Hotel franchisor Choice Hotels (NYSE: CHH) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 3.4% year on year to $440.8 million. Its non-GAAP profit of $2.02 per share was 2.8% above analysts’ consensus estimates.
Is now the time to buy Choice Hotels? Find out by accessing our full research report, it’s free.
Choice Hotels (CHH) Q2 CY2026 Highlights:
- Revenue: $440.8 million vs analyst estimates of $428.4 million (3.4% year-on-year growth, 2.9% beat)
- Adjusted EPS: $2.02 vs analyst estimates of $1.97 (2.8% beat)
- Adjusted EBITDA: $175.4 million vs analyst estimates of $170.8 million (39.8% margin, 2.7% beat)
- Management lowered its full-year Adjusted EPS guidance to $6.98 at the midpoint, a 0.7% decrease
- EBITDA guidance for the full year is $642.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 23.6%, down from 29.2% in the same quarter last year
- Free Cash Flow Margin: 22.6%, up from 13.5% in the same quarter last year
- RevPAR: $61.95 at quarter end, up 6.4% year on year
- Market Capitalization: $4.9 billion
"Our second quarter results reflect encouraging progress across our key priorities, with U.S. net rooms growth improving for the second consecutive quarter to its strongest first-half performance since 2021 and U.S. RevPAR trends strengthening," said Dom Dragisich, Interim Chief Executive Officer.
Company Overview
With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE: CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Choice Hotels grew its sales at a 13.3% annual rate. Though this growth is acceptable on an absolute basis, we need to see more than just topline growth for the consumer discretionary sector, which can display significant earnings volatility. This means our bar for the sector is particularly high, reflecting the non-essential and hit-driven nature of the products and services offered. Additionally, five-year CAGR starts around Covid, when revenue was depressed then rebounded.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or trend. Choice Hotels’s recent performance shows its demand has slowed as its annualized revenue growth of 2.2% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
We can dig further into the company’s revenue dynamics by analyzing its revenue per available room, which clocked in at $61.95 this quarter and is a key metric accounting for daily rates and occupancy levels. Over the last two years, Choice Hotels’s revenue per room was flat. This number doesn’t surprise us as it’s in line with its revenue growth. It is sometimes the strategy of hotels to grow ancillary revenues because they are price takers in room revenues. 
This quarter, Choice Hotels reported modest year-on-year revenue growth of 3.4% but beat Wall Street’s estimates by 2.9%.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection is underwhelming and indicates its products and services will see some demand headwinds.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Choice Hotels’s operating margin has been trending down over the last 12 months and averaged 27.6% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.
In Q2, Choice Hotels generated an operating margin profit margin of 23.6%, down 5.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Choice Hotels’s EPS grew at 18.1% compounded annual growth rate over the last five years. This performance was better than its revenue growth but doesn’t tell us much about its business quality because its operating margin improvement was less than peers.
In Q2, Choice Hotels reported adjusted EPS of $2.02, up from $1.92 in the same quarter last year. This print beat analysts’ estimates by 2.8%. Over the next 12 months, Wall Street expects Choice Hotels’s full-year EPS to grow 8.8% from $6.79 to $7.38.
Key Takeaways from Choice Hotels’s Q2 Results
It was encouraging to see Choice Hotels beat analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 1.7% to $110.43 immediately after reporting.
So do we think Choice Hotels is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
