and other personnel; ▪ the cost and availability of suitable hotel locations; ▪ the availability and cost of capital to allow hotel owners and developers to fund investments; ▪ cost effective and timely construction of hotels (which construction can be delayed due to, among other reasons, availability of financing, labor and materials availability, labor disputes, local zoning and licensing matters, and weather conditions); and ▪ securing required governmental permits. • our ability to continue to enhance our reservation, operational and service delivery systems to support additional franchisees in a timely, cost-effective manner; 28 Table of Contents • our formal impact policy, which may offer certain franchisees protection from the opening of a same-brand property within a specified distance; • the effectiveness and efficiency of our development organization; • our failure to introduce new brands that gain market acceptance; • our dependence on our independent franchisees’ skills and access to financial resources necessary to open the desired number of hotels; and • our ability to attract and retain qualified domestic and international franchisees.
Factors affecting the opening of new hotels, or the conversion of existing hotels to a Choice brand, include, among others: 25 Table of Contents ▪ the availability of hotel management, staff and other personnel; ▪ the cost and availability of suitable hotel locations; ▪ the availability and cost of capital to allow hotel owners and developers to fund investments; ▪ cost effective and timely construction of hotels (which construction can be delayed due to, among other reasons, availability of financing, labor and materials availability, labor disputes, local zoning and licensing matters, and weather conditions); and ▪ securing required governmental permits. • our ability to continue to enhance our reservation, operational and service delivery systems to support additional franchisees in a timely, cost-effective manner; • our formal impact policy, which may offer certain franchisees protection from the opening of a same-brand property within a specified distance; • the effectiveness and efficiency of our development organization; • our failure to introduce new brands that gain market acceptance; • our dependence on our independent franchisees’ skills and access to financial resources necessary to open the desired number of hotels; and • our ability to attract and retain qualified domestic and international franchisees.
These risks could cause actual operating results to differ from those expressed in certain “forward looking statements” contained in this Form 10-K as well as in other Company communications. Before you invest in our securities, you should carefully consider these risk factors together with all other information included in our publicly filed documents.
These risks could cause actual results to differ from those expressed in certain “Forward-Looking Statements” contained in this Form 10-K as well as in other Company communications. Before you invest in our securities, you should carefully consider these risk factors together with all other information included in our publicly filed documents.
In particular, we face specific risks stemming from (1) our ability to assess the fair market value of the real estate; (2) the location’s suitability for development as a hotel; (3) the availability of zoning or other local approvals needed for development; and (4) the availability and pricing of capital.
In particular, we face specific risks stemming from (1) our ability to assess the fair value of the real estate, (2) the location’s suitability for development as a hotel, (3) the availability of zoning or other local approvals needed for development, and (4) the availability and pricing of capital.
To achieve long-term success for new brands, we may be required to provide capital support to incentivize franchisee development and/or to make direct investments, and these extensions of capital support and direct investments may not yield expected or anticipated returns and may be disruptive to our asset-light business model.
To achieve long-term success for new brands, we may be required to provide capital support to incentivize franchisee development and/or to make direct investments, and these extensions of capital support and direct investments may not yield the expected or anticipated returns and may be disruptive to our asset-light business model.
In particular, when we make loans to franchisees, agree to provide loan guaranties for the benefit of franchisees, or make equity investments in franchisees, we are subject to all generally applicable credit and investment risks, such as: • construction delays, cost overruns, or acts of God such as earthquakes, hurricanes, floods or fires that may increase overall project costs or result in project cancellations; • the possibility that the parties with which we have entered into a co-investment, hotel development, financing or guaranty relationships could become bankrupt or otherwise lack the financial resources to meet their obligations, or could have or develop business interests, policies or objectives that are inconsistent with ours; and • that conditions within credit or capital markets may limit the ability of franchisees or us to raise additional debt or equity that may be required for completion of projects.
In particular, when we make loans to franchisees, agree to provide loan guaranties for the benefit of franchisees, or make equity investments in franchisees, we are subject to all generally applicable credit and investment risks, such as: • construction delays, cost overruns, or acts of God, such as earthquakes, hurricanes, fires, floods, or other natural disasters that may increase overall project costs or result in project cancellations; • the possibility that the parties with which we have entered into a co-investment, hotel development, financing, or guaranty relationships could become bankrupt or otherwise lack the financial resources to meet their obligations, or could have or develop business interests, policies, or objectives that are inconsistent with ours; and • that conditions within credit or capital markets may limit the ability of franchisees or us to raise additional debt or equity that may be required for completion of projects.
Moreover, we may be involved in matters such as class actions, administrative proceedings, employment and personal injury claims, and litigation with or involving our relationship with franchisees and the legal distinction between our franchisees and us for employment law or general liability purposes, for which the cost and other effects of defense, settlements or judgments may require us to make disclosures or take other actions that may affect perceptions of our brand and products and adversely affect our business results.
Moreover, we may be involved in matters such as class actions, 23 Table of Contents administrative proceedings, employment and personal injury claims, and litigation with or involving our relationship with franchisees and the legal distinction between our franchisees and us for employment law or general liability purposes, for which the cost and other effects of defense, settlements or judgments may require us to make disclosures or take other actions that may affect perceptions of our brand and products and adversely affect our business results.
Information technology and systems that we rely upon are or may be vulnerable to damage or interruption from: • penetration by individuals or entities seeking to disrupt operations or misappropriate information and other breaches of security; • fraud, misuse and other unauthorized access to customer loyalty program accounts or interference with these systems; • computer viruses, software errors, and design or security vulnerabilities; • power losses, computer systems failures, internet and telecommunications or data network failures, service provider negligence, improper operation by or supervision of employees, user error, physical and electronic losses of data and similar events; and • earthquakes, fires, floods, and other natural disasters.
Information technology and systems that we rely upon are or may be vulnerable to damage or interruption from: • penetration by individuals or entities seeking to disrupt operations or misappropriate information and other breaches of security; 27 Table of Contents • fraud, misuse and other unauthorized access to customer loyalty program accounts or interference with these systems; • computer viruses, software errors, and design or security vulnerabilities; • power losses, computer systems failures, internet and telecommunications or data network failures, service provider negligence, improper operation by or supervision of employees, user error, physical and electronic losses of data and similar events; and • earthquakes, hurricanes, fires, floods, and other natural disasters.
Any loss of data or funds, security breaches or even unsuccessful attempts at unauthorized access could harm our reputation, our relationship with our customer 30 Table of Contents loyalty program members and our relationship with co-branded credit card companies. Further, such events could expose us to potential litigation as well as expenses associated with remediation and other impacts.
Any loss of data or funds, security breaches or even unsuccessful attempts at unauthorized access could harm our reputation, our relationship with our customer loyalty program members and our relationship with co-branded credit card companies. Further, such events could expose us to potential litigation as well as expenses associated with remediation and other impacts.
If access to these lists was prohibited or otherwise restricted, our ability to develop new customers and introduce them to our products could be impaired. 34 Table of Contents Legal and Regulatory Risks Government franchise and tax regulation could impact our business. The FTC, various states, and certain foreign jurisdictions where we market franchises regulate the sale of franchises.
If access to these lists was prohibited or otherwise restricted, our ability to develop new customers and introduce them to our products could be impaired. Legal and Regulatory Risks Government franchise and tax regulation could impact our business. The FTC, various states, and certain foreign jurisdictions where we market franchises regulate the sale of franchises.
The failure of any third-party operator or provider to make decisions, perform their services, discharge their obligations, deal with regulatory agencies, provide accurate information and comply with laws, rules and regulations could result in material adverse consequences to our business. 25 Table of Contents We are subject to certain risks related to our indebtedness.
The failure of any third-party operator or provider to make decisions, perform their services, discharge their obligations, deal with regulatory agencies, provide accurate information and comply with laws, rules and regulations could result in material adverse consequences to our business. We are subject to certain risks related to our indebtedness.
If we do not realize the financial or strategic goals that are contemplated at the time we commit to significant investments in support of these ventures, our reputation, financial condition, operating results, and growth trajectory may be impacted. Investing jointly through affiliates decreases our ability to manage risk.
If we do not realize the financial or strategic goals that are contemplated at the time we commit to significant investments in support of these ventures, our reputation, financial condition, operating results, and growth trajectory may be impacted. 30 Table of Contents Investing jointly through affiliates decreases our ability to manage risk.
In certain countries, these risks include the risk of war, conflict or civil unrest, political instability, disruptions caused by terrorist activities or otherwise, expropriation and nationalization. 26 Table of Contents Moreover, our international operations are subject to compliance with anti-corruption and anti-bribery laws and other foreign laws and regulations.
In certain countries, these risks include the risk of war, conflict or civil unrest, political instability, disruptions caused by terrorist activities or otherwise, expropriation and nationalization. Moreover, our international operations are subject to compliance with anti-corruption and anti-bribery laws and other foreign laws and regulations.
An extended period of occupancy or room rate declines may adversely affect the operating results and financial condition of our franchisees. These negative operating conditions could result in the financial failure of our owners and result in a termination of the franchisee for non-payment of franchise fees or require the transfer of ownership of the franchise.
An extended period of occupancy or room rate declines may adversely affect the operating results and financial condition of our franchisees. These negative operating conditions could result in the financial failure of our owners and result in a termination of 26 Table of Contents the franchisee for non-payment of franchise fees or require the transfer of ownership of the franchise.
Our success and growth prospects depend on the strength and desirability of our brands, particularly in the midscale and upper midscale hotel franchise chains which represents a significant portion of our business.
Our success and growth prospects depend on the strength and desirability of our brands, particularly in the extended stay, midscale, and upper midscale hotel franchise chains which represents a significant portion of our business.
Methodologies for reporting these data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations (including from acquisitions and divestitures), and other changes in circumstances, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Methodologies for reporting these data may be updated and previously reported data may be adjusted to reflect improvement in availability and quality of third-party data, changing 24 Table of Contents assumptions, changes in the nature and scope of our operations (including from acquisitions and divestitures), and other changes in circumstances, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals.
Cybercriminals have increasingly demonstrated advanced capabilities, such as use of zero-day vulnerabilities, and rapid integration of new technology such as generative artificial intelligence. Our systems may also be vulnerable to human error, negligence, fraud, or other misuse.
Cybercriminals have increasingly demonstrated advanced capabilities, such as use of zero-day vulnerabilities, and rapid integration of new technology such as generative artificial intelligence and machine learning technologies. Our systems may also be vulnerable to human error, negligence, fraud, or other misuse.
These attacks can be deliberate attacks or unintentional events that could result in theft, unauthorized access, unauthorized alteration, loss, fraudulent or unlawful use of sensitive information or cause interruptions, outages, or delays in 33 Table of Contents our business, loss of data, or render us unable to operate our business.
These attacks can be deliberate attacks or unintentional events that could result in theft, unauthorized access, unauthorized alteration, loss, fraudulent or unlawful use of sensitive information or cause interruptions, outages, or delays in our business, loss of data, or render us unable to operate our business.
The Company is obligated to use the system fees it collects from the current franchisees comprising its various hotel brands to provide system services, such as marketing and reservations services, appropriate to fulfill our obligations under the Company’s franchise agreements.
The Company is obligated to use the marketing and reservation system fees it collects from the current franchisees comprising its various hotel brands to provide system services, such as marketing and reservations services, that are appropriate to fulfill our obligations under the Company’s franchise agreements.
In addition, at times, the Company provides financial support to our franchisees via notes and guaranties. Factors that may 29 Table of Contents adversely affect the operating results and financial condition of these franchisees may result in the Company incurring losses related to this financial support.
In addition, at times, the Company provides financial support to our franchisees via notes and guaranties. Factors that may adversely affect the operating results and financial condition of these franchisees may result in the Company incurring losses related to this financial support.
These provisions together with the concentration of our share ownership could discourage tender offers or other bids for our common stock at a premium over market price. The concentration of share ownership may influence the outcome of certain matters.
These provisions, together with the concentration of our share ownership, could discourage tender offers or other bids for our common stock at a premium over market price. 32 Table of Contents The concentration of share ownership may influence the outcome of certain matters.
As a result of our program to make financial support available to developers in the form of loans, credit support, such as guaranties, and equity investments, we are subject to investment and credit risks that we would not otherwise be exposed to as a franchisor.
As a result of our program to make financial support available to developers in the form of franchise agreement acquisition costs, loans, credit support, such as guaranties, and equity investments, we are subject to investment and credit risks that we would not otherwise be exposed to as a franchisor.
In the past, we have both acquired and launched internally developed business divisions that develop and market technology products to the hotel industry. We expect to continue to invest in alternate lines of business and may in the future invest in other new business strategies, products, services, and technologies.
In the past, we have both acquired and launched internally developed business divisions. We expect to continue to invest in alternate lines of business and may in the future invest in other new business strategies, products, services, and technologies.
For example, competition may require us to reduce or change fee structures, make greater use of financial incentives such as loans and guaranties to acquire franchisees and/or reduce the level of property improvements required before operating under our brand names. This could potentially impact our margins negatively.
For example, competition may require us to reduce or change fee structures, make greater use of financial incentives, including franchise agreement acquisition costs, loans and guaranties to acquire franchisees and/or reduce the level of property improvements required before operating under our brand names. This could potentially impact our cash flows and margins negatively.
The considerable increase in the use of social media over recent years has greatly accelerated the speed at which negative publicity could spread and the scope of its dissemination, and could lead to litigation, increase our costs or result in a loss of consumer confidence in our brands.
The considerable increase in the use of social media over recent years has greatly accelerated the speed at which negative publicity, feedback, criticism and other information, whether or not based in fact, could spread and the scope of its dissemination, which could lead to litigation, increase our costs, or result in a negative impact on our reputation or loss of consumer confidence in our brands.
While our business model is primarily asset-light, franchising focused business, there are instances where, typically to support the growth of new hotel brands, we may acquire existing operating hotels and acquire real estate for the purpose of developing new hotels. Of the open hotels in our system, we currently own seven Cambria hotels and three legacy Radisson Hotels Americas hotels.
While our business model is primarily an asset-light, franchising focused business, there are instances where, typically to support the growth of new hotel brands, we may acquire existing operating hotels and acquire real estate for the purpose of developing new hotels.
For example, the California Privacy Rights Act (CPRA), which went into effect on January 1, 2023, imposes new compliance requirements on businesses that collect personal information from California residents.
For example, the California Privacy Rights Act (CPRA) imposes new compliance requirements on businesses that collect personal information from California residents.
Because these ventures are software and technology businesses, they are inherently risky, and there can be no assurance that our investments will be successful.
Because these new ventures are inherently risky, there can be no assurance that our investments will be successful.
Our responsibilities under our franchise agreements may be subject to interpretation and may give rise to disagreements in some instances. Such disagreements may be more likely when hotel returns are depressed as a result of economic conditions.
We may have disputes with the owners of our franchised hotels or their representative franchisee associations. Our responsibilities under our franchise agreements may be subject to interpretation and may give rise to disagreements in some instances. Such disagreements may be more likely when hotel returns are depressed as a result of economic conditions.
From time to time, we apply to have certain trademarks registered. There is no guarantee that such trademark registrations will be granted. We cannot assure you that all of the steps we have taken to protect our trademarks in the United States and foreign countries will be adequate to prevent imitation of our trademarks by others.
We cannot assure you that all of the steps we have taken to protect our trademarks in the United States and foreign countries will be adequate to prevent imitation of our trademarks by others.
In addition, our implementation of programs such as closed-user group pricing may cause travel intermediaries to respond by diverting business away from our hotels by removing or marginalizing our hotels in search results on their platforms. 31 Table of Contents Finally, there can be no assurance that we will be able to maintain stable commercial or contractual relationships with every significant internet travel intermediary, and any resulting instability may have a significant adverse impact on our business, if for example, our brands are not available through one or more of such intermediaries.
Finally, there can be no assurance that we will be able to maintain stable commercial or contractual relationships with every significant internet travel intermediary, and any resulting instability may have a significant adverse impact on our business, if for example, our brands are not available through one or more of such intermediaries.
As a result of the foregoing, we may experience significant increased operating and compliance costs, operating disruptions or limitations, reduced demand, constraints on our growth, and physical damage to our hotels, all of which could adversely affect our profits or growth. 27 Table of Contents Risks Related to Our Franchise System We may not grow our franchise system or we may lose business by failing to compete effectively or by failing to manage the reputations of our brands.
As a result of the foregoing, we may experience significant increased operating and compliance costs, operating disruptions or limitations, reduced demand, constraints on our growth, and physical damage to our hotels, all of which could adversely affect our profits or growth.
If these intermediaries are successful in continuing to increase their share of bookings or are otherwise successful in executing strategies to strengthen their commercial and contractual ties to our hotels and hotel guests, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant contractual and operational concessions from our franchisees or us.
If these intermediaries are successful in continuing to increase their share of bookings or are otherwise successful in executing strategies to strengthen their commercial and contractual ties to our hotels and hotel guests, these intermediaries may be able to obtain higher commissions, reduced room rates, or other significant contractual and operational concessions from our franchisees or us. 28 Table of Contents Moreover, some of these internet travel intermediaries hope that consumers will eventually develop brand loyalties to their reservations systems rather than to our lodging brands and our existing distribution channels.
We are also developing Cambria hotels and Everhome Suites on a stand alone basis and with joint venture partners. As a result, fluctuations in values could require us to record a significant non-cash impairment charge in our financial statements in a particular period which may negatively impact our results of operations and shareholders' equity.
As a result, fluctuations in fair market values could require us to record a significant non-cash impairment charge in our financial statements in a particular period which may negatively impact our results of operations and shareholders' equity.
If we are found liable for violations of anti-corruption or sanctions laws, we could incur criminal or civil liabilities which could have a material and adverse effect on our results of operations, our financial condition and our reputation.
Further, investigations by regulatory agencies have been increasing and, therefore, it may become increasingly costly and time-consuming to maintain proper internal controls. If we are found liable for violations of anti-corruption or sanctions laws, we could incur criminal or civil liabilities which could have a material adverse effect on our results of operations, our financial condition and our reputation.
If the Company fails to maintain compliance with the various United States and international laws and regulations applicable to the protection of such data or with the Payment Card Industry Data Security Standards, the Company’s ability to process such data could be adversely impacted and expose the Company to fines, litigation or other expenses or sanctions.
If the Company fails to maintain compliance with the various United States and international laws and regulations applicable to the protection of such data or with the Payment Card Industry Data Security Standards, the Company’s ability to process such data could be adversely impacted and expose the Company to fines, litigation or other expenses or sanctions. 31 Table of Contents Privacy laws and regulations could adversely affect our ability to transfer guest data and market our products effectively and could be applied to impose costs, fines, and operational conditions on our business in the event of perceived non-compliance, and could otherwise impact our results from operations.
In such instances, there is no assurance that we will be able to recover any or all of such impaired or paid amounts, in which case we will experience losses which could be material.
In such instances, there is no assurance that we will be able to recover any or all of such impaired or paid amounts, in which case we will experience losses which could be material. 29 Table of Contents Our involvement in hotel ownership and hotel development activities to stimulate the development of new brands may result in exposure to losses and be disruptive to our asset-light business model.
Litigation has been and may continue to be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others.
Litigation has been and may continue to be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources, may result in counterclaims or other claims against us and could significantly harm our results of operations.
Incidents can be difficult to detect for long periods of time and can involve complex or extended assessment and remediation periods, which could magnify the severity of an incident. Accordingly, there are no guarantees that our cybersecurity practices and our efforts to implement appropriate risk reduction measures will be sufficient to prevent or mitigate all attacks.
Incidents can be difficult to detect for long periods of time and can involve complex or extended assessment and remediation periods, which could magnify the severity of an incident.
Therefore, as we expand internationally, we may not experience the operating margins we expect, our results of operations may be negatively impacted and our stock price may decline. We may have disputes with the owners of our franchised hotels or their representative franchisee associations.
Operations in new foreign markets may achieve low margins or may be unprofitable, and expansion in existing markets may be affected by local economic and market conditions. Therefore, as we expand internationally, we may not experience the operating margins we expect, our results of operations may be negatively impacted and our stock price may decline.
This may require considerable management time as well as start-up expenses for market development before any significant revenues and earnings are generated. Operations in new foreign markets may achieve low margins or may be unprofitable, and expansion in existing markets may be affected by local economic and market conditions.
We are currently planning to further expand in many of the international markets where we currently operate, as well as in select new markets. This may require considerable management time as well as start-up expenses for market development before any significant revenues and earnings are generated.
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Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.
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From time to time, we may face audits or investigations by one or more domestic or foreign governmental agencies relating to our international business activities, compliance with which could be costly and time-consuming, and could divert our management and key personnel from our business operations.
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Business and Operational Risks • We are subject to the operating risks common in the lodging and franchising industries. • We depend on the skill, ability, and decisions of third-party operators. • We are subject to certain risks related to our indebtedness. • We are subject to certain risks related to litigation filed by or against us. • Our international operations are subject to political and monetary risks. • Labor shortages could restrict our ability and the ability of franchisees to operate hotel properties or grow our business or result in increased labor costs that could adversely affect the results of operations. • Climate change and sustainability related concerns could have a material adverse effect on our business and results of operations.
Added
Risks Related to Our Franchise System We may not grow our franchise system or we may lose business by failing to compete effectively or by failing to manage the reputations of our brands.
Removed
Risks Related to Our Franchise System • We may not grow our franchise system or we may lose business by failing to compete effectively or by failing to manage the reputations of our brands. • We may not achieve our objectives for growth in the number of franchised hotels. • We may have disputes with the owners of our franchised hotels or their representative franchisee associations. • Under certain circumstances our franchisees may terminate our franchise contracts. • Deterioration in the general financial condition of our franchisees may adversely affect our results. • We may not be able to recover advances for system services that we may at certain times provide to our franchisees. • Our franchisees may fail to make the investments necessary to maintain or improve their properties, preference for our brands and our reputation could suffer and our franchise agreements with these franchisees could terminate. • We and our franchisees are reliant upon information technology systems to operate our business and remain competitive, and any disruption or malfunction or failure to adapt to technological developments could adversely affect our business.
Added
In addition, our implementation of programs such as closed-user group pricing may cause travel intermediaries to respond by diverting business away from our hotels by removing or marginalizing our hotels in search results on their platforms.
Removed
Risks Related to Our Brands • We are subject to the risks relating to the acquisition of new brands or lines of business. • New brands may not be accepted by franchisees and consumers. • Increasing use by consumers of alternative internet reservation channels may decrease loyalty to our brands and our existing distribution channels, and may influence our distribution strategies, in ways that may adversely affect us. • Development and brand support activities that involve our co-investment or financing and guaranty support for third parties or development of hotels may result in losses. • Our involvement in hotel ownership and hotel development activities to stimulate the development of new brands may result in exposure to losses and be disruptive to our asset-light business model. • Failure to protect our trademarks and other intellectual property could impact our business.
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An increase in the use of AI enabled third-party internet services to book online hotel reservations could adversely impact our business. Some of our hotel rooms are booked by internet travel intermediaries and other online travel service providers.
Removed
Risks Related to Different Lines of Business • We may not be able to generate significant procurement services revenue from our platform business. • Our investment in new business lines is inherently risky and could disrupt our core business. • Investing jointly through affiliates decreases our ability to manage risk.
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AI is being used to book hotels through targeted in-feed ads that leverage user data to display relevant hotel options based on interests and location, as well as through AI-powered chatbots that can answer booking questions directly within an app, allowing users to seamlessly initiate the booking process while watching videos on the app platform.
Removed
Risks Related to Cybersecurity and Data Privacy • We are subject to the risks related to cybersecurity. • Failure to maintain the integrity of internal or customer data could result in faulty business decisions, damage of reputation, and/or subject us to costs, fines or lawsuits. 23 Table of Contents • Privacy laws and regulations could adversely affect our ability to transfer guest data and market our products effectively and could be applied to impose costs, fines and operational conditions on our business in the event of perceived non-compliance, and could otherwise impact our results from operations.
Added
In addition, AI can be used to personalize the hotel booking experience by showing users ads for hotels they may be interested in based on their in-app activity.
Removed
Legal and Regulatory Risks • Government franchise and tax regulation could impact our business. • We may be deemed to be a joint employer with our franchisees under certain new laws, rules and regulations. Anti-takeover and Control Risks • Anti-takeover provisions may prevent a change in control. • The concentration of share ownership may influence the outcome of certain matters.
Added
Our business and profitability could be harmed to the extent that online intermediaries succeed in significantly shifting loyalties from our brands to their travel services utilizing these AI tools, diverting bookings away from our direct online channels, or through their fees, increasing the overall cost of internet bookings for our hotels.
Removed
Risk Factors Relating to the Offer and the Second-Step Mergers • Because the market price of our common stock that Wyndham stockholders may receive in the proposed Offer will fluctuate, Wyndham stockholders cannot be sure of the value of the common stock they may receive. • We must obtain governmental and regulatory approvals to consummate the Offer, which, if delayed or not granted, may delay, jeopardize or prohibit the Offer and the Second-Step Mergers. • Our stock price may be adversely affected if the Offer and the Second-Step Mergers are not completed. • The Offer is subject to other conditions that we do not control. • Uncertainties associated with the Offer and the Second-Step Mergers may affect our future business and operations. • We have not negotiated the price or terms of the Offer or Second-Step Mergers with Wyndham. • You may be unable to assert a claim against Wyndham’s independent registered public accounting firm under Section 11 of the Securities Act of 1933, as amended (the “Securities Act”).
Added
Of the open hotels in our system, we currently own eight Cambria hotels, one Everhome Suites hotel, one Radisson RED hotel, one Radisson Blu hotel, and one Country Inn & Suites hotel. We are also developing Cambria hotels and Everhome Suites hotels on a standalone basis and with joint venture partners.
Removed
Risk Factors Relating to Choice Following Acceptance of the Offer and the Second-Step Mergers • Wyndham and Choice may not successfully integrate. • We may not realize the financial benefits expected following the consummation of the Proposed Combination. • We have only conducted a review of Wyndham’s publicly available information and have not had access to Wyndham’s non-public information.
Added
In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as do the laws of the United States. From time to time, we apply to have certain trademarks registered. There is no guarantee that such trademark registrations will be granted.
Removed
Therefore, we may not be able to retain certain agreements and may be subject to liabilities of Wyndham unknown to us, which may have a material adverse effect on our profitability, financial condition and results of operations and which may result in a decline in the market value of our common stock. • We expect to incur a substantial amount of indebtedness to acquire the shares of Wyndham Common Stock pursuant to the Offer and the Second-Step Mergers and, as a result, will increase its outstanding indebtedness.
Added
Accordingly, there are no guarantees that our cybersecurity practices and our efforts to implement appropriate risk reduction measures will be sufficient to prevent or mitigate attacks, and our defense strategies may ultimately prove ineffective as threat actors evolve and become more sophisticated.
Removed
Our failure to meet our debt service obligations, including a failure to comply with the restrictive covenants contained in the related agreements, could have a material adverse effect on its business, financial condition and results of operations. • All of our debt obligations, and any future indebtedness we may incur, will have priority over our common stock with respect to payment in the event of a liquidation, dissolution or winding up. • The consummation of the Offer and the Second-Step Mergers may result in ratings organizations and/or securities analysts taking actions which may adversely affect the combined companies’ business, financial condition and operating results, as well as the market price of our common stock. • The Offer could trigger certain provisions contained in Wyndham’s equity plan or award agreements and certain employee benefit plans or agreements that could require us to vest outstanding equity awards, make change of control or severance payments or accelerate vesting and payment of certain deferred compensation amounts. • Our future results may differ materially from the unaudited pro forma condensed combined financial statements of Choice and Wyndham presented in the Exchange Offer. • Resales of our common stock following the Offer may cause the market price of our common stock to fall. • The trading price of our common stock may be affected by factors different from those affecting the price of Wyndham Common Stock.
Added
In addition, if directors and affiliates are acquiring and holding more shares, our share repurchase program may further concentrate our share ownership in our directors and affiliates. Item 1B. Unresolved Staff Comments None.
Removed
In addition, as a result of the Radisson transaction, we have expanded our international operations in several markets. We are currently planning to further expand in many of the international markets where we currently operate, as well as in select new markets.
Removed
Moreover, some of these internet travel intermediaries hope that consumers will eventually develop brand loyalties to their reservations systems rather than to our lodging brands and our existing distribution channels.
Removed
Our involvement in hotel ownership and hotel development activities to stimulate the development of new brands may result in exposure to losses and be disruptive to our asset-light business model.
Removed
Litigation of this type could result in substantial costs and diversion of resources, may result in counterclaims or other claims against us and could significantly harm our results of 32 Table of Contents operations. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as do the laws of the United States.
Removed
For our SaaS technology solutions division, additional specific risks and uncertainties include, among others, a limited history as a stand-alone operating business, the willingness of our potential competitors to enter into a business relationship with one of our operating divisions, the ability to develop and offer innovative products that appeal to hoteliers, continuing market acceptance of the division's enterprise cloud-based technology products, security threats to processed and stored data, intense competition in the technology industry, protection of intellectual property rights, and claims of infringement of the intellectual property of third parties.
Removed
Privacy laws and regulations could adversely affect our ability to transfer guest data and market our products effectively and could be applied to impose costs, fines and operational conditions on our business in the event of perceived non-compliance, and could otherwise impact our results from operations.
Removed
Risk Factors Relating to the Offer and the Second-Step Mergers Because the market price of our common stock that Wyndham stockholders may receive in the proposed Offer will fluctuate, Wyndham stockholders cannot be sure of the value of the common stock they may receive.
Removed
Upon consummation of the proposed offer to exchange (“Exchange Offer”) and the related letter of election and transmittal (the Exchange Offer and such letter, together the “Offer”), each issued and outstanding share of Wyndham common stock (“Wyndham Common Stock”) tendered and accepted for exchange by us pursuant to the Offer will be converted into the right to receive consideration consisting of, at the election of each Wyndham stockholder, (1) $49.50 in cash and 0.324 shares of our common stock (the “Standard Election Consideration”), (2) an amount in cash (the “Cash Election Consideration”), equal to the equivalent market value of the Standard Election Consideration (based on the volume-weighted average price as reported by Bloomberg, L.P.
Removed
(“VWAP”) of our common stock as quoted on the New York Stock Exchange (the “NYSE”), over the five NYSE trading days ending on the 10th business day preceding the date of expiration of the Offer or (3) a number of shares of our common stock (the “Stock Election Consideration”) having a value equal to the equivalent market value of the Standard Election Consideration (in each case based on the VWAP of our common stock as quoted on the NYSE over the five NYSE trading days ending on the 10th business day preceding the date of expiration of the Offer, subject, in each case, to the election and proration procedures described in the Offer and the Additional Consideration (as defined in the Offer), if any.
Removed
The purpose 35 Table of Contents of the Offer is for us to acquire all of the outstanding shares of Wyndham Common Stock in order to combine the businesses of Choice and Wyndham (the “Proposed Combination”).
Removed
We intend, promptly after consummation of the Offer, to cause WH Acquisition Corporation (“Purchaser”), our wholly owned subsidiary, to merge with and into Wyndham with Wyndham as the surviving corporation (the “First Merger”), immediately following which Wyndham will merge with and into our newly formed wholly-owned subsidiary (“NewCo”) with NewCo as the surviving corporation (together with the First Merger, the “Second-Step Mergers”), after which Wyndham would be our direct or indirect wholly owned subsidiary.
Removed
The market value of the consideration Wyndham stockholders will receive in the Offer (if they receive our common stock) will be based in whole or in part on the value of our common stock at the time the consideration in the Offer is received.
Removed
If the price of our common stock declines, Wyndham stockholders could receive less value for their shares of Wyndham Common Stock upon the consummation of the Offer than the value calculated on the date the first public offer was announced, as of the date of the filing of the Exchange Offer, as of the date of the filing of this Annual Report on Form 10-K or as of the date such Wyndham stockholder made its election and tendered shares into the Offer.
Removed
Stock price changes may result from a variety of factors, many of which are beyond the companies’ control, including general market and economic conditions, changes in business prospects, catastrophic events, both natural and man-made, and regulatory considerations.
Removed
In addition, the ongoing businesses of Choice and Wyndham may be adversely affected by actions taken by us or by Wyndham in connection with the Offer, including payment by the companies of certain expenses relating to the Offer, including certain legal, accounting, financing and financial and other advisory fees.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+1 added−1 removed11 unchanged
Biggest changeThe Company has a multilayered system for assessing, identifying, and managing cybersecurity risks, designed to help protect the Company’s information assets and operations from internal and external cyber threats by understanding and seeking to manage risk while helping to support business resiliency and seeking to protect employee, guest, and franchisee information from unauthorized access or attack, as well as seeking to secure the Company’s networks, systems, devices, products, and services.
Biggest changeThe system is used to understand and manage risks to help support business resiliency and to protect data subjects' information from unauthorized access or attack, as well as to secure the Company’s networks, systems, devices, products, and services. Cybersecurity is incorporated into the Company’s enterprise risk management program through membership within and regular reporting to the Enterprise Risk Committee.
Annually, the Company’s adherence to the Payment Card Industry Data Security Standard is assessed by an external party which includes one or more penetration tests of the Company’s technological environment. The Company has engaged an independent security assessor to evaluate the Company’s cybersecurity program against the Framework.
Annually, the Company’s adherence to the Payment Card Industry Data Security Standard is assessed by an external party which includes one or more penetration tests of the Company’s applicable technological environment. The Company has engaged an independent security assessor to evaluate the Company’s cybersecurity program against the Framework.
Additionally, the cybersecurity program is subject to regular assessment by internal audit and the Company's external auditors. The Company participates in the Retail & Hospitality 42 Table of Contents Information Sharing and Analysis Center (“RH-ISAC”) where peer companies are engaged on industry trends and emerging threats, including those relating to cybersecurity.
Additionally, the cybersecurity program is subject to regular assessment by internal audit and the Company's external auditors. The Company participates in the Retail & Hospitality Information Sharing and Analysis Center (“RH-ISAC”) where peer companies are engaged on industry trends and emerging threats, including those relating to cybersecurity.
For example, the Company seeks to conduct incident simulations and assessments annually to help discover potential vulnerabilities, with the objective of improving decision-making and prioritization and promoting monitoring and reporting across compliance functions. As part of its overall risk mitigation strategy, the Company also maintains cyber insurance coverage.
For example, the Company seeks to conduct incident simulations and assessments annually to help discover potential vulnerabilities, with the objective to improve decision-making and prioritize and promote the monitoring and reporting across compliance functions. As part of its overall risk mitigation strategy, the Company also maintains cyber insurance coverage.
Cybersecurity updates are rotated quarterly between the Board of Directors and the Audit Committee. The reports generally focus on items such as risk reduction efforts, emerging and existing threats, training initiatives, the status of projects to strengthen cybersecurity, emerging regulatory policies and regulations, cybersecurity technologies and best practices, cyber readiness, results of third-party assessments, mitigation efforts, and response plans.
The reports generally focus on items such as risk reduction efforts, emerging and existing threats, training initiatives, the status of projects to strengthen cybersecurity, emerging security and privacy regulatory policies and regulations, cybersecurity technologies and best practices, cyber readiness, results of third-party assessments, mitigation efforts, and response plans.
The Company’s Board of Directors does not believe that there are currently any risks from cybersecurity threats that are reasonably likely to materially affect the Company or its business strategy, financial condition, results of operations, or cash flows.
The Company’s Board of Directors does not believe that there are currently any risks from cybersecurity threats that are reasonably likely to materially affect the Company or its business strategy, financial condition, results of operations, or cash flows. 33 Table of Contents Governance and Oversight The Audit Committee of the Company’s Board of Directors maintains oversight over cybersecurity risk, in coordination with the full Board of Directors.
Cybersecurity is incorporated into the Company’s enterprise risk management program through membership within and regular reporting to the Compliance and Enterprise Risk Management Committee. The Company devotes significant resources to helping protect and evolve the security of its computer systems, software, networks, and other technology assets, and the Company’s cybersecurity risk management program includes physical, administrative, and technical safeguards.
The Company devotes significant resources to help protect and evolve the security of its computer systems, software, networks, and other technology assets, and the Company’s cybersecurity risk management program includes physical, administrative, and technical safeguards. The Company’s cybersecurity policies, standards, and procedures include data breach response plans, which are reviewed regularly.
The Company’s cybersecurity policies, standards, and procedures include data breach response plans, which are reviewed regularly. The Company is in the process of assessing its cybersecurity program and safeguards against the National Institute of Standards of Technology Cybersecurity Framework (the “Framework”).
The Company annually assesses its cybersecurity program and safeguards against the National Institute of Standards of Technology Cybersecurity Framework (the “Framework”).
Item 1C. Cybersecurity Risk Management and Strategy Cybersecurity is an important element of the Company’s overall enterprise risk management program.
Item 1C. Cybersecurity Risk Management and Strategy Cybersecurity is an important element of the Company’s overall enterprise risk management program. The Company has a multilayered system to assess, identify, and manage cybersecurity risks. The system is designed to help protect the Company’s information assets and operations from internal and external cyber threats.
Removed
Governance and Oversight The Audit Committee of the Company’s Board of Directors maintains oversight over cybersecurity risk, in coordination with the full Board of Directors.
Added
Cybersecurity updates are rotated quarterly between the Board of Directors and the Audit Committee.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2023, we owned seven Cambria hotels (located in Bloomington, MN, Burbank, CA, Columbia, SC, El Segundo, CA, Houston, TX, New Orleans, LA, and Pittsburgh, PA), a Radisson Blu (located in Bloomington, MN), a Radisson RED (located in Minneapolis, MN), and a Country Inn & Suites (located in Bloomington, MN). 43 Table of Contents We believe that all of our owned and leased properties are in generally good physical condition with the need for only routine repairs and maintenance and periodic capital improvements.
Biggest changeAs of December 31, 2024, our wholly-owned hotels consist of eight Cambria hotels (located in Bloomington, MN, Burbank, CA, Columbia, SC, Denver, CO, El Segundo, CA, Houston, TX, New Orleans, LA, and Pittsburgh, PA), an Everhome Suites hotel (located in Fayetteville, NC), a Radisson Blu hotel (located in Bloomington, MN), a Radisson RED hotel (located in Minneapolis, MN), and a Country Inn & Suites hotel (located in Bloomington, MN).
The Company also maintains several international regional offices. Management believes that the Company’s existing properties and property commitments are sufficient to meet its present needs and does not anticipate any difficulty in securing additional or alternative space, as needed, on terms acceptable to the Company. We discuss our limited hotel development and ownership program and strategy in Item 1.
Management believes that the Company’s existing properties and property commitments are sufficient to meet its present needs and does not anticipate any difficulty in securing additional or alternative space, as needed, on terms that are acceptable to the Company. We discuss our limited hotel development and ownership program and strategy in Item 1. Business and Item 7.
Business and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 2. Properties Our principal executive offices are located at 915 Meeting Street, Suite 600, North Bethesda, Maryland 20852 and are leased from a third party. We also lease office space in Scottsdale, Arizona (this office contains our reservation and property systems' information technology operations and our domestic SaaS technology solutions division), Minneapolis, Minnesota, and Omaha, Nebraska.
Item 2. Properties Our principal executive offices are located at 915 Meeting Street, Suite 600, North Bethesda, Maryland 20852 and are leased from a third party. We also lease office space in Scottsdale, Arizona, Minneapolis, Minnesota, and Omaha, Nebraska. The Company also maintains several international regional offices.
Added
We believe that all of our owned and leased properties are in generally good physical condition with the need for only routine repairs and maintenance and periodic capital improvements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company's management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or in the aggregate, will have a material adverse effect on the Company's financial position, results of operations, or cash flows. Item 4. Mine Safety Disclosures None. 44 Table of Contents PART II
Biggest changeThe Company's management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or in the aggregate, will have a material adverse effect on the Company's financial position, results of operations, or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMonth Ending Total Number of Shares Purchased or Redeemed Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that may yet be Purchased Under the Plans or Programs, End of Period January 31, 2023 554,622 $ 118.66 554,622 4,120,542 February 28, 2023 404,509 124.03 404,509 3,716,033 March 31, 2023 382,389 119.44 272,089 3,443,944 April 30, 2023 183,083 122.85 182,949 3,260,995 May 31, 2023 207,507 123.84 206,009 3,054,986 June 30, 2023 228,469 116.03 228,469 2,826,517 July 31, 2023 203,134 122.20 203,134 2,623,383 August 31, 2023 177,635 131.26 177,003 2,446,380 September 30, 2023 177,991 126.38 177,763 2,268,617 October 31, 2023 231,841 118.50 231,783 2,036,834 November 30, 2023 232,744 112.75 232,744 1,804,090 December 31, 2023 42,010 124.37 40,618 1,763,472 Total 3,025,934 $ 120.93 2,911,692 1,763,472 (1) During the year ended December 31, 2023, the Company redeemed 114,242 shares of common stock from employees to satisfy the option price and the minimum tax-withholding requirements related to the exercising of options and the vesting of performance vested restricted stock units and restricted stock grants.
Biggest changeMonth Ending Total Number of Shares Purchased or Redeemed Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that may yet be Purchased Under the Plans or Programs, End of Period January 31, 2024 — $ — — 1,763,472 February 29, 2024 — — — 1,763,472 March 31, 2024 (2) 494,910 122.39 382,374 6,381,098 April 30, 2024 1,124,226 121.00 1,124,226 5,256,872 May 31, 2024 603,342 118.52 601,707 4,655,165 June 30, 2024 222,864 125.82 222,864 4,432,301 July 31, 2024 160,879 122.72 160,879 4,271,422 August 31, 2024 163,456 123.79 162,687 4,108,735 September 30, 2024 128,594 129.97 128,594 3,980,141 October 31, 2024 82,074 133.01 81,570 3,898,571 November 30, 2024 34,301 145.54 34,301 3,864,270 December 31, 2024 92,300 145.64 87,143 3,777,127 Total 3,106,946 $ 122.99 2,986,345 3,777,127 (1) During the year ended December 31, 2024, the Company redeemed 120,601 shares of common stock from employees to satisfy the option price and the minimum tax-withholding requirements related to the exercising of options and the vesting of performance vested restricted stock units and restricted stock grants.
ISSUER PURCHASES OF EQUITY SECURITIES The following table sets forth purchases and redemptions of the Company's common stock made by the Company during the year ended December 31, 2023. Refer to Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Resulted of Operations for more information.
ISSUER PURCHASES OF EQUITY SECURITIES The following table sets forth the purchases and redemptions of the Company's common stock made by the Company during the year ended December 31, 2024. Refer to the Liquidity and Capital Resources section of Item 7. Management's Discussion and Analysis of Financial Condition and Resulted of Operations for more information.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are traded on the New York Stock Exchange under the symbol "CHH." As of February 14, 2024, there were 888 holders of record of the Company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares are traded on the New York Stock Exchange under the symbol "CHH." As of February 11, 2025, there were 841 holders of record of the Company’s common stock.
These redemptions were not part of the Board repurchase authorization. 45 Table of Contents STOCKHOLDER RETURN PERFORMANCE The graph below matches Choice Hotels International, Inc.'s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the NYSE Composite index, the S&P Hotels, Resorts & Cruise Lines index, and the S&P 400 Consumer Discretionary index.
(2) On March 11, 2024, the Company's board of directors approved an increase of 5.0 million shares in the number of shares authorized to be repurchased under its share repurchase program. 35 Table of Contents STOCKHOLDER RETURN PERFORMANCE The graph below matches Choice Hotels International, Inc.'s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the NYSE Composite index, the S&P 500 Hotels, Resorts & Cruise Lines index, and the S&P 400 Consumer Discretionary index.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2018 to December 31, 2023. 12/31/18 6/30/19 12/31/19 6/30/20 12/31/20 6/30/21 12/31/21 6/30/22 12/31/22 6/30/23 12/31/23 Choice Hotels International, Inc. $ 100.00 $ 121.89 $ 145.92 $ 111.74 $ 151.15 $ 168.65 $ 221.72 $ 159.52 $ 161.65 $ 169.07 $ 164.20 NYSE Composite $ 100.00 $ 116.29 $ 125.51 $ 108.73 $ 134.28 $ 154.67 $ 162.04 $ 138.45 $ 146.89 $ 155.57 $ 167.12 S&P Hotels, Resorts & Cruise Lines $ 100.00 $ 123.55 $ 137.05 $ 67.78 $ 101.59 $ 112.73 $ 121.75 $ 82.52 $ 92.23 $ 127.12 $ 153.39 S&P 400 Consumer Discretionary $ 100.00 $ 116.36 $ 126.57 $ 118.99 $ 165.80 $ 207.51 $ 211.70 $ 150.71 $ 167.18 $ 187.39 $ 207.78 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 46 Table of Contents Item 6.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2019 to December 31, 2024. 12/31/19 6/30/20 12/31/20 6/30/21 12/31/21 6/30/22 12/31/22 6/30/23 12/31/23 6/30/24 12/31/24 Choice Hotels International, Inc. $ 100.00 $ 76.58 $ 103.59 $ 115.58 $ 151.95 $ 109.32 $ 110.78 $ 115.87 $ 112.53 $ 118.46 $ 142.00 NYSE Composite $ 100.00 $ 86.64 $ 106.99 $ 123.24 $ 129.11 $ 110.32 $ 117.04 $ 123.96 $ 133.16 $ 144.09 $ 154.19 S&P 500 Hotels, Resorts & Cruise Lines $ 100.00 $ 49.45 $ 74.12 $ 82.26 $ 88.83 $ 60.21 $ 67.29 $ 92.75 $ 111.92 $ 123.92 $ 147.93 S&P 400 Consumer Discretionary $ 100.00 $ 94.02 $ 130.99 $ 163.95 $ 167.26 $ 119.07 $ 132.09 $ 148.05 $ 164.16 $ 170.99 $ 179.62 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 36 Table of Contents Item 6.
Added
These redemptions were not part of the share repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA summary of the operating performance for the Company's domestic franchised hotels, organized by chain scale, is as follows: 2023 2022 Change Average Daily Rate Occupancy RevPAR Average Daily Rate Occupancy RevPAR Average Daily Rate Occupancy RevPAR Upscale & Above (1) $ 151.14 56.7 % $ 85.73 $ 146.24 55.8 % $ 81.65 3.4 % 90 bps 5.0 % Midscale & Upper Midscale (2) 101.14 56.8 % 57.46 100.42 57.4 % 57.64 0.7 % (60) bps (0.3) % Extended Stay (3) 63.50 72.2 % 45.88 61.91 75.6 % 46.81 2.6 % (340) bps (2.0) % Economy (4) 71.71 47.9 % 34.37 71.75 50.1 % 35.94 (0.1) % (220) bps (4.4) % Total (5) $ 96.93 57.0 % $ 55.21 $ 95.13 58.0 % $ 55.16 1.9 % (100) bps 0.1 % (1) Includes Ascend Hotel Collection, Cambria, Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands.
Biggest changeThe decrease in domestic royalty fees was primarily due to a 1.2% domestic system-wide RevPAR decrease as a result of a 0.3% decrease in average daily rates and a 50 basis points decrease in occupancy, all of which were partially offset by a 3.0% increase in open and operating domestic hotel rooms and a system-wide 7 basis points increase in the effective royalty rate from 4.99% for the year ended December 31, 2023 to 5.06% for the year ended December 31, 2024. 40 Table of Contents A summary of the operating performance for the Company's domestic franchised hotels, organized by chain scale, was as follows: 2024 2023 Change Average Daily Rate Occupancy RevPAR Average Daily Rate Occupancy RevPAR Average Daily Rate Occupancy RevPAR Upscale & Above (1) $ 151.91 57.7 % $ 87.67 $ 151.19 56.6 % $ 85.65 0.5 % 110 bps 2.4 % Midscale & Upper Midscale (2) 100.95 55.9 % 56.45 101.12 56.8 % 57.43 (0.2) % (90) bps (1.7) % Extended Stay (3) 64.13 71.2 % 45.66 63.50 72.3 % 45.88 1.0 % (110) bps (0.5) % Economy (4) 72.18 47.1 % 34.00 71.66 47.9 % 34.36 0.7 % (80) bps (1.0) % Total $ 96.67 56.4 % $ 54.54 $ 96.92 56.9 % $ 55.19 (0.3) % (50) bps (1.2) % (1) Includes Ascend Hotel Collection, Cambria, Park Plaza, Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands.
We believe the Company’s cash on hand, available borrowing capacity under the senior unsecured revolving credit facility, cash flows from operations, and access to additional capital in the debt markets is sufficient to meet the expected future operating, investing, and financing needs of the business. Refer to the Liquidity and Capital Resources section of MD&A for additional analysis.
We believe the Company’s cash on hand, available borrowing capacity under the senior unsecured revolving credit facility, cash flows from operations, and access to additional capital in the debt markets is sufficient to meet the expected future operating, investing, and financing needs of the business. Refer to the Liquidity and Capital Resources section in MD&A for additional analysis.
Liquidity and Capital Resources - Historically, the Company has generated significant cash flows from operations . Since our business has not historically required significant reinvestment of capital, we typically utilize cash in ways that management believes provide the greatest returns to our shareholders, which include acquisitions, share repurchases, and dividends.
Liquidity and Capital Resources - Historically, the Company has generated significant cash flows from operations . Since our business has not historically required a significant reinvestment of capital, we typically utilize cash in ways that management believes provide the greatest returns to our shareholders, which include acquisitions, share repurchases, and dividends.
Debt issuance costs incurred in connection with the Restated Credit Agreement are amortized on a straight-line basis, which is not materially different from the effective interest method, and through the loan's maturity date. The amortization of the debt issuance costs is included in interest expense in the consolidated statements of income.
Debt issuance costs incurred in connection with the Restated Credit Agreement are amortized on a straight-line basis, which is not materially different from the effective interest method, through the loan's maturity date. The amortization of the debt issuance costs is included in interest expense in the consolidated statements of income.
The Restated Credit Agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations under the Restated Credit Agreement to be immediately due and payable.
The Restated Credit Agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of the Company under the Restated Credit Agreement to be immediately due and payable.
The Company did not identify any indicators of impairment of long-lived assets in the Hotel Franchising reporting unit during the years ended December 31, 2023, 2022, and 2021, other than impairments on franchise sales commission assets and franchise agreement acquisition cost intangible assets primarily resulting from the termination of franchise agreements from the Choice system or significant delinquencies in construction or invoice payments.
The Company did not identify any indicators of impairment of long-lived assets in the Hotel Franchising reporting unit during the years ended December 31, 2024, 2023, and 2022, other than impairments on franchise sales commission assets and franchise agreement acquisition cost intangible assets primarily resulting from the termination of franchise agreements from the Choice system or significant delinquencies in construction or invoice payments.
Maximizing Financial Returns and Creating Value for Shareholders - Our capital allocation decisions, including capital structure and uses of capital, are intended to maximize our return on invested capital and create value for our shareholders.
Maximizing Financial Returns and Creating Value for Shareholders - Our capital allocation decisions, including our capital structure and the uses of capital, are intended to maximize our return on invested capital and create value for our shareholders.
If the Company redeems the 2020 Senior Notes prior to October 15, 2030 (three months prior to the maturity date) (the “2020 Notes Par Call Date”), the redemption price will be equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, or (b) the sum of the present values of the remaining scheduled principal and interest payments that would have been payable had the 2020 Senior Notes matured on the 2020 Notes Par Call Date, discounted to the redemption date on a semi-annual basis at the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest.
If the Company redeems the 2020 Senior Notes prior to October 15, 2030 (three months prior to the maturity date) (the “2020 Notes Par Call Date”), the redemption price will be equal to the greater of (a) 100% of the principal amount of the notes to be redeemed, or (b) the sum of the present values of the remaining scheduled principal and interest payments that would have been 46 Table of Contents payable had the 2020 Senior Notes matured on the 2020 Notes Par Call Date, discounted to the redemption date on a semi-annual basis at the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest.
The Company's reporting units are determined primarily by the availability of discrete financial information relied upon by the chief operating decision maker ("CODM") to assess performance and make operating segment resource allocation decisions. As of December 31, 2023, the Company's goodwill is allocated to the Hotel Franchising reporting unit.
The Company's reporting units are determined primarily by the availability of discrete financial information relied upon by the chief operating decision maker ("CODM") to assess performance and make operating segment resource allocation decisions. As of December 31, 2024, the Company's goodwill is allocated to the Hotel Franchising reporting unit.
A tax liability may also be recognized for a position that meets the more likely than not threshold, based upon management’s assessment of the position’s probable settlement value. The Company records interest and penalties on unrecognized tax benefits in the provision for income taxes in the consolidated statements of income.
A tax liability may also be recognized for a position that meets the more likely than not threshold, based upon management’s assessment of the position’s probable settlement value. The Company records interest and penalties on unrecognized tax benefits in the provision for income taxes.
MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes. Overview We are primarily a hotel franchisor operating in 50 states, the District of Columbia, and 46 countries and territories.
MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes. Overview We are primarily a hotel franchisor operating in 49 states, the District of Columbia, and 46 countries and territories.
While the Company’s pipeline provides a strong platform for growth, a hotel in the pipeline does not always result in an open and operating hotel due to various macroeconomic factors, including access to liquidity, availability of construction labor, and local governmental approvals and entitlements.
While the pipeline provides a strong platform for growth, a hotel in the pipeline does not always result in an open and operating hotel due to various macroeconomic factors, including access to liquidity, availability of construction labor and materials, and local governmental approvals and entitlements.
If the franchisee remains in the franchise system in good standing over the term specified in the incentive agreement, the Company forgives the incentive ratably.
If the franchisee remains in the franchise system in good standing over the term specified in the incentive agreement, then the Company forgives the incentive ratably.
Our board of directors authorized a program which permits us to offer financing, investment, and guaranty support to qualified franchisees, and allows us to acquire or develop and resell hotels to incentivize franchise development of our brands in strategic markets.
Our board of directors authorized a program which permits us to offer financing, investment, and guaranty support to qualified franchisees, and to acquire or develop and then resell hotels to incentivize franchise development of our brands in strategic markets.
The Company evaluates the potential impairment of its long-lived asset groups annually as of December 31 or earlier when other circumstances indicate that the Company may not be able to recover the carrying value of the asset group. When indicators of impairment are present, then the recoverability is assessed based on undiscounted expected cash flows.
The Company evaluates the potential impairment of its long-lived asset groups annually as of December 31 or earlier when other circumstances indicate that the Company may not be able to recover the 49 Table of Contents carrying value of the asset group. When indicators of impairment are present, then the recoverability is assessed based on undiscounted expected cash flows.
Guest Loyalty Programs Choice Privileges is the Company’s guest loyalty program, which enable members to earn points based on their spending levels with the Company’s franchisees. The points, which the Company accumulates and tracks on the members’ behalf, may be redeemed for free accommodations or other benefits (e.g., gift cards to participating retailers).
Guest Loyalty Program Choice Privileges is the Company’s guest loyalty program, which enables members to earn points based on their spending levels with the Company’s franchisees. The points, which the Company accumulates and tracks on the members’ behalf, may be redeemed for free accommodations or other benefits (e.g., gift cards to participating retailers).
During the year ended December 31, 2023, the Company declared aggregate annual cash dividends of $1.15 per share or approximately $56.5 million in aggregate dividend payments. We expect that cash dividends will continue to be paid in the future, subject to the declaration by our board of directors, future business performance, economic conditions, changes in tax regulations, and other matters.
During the year ended December 31, 2024, the Company declared aggregate annual cash dividends of $1.15 per share or approximately $55.5 million in aggregate dividend payments. We expect that cash dividends will continue to be paid in the future, subject to the declaration by our board of directors, future business performance, economic conditions, changes in tax regulations, and other matters.
The effective income tax rates for the years ended December 31, 2023 and 2022 were higher than the U.S. federal income tax rate of 21.0% primarily due to state income taxes and tax expense related to compensation, partially offset by federal income tax credits.
The effective income tax rates for the years ended December 31, 2024 and 2023 were higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes and tax expense related to compensation, partially offset by federal income tax credits.
As of December 31, 2023, the Company was in compliance with all of its financial covenants under its credit agreements and the Company expects to remain in such compliance.
As of December 31, 2024, the Company was in compliance with all of its financial covenants under its credit agreements and the Company expects to remain in such compliance.
The Company has equity method investments in affiliates related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites branded-hotels in strategic markets. During the years ended December 31, 2023, 2022, and 2021, the Company invested $38.9 million, $3.1 million, and $2.8 million, respectively, to support these efforts.
The Company has equity method investments in affiliates related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites branded-hotels in strategic markets. During the years ended December 31, 2024, 2023, and 2022, the Company invested $52.8 million, $38.9 million, and $3.1 million, respectively, to support these efforts.
In March 2023, the Company's board of directors approved a 21% increase in the quarterly cash dividend to $0.2875 per share, which is the current per share dividend amount that was utilized in each of the dividends that were declared in 2023.
In March 2023, the Company's board of directors approved a 21% increase in the quarterly cash dividend to $0.2875 per share, which is the per share dividend amount that was utilized in each of the dividends that were declared in 2023 and 2024.
Additionally, the legacy Radisson Hotels Americas management agreements include cost reimbursements, primarily related to payroll costs at managed hotels where the Company is the employer. These activities are reflected in other revenues from franchised and managed properties and other expenses from franchised and managed properties.
Additionally, the Company's management agreements include cost reimbursements, primarily related to the payroll costs at the managed hotels where the Company is the employer. These activities are reflected in other revenues from franchised and managed properties and other expenses from franchised and managed properties.
The Company's short-term and long-term liquidity requirements primarily arise from working capital needs, debt obligations, income tax payments, dividend payments, share repurchases, capital expenditures, and investments in growth opportunities. As of December 31, 2023, the Company's primary sources of liquidity consisted of $648.3 million in cash and cash equivalents and available borrowing capacity under the senior unsecured revolving credit facility.
The Company's short-term and long-term liquidity requirements primarily arise from working capital needs, debt obligations, income tax payments, dividend payments, share repurchases, capital expenditures, and investments in growth opportunities. As of December 31, 2024, the Company's primary sources of liquidity consisted of $699.5 million in cash and cash equivalents and available borrowing capacity under the senior unsecured revolving credit facility.
The Restated Credit Agreement requires the Company to pay a fee on the total commitments, calculated on the basis of the actual daily amount of the commitments (regardless of usage) times a percentage per annum ranging from 0.075% to 0.25%, which is dependent on the Company’s senior unsecured long-term debt rating or other circumstances as set forth in the Restated Credit Agreement if the Company’s total leverage ratio is less than 2.5 to 1.0.
The Restated Credit Agreement requires the Company to pay a fee on the total commitments under the Revolver, calculated on the basis of the actual daily amount of the commitments under the Revolver (regardless of usage) times a percentage per annum ranging from 0.075% to 0.25% (depending on the Company’s senior unsecured long-term debt rating or under specific circumstances as set forth in the Restated Credit Agreement if the Company’s total leverage ratio is less than 2.5 to 1.0).
The term loan agreement has financial covenants which require the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0, and a total leverage ratio of not more than 4.5 to 1.0 which may be increased to 5.5 to 1.0 for up to three consecutive fiscal quarters commencing with the fiscal quarter in which certain material acquisitions are consummated.
The term loan agreement had financial covenants which required the Company to maintain a consolidated fixed charge coverage ratio of at least 2.5 to 1.0, and a total leverage ratio of not more than 4.5 to 1.0 which may have been increased to 5.5 to 1.0 for up to three consecutive fiscal quarters commencing with the fiscal quarter in which certain material acquisitions are consummated.
The 2019 Senior Notes will mature on December 1, 2029, with interest to be paid semi-annually on December 1 st and June 1 st .
The 2019 Senior Notes will mature on December 1, 2029, with interest to be paid semi-annually on December 1 st and June 1 st of each year.
Impairment of Long-Lived Assets Impairment of long-lived assets of $3.7 million for the year ended December 31, 2023 was primarily related to a sublease agreement that was signed for the legacy Radisson corporate office space in Minneapolis, Minnesota.
Impairment of Long-Lived Assets Impairment of long-lived assets decreased $3.7 million to zero for the year ended December 31, 2024 from $3.7 million for the year ended December 31, 2023. The decrease was primarily related to a sublease agreement that was signed for the legacy Radisson corporate office space in Minneapolis, Minnesota.
During the years ended December 31, 2023, 2022, and 2021, other revenues from franchised and managed properties exceeded other expenses from franchised and managed properties by $1.8 million, $49.7 million, and $83.9 million, respectively. Refer to the Operations Review section of MD&A for additional analysis of our results of operations.
During the years ended December 31, 2024, 2023, and 2022, other revenues from franchised and managed properties exceeded other expenses from franchised and managed properties by $36.1 million, $1.8 million, and $49.7 million, respectively. Refer to the Operations Review section in MD&A for additional analysis of our results of operations.
During the years ended December 31, 2023, 2022, and 2021, the Company's net franchise agreement acquisition costs were $98.3 million, $54.5 million, and $38.2 million, respectively.
During the years ended December 31, 2024, 2023, and 2022, the Company's net franchise agreement acquisition costs were $112.2 million, $98.3 million, and $54.5 million, respectively.
From time to time, the Company may designate one or more wholly-owned subsidiaries of the Company as additional borrowers under the Restated Credit Agreement, subject to the consent of the lenders and certain customary conditions. There are no subsidiary guarantors under the Restated Credit Agreement .
The Company may from time to time designate one or more wholly-owned subsidiaries of the Company as additional borrowers under the Restated Credit Agreement, subject to the consent of the lenders and certain customary conditions.
The Restated Credit Agreement requires that the Company and its restricted subsidiaries comply with various covenants, including restrictions on liens, incurring indebtedness, making investments, and effecting mergers and/or asset sales.
The Restated Credit Agreement requires that the Company and its restricted subsidiaries comply with various covenants, including with respect to restrictions on liens, incurring indebtedness, making dividends and stock repurchases, making investments and effecting mergers and/or asset sales.
As of December 31, 2023, the Company maintained a total leverage ratio of 2.57x, including outstanding debt of approximately $227 million on the senior unsecured revolving credit facility. The Company was in compliance with all financial covenants under the Restated Credit Agreement.
As of December 31, 2024, the Company maintained a total leverage ratio of 2.76x, including outstanding debt of approximately $336 million on the senior unsecured revolving credit facility. The Company was in compliance with all financial covenants under the Restated Credit Agreement.
Management's Discussion and Analysis of Financial Condition and Results of Operations for more information regarding our capital returns to shareholders. In addition to our hotel franchising business, we have also developed or acquired seven Cambria and three legacy Radisson Hotels Americas open and operating hotels.
Management's Discussion and Analysis of Financial Condition and Results of Operations for more information regarding our capital returns to shareholders. In addition to our hotel franchising business, we have also developed or acquired 12 open and operating hotels.
The amount of the loyalty program fees in excess of the guest loyalty program point liability represents current and non-current deferred revenue, which is recognized to revenue as the points are redeemed including an estimate of the future forfeitures (“breakage”).
The amount of the loyalty program fees in excess of the guest loyalty program point liability represents current and non-current deferred revenue, which is recognized to revenue as the points are redeemed including an estimate of the future forfeitures (“breakage”). The anticipated redemption pattern of the points is the basis for the current and non-current designation of each liability.
In accordance with these agreements, the governmental entities agreed to advance approximately $4.4 million to the Company to offset a portion of the corporate headquarters relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees within the jurisdictions. These advances bear interest at a rate of 3% per annum.
In accordance with these agreements, the governmental entities agreed to advance approximately $4.4 million to the Company to offset a portion of the corporate headquarters relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees within the jurisdictions.
The $4.4 million of advances have been included in debt in the consolidated balance sheets. Upon the expiration of the Company's previous ten-year corporate headquarters lease agreement in 2023, the Company concluded that it had achieved the performance conditions over the entire term of the agreement and therefore, the Company is not required to repay the advances.
The $4.4 million of advances were previously recognized as in debt in the consolidated balance sheets. 47 Table of Contents Upon the expiration of the Company's previous ten-year corporate headquarters lease agreement in 2023, the Company concluded that it had achieved the performance conditions over the entire term of the agreement and therefore, the Company is not required to repay the advances.
Owned Hotels The Company's revenues, net of operating expenses, from the owned hotels increased $4.1 million from $22.0 million for the year ended December 31, 2022 to $26.1 million for the year ended December 31, 2023.
Owned Hotels The Company's revenues, net of operating expenses, from the owned hotels increased $4.1 million to $30.3 million for the year ended December 31, 2024 from $26.1 million for the year ended December 31, 2023.
The Company performed a qualitative impairment analysis for the Hotel Franchising reporting unit and concluded that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount.
The Company performed a qualitative impairment analysis for the Hotel Franchising reporting unit and concluded that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount. As such, no impairment was recognized and a quantitative test was not required.
We manage costs by setting performance goals for our hotel management companies and optimizing distribution channels. The Company also allocates capital to financing, investment and guaranty support to incentivize franchise development for certain brands in strategic markets.
We manage costs by setting performance goals for our hotel management companies and optimizing distribution channels. The Company also allocates capital to financing, investment and guaranty support to incentivize franchise development for certain brands in strategic markets. The timing and amount of these investments are subject to market and other conditions.
During the years ended December 31, 2023, 2022, and 2021, the activity from other revenues from franchised and managed properties 54 Table of Contents exceeded the activity of other expenses from franchised and managed properties by $1.8 million, $49.7 million, and $83.9 million, respectively.
During the years ended December 31, 2024, 2023, and 2022, the activity from other revenues from franchised and managed properties exceeded the activity of other expenses from franchised and managed properties by $36.1 million, $1.8 million, and $49.7 million, respectively.
In total through December 31, 2023, the Company repurchased 58.3 million shares of its common stock (including 33.0 million prior to the two-for-one stock split effected in October 2005) under the program at a total cost of $2.3 billion.
In total, the Company has repurchased 61.3 million shares of its common stock (including 33.0 million shares prior to the two-for-one stock split effected in October 2005) under the share repurchase program at a total cost of $2.6 billion.
The timing and amount of these investments are subject to market and other conditions. 48 Table of Contents We believe our growth investments and strategic priorities, when properly implemented, will enhance our profitability, maximize our financial returns, and continue to generate value for our shareholders. The ultimate measure of our success will be reflected in the items below.
We believe our growth investments and strategic priorities, when properly implemented, will enhance our profitability, maximize our financial returns, and continue to generate value for our shareholders. The ultimate measure of our success will be reflected in the items below.
(2) Includes the Country Inn & Suites and Park Plaza brands. (3) Includes the Clarion family of brand extensions, including Clarion and Clarion Pointe. (4) Includes the Radisson, Radisson Blu, Radisson Individuals, and Radisson Red brands. International royalty fees increased to $28.9 million for the year ended December 31, 2023 from $20.0 million for the year ended December 31, 2022.
(2) Includes the Clarion family of brand extensions, including Clarion and Clarion Pointe. (3) Includes the Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands. International royalty fees increased $0.9 million to $29.8 million for the year ended December 31, 2024 from $28.9 million for the year ended December 31, 2023.
During the year ended December 31, 2023, the Company purchased $112.4 million of equity securities in Wyndham in conjunction with its proposed acquisition, and made no dispositions. There were no purchases or dispositions of equity securities during the years ended December 31, 2022 and 2021.
There were no purchases of equity securities during the year ended December 31, 2024. During the year ended December 31, 2023, the Company purchased $112.4 million of equity securities in conjunction with the Wyndham acquisition pursuit and there were no sales of equity securities. There were no purchases or sales of equity securities during the year ended December 31, 2022.
We are currently engaged in these financial support activities to encourage acceleration of the growth of our Cambria Hotels and Everhome Suites brands. With respect to these activities, the Company had approximately $467.8 million in financial support of the Cambria Hotels and Everhome Suites brands reflected in the consolidated balance sheet as of December 31, 2023.
We primarily engage in these financial support activities to encourage acceleration of the growth of our Cambria Hotels and Everhome Suites brands. With respect to these activities, the Company had approximately $605.4 million in financial support of the Cambria Hotels and Everhome Suites brands reflected in the consolidated balance sheet as of December 31, 2024.
As long as the Company maintains an Investment Grade Rating, as defined in the term loan agreement, then the Company will not need to comply with the consolidated fixed charge coverage ratio covenant.
So long as the 45 Table of Contents Company maintains an Investment Grade Rating, as defined in the Restated Credit Agreement, then the Company will not need to comply with the consolidated fixed charge coverage ratio covenant.
In accordance with the Restated Credit Agreement and the 2023 Term Loan, the Company may not declare or make any dividend payments if there is an existing event of default or if the dividend payment would create an event of default. Share Repurchases & Redemptions In 1998, we instituted a share repurchase program.
In accordance with the Restated Credit Agreement, the Company may not declare or make any dividend payments if there is an existing event of default or if the dividend payment would create an event of default. Share Repurchases & Redemptions In 1998, we instituted a share repurchase program. Treasury stock activity is recorded at cost in the consolidated balance sheets.
Considering the effect of the two-for-one stock split, 58 Table of Contents the Company has repurchased 91.3 million shares at an average price of $24.88 per share. As of December 31, 2023, the Company had 1.8 million shares remaining under the current share repurchase authorization.
Considering the effect of the two-for-one stock split, the Company has repurchased 94.3 million shares at an average price of $27.98 per share. As of December 31, 2024, the Company had 3.8 million shares remaining under the current share repurchase authorization.
Consequently, the Company did not record any additional deferred taxes for this item in 2023. With respect to uncertain income tax positions, a tax liability is recorded in full when management determines that the position does not meet the more likely than not threshold of being sustained on examination.
With respect to uncertain income tax positions, a tax liability is recorded in full when management determines that the position does not meet the more likely than not threshold of being sustained on examination.
In addition, during the years ended December 31, 2023 and 2021, the Company received proceeds from the sale of certain affiliates totaling $0.9 million and $15.6 million, respectively. The Company received no distributions from affiliates during the year ended December 31, 2022.
In addition, during the years ended December 31, 2024 and 2023, the Company received distributions from these affiliates totaling $15.9 million and $0.9 million, respectively. The Company received no distributions from affiliates during the year ended December 31, 2022. During the year ended December 31, 2024, the Company received proceeds of $108.1 million from the sales of equity securities.
The Company's franchise agreements require the payment of marketing and reservation system fees to be used by the Company for the expenses associated with providing franchise services such as national marketing, media advertising, and central reservation systems. The Company is obligated to expend the marketing and reservation system fees it collects from its franchisees in accordance with the franchise agreements.
The Company's franchise 38 Table of Contents agreements require the payment of marketing and reservation system fees to be used by the Company for the expenses associated with providing franchise services such as national marketing, media advertising, and central reservation systems.
The Company used the net proceeds of the 2020 Senior Notes, after deducting underwriting discounts, commissions and offering expenses, to repay in full the $250 million term loan entered in April 2020 and to fund the purchase price of the 2012 Senior Notes tendered and accepted by the Company for the purchase pursuant to the tender offer (discussed further below under "Senior Unsecured Notes Due 2022").
The Company used the net proceeds of the 2020 Senior Notes, after deducting underwriting discounts, commissions, and offering expenses, to repay in full the $250 million term loan entered in April 2020 and to fund the purchase price of the 2012 Senior Notes.
Debt Restated Senior Unsecured Credit Facility On August 20, 2018, the Company entered into the Restated Senior Unsecured Credit Agreement (the "Restated Credit Agreement"), which amended and restated the Company’s existing senior unsecured revolving credit agreement dated July 21, 2015.
Debt Senior Unsecured Revolving Credit Facility On June 28, 2024, the Company entered into a Second Amended and Restated Senior Unsecured Credit Agreement (the "Restated Credit Agreement"), which amended and restated the Company’s existing amended and restated senior unsecured credit agreement dated August 20, 2018 (the “Former Credit Agreement”).
The Company's domestic operations are conducted through direct franchising relationships, the ownership of seven Cambria and three legacy Radisson Hotels Americas open and operating hotels, and the management of 14 hotels (inclusive of four owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.
The hotel franchising business represents the Company's primary operations. The Company's domestic operations are conducted through direct franchising relationships, the ownership of 12 open and operating hotels, and the management of 13 hotels (inclusive of four owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships.
(2) Includes Clarion, Comfort Inn, Country Inn & Suites, Park Inn, Park Plaza, Quality, and Sleep Inn brands. (3) Includes Everhome Suites, Mainstay Suites, Suburban Studios, and WoodSpring Suites brands. (4) Includes Econo Lodge and Rodeway brands. (5) Radisson Hotels Americas was acquired on August 11, 2022.
(2) Includes Clarion, Comfort Inn, Comfort Suites, Country Inn & Suites, Park Inn, Quality Inn, and Sleep Inn brands. (3) Includes Everhome Suites, Mainstay Suites, Suburban Studios, and WoodSpring Suites brands. (4) Includes Econo Lodge and Rodeway brands.
Our capital allocation decisions, including capital structure and our uses of capital, are intended to maximize our return on invested capital and create value for our shareholders, while maintaining a strong balance sheet and financial flexibility.
Liquidity and Capital Resources Our Company historically generates strong and predictable operating cash flows primarily from our hotel franchising operations. Our capital allocation decisions, including capital structure and our uses of capital, are intended to maximize our return on invested capital and create value for our shareholders, while maintaining a strong balance sheet and financial flexibility.
During the years ended December 31, 2023, 2022, and 2021, the Company issued a total of $4.3 million, $5.6 million, and $20.1 million of notes receivable loans, respectively, and received repayments totaling $10.9 million, $1.0 million, and $0.2 million on the notes receivable loans, respectively.
During the years ended December 31, 2024, 2023, and 2022, the Company issued a total of $38.0 million, $4.3 million, and $5.6 million of notes receivable loans, respectively, and received repayments totaling $32.1 million, $10.9 million, and $1.0 million on the notes receivable loans, respectively. 44 Table of Contents The Company did not sell any businesses or assets during the years ended December 31, 2024 and 2023.
The long-lived asset group associated with the office space was determined to be impaired due to the carrying value exceeding its fair value, which resulted in the recognition of a $3.4 million impairment loss. Gain on Sale of Business and Assets, Net Gain on sale of business and assets, net, was $16.2 million for the year ended December 31, 2022.
The long-lived asset group associated with the office space was determined to be impaired due to the carrying value exceeding its fair value, which resulted in the recognition of a $3.4 million impairment loss in 2023. The Company did not recognize any impairments of long-lived assets during the year ended December 31, 2024.
During the year ended December 31, 2023, the Company redeemed 114.2 thousand shares of common stock at a total cost of $14.2 million from employees to satisfy the option exercise price and statutory minimum tax-withholding requirements related to the exercising of stock options and the vesting of PVRSUs and restricted stock grants. These redemptions were outside the share repurchase program.
During the year ended December 31, 2024, the Company redeemed 0.1 million shares of common stock at a total cost of $12.4 million from employees to satisfy the option exercise price and the statutory minimum tax-withholding requirements related to the exercising of stock options and the vesting of performance vested restricted stock units ("PVRSUs") and restricted stock grants.
At December 31, 2023, we had 7,527 hotels with 632,986 rooms open and operating, and 1,032 hotels with 105,062 rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding master development agreements (collectively, "pipeline") in our global system.
As of December 31, 2024, we had 7,586 hotels with 653,810 rooms open and operating, and 964 hotels with 97,325 rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding master development agreements (collectively, "pipeline") in our global system.
The Company utilized the net proceeds from this offering, after deducting underwriting discounts, commissions and other offering expenses, together with borrowings under the Company's senior unsecured senior credit facility, to pay a special cash dividend to shareholders that totaled approximately $600.7 million on August 23, 2012. 57 Table of Contents On July 9, 2020, the Company commenced a tender offer (the "Tender Offer") to purchase an aggregate principal amount of up to $160.0 million of the 2012 Senior Notes, subject to increase or decrease.
The Company utilized the net proceeds from this offering, after deducting underwriting discounts, commissions, and other offering expenses, together with borrowings under the Company's senior unsecured senior credit facility, to pay a special cash dividend to shareholders that totaled approximately $600.7 million on August 23, 2012.
Our brand names include Comfort Inn®, Comfort Suites®, Quality®, Clarion®, Clarion Pointe™, Ascend Hotel Collection®, Sleep Inn®, Econo Lodge®, Rodeway Inn®, MainStay Suites®, Suburban Studios™, WoodSpring Suites®, Everhome Suites®, and Cambria® Hotels (collectively, the "legacy Choice brands").
Our brand names include Radisson Blu®, Park Plaza®, Cambria® Hotels, Ascend Hotel Collection®, Radisson RED®, Radisson Individuals®, Radisson®, Radisson Collection®, Clarion®, Clarion Pointe™, Comfort Inn®, Comfort Suites®, Country Inn & Suites® by Radisson, Radisson Inn & Suites SM , Sleep Inn®, Quality®, Park Inn by Radisson®, Everhome Suites®, WoodSpring Suites®, MainStay Suites®, Suburban Studios™, Econo Lodge®, and Rodeway Inn®.
Additionally, at the option of the holders of the 2019 Senior Notes, the Company may be required to repurchase all or a portion of the 2019 Senior Notes upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
Additionally, at the option of the holders of the 2019 Senior Notes, the Company may be required to repurchase all or a portion of the 2019 Senior Notes upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase. 2012 Senior Unsecured Notes Due 2022 On June 27, 2012, the Company issued unsecured senior notes with a principal amount of $400 million (the "2012 Senior Notes") at par, bearing a coupon of 5.75% with an effective rate of 6.00%.
Economic Development Loans The Company entered into economic development agreements with various governmental entities in conjunction with the relocation of its corporate headquarters in April 2013.
The outstanding principal amount of $216.6 million was re-paid on the maturity date. Economic Development Loans The Company entered into economic development agreements with various governmental entities in conjunction with the relocation of its corporate headquarters in April 2013.
Inflation - We believe that moderate increases in the rate of inflation will generally result in comparable or greater increases in hotel room rates. We continue to monitor future inflation trends along with the corresponding impacts to our business.
Inflation - We believe that moderate increases in the rate of inflation will generally result in comparable or greater increases in hotel room rates.
Refer to Choice Hotels International, Inc.'s 2022 10-K Annual Report, specifically the section "Comparison of 2022 and 2021 Operating Results" of Item 7.
Refer to Choice Hotels International, Inc.'s 2023 10-K Annual Report, specifically the section "Comparison of 2023 and 2022 Operating Results" of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for the details regarding the changes between 2023 and 2022.
Treasury stock activity is recorded at cost in the consolidated balance sheets. During the year ended December 31, 2023, the Company repurchased 2.9 million shares of its common stock under the share repurchase program at a total cost, including accrued excise tax, of $351.7 million.
During the year ended December 31, 2024, the Company repurchased 3.0 million shares of its common stock under the share repurchase program at a total cost, including accrued excise tax, of $369.7 million.
Additionally, at the option of the holders of the 2020 Senior Notes, the Company may be required to repurchase all or a portion of the 2020 Senior Notes upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase.
Additionally, at the option of the holders of the 2020 Senior Notes, the Company may be required to repurchase all or a portion of the 2020 Senior Notes upon the occurrence of a change of control event at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest, to the date of repurchase. 2019 Senior Unsecured Notes Due 2029 On November 27, 2019, the Company issued unsecured senior notes with a principal amount of $400 million (the "2019 Senior Notes") at a discount of $2.4 million, bearing a coupon of 3.70% with an effective rate of 3.88%.
Due to the seasonal nature of the Company’s hotel franchising and management business and the multi-year investments required to support franchise operations, quarterly and/or annual deficits may be generated.
As a result, the Company generally excludes the other revenues and other expenses from franchised and managed properties from the analysis of its operations. Due to the seasonal nature of the Company’s hotel franchising and management business and the multi-year investments required to support the franchise operations, quarterly and/or annual surpluses or deficits may be generated.
The primary performance obligations are brand intellectual property and material rights for free or discounted goods or services to the hotel guests. The allocation of fixed and variable consideration to the performance obligations is based on the standalone selling price, which is estimated based on the market and income methods which contain significant judgments.
The allocation of fixed and variable consideration to the performance obligations is based on the standalone selling price, which is estimated based on the market and income methods which contain significant judgments.
The Tender Offer settled on July 24, 2020 for $197.8 million, which included an early tender premium, settlement fees, and accrued interest paid. The 2012 Senior Notes matured on July 1, 2022. The outstanding principal amount of $216.6 million was re-paid on the maturity date.
On July 23, 2020, the Company amended the Tender Offer by increasing the aggregate principal amount from $180.0 million to $183.4 million. The Tender Offer settled on July 24, 2020 for $197.8 million, which included an early tender premium, settlement fees, and accrued interest paid. The 2012 Senior Notes matured on July 1, 2022.
Selling, General and Administrative Selling, general and administrative expenses, which includes the cost to operate the business, increased $48.4 million from $167.7 million for the year ended December 31, 2022 to $216.1 million for the year ended December 31, 2023.
Selling, General and Administrative Selling, general and administrative expenses, which includes the cost to operate the business, increased $3.8 million to $219.9 million for the year ended December 31, 2024 from $216.1 million for the year ended December 31, 2023. The increase in selling, general and administrative expenses reflects general increases to operate the franchising business.
Additional information regarding the Company’s unrecognized tax benefits is provided in Note 15 to the consolidated financial Statement s . New Accounting Standards Refer to the "Recently Adopted & Issued Accounting Standards" section of Note 1 to the consolidated financial statements for information related to our adoption and assessment of new accounting standards.
New Accounting Standards Refer to the "Recently Adopted & Issued Accounting Standards" section of Note 1 to the consolidated financial statements for information related to our adoption and assessment of new accounting standards. 50 Table of Contents
The agreements typically provide for use of the Company’s marks, limited access to the Company’s distribution channels, and the sale of Choice Privileges points, in exchange for the payment of fees which primarily comprises variable consideration each month. Choice Privileges members can earn points through participation in the third-party partner’s program. The partner agreements include multiple performance obligations.
The Company maintains various agreements with third-party partners, including the co-branding of the Choice Privileges credit card. The agreements typically provide for use of the Company’s marks, limited access to the Company’s distribution channels, and the sale of Choice Privileges points, in exchange for the payment of fees which primarily comprises variable consideration each month.
The Tender Offer was subsequently upsized to an aggregate principal amount of up to $180.0 million of the 2012 Senior Notes. On July 23, 2020, the Company amended the Tender Offer by increasing the aggregate principal amount from $180.0 million to $183.4 million.
On July 9, 2020, the Company commenced a tender offer (the "Tender Offer") to purchase an aggregate principal amount of up to $160.0 million of the 2012 Senior Notes, subject to increase or decrease. The Tender Offer was subsequently upsized to an aggregate principal amount of up to $180.0 million of the 2012 Senior Notes.
The Restated Credit Agreement allows for up to $35 million of borrowings that may be used for alternative 55 Table of Contents currency loans and up to $25 million of borrowings that may be used for swingline loans.
The Restated Credit Agreement also provides that up to $50 million of borrowings under the Revolver may be used for alternative currency loans, up to $10 million of capacity under the Revolver may be used for the issuance of letters of credit, and up to $25 million of borrowings under the Revolver may be used for swingline loans.
The Company may elect to have the 2023 Term Loan bear interest at a rate equal to (i) SOFR (subject to a credit spread adjustment of 0.10% and a 0.00% floor) plus a margin ranging from 125 to 175 basis points, or (ii) a base rate plus a margin ranging from 25 to 75 basis points.
The Restated Credit Agreement allows the Company to elect to have the Revolver bear interest at a rate equal to (i) the secured overnight financing rate (subject to a credit spread adjustment of 0.10% and a 0.00% floor) plus a margin ranging from 0.90% to 1.50% or (ii) a base rate plus a margin ranging from 0.00% to 0.50%.
Our operating cash flows decreased $70.5 million primarily due to a decrease in the net surplus generated from our other franchised and managed properties activities, an increase in franchise agreement acquisition cost payments, an increase in business combination, diligence and transition costs associated with the integration of the Radisson Hotels Americas business and acquisition pursuits, an increase in selling, general and administrative expenses, and an increase in borrowing costs, all of which were partially offset by the timing of working capital items.
Our operating cash flows increased $22.8 million primarily due to the timing of working capital items and a decrease in business combination, diligence and transition costs associated with the timing of the termination of the Wyndham acquisition pursuit during the first quarter of 2024 and the due diligence and transition costs related to the integration of the Radisson Hotels Americas business in 2023, all of which were partially offset by an increase in franchise agreement acquisition cost payments, an increase in borrowing costs, and an increase in deferred income taxes.
During the year ended December 31, 2023, the Company received proceeds of $6.3 million from stock options exercised by employees.
These redemptions were outside the share repurchase program. During the year ended December 31, 2024, the Company received proceeds of $17.5 million from stock options exercised by employees.
The increase in international royalty fees is attributable to higher royalty fees for the legacy Radisson brands, improvements in RevPAR performance, and an increase in the international franchise system size by 31 hotels (from 1,191 hotels as of December 31, 2022 to 1,222 hotels as of December 31, 2023), and an increase of 2,626 rooms (from 133,395 rooms as of December 31, 2022 to 136,021 rooms as of December 31, 2023). 51 Table of Contents Initial Franchise Fees Initial franchise fees are generally paid to the Company when a franchisee executes a franchise agreement for a new property entering the franchise system, or an existing franchised property at the time of an ownership change (referred to as a relicensing), or a franchise agreement renewal; however, the recognition of revenue is deferred until the hotel associated with the franchise agreement is open or the franchise agreement is terminated.
Initial Franchise Fees Initial franchise fees are generally paid to the Company when a franchisee executes a franchise agreement for a new property entering the franchise system, or an existing franchised property at the time of an ownership change (referred to as a relicensing), or a franchise agreement renewal; however, the recognition of revenue is deferred until the hotel associated with the franchise agreement is open or the franchise agreement is terminated.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical change of 10% in the Company’s effective interest rate from the December 31, 2023 levels would increase or decrease annual interest expense by $4.9 million. The Company expects to refinance its fixed and variable long-term debt obligations prior to their scheduled maturities. The Company does not presently have any derivative financial instruments. 61 Table of Contents
Biggest changeA hypothetical change of 10% in the Company’s effective interest rate from the December 31, 2024 levels would increase or decrease annual interest expense by $2.1 million. The Company expects to refinance its fixed and variable long-term debt obligations prior to their scheduled maturities. The Company does not currently have any derivative financial instruments. 51 Table of Contents
We are also subject to risk from changes in debt and equity prices from our non-qualified retirement savings plan investments in debt securities and common stock, which have a carrying value of $41.6 million as of December 31, 2023 and are accounted for as trading securities.
We are also subject to risk from changes in debt and equity prices from our non-qualified retirement savings plan investments in debt securities and common stock, which have a carrying value of $49.3 million as of December 31, 2024 and are accounted for as trading securities.
The Company will continue to monitor the exposure in these areas and make the appropriate adjustments as market conditions dictate. As of December 31, 2023, the Company had $728.5 million of variable interest rate debt instruments outstanding at an effective interest rate of 6.74%.
The Company will continue to monitor the exposure in these areas and make the appropriate adjustments as market conditions dictate. As of December 31, 2024, the Company had $340.0 million of variable interest rate debt instruments outstanding at an effective interest rate of 6.10%.

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