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What changed in CHOICE HOTELS INTERNATIONAL INC /DE's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CHOICE HOTELS INTERNATIONAL INC /DE's 2024 and 2025 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 2025 report.

+337 added−342 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-20)

Top changes in CHOICE HOTELS INTERNATIONAL INC /DE's 2025 10-K

337 paragraphs added · 342 removed · 266 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

119 edited+25 added−29 removed143 unchanged
Biggest changeThe 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.
Biggest changeThe following table presents the key statistics related to our U.S. franchise system for the five years ended December 31, 2025: 2021 2022 2023 2024 2025 Number of properties, end of period 5,913 6,296 6,305 6,328 6,187 Number of rooms, end of period 458,030 494,409 496,965 511,739 496,979 Royalty fees (in thousands) (1) $ 391,336 $ 443,313 $ 458,077 $ 454,723 $ 439,840 Average royalty rate (2) 5.01 % 4.93 % 4.99 % 5.06 % 5.14 % Average occupancy percentage (2), (3) 57.2 % 58.0 % 56.9 % 56.4 % 55.6 % Average daily room rate (ADR) (2), (3) $ 84.06 $ 95.13 $ 96.92 $ 96.67 $ 95.05 Revenue per available room (RevPAR) (2), (3) $ 48.10 $ 55.16 $ 55.19 $ 54.54 $ 52.85 (1) For the year ended December 31, 2022, the legacy Radisson brands are included for the period from the August 11, 2022 acquisition date through December 31, 2022.
Accordingly, over the long-term, the continued growth of our franchise business should enable us to realize the benefits from the operating leverage in place and improve our operating results. We are required by our franchise agreements to use the marketing and reservation system fees we collect for system-wide marketing and reservation system activities.
Accordingly, over the long-term, the continued growth of our franchise business should enable us to realize the benefits from the operating leverage in place and improve our operating results. We are required by our franchise agreements to use the marketing and reservation fees we collect for system-wide marketing and reservation activities.
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 attempt to improve our revenues and overall profitability by providing a variety of products and services designed to increase business delivery 4 Table of Contents and/or reduce operating and development costs.
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.
Service Marks and Other Intellectual Property The service marks Ascend 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.
Certain of our brands, such as Quality, Clarion Pointe, Ascend Hotel Collection, Econo Lodge, and Radisson, offer conversion opportunities during both industry contraction and growth cycles to independent operators and non-Choice affiliated hotels who desire to affiliate with our brands and take advantage of the services we have to offer.
Certain of our brands, such as Quality, Clarion Pointe, Ascend Collection, Econo Lodge, and Radisson, offer conversion opportunities during both industry contraction and growth cycles to independent operators and non-Choice affiliated hotels who desire to affiliate with our brands and take advantage of the services we have to offer.
As a hotel franchisor, we derive our revenue primarily from various franchise fees, which consist primarily of an initial fee and ongoing royalty, marketing and reservation system fees that are typically based on a percentage of the franchised hotel’s gross room revenues.
As a hotel franchisor, we derive our revenue primarily from various franchise fees, which consist primarily of an initial fee and ongoing royalty, marketing, and reservation fees that are typically based on a percentage of the franchised hotel’s gross room revenues.
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.
The marketing and reservation 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 royalty rates in our franchise contracts.
In addition, our operating results can also be improved through our company-wide efforts related to improving property-level performance and expanding the number of partnerships with travel-related and other companies with products and services that appeal to our guests.
In addition, our operating results can also be improved through our company-wide efforts related to improving property-level performance and expanding the number of partnerships with travel-related and other companies with products and services that appeal to our franchisees and guests.
Economics of the Franchising Business - The fee and cost structure of our business provides opportunities for us to improve operating results by increasing the number of franchised hotel rooms, improving RevPAR performance, and increasing the effective royalty rates in our franchise contracts.
Economics of the Franchising Business - The fee and cost structure of our business provides opportunities for us to improve operating results by increasing the number of franchised hotel rooms, improving RevPAR performance, and increasing the royalty rates in our franchise contracts.
Franchise fees usually have three primary components: an affiliation fee, a royalty fee, and a marketing and reservation system fee. Royalty fees typically range from 5% to 6% of gross room revenues, and marketing and reservation system fees typically range from 3% to 4% of gross room revenues.
Franchise fees usually have three primary components: an affiliation fee, a royalty fee, and a marketing and reservation fee. Royalty fees typically range from 5% to 6% of gross room revenues, and marketing and reservation fees typically range from 3% to 4% of gross room revenues.
During the negotiation process with a prospective franchisee, the Company may discount the standard royalty fee and/or the marketing and reservation system fee during the initial years of the franchise agreement as a franchise acquisition strategy.
During the negotiation process with a prospective franchisee, the Company may discount the standard royalty fee and/or the marketing and reservation fee during the initial years of the franchise agreement as a franchise acquisition strategy.
Under a typical franchise agreement, the hotel owner pays the franchisor an initial fee, a percentage-of-revenue royalty fee, and a marketing & reservation systems fee. A franchisor’s revenues are dependent on the number of rooms in its system and the top-line revenue performance of those hotels. Earnings drivers include RevPAR increases, unit growth, and effective royalty rate improvement.
Under a typical franchise agreement, the hotel owner pays the franchisor an initial fee, a percentage-of-revenue royalty fee, and a marketing & reservation fee. A franchisor’s revenues are dependent on the number of rooms in its system and the top-line revenue performance of those hotels. Earnings drivers include RevPAR increases, unit growth, and royalty rate improvement.
The primary factors that affect the Company’s results are: the number and relative mix of hotel rooms in the various hotel lodging price categories, growth in the number of hotel rooms owned and under franchise, occupancy and room rates achieved by the hotels in our system, the effective royalty rate achieved in our franchise agreements, the level of franchise sales and relicensing activity, the number of qualified vendor arrangements and partnerships and the level of engagement with these partners by our franchisees and guests, and our ability to manage costs.
The primary factors that affect the Company’s results are: the number and relative mix of hotel rooms in the various hotel lodging price categories, growth in the number of hotel rooms owned and under franchise, occupancy and room rates achieved by the hotels in our system, the average royalty rates achieved in our franchise agreements, the level of franchise sales and relicensing activity, the number of qualified vendor arrangements and partnerships and the level of engagement with these partners by our franchisees and guests, and our ability to manage costs.
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.
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.
We believe that our business is well positioned in the lodging industry since we generally benefit from both increases in RevPAR and unit growth from new hotel construction or conversion of existing hotel assets into our system. In addition, improving business delivery to our franchisees should allow us to improve the effective royalty rate in our franchise contracts.
We believe that our business is well positioned in the lodging industry since we generally benefit from both increases in RevPAR and unit growth from new hotel construction or conversion of existing hotel assets into our system. In addition, improving business delivery to our franchisees should allow us to improve the royalty rates in our franchise contracts.
Our central reservations system is a critical technology used to deliver guests to our franchisees through multiple channels, including our call centers, proprietary web and mobile sites, global distribution systems (e.g., SABRE, Amadeus), online travel agents ("OTAs") (e.g., Expedia, Booking.com) and internet referral or booking services (e.g., Kayak, Trip Advisor).
Our central reservations system is a critical technology used to deliver guests to our franchisees through multiple channels, including our call centers, proprietary web and mobile sites, global distribution systems (e.g., SABRE, Amadeus), online travel agents ("OTAs") (e.g., Expedia, Booking.com), and internet referral or booking services (e.g., Kayak, Tripadvisor).
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.
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.
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.
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 10 Cambria, four Everhome Suites, one Radisson RED, one Radisson Blu, and one Country Inn & Suites open and operating hotels.
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.
Additionally, royalty fees include intersegment royalties assessed to the Company's owned hotels of $2.8 million for 2025, $2.4 million for 2024, $2.0 million for 2023, $2.2 million for 2022, and $1.6 million for 2021.
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.
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.
Our strategy is to maximize the effectiveness of these activities in delivering both leisure and business travelers to Choice-branded hotels. The Company intends to continue to increase awareness of its brands through its national marketing campaigns and its loyalty program promotions.
Our strategy is to maximize the effectiveness of these activities in delivering both leisure and business travelers to Choice-branded hotels. The Company intends to continue to increase awareness of its brands through its national marketing campaigns and continual enhancements to its loyalty program, including promotions.
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.
As a franchisor with 7,575 opened hotels, including ownership of 17 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.
Our Company focuses on the following strategic priorities: Profitable Growth - Our success is dependent on improving the performance of our hotels, increasing the size of our system by selling additional hotel franchises with a focus on revenue-intense chain scales and markets, improving our effective royalty rate, expanding our qualified vendor and partnership platform programs and maintaining a disciplined cost structure.
Our Company focuses on the following strategic priorities: Profitable Growth - Our success is dependent on improving the performance of our hotels, increasing the size of our system by selling additional hotel franchises with a focus on revenue-intense chain scales and markets, improving our royalty rates, expanding our qualified vendor and partnership programs and maintaining a disciplined cost structure.
Item 1. Business Overview We are primarily a hotel franchisor operating in 49 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 50 countries and territories.
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. Our direct real estate exposure is currently limited to activity in the United States, including our owned hotel assets open and under development.
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. Our direct real estate exposure is currently limited to activity in the U.S., including our owned hotel assets open and under development.
We also employ home-based sales personnel geographically located across the United States using personal sales calls, telemarketing, and other techniques to target specific customer groups, such as potential corporate clients in areas where our franchised hotels are located, the group travel market, and meeting planners.
We also employ home-based sales personnel geographically located across the U.S. using personal sales calls, telemarketing, and other techniques to target specific customer groups, such as potential corporate clients in areas where our franchised hotels are located, the group travel market, and meeting planners.
Master franchising relationships are governed by master franchising agreements which generally provide the master franchisee with the right to use our brands and sub-license the use of our brands in a specific geographic region, usually for a fee. As a result of our master franchise relationships and international market conditions, our revenues are primarily concentrated in the United States.
Master franchising relationships are governed by master franchising agreements which generally provide the master franchisee with the right to use our brands and sub-license the use of our brands in a specific geographic region, usually for a fee. As a result of our master franchise relationships and international market conditions, our revenues are primarily concentrated in the U.S.
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.
Franchise System Our standard U.S. 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.
Franchise sales directors are assigned to specific brands to leverage their brand expertise to enhance product consistency and deal flow. Our sales managers ensure each prospective hotel is placed in the appropriate brand, facilitate teamwork and information sharing amongst the sales directors, and provide better service to our potential franchisees.
Regional vice presidents are assigned to specific brands to leverage their brand expertise to enhance product consistency and deal flow. Our sales managers ensure each prospective hotel is placed in the appropriate brand, facilitate teamwork and information sharing amongst the sales directors, and provide better service to our potential 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.
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 20 Table of Contents Capital One from September 2011 to March 2018 in various roles, most recently as Vice President, Digital Brand Strategy and Social Media.
We believe our efforts to leverage the Company’s size, scale and distribution benefit the Company by enhancing brand quality and consistency, improving our franchisees returns and satisfaction, and generating procurement services revenues.
We believe our efforts to leverage the Company’s size, scale, and distribution benefit the Company by enhancing brand quality and consistency, improving our franchisees returns and satisfaction, and generating partnership services and fees revenues.
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.
Our U.S. 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 U.S. franchisees operate under one of 22 brands and brand extensions.
Other marketing efforts include domestic and international trade show programs, targeted marketing campaigns (including print, digital, and social media), direct-mail programs, marketing e-mail programs, and centralized commissions for travel agents.
Other marketing efforts include U.S. and international trade show programs, targeted marketing campaigns (including print, digital, and social media), direct-mail programs, marketing e-mail programs, and centralized commissions for travel agents.
Our franchise sales organization is structured to support the continued growth of the Company through awarding franchise agreements with a focus on revenue-intense chain scales and markets. The franchise sales organization employs both sales managers as well as franchise sales directors.
Our franchise sales organization is structured to support the continued growth of the Company through awarding franchise agreements with a focus on revenue-intense chain scales and markets. The franchise sales organization employs both sales managers as well as regional vice presidents.
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.
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 all associates, regardless of background, have an opportunity to 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. • Trust, Belonging, and Engagement – Fostering a culture where associates are inspired, engaged, and feel like they belong.
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.
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, 2025, the Choice Privileges program had more than 74 million worldwide members.
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.
We are focused on expanding our business through key partnerships, new technology, and other key franchisee resources, which is reflected in our partnership services and fees 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.
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.
The Company's U.S. operations are primarily conducted through direct franchising relationships, the ownership of 10 Cambria, four 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.
The Company's brands also include the Radisson Collection and Radisson Inn & Suites, however there are no open properties under these brands as of December 31, 2024.
The Company's brands also include the Radisson Collection and Radisson Inn & Suites, however there are no open properties under these brands as of December 31, 2025. U.S.
Raul Ramirez Sanchez - Chief Segment and International Operations Officer since August 2023. He was Chief Strategy and International Operations Officer from October 2021 to August 2023. He was Senior Vice President, Head of International, Strategy & Enterprise FP&A from June 2020 until October 2021.
He was Chief Strategy and International Operations Officer from October 2021 to August 2023. He was Senior Vice President, Head of International, Strategy & Enterprise FP&A from June 2020 until October 2021.
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.
We generally believe the effect of local 16 Table of Contents 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 50 countries and territories outside the U.S.
Prior to joining the Company, she was employed by Corporate Executive Board from December 2005 through May 2011. 21 Table of Contents
Prior to joining the Company, she was employed by Corporate Executive Board from December 2005 through May 2011.
Improving the desirability of our brands should also allow us to continue to improve the effective royalty rate in our contracts. Building Strong Brands - Each of our brands has particular attributes and strengths, including awareness with both consumers and developers.
Improving the desirability of our brands should also allow us to continue to improve the royalty rates in our franchise contracts. 7 Table of Contents Building Strong Brands - Each of our brands has particular attributes and strengths, including awareness with both consumers and developers.
(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.
(2) Includes the Clarion family of brand extensions, including Clarion and Clarion Pointe. (3) Includes the Radisson, Radisson Blu, Radisson Individuals, Radisson RED, and Park Plaza brands. (4) Includes other brands under Master Franchise Agreements. Franchise Sales Expansion of the number of hotels in our franchise system is important to our business model.
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.
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 150 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, foster belonging, and promote equal access and opportunity for everyone.
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.
Park Plaza - Park Plaza 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.
The principal competitor brands include Le Meridien and Kimpton . Radisson Individuals - Radisson Individuals is an upper upscale collection brand that brings together independent and boutique hotels, inspiring curious travelers to uncover the untold stories of each destination. Blending a spirit of exploration with service excellence, these hotels offer curated amenities like distinctive dining and wellness facilities.
Radisson Individuals - Radisson Individuals is an upscale collection brand that brings together independent and boutique hotels, inspiring curious travelers to uncover the untold stories of each destination. Blending a spirit of exploration with service 10 Table of Contents excellence, these hotels offer curated amenities like distinctive dining and wellness facilities.
Before that, she was Vice President of Legal and Business Affairs at LightSource Telecom, held legal and business positions at MCI and AOL, and began her legal career in 1989 at Skadden, Arps, Slate, Meagher & Flom. Ms. Wu serves on the Board of Alarm.com. Robert McDowell - Chief Commercial Officer since February 2016.
Before that, she was Vice President of Legal and Business Affairs at LightSource Telecom, held legal and business positions at MCI and AOL, and began her legal career in 1989 at Skadden, Arps, Slate, Meagher & Flom. Ms. Wu serves on the Board of Alarm.com. Patrick J. Cimerola - Chief Human Resources Officer since 2015.
We believe that international franchise operations will provide a long-term growth opportunity for the Company and as a result, we will continue to make investments into our international franchise operations, which are expected to enhance the value proposition for prospective international franchisees.
We believe that international franchise operations will provide a long-term growth opportunity for the Company and as a result, we will continue to make investments into our international franchise operations, which are expected to enhance the value proposition for prospective international franchisees. The following chart summarizes our franchise system and operating results outside of the U.S.
(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.
(2) To enhance the comparability for the year ended December 31, 2022, the average royalty rate, average occupancy percentage, ADR, and RevPAR reflect the operating performance as if the legacy Radisson brands were acquired on January 1, 2022. (3) The Company calculates the RevPAR metrics based on information as reported by the franchisees.
We, directly and through our franchisees, actively use these marks. All of the material marks are registered or have registrations pending with the United States Patent and Trademark Office. We seek to protect our brands and marks throughout the world, although the strength of legal protection available varies from country to country.
All of the material marks are registered or have registrations pending with the U.S. Patent and Trademark Office. We seek to protect our brands and marks throughout the world, although the strength of legal protection available varies from country to country.
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.
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.
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.
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.
For example, we create relationships with qualified vendors to: (i) make low-cost products available to our franchisees, (ii) streamline the purchasing process, and (iii) maintain brand standards and consistency. We also create relationships with key partners to market their services directly to our guests. These relationships provide value-added travel-related services to our guests and generate revenues for the Company.
For example, we create relationships with qualified vendors to: (i) make low-cost products available to our franchisees, (ii) streamline the purchasing process, and (iii) maintain brand standards and 8 Table of Contents consistency. We also create relationships with key partners to market their services directly to our guests.
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.
The principal competitor brands include Holiday Inn and Ramada. Clarion Pointe - 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.
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.
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.
The fee and cost structure of our franchising business provides opportunities to improve our operating results by increasing the number of franchised hotel rooms and the effective royalty rates in our franchise contracts resulting in increased initial franchise fees, ongoing royalty and licensing fees, and platform and procurement services fees.
The fee and cost structure of our franchising business provides opportunities to improve our operating results by increasing the number of franchised hotel rooms and the royalty rates in our franchise contracts.
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.
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.
With free coffee to get guests started in the morning and free high-speed internet, Rodeway is a great option for practical travelers looking for a “Good night. Great Savings.” The principal competitor brands include Americas Best Value Inn and Motel 6.
With free coffee to start the day and free high-speed internet to stay connected, Rodeway Inn delivers a reliable option for practical travelers looking for a “Good night. Great Savings.” The principal competitor brands include Americas Best Value Inn and Motel 6.
Cimerola - Chief Human Resources Officer since 2015. He was Senior Vice President, Human Resources and Administration from September 2009 to 2015. He was Vice President of Human Resources from January 2003 to September 2009. He was Sr. Director of Human Resources from January 2002 to January 2003.
He was Senior Vice President, Human Resources and Administration from September 2009 to 2015. He was Vice President of Human Resources from January 2003 to September 2009. He was Sr. Director of Human Resources from January 2002 to January 2003. Raul Ramirez Sanchez - Chief Segment and International Operations Officer since August 2023.
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.
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 fee, and providing franchise agreement acquisition cost payments to support development, property improvements, and other hotel expenditures.
We continue to expand these relationships and identify new methods for decreasing hotel operating costs by increasing penetration within our existing franchise system and enhancing our existing vendor relationships and/or creating new vendor relationships.
These relationships provide value-added travel-related services to our guests and generate revenues for the Company. We continue to expand these relationships and identify new methods for decreasing hotel operating costs by increasing penetration within our existing franchise system and enhancing our existing vendor relationships and/or creating new vendor relationships.
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.
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.
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.
Dragisich 43 Executive Vice President, Operations and Chief Global Brand Officer Simone Wu 60 Senior Vice President, General Counsel, Corporate Secretary & External Affairs Patrick J.
We 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.
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.
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.
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.
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.
As of December 31, 2025, we had 7,575 hotels with 656,825 rooms open and operating, and 825 hotels with 77,862 rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding 3 Table of Contents master development agreements (collectively, "pipeline") in our global system.
Radisson Blu - Radisson Blu hotels offer full service, upper upscale accommodations that are redefining the hospitality experience. Scandinavian-inspired minimalist design prioritizes comfort and distinctiveness in the guestrooms, in addition to unique dining concepts, multipurpose workspaces with complimentary Wi-Fi, smart TVs, and wellness facilities. Radisson Blu hotels are located in urban and resort locations in key RevPAR markets.
Scandinavian-inspired minimalist design prioritizes comfort and distinctiveness in the guestrooms, in addition to unique dining concepts, multipurpose workspaces with complimentary Wi-Fi, smart TVs, and wellness facilities. Radisson Blu hotels are located in urban and resort locations in key RevPAR markets. The principal competitor brands include Le Meridien and Kimpton .
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.
The principal competitor brands include Holiday Inn Express, Fairfield by Marriott, Best Western Plus, and Hampton by Hilton. 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.
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.
(1) : 2021 2022 2023 2024 2025 Number of properties, end of period 1,117 1,191 1,222 1,258 1,388 Number of rooms, end of period 121,716 133,395 136,021 142,071 159,846 Royalty fees (in thousands) $ 14,958 $ 20,041 $ 28,859 $ 29,822 $ 41,323 (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.
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.
Ascend Collection empowers upscale hotels to retain their individual brand equity and identity while enjoying access to Choice Hotels' global distribution, technology, performance support services, training, and loyalty benefits. For independent hotels, Ascend Collection offers a platform for customer acquisition, delivery and distribution, volume purchasing benefits, and operational efficiencies.
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.
The policy applies to most, but not all, of the Company's brands. 13 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.
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.
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.
Management's Discussion and Analysis of Financial Condition and Results of Operations. 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.
Franchise Agreements Our standard U.S. 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 U.S. franchise agreements generally have terms ranging from 10 to 30 years.
We continue to educate our individual franchisees about the risk of an unfavorable impact to their business from contracting with booking sites when we do not have preferred agreements. We currently have agreements with many, but not all, of the major online third-party booking sites.
These agreements typically offer our brands a preferred placement on these third-party booking sites at reduced transaction fees. We continue to educate our individual franchisees about the risk of an unfavorable impact to their business from contracting with booking sites when we do not have preferred agreements.
The principal competitor brands include Baymont and Best Western. Park Inn by Radisson - Park Inn by Radisson is Choice Hotels' premium value conversion brand focused on delivering the basics to brighten up the stay. The principal competitor brands include Days Inn, Baymont, and SureStay. Park Plaza - Park Plaza combines engaging service, contemporary elegance, and local flavor.
The brand delivers warm, friendly service, a hot breakfast, and premium bedding. The principal competitor brands include Days Inn, Baymont, La Quinta, Best Western, and Ramada. Park Inn by Radisson - Park Inn by Radisson is Choice Hotels' premium value conversion brand focused on delivering the basics to "brighten up the stay".
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 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 15 Table of Contents personalization.
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.
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.
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 Clarion®, Clarion Pointe™, Comfort Inn®, Comfort Suites®, Country Inn & Suites® by Radisson, Sleep Inn®, Quality®, Park Inn by Radisson®, Everhome Suites®, WoodSpring Suites®, MainStay Suites®, Suburban Studios™, Radisson Blu®, Park Plaza®, Cambria® Hotels, Ascend Collection®, Radisson RED®, Radisson Individuals®, Radisson®, Radisson Collection®, Radisson Inn & Suites SM , Econo Lodge®, and Rodeway Inn®.
International Franchise Operations The Company conducts its international franchise operations through a combination of direct franchising and master franchising relationships. Our business strategy has been to conduct direct franchising in those international markets where both franchising is an accepted business model and our brands can achieve significant revenue growth through our proprietary distribution channels.
Our business strategy has been to conduct direct franchising in those international markets where both franchising is an accepted business model and our brands can achieve significant revenue growth through our proprietary distribution channels. We typically enter into master franchise agreements in those international markets with complex business models and language and cultural differences.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf 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.
Biggest changePrivacy 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.
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.
The Company is obligated to use the marketing and reservation 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.
As 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.
As 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; 21 Table of Contents • 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 U.S. affecting domestic and international travel.
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.
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, hurricanes, fires, floods, and other natural disasters.
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.
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.
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.
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; • 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 U.S. and international franchisees.
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.
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.
The United States also imposes sanctions that restrict U.S. companies from engaging in business activities with certain persons or entities, foreign countries, or foreign governments that it determines are adverse to U.S. foreign policy interests.
The U.S. also imposes sanctions that restrict U.S. companies from engaging in business activities with certain persons or entities, foreign countries, or foreign governments that it determines are adverse to U.S. foreign policy interests.
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.
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 25 Table of Contents 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.
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.
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.
Any future restrictions in laws such as Telemarketing Sales Rule, Controlling the Assault of Non-Solicited Pornography & Marketing Act (CAN-SPAM Act), and various United States state laws, or new federal laws regarding marketing and solicitation or international data protection laws that govern these activities could adversely affect the continuing effectiveness of telemarketing, SMS, email, and postal mailing techniques and could force changes in our marketing strategies.
Any future restrictions in laws such as Telemarketing Sales Rule, Controlling the Assault of Non-Solicited Pornography & Marketing Act (CAN-SPAM Act), and various U.S. state laws, or new federal laws regarding marketing and solicitation or international data protection laws that govern these activities could adversely affect the continuing effectiveness of telemarketing, SMS, email, and postal mailing techniques and could force changes in our marketing strategies.
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.
Cybercriminals have increasingly demonstrated advanced capabilities, such as use of zero-day vulnerabilities, and rapid integration of new technology such as generative AI and machine learning technologies. Our systems may also be vulnerable to human error, negligence, fraud, or other misuse.
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.
From time to time, we may face audits or investigations by one or more U.S. 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.
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.
Of the open hotels in our system, we currently own 10 Cambria hotels, four 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.
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.
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.
However, our ability to recover these advances may be adversely impacted by certain factors, including, among others, declines in the ability of our franchisees to generate revenues at properties they franchise from us.
However, our ability to recover these advances may be adversely impacted by certain 26 Table of Contents factors, including, among others, declines in the ability of our franchisees to generate revenues at properties they franchise from us.
Unless we enter into interest rate hedges, if interest rates increase, our debt service obligations on the variable-rate indebtedness could increase significantly even though the amount borrowed would remain the same. We are subject to certain risks related to litigation filed by or against us.
Unless we enter into interest rate hedges, if interest rates increase, our debt service obligations on the variable-rate indebtedness could increase significantly even though the amount borrowed would remain the same. 22 Table of Contents We are subject to certain risks related to litigation filed by or against us.
In addition, several states in which our franchisees operate have “franchise relationship laws” that limit the ability of the franchisor to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreements.
In 31 Table of Contents addition, several states in which our franchisees operate have “franchise relationship laws” that limit the ability of the franchisor to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreements.
This litigation may involve, but is not limited to, actions or negligence by franchisees outside of our control.
Such litigation may involve, but is not limited to, actions or negligence by franchisees outside of our control.
Further, there can be no assurance that disruptions of the operation of these systems will not occur as a result of failures related to our internal or third-party systems and support. Risks Related to Our Brands We are subject to the risks relating to the acquisition of new brands or lines of business.
Further, there can be no assurance that disruptions of the operation of these systems will not occur as a result of failures related to our internal or third-party systems and support. 27 Table of Contents Risks Related to Our Brands We are subject to the risks relating to the acquisition of new brands.
We franchise hotels to independent third parties pursuant to franchise agreements. These agreements may be terminated, renegotiated or expire but typically have an initial term of between ten and thirty years.
We franchise hotels to independent third parties pursuant to franchise agreements. These agreements may be terminated, renegotiated or expire but typically have an initial term of between 10 and 30 years.
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.
In addition, AI can be used to personalize 28 Table of Contents the hotel booking experience by showing users ads for hotels they may be interested in based on their in-app activity.
Our business faces increasing scrutiny related to environmental, social and governance activities and the risk of damage to our reputation and the value of our hotel brands if we (or our franchisees) fail to act responsibly or comply with regulatory requirements in a number of areas, such as safety and security, responsible tourism, environmental stewardship, supply chain management, climate change, human trafficking, diversity, human rights, philanthropy and support for local communities.
Our business faces increasing scrutiny related to environmental, social, and governance matters, and as a result we also face the risk of liability, boycotts, and damage to our reputation and the value of our hotel brands for any of our initiatives related to these matters or if we (or our franchisees) fail to act responsibly or comply with regulatory requirements in a number of areas, such as safety and security, responsible tourism, environmental stewardship, supply chain management, climate change, human trafficking, diversity, human rights, philanthropy and support for local communities.
Our international operations are subject to political and monetary risks. We have franchised hotels open and operating in 46 countries and territories outside of the United States. We also have, and may in the future make, investments in foreign hotel franchisors. International operations generally are subject to greater economic, political and other risks than those affecting United States operations.
Our international operations are subject to political and monetary risks. We have franchised hotels open and operating in 50 countries and territories outside of the U.S. We also have made, and may in the future make, investments in foreign hotel franchisors. International operations generally are subject to greater economic, political, and other risks than those affecting the U.S. operations.
Further, the regulatory environment surrounding information security and privacy is increasingly demanding, both in the United States and in the international jurisdictions in which we operate.
Further, the regulatory environment surrounding information security and privacy is increasingly demanding, both in the U.S. and in the international jurisdictions in which we operate.
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.
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. We are incorporating artificial intelligence technologies into our processes and franchisee tools.
We may be deemed to be a joint employer with our franchisees under certain new laws, rules, and regulations. Companies that operate franchise systems may be subject to liabilities and claims relating to the franchisor/franchisee relationship, such as for allegedly being a joint employer with a franchisee.
Companies that operate franchise systems may be subject to liabilities and claims relating to the franchisor/franchisee relationship, such as for allegedly being a joint employer with a franchisee.
In addition, the efforts and abilities of our senior executives are important elements of maintaining our competitive position and driving future growth, and the loss of the services of one or more of our senior executives could result in challenges executing our business strategies or other adverse effects on our business.
In addition, the efforts and abilities of our senior executives are important elements of maintaining our competitive position and driving future growth, and the loss of the services of one or more of our senior executives could result in challenges executing our business strategies or other adverse effects on our business. 23 Table of Contents Climate change and sustainability related concerns could have a material adverse effect on our business and results of operations.
We have invested and expect to continue to invest in real estate and other hospitality related affiliates.
Investing jointly through affiliates decreases our ability to manage risk. We have invested and expect to continue to invest in real estate and other hospitality related affiliates.
Many factors influence our reputation and the value of our hotel brands including the perception held by guests, our franchisees, our other key stakeholders and the communities in which we do business.
An adverse incident involving our franchisees or their guests, and any media coverage resulting therefrom, could also damage our brands and reputation. Many factors influence our reputation and the value of our hotel brands including the perception held by guests, our franchisees, our other key stakeholders and the communities in which we do business.
Like most large multinational companies, we have experienced, and expect to continue to be subject to, cybersecurity threats and attempts to disrupt or gain access to our systems and those operated by our franchisees, and attempts to affect the confidentiality, availability, and integrity of our data, none of which are known to be material to the Company to date.
Like most large multinational companies, we have experienced, and expect to continue to be subject to, cybersecurity threats and attempts to disrupt or gain access to our systems and those operated by our franchisees, and attempts to affect the confidentiality, availability, and integrity of our data, none of which are known to be material to the Company to date. 30 Table of Contents We seek to minimize the impact of these cybersecurity incidents through the use of various technologies, processes and practices designed to help protect our networks, systems, computers and data from attack, damage or unauthorized access.
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.
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 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.
Because these new ventures are inherently risky, there can be no assurance that our investments will be successful. 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.
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.
In addition, our share repurchase program may further concentrate our share ownership in our directors and affiliates and increase their influence on such matters. Item 1B. Unresolved Staff Comments None.
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.
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 U.S. and foreign countries will be adequate to prevent imitation of our trademarks by others.
The determination of our worldwide provision for income taxes and other tax liabilities requires estimation and significant judgment and there are many transactions and calculations where the ultimate tax determination is uncertain.
The determination of our worldwide provision for income taxes and other tax liabilities requires estimation and significant judgment and there are many transactions and calculations where the ultimate tax determination is uncertain. Like many other multinational corporations, we are subject to tax in multiple U.S. and foreign tax jurisdictions and have structured our operations to reduce our effective tax rate.
New competition may also emerge using different business models with a lesser reliance on franchise fees. In addition, an excess supply of hotel rooms or unfavorable borrowing conditions may discourage potential franchisees from expanding or constructing new hotels, thereby limiting a source of growth of the franchise fees received by us.
In addition, an excess supply of hotel rooms or unfavorable borrowing conditions may discourage potential franchisees from expanding or constructing new hotels, thereby limiting a source of growth of the franchise fees received by us. 24 Table of Contents Also, each of our hotel brands competes with major hotel chains in national and international markets and with independent companies in regional markets.
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.
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.
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.
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.
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.
AI also presents emerging ethical issues and if our use of AI becomes controversial, then we may experience brand or reputational harm, competitive harm, or legal liability. 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.
Climate change and sustainability related concerns could have a material adverse effect on our business and results of operations. We are subject to the physical and transition risks associated with climate change and extreme weather events.
We are subject to the physical and transition risks associated with climate change and extreme weather events.
Any adverse outcome of any such audit or review could have a negative effect on our business, operating results and financial condition. The ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.
The ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made. We may be deemed to be a joint employer with our franchisees under certain new laws, rules, and regulations.
Also, each of our hotel brands competes with major hotel chains in national and international markets and with independent companies in regional markets. Our ability to remain competitive and to attract and retain business and leisure travelers depends on our success in distinguishing our products and services from those offered by our competitors.
Our ability to remain competitive and to attract and retain business and leisure travelers depends on our success in distinguishing our products and services from those offered by our competitors. If we are unable to compete successfully in these areas, this could adversely affect our market share and our results of operations.
Removed
If we are unable to compete successfully in these areas, this could adversely affect our market share and our results of operations. An adverse incident involving our franchisees or their guests, and any media coverage resulting therefrom, could also damage our brands and reputation.
Added
These technologies may present business, compliance, reputational, and legal risks. If we fail to keep pace with rapidly evolving technological developments in artificial intelligence ("AI"), our competitive position and business results may suffer.
Removed
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.
Added
The introduction of these technologies, particularly generative AI, into new or existing offerings may also result in new or expanded risks and liabilities, including enhanced governmental or regulatory scrutiny, litigation, copyright infringement, compliance issues, ethical concerns, security risks relating to private and/or confidential information, as well as other factors that could adversely affect our business, reputation, and financial results.
Removed
Because these new ventures are inherently risky, there can be no assurance that our investments will be successful.
Added
If the content, analyses, or recommendations that AI programs assist in producing are, or are alleged to be, deficient, misleading, inaccurate, or biased, then our business, financial condition, and results of operations and our reputation may be adversely affected. In addition, it is possible that AI and machine learning-technology could be improperly utilized by employees while carrying out their responsibilities.
Removed
We seek to minimize the impact of these cybersecurity incidents through the use of various technologies, processes and practices designed to help protect our networks, systems, computers and data from attack, damage or unauthorized access.
Added
The use of AI can lead to unintended consequences, such as generating content that appears correct but is factually inaccurate, misleading, or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies.
Removed
Like many other multinational corporations, we are subject to tax in multiple United States and foreign tax jurisdictions and have structured our operations to reduce our effective tax rate. Our determination of our tax liability is always subject to audit and review by applicable domestic and foreign tax authorities.
Added
New competition may also emerge using different business models with a lesser reliance on franchise fees.
Added
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.
Added
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.
Added
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 29 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 U.S.
Added
If the Company fails to maintain compliance with the various U.S. 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.
Added
Our determination of our tax liability is always subject to audit and review by applicable U.S. and foreign tax authorities. Any adverse outcome of any such audit or review could have a negative effect on our business, operating results and financial condition.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+2 added−0 removed15 unchanged
Biggest changeThe 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.
Biggest changeThe Company’s Board of Directors does not believe that there are currently any risks from cybersecurity threats that have materially affected, or are reasonably likely to materially affect, the Company or its business strategy, financial condition, results of operations, or cash flows.
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.
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 intended 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.
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.
For example, the Company seeks to conduct incident simulations and assessments regularly 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.
In an effort to prevent and detect cyber threats, the Company annually provides all employees, including part-time and temporary, with cybersecurity and privacy training, which covers timely and relevant topics, including social engineering, phishing, password protection, data protection, physical security, and educates employees on the importance of reporting all incidents immediately.
In an effort to prevent and detect cyber threats, the Company annually provides all employees, including part-time and temporary, with cybersecurity and privacy training, which covers timely and relevant topics, including social engineering, 33 Table of Contents phishing, password protection, data protection, physical security, and educates employees on the importance of reporting all incidents immediately.
The Company's cyber incident response plan is designed to help coordinate our response to, and recovery from, cybersecurity incidents, and includes processes intended to triage, assess the severity of, escalate, contain, investigate, and remediate incidents, as well as to comply with applicable legal obligations.
The Company's cyber incident response plan is designed to help coordinate our response to, and recovery from, cybersecurity incidents, and includes processes intended 32 Table of Contents to triage, assess the severity of, escalate, contain, investigate, and remediate incidents, as well as to comply with applicable legal obligations.
The CISO holds a Master of Business Administration, as well as Certified Information Systems Security Professional, Certified Information Systems Auditor, and Certified Information Security Manager cybersecurity-related certifications. The CISO also serves as a Director for the RH-ISAC.
The CISO holds a Master of Business Administration, as well as Certified Information Systems Security Professional, Certified Information Systems Auditor, and Certified Information Security Manager cybersecurity-related certifications. The CISO also serves as Chair of the Board for RH-ISAC.
Added
However, we have been the target of cybersecurity incidents and we expect them to continue as cybersecurity threats continue to evolve. We cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced an undetected cybersecurity incident in the past or that we will not experience such an incident in the future.
Added
For more information on the risks from cybersecurity threats that we face, refer to Part I, Item 1A. Risk Factors. 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.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed3 unchanged
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).
Biggest changeAs of December 31, 2025, our wholly-owned hotels consist of 10 Cambria hotels (located in Bloomington, MN, Burbank, CA, Columbia, SC, Denver, CO, El Segundo, CA, Fort Worth, TX, Houston, TX, New Orleans, LA, Pittsburgh, PA, and Portland, OR), four Everhome Suites hotels (located in Bastrop, TX, Bowling Green, KY, Fayetteville, NC, and San Antonio, TX), 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).
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.
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 and Minneapolis, Minnesota. The Company also maintains several international regional offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
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.
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. 34 Table of Contents PART II

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, 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.
Biggest changePeriod 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 1, 2025 through January 31, 2025 129,106 $ 143.45 129,106 3,648,021 February 1, 2025 through February 28, 2025 96,825 149.77 96,825 3,551,196 March 1, 2025 through March 31, 2025 230,211 137.68 162,828 3,388,368 April 1, 2025 through April 30, 2025 191,086 125.18 190,693 3,197,675 May 1, 2025 through May 31, 2025 163,110 129.86 162,851 3,034,824 June 1, 2025 through June 30, 2025 1,080 110.90 304 3,034,520 July 1, 2025 through July 31, 2025 — — — 3,034,520 August 1, 2025 through August 31, 2025 1,619 124.50 — 3,034,520 September 1, 2025 through September 30, 2025 — — — 3,034,520 October 1, 2025 through October 31, 2025 349 106.50 — 3,034,520 November 1, 2025 through November 30, 2025 31 92.13 — 3,034,520 December 1, 2025 through December 31, 2025 278,333 91.79 277,757 2,756,763 Total 1,091,750 $ 124.32 1,020,364 2,756,763 (1) During the year ended December 31, 2025, the Company redeemed 71,386 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 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.
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, 2025. 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 11, 2025, there were 841 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 10, 2026, there were 800 holders of record of the Company’s common stock.
(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.
These redemptions were not part of the 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, 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.
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, 2020 to December 31, 2025. 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 6/30/25 12/31/25 Choice Hotels International, Inc. $ 100.00 $ 111.58 $ 146.69 $ 105.54 $ 106.95 $ 111.86 $ 108.63 $ 114.36 $ 137.08 $ 123.02 $ 92.81 NYSE Composite $ 100.00 $ 115.19 $ 120.68 $ 103.11 $ 109.39 $ 115.86 $ 124.46 $ 134.68 $ 144.12 $ 155.95 $ 169.62 S&P 500 Hotels, Resorts & Cruise Lines $ 100.00 $ 110.97 $ 119.84 $ 81.23 $ 90.79 $ 125.13 $ 150.99 $ 167.18 $ 199.57 $ 221.93 $ 226.60 S&P 400 Consumer Discretionary $ 100.00 $ 125.16 $ 127.69 $ 90.90 $ 100.83 $ 113.02 $ 125.32 $ 130.53 $ 137.12 $ 129.86 $ 129.35 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 36 Table of Contents Item 6.
Removed
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

87 edited+34 added−41 removed82 unchanged
Biggest changeOur 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.
Biggest changeOur operating cash flows decreased $49.0 million during the year ended December 31, 2025 primarily due to the timing of working capital items, the final installment payment made in 2025 for the one-time transition tax on earnings of foreign subsidiaries that was imposed by 2017 tax legislation, and the cash paid for the purchase of transferrable tax credits in 2025 of which a portion will be utilized in 2026, all of which were partially offset by 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, a decrease in deferred income taxes primarily attributable to the enactment of a tax act, and a decrease in the franchise agreement acquisition cost payments.
Accordingly, over the long-term, the continued growth of our franchise business should enable us to realize the benefits from the operating leverage in place and improve our operating results. We are required by our franchise agreements to use the marketing and reservation system fees we collect for system-wide marketing and reservation system activities.
Accordingly, over the long-term, the continued growth of our franchise business should enable us to realize the benefits from the operating leverage in place and improve our operating results. We are required by our franchise agreements to use the marketing and reservation fees we collect for system-wide marketing and reservation activities.
The increase in international royalty fees was primarily due to an increase in the international franchise system size by 36 hotels (from 1,222 hotels as of December 31, 2023 to 1,258 hotels as of December 31, 2024) and 6,050 rooms (from 136,021 rooms as of December 31, 2023 to 142,071 rooms as of December 31, 2024), and an increase in international RevPAR.
The increase in international royalty fees was primarily due to an increase in the size of the international franchise system by 36 hotels (from 1,222 hotels as of December 31, 2023 to 1,258 hotels as of December 31, 2024) and 6,050 rooms (from 136,021 rooms as of December 31, 2023 to 142,071 rooms as of December 31, 2024), and an increase in international RevPAR.
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 management companies that provide their own employees.
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.
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.
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, which were partially offset by federal income tax credits.
In addition, our operating results can also be improved through our company-wide efforts related to improving property-level performance and expanding the number of partnerships with travel-related and other companies with products and services that appeal to our guests.
In addition, our operating results can also be improved through our company-wide efforts related to improving property-level performance and expanding the number of partnerships with travel-related and other companies with products and services that appeal to our franchisees and guests.
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®.
Our brand names include Clarion®, Clarion Pointe™, Comfort Inn®, Comfort Suites®, Country Inn & Suites® by Radisson, Sleep Inn®, Quality®, Park Inn by Radisson®, Everhome Suites®, WoodSpring Suites®, MainStay Suites®, Suburban Studios™, Radisson Blu®, Park Plaza®, Cambria® Hotels, Ascend Collection®, Radisson RED®, Radisson Individuals®, Radisson®, Radisson Collection®, Radisson Inn & Suites SM , Econo Lodge®, and Rodeway Inn®.
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.
Our board of directors authorized a program which permits us to offer 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.
These measures are primarily driven by the operations of our hotel franchise system and therefore, our analysis of the Company's operations is primarily focused on the size, performance, and the potential growth of the hotel franchise system as well as our variable overhead costs.
These measures are primarily driven by the operations of our hotel franchise system and therefore, our analysis of the Company's results of operations is primarily focused on the size, performance, and the potential growth of the hotel franchise system as well as our variable overhead costs.
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's franchise agreements require the payment of marketing and reservation 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 increase in income before income taxes was primarily due to an $88.7 million increase in operating income and a $9.5 million increase in the equity in net gain of affiliates, both of which were partially offset by a $23.4 million increase in interest expense, a $12.3 million decrease in other loss (gain), and a $4.7 million decrease in loss (gain) on extinguishment of debt.
The increase in income before income taxes was primarily due to an $88.7 million increase in operating income and a $9.5 million increase in the equity in net gain of affiliates, both of which were partially offset by a $23.4 million increase in interest expense, a $12.3 million decrease in other losses (gains), net, and a $4.7 million decrease in loss (gain) on extinguishment of debt.
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.
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.
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.
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, 2025, the Company's goodwill is allocated to the Hotel Franchising reporting unit.
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.
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 50 countries and territories.
The primary factors that affect the Company’s results are: the number and relative mix of hotel rooms in the various hotel lodging price categories, growth in the number of hotel rooms owned and under franchise, occupancy and room rates achieved by the hotels in our system, the effective royalty rate achieved in our franchise agreements, the level of franchise sales and relicensing activity, the number of qualified vendor arrangements and partnerships and the level of engagement with these partners by our franchisees and guests, and our ability to manage costs.
The primary factors that affect the Company’s results are: the number and relative mix of hotel rooms in the various hotel lodging price categories, growth in the number of hotel rooms owned and under franchise, occupancy and room rates achieved by the hotels in our system, the average royalty rates achieved in our franchise agreements, the level of franchise sales and relicensing activity, the number of qualified vendor arrangements and partnerships and the level of engagement with these partners by our franchisees and guests, and our ability to manage costs.
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.
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 17 open and operating hotels.
The deployment and annual pace of future financial support activities will depend upon market and other conditions, including among others, our franchise sales results, the environment for new construction hotel development, and the hotel lending environment. The Company also strategically deploys capital in the form of franchise agreement acquisition costs across our brands to incentivize franchise development.
The deployment and annual pace of future investment and guaranty support activities will depend upon market and other conditions, including among others, our franchise sales results, the environment for new construction hotel development, and the hotel lending environment. The Company also strategically deploys capital in the form of franchise agreement acquisition costs across our brands to incentivize franchise development.
Our Company focuses on the following strategic priorities: Profitable Growth - Our success is dependent on improving the performance of our hotels, increasing the size of our system by selling additional hotel franchises with a focus on revenue-intense chain scales and markets, improving our effective royalty rate, expanding our qualified vendor and partnership platform programs and maintaining a disciplined cost structure.
Our Company focuses on the following strategic priorities: Profitable Growth - Our success is dependent on improving the performance of our hotels, increasing the size of our system by selling additional hotel franchises with a focus on revenue-intense chain scales and markets, improving our royalty rates, expanding our qualified vendor and partnership programs and maintaining a disciplined cost structure.
The Company evaluates the impairment of goodwill and intangible assets with indefinite lives annually as of December 31 or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization that indicate that the Company may not be able to recover the carrying amount of the asset.
Goodwill and Intangible Assets The Company evaluates the impairment of goodwill and intangible assets with indefinite lives annually as of October 1st or earlier upon the occurrence of substantive unfavorable changes in economic conditions, industry trends, costs, cash flows, or ongoing declines in market capitalization that indicate that the Company may not be able to recover the carrying amount of the asset.
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.
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 The Company has a share repurchase program. Treasury stock activity is recorded at cost in the consolidated balance sheets.
Master franchising relationships are governed by master franchising agreements, which generally provide the master franchisee with the right to use our brands and sub-license the use of our brands in a specific geographic region, usually for a fee. As a result of our master franchise relationships and international market conditions, our revenues are primarily concentrated in the United States.
Master franchising relationships are governed by master franchising agreements, which generally provide the master franchisee with the right to use our brands and sub-license the use of our brands in a specific geographic region, usually for a fee. As a result of our master franchise relationships and international market conditions, our revenues are primarily concentrated in the U.S.
A summary of the domestic hotels and rooms by brand in our franchise system as of December 31, 2024 and 2023 was as follows: December 31, 2024 December 31, 2023 Variance Hotels Rooms Hotels Rooms Hotels % Rooms % Comfort (1) 1,674 131,495 1,675 131,637 (1) (0.1) % (142) (0.1) % Quality Inn 1,627 118,725 1,620 119,153 7 0.4 % (428) (0.4) % Econo Lodge 642 37,528 675 39,805 (33) (4.9) % (2,277) (5.7) % Rodeway 447 24,948 470 26,309 (23) (4.9) % (1,361) (5.2) % Country 422 33,771 428 34,122 (6) (1.4) % (351) (1.0) % Sleep Inn 415 29,118 432 30,411 (17) (3.9) % (1,293) (4.3) % Ascend Hotel Collection 233 38,589 209 23,484 24 11.5 % 15,105 64.3 % WoodSpring Suites 256 30,846 235 28,350 21 8.9 % 2,496 8.8 % Clarion (2) 193 19,944 186 19,813 7 3.8 % 131 0.7 % MainStay Suites 141 10,157 127 8,863 14 11.0 % 1,294 14.6 % Suburban Studios 111 9,159 105 9,112 6 5.7 % 47 0.5 % Cambria Hotels 76 10,344 74 10,239 2 2.7 % 105 1.0 % Radisson (3) 57 13,390 64 15,206 (7) (10.9) % (1,816) (11.9) % Park Inn 27 2,926 4 363 23 575.0 % 2,563 706.1 % Everhome Suites 7 799 1 98 6 600.0 % 701 715.3 % Total Domestic Franchises 6,328 511,739 6,305 496,965 23 0.4 % 14,774 3.0 % (1) Includes the Comfort family of brand extensions, including Comfort Inn and Comfort Suites.
A summary of the U.S. hotels and rooms by brand in our franchise system as of December 31, 2024 and 2023 was as follows: December 31, 2024 December 31, 2023 Variance Hotels Rooms Hotels Rooms Hotels % Rooms % Comfort (1) 1,674 131,495 1,675 131,637 (1) (0.1) % (142) (0.1) % Quality Inn 1,627 118,725 1,620 119,153 7 0.4 % (428) (0.4) % Econo Lodge 642 37,528 675 39,805 (33) (4.9) % (2,277) (5.7) % Rodeway 447 24,948 470 26,309 (23) (4.9) % (1,361) (5.2) % Country 422 33,771 428 34,122 (6) (1.4) % (351) (1.0) % Sleep Inn 415 29,118 432 30,411 (17) (3.9) % (1,293) (4.3) % Ascend Collection 233 38,589 209 23,484 24 11.5 % 15,105 64.3 % WoodSpring Suites 256 30,846 235 28,350 21 8.9 % 2,496 8.8 % Clarion (2) 193 19,944 186 19,813 7 3.8 % 131 0.7 % MainStay Suites 141 10,157 127 8,863 14 11.0 % 1,294 14.6 % Suburban Studios 111 9,159 105 9,112 6 5.7 % 47 0.5 % Cambria Hotels 76 10,344 74 10,239 2 2.7 % 105 1.0 % Radisson (3) 57 13,390 64 15,206 (7) (10.9) % (1,816) (11.9) % Park Inn 27 2,926 4 363 23 575.0 % 2,563 706.1 % Everhome Suites 7 799 1 98 6 600.0 % 701 715.3 % Total U.S.
In each case, the margin is determined according to the Company’s senior unsecured long-term debt rating or under circumstances as set forth in the Restated Credit Agreement if the Company’s total leverage ratio is less than 2.5 to 1.0.
In each case, the margin is determined according to the 47 Table of Contents Company’s senior unsecured long-term debt rating or under circumstances as set forth in the Restated Credit Agreement if the Company’s total leverage ratio is less than 2.5 to 1.0.
These investments related to the ongoing hotel development efforts to support the continued growth of the Cambria Hotels and Everhome Suites brands. During the years ended December 31, 2024, 2023, and 2022, investments in other property and equipment totaled $39.1 million, $47.7 million, and $24.1 million, respectively. These investments primarily related to leasehold improvements, office equipment, and capitalized software.
These investments related to the ongoing hotel development efforts to support the continued growth of the Cambria Hotels and Everhome Suites brands. During the years ended December 31, 2025, 2024, and 2023, investments in other property and equipment totaled $38.9 million, $39.1 million, and $47.7 million, respectively. These investments primarily related to leasehold improvements, office equipment, and capitalized software.
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.
During the year ended December 31, 2025, the Company redeemed 0.1 million shares of common stock at a total cost of $9.9 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.
The Company is obligated to expend the marketing and reservation system fees it collects from its franchisees in accordance with the franchise agreements. Furthermore, the franchisees are required to reimburse the Company for any deficits generated by these marketing and reservation system activities.
The 38 Table of Contents Company is obligated to expend the marketing and reservation fees it collects from its franchisees in accordance with the franchise agreements. Furthermore, the franchisees are required to reimburse the Company for any deficits generated by these marketing and reservation system activities.
The loyalty program point redemption revenues are recognized within other revenues from franchised and managed properties in the consolidated statements of income. Any changes in the estimates used in developing the breakage rate or other future guest loyalty program operations could result in a material change to the liability for the guest loyalty program and the deferred revenues.
The loyalty program point redemption revenues are presented within revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income. Any changes in the estimates used in developing the breakage rate or other future guest loyalty program operations could result in a material change to the liability for the guest loyalty program and the deferred revenues.
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 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, 2025, the Company's primary sources of liquidity consisted of $571.4 million in cash and cash equivalents and available borrowing capacity under the senior unsecured revolving credit facility.
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
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.
Results of Operations - Royalty, licensing and management fees, operating income, net income, and diluted earnings per share ("EPS") represent the key measures of our financial performance.
Results of Operations - Franchise and management fees, operating income, net income, and diluted earnings per share ("EPS") represent the key measures of our financial performance.
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.
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, 2025, 2024, and 2023, the Company invested $93.7 million, $52.8 million, and $38.9 million, respectively, to support these efforts.
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.
So long as the 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.
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.
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.
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.
The hotel franchising business represents the Company's primary operations. The Company's U.S. operations are conducted through direct franchising relationships, the ownership of 17 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.
The amounts allocated to material rights for free or discounted goods or services to hotel guests are recognized to revenue as the points are redeemed including an estimate of breakage, primarily within other revenues from franchised and managed properties.
The amounts allocated to material rights for free or discounted goods or services to hotel guests are recognized to revenue as the points are redeemed including an estimate of breakage, within revenue for reimbursable costs from franchised and managed properties.
The Company provides financing to franchisees for hotel development efforts and other purposes in the form of notes receivable loans. The loans bear interest and are expected to be repaid in accordance with the terms of the loan agreements.
Refer to Note 7 for more information. The Company provides financing to franchisees for hotel development efforts and other purposes in the form of notes receivable loans. The loans bear interest and are expected to be repaid in accordance with the terms of the loan agreements.
On March 11, 2024, the Company's board of directors approved an increase of 5 million shares in the number of shares authorized to be repurchased under its share repurchase program. As of December 31, 2024, the 43 Table of Contents Company had 3.8 million shares remaining under the current share repurchase authorization.
On March 11, 2024, the Company's board of directors approved an increase of 5 million shares in the number of shares authorized to be repurchased under its share repurchase program. As of December 31, 2025, the Company had 2.8 million shares remaining under the current share repurchase authorization.
On July 2, 2024, the Company used a portion of the net proceeds from the sale of the 2024 Senior Notes, after deducting underwriting discounts and commissions and other offering expenses, to repay in full the 2023 Term Loan. 2020 Senior Unsecured Notes Due 2031 On July 23, 2020, the Company issued unsecured senior notes with a principal amount of $450 million (the "2020 Senior Notes") bearing a coupon of 3.70%.
The Company was in compliance with all covenants upon the repayment in full of the 2023 Term Loan. 48 Table of Contents On July 2, 2024, the Company used a portion of the net proceeds from the sale of the 2024 Senior Notes, after deducting underwriting discounts and commissions and other offering expenses, to repay in full the 2023 Term Loan. 2020 Senior Unsecured Notes Due 2031 On July 23, 2020, the Company issued unsecured senior notes with a principal amount of $450 million (the "2020 Senior Notes") bearing a coupon of 3.70%.
Our discussion of our results of operations excludes reimbursable franchise marketing and reservation system revenues and expenses and the management agreement cost reimbursements and expenses included in the Company's other revenues from franchised and managed properties and other expenses from franchised and managed properties.
Our discussion of our results of operations excludes reimbursable franchise marketing and reservation revenues and expenses and the management agreement cost reimbursements and expenses included in the Company's revenue for reimbursable costs from franchised and managed properties and reimbursable expenses from franchised and managed properties.
The amounts allocated to the brand intellectual property are recognized on a gross basis over time using the output measure of time elapsed, and are presented within royalty, licensing and management fees and platform and procurement services fees in the consolidated statements of income.
The amounts allocated to the brand intellectual property are recognized on a gross basis over time using the output measure of time elapsed, and are presented within partnership services and fees in the consolidated statements of income.
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.
As of December 31, 2025, the Company maintained a total leverage ratio of 2.86x, including outstanding debt of approximately $469.8 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 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, 2025, the Company was in compliance with all of its financial covenants under its credit agreements and the Company expects to remain in such 45 Table of Contents compliance.
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.
These redemptions were outside the share repurchase program. During the year ended December 31, 2025, the Company received proceeds of $6.8 million from stock options exercised by employees.
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.
During the years ended December 31, 2025, 2024, and 2023, the Company's net franchise agreement acquisition costs were $83.4 million, $112.2 million, and $98.3 million, respectively.
The decrease was primarily due to a net loss of $8.3 million on the sales of equity securities related to the pursuit of the Wyndham acquisition in 2024 and a $4.0 million unrealized gain on investments in equity securities in 2023, both of which were partially offset by dividend income of $1.5 million and a $0.6 million increase in the Company's deferred compensation and employee benefit plans assets based on increases in the fair value of the underlying investments.
Other Losses (Gains), net Other losses (gains), net decreased $12.3 million primarily due to a net loss of $8.3 million on the sales of equity securities related to the pursuit of the Wyndham acquisition during the year ended December 31, 2024 and a $4.0 million unrealized gain on investments in equity securities during the year ended December 31, 2023, all of which were partially offset by dividend income of $1.5 million that was recognized during the year ended December 31, 2024 and a $0.6 million increase in the Company's deferred compensation and employee benefit plans assets based on increases in the fair value of the underlying investments.
Royalty, Licensing and Management Fees Domestic royalty fees decreased $3.4 million to $454.7 million for the year ended December 31, 2024 from $458.1 million for the year ended December 31, 2023.
U.S. royalty fees decreased $3.4 million to $454.7 million for the year ended December 31, 2024 from $458.1 million for the year ended 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.
We primarily engage in these investment and guaranty 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 $667.2 million of investments in the Cambria Hotels and Everhome Suites brands reflected in the consolidated balance sheet as of December 31, 2025.
As long as the Company maintained an Investment Grade Rating, as defined in the term loan agreement, then the Company would not need to comply with the consolidated fixed charge coverage ratio covenant. The Company was in compliance with all covenants upon the repayment in full of the 2023 Term Loan.
As long as the Company maintained an Investment Grade Rating, as defined in the term loan agreement, then the Company would not need to comply with the consolidated fixed charge coverage ratio covenant.
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.
As of December 31, 2025, we had 7,575 hotels with 656,825 rooms open and operating, and 825 hotels with 77,862 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.
In 2024, the Company recognized a loss on extinguishment of debt due to the repayment of the 2023 Term Loan.
During the year ended December 31, 2024, the Company recognized a loss on extinguishment of debt due to the repayment of the 2023 Term Loan.
Cash Flows from Investing Activities The net cash used in investing activities was $84.6 million, $265.6 million, and $442.4 million for the years ended December 31, 2024, 2023, and 2022, respectively. During the years ended December 31, 2024, 2023, and 2022, investments in owned hotel properties totaled $106.8 million, $68.6 million, and $65.8 million, respectively.
Cash Flows from Investing Activities The net cash used in investing activities was $218.3 million, $84.6 million, and $265.6 million for the years ended December 31, 2025, 2024, and 2023, respectively. 46 Table of Contents During the years ended December 31, 2025, 2024, and 2023, investments in owned hotel properties totaled $106.9 million, $106.8 million, and $68.6 million, respectively.
The fee and cost structure of our franchising business provides opportunities to improve our operating results by increasing the number of franchised hotel rooms and the effective royalty rates in our franchise contracts resulting in increased initial franchise fees, ongoing royalty and licensing fees, and platform and procurement services fees.
The fee and cost structure of our franchising business provides opportunities to improve our operating results by increasing the number of franchised hotel rooms and the royalty rates in our franchise contracts.
The 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.
A summary of the operating performance for the Company's U.S. 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 Collection, Cambria, Park Plaza, Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands.
The decrease was primarily due to the termination of the Wyndham acquisition pursuit on March 8, 2024 and substantial completion of the integration of the Radisson Hotels Americas business in the fourth quarter of 2023.
Business Combination, Diligence and Transition Costs Business combination, diligence and transition costs decreased $38.5 million primarily due to the termination of the Wyndham acquisition pursuit on March 8, 2024 and substantial completion of the integration of the Radisson Hotels Americas business in the fourth quarter of 2023.
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.
Impairment of Long-Lived Assets Impairment of long-lived assets decreased $3.7 million primarily due to a sublease agreement that was signed for the legacy Radisson corporate office space in Minneapolis, Minnesota.
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, 2025, 2024, and 2023, reimbursable expenses from franchised and managed properties exceeded revenue for reimbursable costs from franchised and managed properties by $47.1 million, $18.2 million, and $32.8 million, respectively. Refer to the Operations Review section in MD&A for additional analysis of our results of operations.
The increase was primarily due to a distribution from an unconsolidated affiliate, which sold its underlying assets, resulting in the recognition of a $7.2 million gain in 2024. Refer to Note 8 to our consolidated financial statements for additional information.
Equity in Net Gain of Affiliates Equity in net gain of affiliates increased $9.5 million primarily due to a distribution from an unconsolidated affiliate, which sold its underlying assets, resulting in the recognition of a $7.2 million gain during the year ended December 31, 2024. Refer to Note 7 to our consolidated financial statements for additional information.
The 2024 annual dividend rate was $1.15 per share or approximately $55.5 million in aggregate dividend payments. Cash Flows from Operating Activities During the years ended December 31, 2024, 2023, and 2022, the net cash provided by operating activities was $319.4 million, $296.6 million, and $367.1 million, respectively.
The 2025 annual dividend rate was $1.15 per share or approximately $53.5 million in aggregate dividend payments. Future dividends are subject to declarations by our board of directors. Cash Flows from Operating Activities During the years ended December 31, 2025, 2024, and 2023, the net cash provided by operating activities was $270.4 million, $319.4 million, and $296.6 million, 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.
During the years ended December 31, 2025, 2024, and 2023, the Company issued a total of $6.9 million, $38.0 million, and $4.3 million of notes receivable loans, respectively, and received repayments totaling $7.4 million, $32.1 million, and $10.9 million on the notes receivable loans, respectively.
The following table summarizes the material contractual obligations (excluding the previously addressed debt obligations, the financing, investment, guaranty, and franchise agreement acquisition cost commitments to franchisees, and the deferred compensation plan liabilities) as of December 31, 2024: Payments due by period (in thousands) Total Less than 1 year Greater than 1 year Purchase obligations $ 112,222 $ 66,542 $ 45,680 Total contractual obligations $ 112,222 $ 66,542 $ 45,680 48 Table of Contents Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, and the related disclosures in the consolidated financial statements and the accompanying footnotes.
The Company has material future contractual obligations of $104.2 million (excluding the previously addressed debt obligations, the financing, investment, guaranty, and franchise agreement acquisition cost commitments to franchisees, and the deferred compensation plan liabilities) as of December 31, 2025. 50 Table of Contents Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, and the related disclosures in the consolidated financial statements and the accompanying footnotes.
In 2023, the Company derecognized certain economic development loans from the consolidated balance sheets due to satisfying the relevant performance conditions in the loan agreement, resulting in a gain on extinguishment of debt. 42 Table of Contents Other Loss (Gain) Other loss (gain) decreased $12.3 million to other losses of $1.6 million for the year ended December 31, 2024 from other gains of $10.6 million for the year ended December 31, 2023.
During the year ended December 31, 2023, the Company derecognized certain economic development loans from the consolidated balance sheets due to satisfying the relevant performance conditions in the loan agreement, resulting in a gain on extinguishment of debt.
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.
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.
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.
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.
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.
During the year ended December 31, 2025, the Company repurchased 1.0 million shares of its common stock under the share repurchase program at a total cost, including accrued excise tax, of $125.9 million. As of December 31, 2025, the Company had 2.8 million shares remaining under the current share repurchase authorization.
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.
Upon the expiration of the Company's previous 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 was not required to repay the advances.
Upon the expiration of the Company's previous ten-year corporate headquarters lease agreement in 2023, any outstanding advances would be forgiven in full.
Under the terms of the agreement, upon the expiration of the Company's previous ten-year corporate headquarters lease agreement in 2023, any outstanding advances would be forgiven in full. The $4.4 million of advances were previously recognized as debt in the consolidated balance sheets.
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. 37 Table of Contents 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.
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.
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's franchise agreements require the payment of marketing and reservation 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. 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.
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.
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.
We continue to monitor future inflation trends along with the corresponding impacts to our business. 39 Table of Contents Operations Review A summary of the financial results for the years ended December 31, 2024 and 2023 was as follows: December 31, (in thousands) 2024 2023 REVENUES Royalty, licensing and management fees $ 514,569 $ 513,412 Initial franchise fees 25,606 27,787 Platform and procurement services fees 75,752 75,114 Owned hotels 113,459 97,641 Other 61,803 46,051 Other revenues from franchised and managed properties 793,650 784,160 Total revenues 1,584,839 1,544,165 OPERATING EXPENSES Selling, general and administrative 219,878 216,081 Business combination, diligence and transition costs 17,233 55,778 Depreciation and amortization 43,282 39,659 Owned hotels 83,148 71,474 Other expenses from franchised and managed properties 757,525 782,409 Total operating expenses 1,121,066 1,165,401 Impairment of long-lived assets — (3,736) Operating income 463,773 375,028 OTHER EXPENSES AND INCOME, NET Interest expense 87,131 63,780 Interest income (8,646) (7,764) Loss (gain) on extinguishment of debt 331 (4,416) Other loss (gain) 1,641 (10,649) Equity in net gain of affiliates (12,329) (2,879) Total other expenses and income, net 68,128 38,072 Income before income taxes 395,645 336,956 Income tax expense 95,980 78,449 Net income $ 299,665 $ 258,507 Results of Operations For the year ended December 31, 2024, the Company recognized income before income taxes of $395.6 million, which is a $58.7 million increase from the year ended December 31, 2023.
The effective income tax rate for the year ended December 31, 2024 was 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, which were partially offset by federal income tax credits. 42 Table of Contents Operations Review A summary of the financial results for the years ended December 31, 2024 and 2023 was as follows: December 31, (in thousands) 2024 2023 REVENUES Franchise and management fees $ 669,637 $ 652,060 Partnership services and fees 99,491 91,790 Owned hotels 113,459 97,641 Other 64,060 55,097 Revenue for reimbursable costs from franchised and managed properties 638,192 647,577 Total revenues 1,584,839 1,544,165 OPERATING EXPENSES Selling, general and administrative 312,388 312,701 Business combination, diligence and transition costs 17,233 55,778 Depreciation and amortization 51,953 45,038 Owned hotels 83,148 71,474 Reimbursable expenses from franchised and managed properties 656,344 680,410 Total operating expenses 1,121,066 1,165,401 Impairment of long-lived assets — (3,736) Operating income 463,773 375,028 OTHER EXPENSES AND (INCOME), NET Interest expense 87,131 63,780 Interest income (8,646) (7,764) Loss (gain) on extinguishment of debt 331 (4,416) Other losses (gains), net 1,641 (10,649) Equity in net gain of affiliates (12,329) (2,879) Total other expenses and (income), net 68,128 38,072 Income before income taxes 395,645 336,956 Income tax expense 95,980 78,449 Net income $ 299,665 $ 258,507 Results of Operations For the year ended December 31, 2024, the Company recognized income before income taxes of $395.6 million, which is a $58.7 million increase from the year ended December 31, 2023.
(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.
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.
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.
Additionally, the 37 Table of Contents Company's management agreements include cost reimbursements, which is primarily related to payroll costs at the managed hotels where the Company is the employer.
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.
During the year ended December 31, 2025, there were no purchases or sales of equity securities. During the year ended December 31, 2024, the Company purchased no equity securities and received $108.1 million in proceeds from the sales of equity securities.
Our principal source of revenue is franchise fees, which is based on the gross room revenues or the number of rooms at our franchised properties.
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. Our principal source of revenue is franchise fees, which is based on the gross room revenues or the number of rooms at our franchised properties.
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. Our Company articulates its mission as a commitment to our franchisees’ profitability by providing our franchisees with hotel franchises that strive to generate the highest return on investment of any hotel franchise.
Our Company articulates its mission as a commitment to our franchisees’ profitability by providing our franchisees with hotel franchises that strive to generate the highest return on investment of any hotel franchise. We have developed an operating system dedicated to our franchisees’ success that focuses on delivering guests to their hotels and reducing hotel operating costs.
We intend to continue to strategically develop hotels to increase the presence of our newly introduced brands in the United States, drive greater guest satisfaction and brand preference, and ultimately increase the number of franchise agreements awarded.
We have strategically developed hotels to increase the presence of our newly introduced brands in the U.S., drive greater guest satisfaction and brand preference, and ultimately increase the number of franchise agreements awarded. When developing hotels, we seek key markets with strong growth potential that will deliver strong operating performance and improve the recognition of our brands.
Operating income increased $88.7 million primarily due to a $34.4 million increase in the net surplus generated from other revenues and other expenses from franchised and managed properties, a $15.8 million increase in other revenues, and a $38.5 million decrease in business combination, diligence and transition costs. The primary reasons for these fluctuations are described in more detail below.
Operating income increased $88.7 million primarily due to a $17.6 million increase in franchise and management fees, a $7.7 million increase in partnership services and fees, a $9.0 million increase in other revenues, a $14.7 million decrease in the net reimbursable deficit from franchised and managed properties, and a $38.5 million decrease in business combination, diligence and transition costs.
Other Revenues Other revenues increased $15.8 million to $61.8 million for the year ended December 31, 2024 from $46.1 million for the year ended December 31, 2023. The increase was primarily due to an increase in liquidated damages that resulted from the early termination of franchise agreements and other franchising revenues.
Owned Hotels The Company's revenues, net of operating expenses, from the owned hotels increased $4.1 million primarily due to the improved operating performance at our owned hotels and the addition of two owned hotels during the year ended December 31, 2024 as compared to the prior year. 44 Table of Contents Other Revenues Other revenues increased $9.0 million primarily due to an increase in liquidated damages that resulted from the early termination of franchise agreements and other franchising revenues.
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%.
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. 2025 Economic Development Loans The Company entered into certain economic development agreements with various governmental entities in conjunction with the relocation of its corporate headquarters in November 2023.
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.
The Company is in compliance with all applicable current performance conditions as of December 31, 2025. 2013 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.

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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, 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
Biggest changeA hypothetical change of 10% in the Company’s effective interest rate from the December 31, 2025 levels would increase or decrease annual interest expense by $2.5 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 material derivative financial instruments. 52 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 $49.3 million as of December 31, 2024 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 $52.0 million as of December 31, 2025, 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, 2024, the Company had $340.0 million of variable interest rate debt instruments outstanding at an effective interest rate of 6.10%.
The Company will continue to monitor the exposure in these areas and make the appropriate adjustments as market conditions dictate. As of December 31, 2025, the Company had $472.6 million of variable interest rate debt instruments outstanding at an effective interest rate of 5.22%.

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