What changed in this filing

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Item 1. Financial Statements

2025-08-06 compared with 2025-05-08 · 127 added, 79 removed, 452 unchanged (31% of the section changed)

3 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Franchise and management fees $ 177,086 $ 179,803 $ 322,154 $ 323,213

15 unchanged sentences

Interest income ( 1,456 ) ( 2,415 ) ( 3,015 ) ( 4,146 )

Other loss 436 1,336

Equity in net loss of affiliates 51 155

Other (gain) loss ( 5,374 ) 2,544 ( 4,938 ) 3,880

Equity in net loss (gain) of affiliates 80 ( 7,933 ) 131 ( 7,778 )

Total other expenses and income, net 15,986 16,041 36,156 35,982

9 unchanged sentences

(IN THOUSANDS)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Net income $ 81,734 $ 87,136 $ 126,268 $ 118,145

Other comprehensive income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 2,079 ( 694 ) 2,142 ( 240 )

Other comprehensive income, net of tax 63 454

Other comprehensive income (loss), net of tax 2,079 ( 694 ) 2,142 ( 240 )

Comprehensive income $ 83,813 $ 86,442 $ 128,410 $ 117,905

3 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current assets

37 unchanged sentences

160,000,000 shares authorized;

95,065,638 shares issued at March 31, 2025 and December 31, 2024;

46,589,011 and 46,856,567 shares outstanding at March 31, 2025 and December 31, 2024, respectively

95,065,638 shares issued at June 30, 2025 and December 31, 2024;

46,263,374 and 46,856,567 shares outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid-in-capital 387,161 370,201

1 unchanged sentence

Treasury stock, at cost;

48,476,627 and 48,209,071 shares at March 31, 2025 and December 31, 2024, respectively

48,802,264 and 48,209,071 shares at June 30, 2025 and December 31, 2024, respectively

( 2,511,169 ) ( 2,411,527 )

6 unchanged sentences

(IN THOUSANDS)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Non-cash share-based compensation and other charges 19,438 19,253

Non-cash interest, investments, and affiliate loss, net 1,515 2,510

Non-cash interest, investments, and affiliate income, net ( 1,668 ) ( 1,791 )

Deferred income taxes 850 ( 2,689 )

10 unchanged sentences

Proceeds from sales of equity securities — 16,815

Distributions from sales of affiliates — 15,850

Other items, net ( 1,201 ) ( 1,936 )

2 unchanged sentences

Net borrowings pursuant to revolving credit facilities 130,000 301,500

Debt issuance costs — ( 2,760 )

Purchases of treasury stock ( 112,756 ) ( 292,711 )

1 unchanged sentence

Proceeds from the exercise of stock options 6,385 4,261

Net cash provided by financing activities 32,208 56,473

Net cash used in financing activities ( 3,239 ) ( 18,564 )

Net change in cash and cash equivalents 17,683 32,999

29 unchanged sentences

Balance as of March 31, 2024 49,284,204 $ 951 $ 335,612 $ ( 5,217 ) $ ( 2,097,840 ) $ 1,773,221 $ 6,727

Net income — — — — — 87,136 87,136

Other comprehensive loss, net of tax — — — ( 694 ) — — ( 694 )

Share-based payment activity (1)

17,095 — 8,561 — 685 — 9,246

Dividends declared ($ 0.2875 per share)

— — — — — ( 13,613 ) ( 13,613 )

Treasury purchases ( 1,950,432 ) — — — ( 235,581 ) — ( 235,581 )

Balance as of June 30, 2024 47,350,867 $ 951 $ 344,173 $ ( 5,911 ) $ ( 2,332,736 ) $ 1,846,744 $ ( 146,779 )

Outstanding Common

14 unchanged sentences

Balance as of March 31, 2025 46,589,011 $ 951 $ 376,014 $ ( 6,130 ) $ ( 2,467,209 ) $ 2,032,440 $ ( 63,934 )

Net income — — — — — 81,734 81,734

Other comprehensive income, net of tax — — — 2,079 — — 2,079

Share-based payment activity (1)

29,639 — 11,147 — 1,181 — 12,328

Dividends declared ($ 0.2875 per share)

— — — — — ( 13,304 ) ( 13,304 )

Treasury purchases ( 355,276 ) — — — ( 45,141 ) — ( 45,141 )

Balance as of June 30, 2025 46,263,374 $ 951 $ 387,161 $ ( 4,051 ) $ ( 2,511,169 ) $ 2,100,870 $ ( 26,238 )

(1) During certain periods presented, accumulated dividends were paid to certain shareholders upon vesting of their performance vested restricted stock units ("PVRSU"), which are presented in Share-based payment activity.

26 unchanged sentences

The reclassifications had no effect on the Company's previously reported total revenues, total operating expenses, operating income, or net income.

The following table presents the effect of the reclassifications on the three months ended March 31, 2024 consolidated statement of income.

Three Months Ended

March 31, 2024

As previously reported Reclassification As reclassified

The following table presents the effect of the reclassifications on the three and six months ended June 30, 2024 consolidated statements of income.

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2024

As previously reported Reclassification As reclassified As previously reported Reclassification As reclassified

Franchise and management fees $ 141,813 $ 37,990 $ 179,803 $ 247,280 $ 75,933 $ 323,213

22 unchanged sentences

Recently Issued Accounting Standards

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Improvements to Reportable Segment Disclosures ("ASU 2023-07").

ASU 2023-07 requires public entities to disclose significant segment expenses by reportable segment if they are regularly provided to the chief operating decision maker and

included in each reported measure of segment profit or loss on both an annual and an interim basis.

ASU 2023-07 was effective for the annual reporting period beginning after December 15, 2023 and the interim periods within the annual reporting period beginning after December 15, 2024.

The Company adopted ASU 2023-07 on a retrospective basis effective December 31, 2024 for annual periods and March 31, 2025 for interim periods.

The adoption of this standard did not have an impact on the Company's consolidated financial statements, but it did require enhanced segment disclosures in the notes to the consolidated financial statements.

Refer to Note 11 for more information.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09").

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09").

ASU 2023-09 is designed to provide additional information to financial statement users in regard to how an entity's operations, risks, and planning affect its tax rate, opportunities, and future cash flows.

11 unchanged sentences

Loyalty points are typically redeemed within three years of issuance.

The following table summarizes the significant changes in the contract liabilities balances during the period from December 31, 2024 to March 31, 2025:

The following table summarizes the significant changes in the contract liabilities balances during the period from December 31, 2024 to June 30, 2025:

(in thousands)

2 unchanged sentences

Revenue recognized in the period ( 56,620 )

Balance as of March 31, 2025 $ 220,593

Balance as of June 30, 2025 $ 217,936

Remaining Performance Obligations

The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $ 220.6 million as of March 31, 2025.

The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $ 217.9 million as of June 30, 2025.

This amount represents the fixed transaction price that will be recognized as revenue in future periods, which is presented as current and non-current deferred revenue in the consolidated balance sheets.

2 unchanged sentences

third-party partners), net of the cost of redemptions.

For both the three months ended March 31, 2025 and 2024, the loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $ 19.5 million.

The loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $ 37.2 million and $ 36.3 million for the three months ended June 30, 2025 and 2024, respectively, and $ 56.7 million and $ 55.8 million for the six months ended June 30, 2025 and 2024, respectively.

Receivables and Allowance for Credit Losses

3 unchanged sentences

The following table summarizes the composition of the notes receivable balances by credit quality indicator and the allowance for credit losses:

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Senior $ 97,942 $ 94,963

13 unchanged sentences

The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses:

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Beginning balance $ 7,331 $ 8,616

3 unchanged sentences

During the year ended December 31, 2024, the recoveries were primarily associated with cash collections pursuant to a settlement agreement with a borrower.

As of March 31, 2025 and December 31, 2024, three and one note receivable loans, respectively, with senior credit quality indicators met the definition of collateral-dependent and are collateralized by the membership interests in the borrowing entities, the associated land parcel, or the operating hotel.

As of June 30, 2025 and December 31, 2024, three and one note receivable loans, respectively, with senior credit quality indicators met the definition of collateral-dependent and are collateralized by the membership interests in the borrowing entities, the associated land parcel, or the operating hotel.

The Company used both a market approach that uses quoted market prices and an income approach that uses discounted cash flows to value the underlying collateral.

1 unchanged sentence

These nonrecurring fair value measurements are classified as Level 3 in the fair value measurement hierarchy because they are unobservable inputs which are significant to the overall fair value.

Based on the Company's analysis, the fair value of the collateral secures substantially all of the carrying value of the respective note receivable loan.

The allowance for credit losses attributable to the collateral-dependent note receivable loans was $ 3.2 million and $ 2.2 million as of March 31, 2025 and December 31, 2024, respectively.

Based on the Company's analysis, the fair value of the collateral secures substantially all of the carrying value of the

respective note receivable loan.

The allowance for credit losses attributable to the collateral-dependent note receivable loans was $ 3.2 million and $ 2.2 million as of June 30, 2025 and December 31, 2024, respectively.

The following table summarizes the past due balances by credit quality indicator of the notes receivable:

5 unchanged sentences

Notes Receivable

As of March 31, 2025

As of June 30, 2025

Senior $ — $ — $ 42,900 $ 42,900 $ 55,042 $ 97,942

7 unchanged sentences

$ — $ — $ 18,248 $ 18,248 $ 97,266 $ 115,514

The amortized cost basis of the notes receivable in a non-accrual status was $ 45.2 million and $ 17.5 million as of March 31, 2025 and December 31, 2024, respectively.

The amortized cost basis of the notes receivable in a non-accrual status was $ 45.2 million and $ 17.5 million as of June 30, 2025 and December 31, 2024, respectively.

Variable Interest through Notes Receivable

The Company has issued notes receivable loans to certain entities that have created variable interests in the associated borrowers totaling $ 104.5 million and $ 103.1 million as of March 31, 2025 and December 31, 2024, respectively.

The Company has issued notes receivable loans to certain entities that have created variable interests in the associated borrowers totaling $ 105.0 million and $ 103.1 million as of June 30, 2025 and December 31, 2024, respectively.

The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs").

2 unchanged sentences

The Company has extended loans to various unconsolidated affiliates or members of our unconsolidated affiliates.

The Company had a total principal balance on these loans of $ 66.0 million and $ 66.2 million as of March 31, 2025 and December 31, 2024, respectively.

The Company had a total principal balance on these loans of $ 65.8 million and $ 66.2 million as of June 30, 2025 and December 31, 2024, respectively.

These loans mature at various dates and bear interest at fixed or variable rates.

1 unchanged sentence

Accounts receivable consists primarily of franchise and related fees due from the hotel franchisees and are recorded at the invoiced amount.

During the three months ended March 31, 2025, the Company recognized provisions for credit losses on accounts receivable of $ 5.2 million in selling, general and administrative expenses, and $ 4.0 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income.

During the six months ended June 30, 2025, the Company recognized provisions for credit losses on accounts receivable of $ 9.2 million in selling, general and administrative expenses, and $ 6.9 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income.

During the year ended December 31, 2024, the Company recognized provisions for credit losses on accounts receivable of $ 11.0 million in selling, general and administrative expenses, and $ 9.7 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income.

During the three months ended March 31, 2025, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 3.1 million.

During the six months ended June 30, 2025, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 12.5 million.

During the year ended December 31, 2024, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 14.4 million.

1 unchanged sentence

The Company has equity method investments in affiliates primarily related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites in strategic markets.

As of March 31, 2025 and December 31, 2024, the Company had total investments in affiliates in the consolidated balance sheets of $ 122.1 million and $ 117.0 million, respectively, which included investments in affiliates that represent VIEs of $ 108.8 million and $ 104.2 million, respectively.

As of June 30, 2025 and December 31, 2024, the Company had total investments in affiliates in the consolidated balance sheets of $ 125.5 million and $ 117.0 million, respectively, which included investments in affiliates that represent VIEs of $ 110.5 million and $ 104.2 million, respectively.

The Company has determined that it is not the primary beneficiary of any of these VIEs, however the Company does exercise significant influence through its equity ownership and as a result, the investments in these affiliates are accounted for under the equity method of accounting.

During the three months ended March 31, 2025 and 2024, the Company recognized losses totaling $ 0.9 million and $ 1.2 million, respectively, from these investments that represent VIEs.

During the three months ended June 30, 2025 and 2024, the Company recognized losses totaling $ 1.0 million and gains totaling $ 6.8 million, respectively, from these investments that represent VIEs.

During the six months ended June 30, 2025 and 2024, the Company recognized losses totaling $ 1.9 million

and gains totaling $ 5.6 million, respectively, from these investments that represent VIEs.

The Company's maximum exposure to losses related to its investments in the VIEs is limited to the total of its respective equity investment as well as certain limited payment guaranties, which are described in Note 12 to these consolidated financial statements.

During the three months ended March 31, 2025 and 2024, the Company recognized no impairment charges related to its equity method investments.

On May 24, 2024, one of the Company's unconsolidated affiliates sold its underlying assets.

The Company received a distribution from the unconsolidated affiliate and recognized a gain of $ 7.2 million, which was recognized in equity in net gain of affiliates in the consolidated statements of income for the three and six months ended June 30, 2024.

During the three and six months ended June 30, 2025 and 2024, the Company recognized no impairment charges related to its equity method investments.

Debt consisted of the following:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

(in thousands)

$ 400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88 %, less a discount and deferred issuance costs of $ 2.8 million and $ 3.0 million at March 31, 2025 and December 31, 2024, respectively

$ 400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88 %, less a discount and deferred issuance costs of $ 2.7 million and $ 3.0 million at June 30, 2025 and December 31, 2024, respectively

$ 397,343 $ 397,042

$ 450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86 %, less a discount and deferred issuance costs of $ 3.5 million and $ 3.7 million at March 31, 2025 and December 31, 2024, respectively

$ 450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86 %, less a discount and deferred issuance costs of $ 3.4 million and $ 3.7 million at June 30, 2025 and December 31, 2024, respectively

446,605 446,300

$ 600 million senior unsecured notes due 2034 ("2024 Senior Notes") with an effective interest rate of 6.11 %, less a discount and deferred issuance costs of $ 10.9 million and $ 11.2 million at March 31, 2025 and December 31, 2024, respectively

$ 600 million senior unsecured notes due 2034 ("2024 Senior Notes") with an effective interest rate of 6.11 %, less a discount and deferred issuance costs of $ 10.7 million and $ 11.2 million at June 30, 2025 and December 31, 2024, respectively

589,350 588,764

$ 1 billion senior unsecured revolving credit facility with an effective interest rate of 5.73 %, less deferred issuance costs of $ 3.4 million and $ 3.6 million at March 31, 2025 and December 31, 2024, respectively

$ 1 billion senior unsecured revolving credit facility with an effective interest rate of 5.72 %, less deferred issuance costs of $ 3.2 million and $ 3.6 million at June 30, 2025 and December 31, 2024, respectively

466,818 336,420

3 unchanged sentences

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2025 and 2024 were as follows:

The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2025 and 2024 were as follows:

(in thousands)

1 unchanged sentence

Other comprehensive income before reclassification 2,142

Balance as of March 31, 2025 $ ( 6,130 )

Balance as of June 30, 2025 $ ( 4,051 )

(in thousands)

1 unchanged sentence

Other comprehensive income before reclassification ( 240 )

Balance as of March 31, 2024 $ ( 5,217 )

Other comprehensive loss, net of tax, for both the three months ended March 31, 2025 and 2024 relates entirely to foreign currency items, and there were no amounts reclassified from accumulated other comprehensive loss during either period.

Balance as of June 30, 2024 $ ( 5,911 )

Other comprehensive loss, net of tax, for both the six months ended June 30, 2025 and 2024 relates entirely to foreign currency items, and there were no amounts reclassified from accumulated other comprehensive loss during either period.

Fair Value Measurements

6 unchanged sentences

Level 3 - Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument.

The Company does not currently have any assets recorded at fair value on a recurring basis whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the three months ended March 31, 2025 and during the year ended December 31, 2024.

The Company does not currently have any assets recorded at fair value on a recurring basis whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the six months ended June 30, 2025 and during the year ended December 31, 2024.

The Company recognized the following assets at fair value on a recurring basis in the consolidated balance sheets:

1 unchanged sentence

(in thousands) Total Level 1 Level 2 Level 3

As of March 31, 2025

As of June 30, 2025

Mutual funds (1)

17 unchanged sentences

Refer to Note 5 for additional information on debt.

As of March 31, 2025 and December 31, 2024, the carrying amounts and the fair values were as follows:

March 31, 2025 December 31, 2024

As of June 30, 2025 and December 31, 2024, the carrying amounts and the fair values were as follows:

June 30, 2025 December 31, 2024

(in thousands) Carrying Amount Fair Value Carrying Amount Fair Value

4 unchanged sentences

The settlement of such fair value amounts may not be possible or a prudent management decision.

The Company's effective income tax rates were 25.5 % and 22.9 % for the three months ended March 31, 2025 and 2024, respectively.

The Company's effective income tax rates were 24.7 % and 25.3 % for the three months ended June 30, 2025 and 2024, respectively.

The Company's effective income tax rates were 25.0 % and 24.6 % for the six months ended June 30, 2025 and 2024, respectively.

The effective income tax rates were higher than the U.S.

2 unchanged sentences

The components of the Company’s share-based compensation expense were as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands) 2025 2024 2025

3 unchanged sentences

Total share-based compensation expense $ 10,953 $ 9,277 $ 21,368 $ 18,371

A summary of the share-based award activity during the three months ended March 31, 2025 is presented below:

A summary of the share-based award activity during the six months ended June 30, 2025 is presented below:

Stock Options Restricted Stock Performance Vested

11 unchanged sentences

Forfeited ( 613 ) 134.58 ( 6,231 ) 124.52 ( 8,845 ) 148.03

Outstanding as of March 31, 2025 727,538 $ 111.29 6.0 years 341,333 $ 138.02 505,908 $ 137.61

Options exercisable as of March 31, 2025 582,137 $ 108.03 5.5 years

(1) Any revisions to the outstanding PVRSUs during the three months ended March 31, 2025 is based on the Company's performance relative to the targeted performance conditions in the respective PVRSUs.

The fair value of the restricted stock and the PVRSUs with performance conditions that were granted during the three months ended March 31, 2025 was equal to the market price of the Company’s common stock on the date of the grant.

Outstanding as of June 30, 2025 701,153 $ 110.88 5.7 years 340,621 $ 138.21 504,817 $ 137.62

Options exercisable as of June 30, 2025 561,418 $ 107.64 5.2 years

(1) Any revisions to the outstanding PVRSUs during the six months ended June 30, 2025 is based on the Company's performance relative to the targeted performance conditions in the respective PVRSUs.

The fair value of the restricted stock and the PVRSUs with performance conditions that were granted during the six months ended June 30, 2025 was equal to the market price of the Company’s common stock on the date of the grant.

The fair value of the PVRSUs with market conditions that are based on the Company’s total shareholder return relative to a predetermined peer group was estimated using a Monte Carlo simulation method as of the date of the grant.

6 unchanged sentences

The computation of basic and diluted earnings per share was as follows:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in thousands, except per share amounts) 2025 2024 2025 2024

12 unchanged sentences

The following securities have been excluded from the calculation of the diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive effect:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(in thousands) 2025 2024 2025 2024

Stock options 128 248 128 231

PVRSUs — 49 — 49

Reportable Segments

11 unchanged sentences

The following tables present the financial information for the Company's segments:

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

(in thousands) Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated

7 unchanged sentences

Interest income ( 1,456 ) ( 2,415 )

Other loss 436

Equity in net loss of affiliates 51

Other (gain) loss ( 5,374 ) 2,544

Equity in net loss (gain) of affiliates 80 ( 7,933 )

Income before income taxes $ 108,611 $ 116,581

Three Months Ended March 31, 2024

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

(in thousands) Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated

7 unchanged sentences

Interest income ( 3,015 ) ( 4,146 )

Other loss 1,336

Equity in net loss of affiliates 155

Other (gain) loss ( 4,938 ) 3,880

Equity in net loss (gain) of affiliates 131 ( 7,778 )

Income before income taxes $ 168,373 $ 156,789

4 unchanged sentences

Contingencies

The Company entered into various limited payment guaranties with regards to the Company’s VIEs in order to support their efforts to develop and own hotels that are franchised under the Company’s brands.

The Company entered into various limited payment guaranties with regards to the Company’s VIEs in order to support it's efforts to develop and own hotels that are franchised under the Company’s brands.

Under these limited payment guaranties, the Company has agreed to guarantee a portion of the outstanding debt until certain conditions are met, such as (a) the loan matures, (b) certain debt covenants are achieved, (c) the maximum amount guaranteed by the Company is paid in full, or (d) the Company, through its affiliates, ceases to be a member of the VIE.

As of March 31, 2025, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $ 38.2 million, plus unpaid expenses and accrued but unpaid interest.

As of June 30, 2025, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $ 47.4 million, plus unpaid expenses and accrued but unpaid interest.

The Company believes the likelihood of having to perform under these guaranties is remote.

In the event of performance, the Company has recourse for certain of the guaranties in the form of partial guaranties from third parties.

The Company had the following outstanding commitments as of March 31, 2025:

The Company had the following outstanding commitments as of June 30, 2025:

• As part of the acquisition of Radisson Hotels Americas in August 2022, the Company entered into a long-term management arrangement, with an expiration date of July 31, 2031, to manage hotels owned by a third-party.

As of March 31, 2025, the Company managed seven hotels pursuant to the long-term management arrangement.

As of June 30, 2025, the Company managed seven hotels pursuant to the long-term management arrangement.

In conjunction with the management arrangement, the Company entered into a guarantee with the third-party to fund any shortfalls in the payment of the third-party owner’s priority that is stipulated in the management agreement.

The maximum guarantee under the agreement is $ 22 million.

The Company believes the future performance of the hotels is expected to be sufficient on an annual basis.

Accordingly, no liability was recognized as of March 31, 2025 in the consolidated balance sheets.

As of June 30, 2025, no liability was recognized in the consolidated balance sheets.

For the six months ended June 30, 2025, the Company recognized guarantee payments of $ 2.0 million in selling, general and administrative expenses in the consolidated statements of income.

As of June 30, 2025, the maximum unrecorded exposure of the guarantee was $ 20.0 million.

• The Company strategically deploys capital in the form of franchise agreement acquisition cost payments across our brands to incentivize franchise development.

2 unchanged sentences

• The Company has committed to provide financing in the form of loans or credit facilities to franchisees for brand development efforts.

As of March 31, 2025, the Company had remaining commitments of up to $ 5.8 million, if certain conditions are met.

As of June 30, 2025, the Company had remaining commitments of up to $ 4.3 million, if certain conditions are met.

• The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation system fees.

9 unchanged sentences

With respect to certain of the aforementioned indemnities, such as the indemnifications of the landlords against third-party claims for the use of real estate property leased by the Company, the Company maintains insurance coverage that mitigates any potential liability.

Subsequent Events

On July 2, 2025, the Company acquired the remaining 50 % of the outstanding shares of Choice Hotels Canada, Inc.

("Choice Hotels Canada") and amended the existing master franchise agreement for a purchase price of approximately $ 112.0 million, subject to customary adjustments related to working capital and cash.

The acquisition was funded with available cash and borrowings under the Company's senior unsecured revolving credit facility.

Choice Hotels Canada franchises more than 26,000 rooms in Canada, which have been included in the Company's franchised hotel statistics as a result of the existing master franchise agreement, and will soon have the ability to offer developers access to all 22 hotel brands, including the Company's extended stay brands.

Prior to the acquisition date, the Company owned 50 % of the outstanding shares of Choice Hotels Canada, which was accounted for under the equity method of accounting and reported within investments in affiliates in the consolidated balance sheets.

Due to the close proximity of the Choice Hotels Canada acquisition date and the Company's filing of its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025, the initial accounting for the acquisition is incomplete as of the filing date.

The initial accounting for the acquisition will be included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025.

On July 10, 2025, the Company entered into a joint venture agreement to develop and operate Everhome Suites in certain strategic markets (the "Joint Venture").

The Company contributed $ 71.6 million in cash to the Joint Venture in exchange for an equity ownership interest.

The Company concluded that the Joint Venture represents a VIE.

The Company determined that it is not the primary beneficiary of the VIE, however, the Company does exercise significant influence through its equity ownership and as a result, the Company's investment in the Joint Venture will be accounted for under the equity method of accounting and reported within investments in affiliates in the consolidated balance sheets.

Subsequent to the formation of the Joint Venture, the following transactions were completed:

• The Joint Venture entered into a loan facility for up to $ 500 million.

In connection with the loan facility, the Company has provided a limited payment guarantee, which applies to all hotel projects funded by the loan facility, with the applicable guaranteed amount being determined on a hotel project by hotel project basis.

The Company’s obligation under the limited payment guarantee with respect to any hotel project is effective upon the earlier of (a) the hotel's opening date or (b) 18 months after the date on which construction first started for the hotel.

As of the date of the loan facility, the Company's maximum unrecorded exposure of the principal associated with the limited payment guarantee was $ 11.5 million, plus unpaid expenses and accrued but unpaid interest.

The Company believes the likelihood of having to perform under the guarantee is remote.

In the event of performance, the Company has recourse for the limited payment guarantee in the form of partial guaranties from third parties associated with the Joint Venture.

• The Company sold four wholly-owned Everhome Suites hotels under construction to the Joint Venture for an aggregate sale price of $ 52.0 million, subject to customary prorations.

Prior to the sale, the four wholly-owned Everhome Suites hotels were reported within property and equipment in the consolidated balance sheets.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements