What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-19 compared with 2025-02-20 · 375 added, 325 removed, 953 unchanged (42% of the section changed)

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Consolidated Statements of Cash Flows

Consolidated Statements of Shareholders' (Deficit) Equity

Consolidated Statements of Shareholders' Equity (Deficit)

Notes to Consolidated Financial Statements

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Choice Privileges Loyalty Program

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With the assistance of our actuarial specialists, we evaluated management’s methodologies as well as the actuarial assumptions used in estimating the Choice Privileges Loyalty Program expected redemption rates.

Choice Hotels Canada Acquisition

Description of the Matter On July 2, 2025, the Company completed its acquisition of the remaining 50% of the outstanding shares of Choice Hotels Canada, Inc.

(“Choice Hotels Canada”) for a purchase price of approximately $114.5 million, as disclosed in Note 17 to the consolidated financial statements.

Auditing the Company's accounting for its acquisition was complex due to the estimation uncertainty in the Company’s determination of the fair value of identified intangible assets, which consisted of franchise agreements and reacquired territory rights.

The estimation uncertainty was primarily due to the sensitivity of the respective fair values to underlying significant assumptions.

The Company used a discounted cash flow model to measure the franchise agreements and reacquired territory rights intangible assets.

The significant assumptions used to estimate the value of these assets included discount rates and the forecasted cash flows.

These significant assumptions are forward-looking and could be affected by future economic and market conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the accounting for the acquisition.

For example, we tested controls over management’s review of the valuation models, the significant assumptions used to develop the estimates, and the completeness and accuracy of the data used in the valuations.

To test the estimated fair value of the acquired intangible assets, including the franchise agreements and reacquired territory rights, we performed audit procedures that included, among others, evaluating the Company’s selection of the valuation methodologies and testing the significant assumptions, including the forecasted cash flows and the selected discount rates used by the Company’s valuation specialist.

Our procedures included evaluating the completeness and accuracy of the underlying data supporting the significant assumptions in management’s estimates.

We involved our valuation specialists to assist with our evaluation of the valuation methodologies used by the Company and significant assumptions included in the fair value estimates.

For example, we compared the significant assumptions to the Company’s historical performance, to the historical results of the acquired business, and to current industry, market, and economic trends.

/s/ Ernst & Young LLP

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2025 2024 2023

Royalty, licensing and management fees $ 514,569 $ 513,412 $ 471,759

Initial franchise fees 25,606 27,787 28,074

Platform and procurement services fees 75,752 75,114 63,800

Franchise and management fees $ 673,197 $ 669,637 $ 652,060

Partnership services and fees 113,789 99,491 91,790

Owned hotels 121,373 113,459 97,641

Other 72,230 64,060 55,097

Other revenues from franchised and managed properties 793,650 784,160 702,750

Revenue for reimbursable costs from franchised and managed properties 616,204 638,192 647,577

Total revenues 1,596,793 1,584,839 1,544,165

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Owned hotels 91,684 83,148 71,474

Other expenses from franchised and managed properties 757,525 782,409 653,060

Reimbursable expenses from franchised and managed properties 663,336 656,344 680,410

Total operating expenses 1,148,394 1,121,066 1,165,401

Impairment of long-lived assets — — ( 3,736 )

Gain on sale of business and assets, net — — 16,249

Operating income 448,399 463,773 375,028

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Interest income ( 6,237 ) ( 8,646 ) ( 7,764 )

Gain from an acquisition of a joint venture ( 100,025 ) — —

Gain on sale of assets ( 713 ) — —

Loss (gain) on extinguishment of debt — 331 ( 4,416 )

Other loss (gain) 1,641 ( 10,649 ) 7,018

Equity in net gain of affiliates ( 12,329 ) ( 2,879 ) ( 1,732 )

Other (gains) losses, net ( 6,989 ) 1,641 ( 10,649 )

Equity in net loss (gain) of affiliates 14,324 ( 12,329 ) ( 2,879 )

Total other expenses and (income), net ( 8,492 ) 68,128 38,072

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Net income $ 369,946 $ 299,665 $ 258,507

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 886 ( 522 ) ( 460 )

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

886 ( 522 ) ( 460 )

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12,490 32,682

Investments in equity securities, at fair value — 116,374

Investments for employee benefit plans, at fair value 50,227 47,603

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Total assets $ 2,918,203 $ 2,530,527

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities

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Liability for guest loyalty program 85,035 89,013

Current portion of long-term debt — 499,268

Total current liabilities 467,291 462,721

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Deferred compensation and retirement plan obligations 56,532 53,316

Income taxes payable — 8,601

Deferred income taxes 25,303 —

Operating lease liabilities 107,963 113,255

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Retained earnings 2,318,031 2,001,297

Total shareholders’ (deficit) equity ( 45,271 ) 35,598

Total liabilities and shareholders’ (deficit) equity $ 2,530,527 $ 2,394,799

Total shareholders’ equity (deficit) 181,229 ( 45,271 )

Total liabilities and shareholders’ equity (deficit) $ 2,918,203 $ 2,530,527

The accompanying notes are an integral part of these consolidated financial statements.

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Depreciation and amortization 59,715 51,953 45,038

Depreciation and amortization - other expenses from franchised and managed properties 27,578 36,076 33,488

Depreciation and amortization – reimbursable expenses from franchised and managed properties 19,554 18,907 30,697

Franchise agreement acquisition cost amortization 31,966 28,702 20,024

Gain from an acquisition of a joint venture ( 100,025 ) — —

Gain on sale of assets ( 713 ) — —

Loss (gain) on extinguishment of debt — 331 ( 4,416 )

Impairment of long-lived assets — 3,736 —

Gain on sale of business and assets, net — — ( 16,251 )

Loss on impairment of long-lived assets — — 3,736

Non-cash share-based compensation and other charges 38,254 43,250 46,809

Non-cash interest, investments, and affiliate (income) loss, net ( 7,282 ) ( 8,747 ) 7,365

Non-cash interest, investments, and affiliate income, net ( 6,439 ) ( 7,282 ) ( 8,747 )

Deferred income taxes 19,764 ( 19,028 ) ( 1,336 )

Equity in net (gain) loss of affiliates, less distributions received ( 2,327 ) ( 1,570 ) 489

Equity in net loss (gain) of affiliates, less distributions received 19,848 ( 2,327 ) ( 1,570 )

Franchise agreement acquisition costs, net of reimbursements ( 83,444 ) ( 112,164 ) ( 98,316 )

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Issuances of notes receivable ( 6,885 ) ( 37,994 ) ( 4,323 )

Purchases of equity securities — ( 112,420 ) —

Business acquisition, net of cash acquired — — ( 550,431 )

Distributions from sales of affiliates 15,850 868 —

Collections of notes receivable 7,373 32,100 10,852

Business acquisition, net of cash acquired ( 73,395 ) — —

Proceeds from the sale of assets 52,000 — —

Purchases of equity securities — — ( 112,420 )

Proceeds from sales of equity securities — 108,149 —

Proceeds from the sale of assets and business — — 166,568

Proceeds from the termination of intangible assets — — 44,711

Distributions from sales of affiliates 44,617 15,850 868

Other items, net ( 2,504 ) ( 4,056 ) ( 5,396 )

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Proceeds from the issuance of long-term debt — 593,574 500,000

Proceeds from economic development loans 1,850 — —

Repayment of long-term debt — ( 500,000 ) —

Payments to extinguish acquired debt — — ( 55,975 )

Proceeds from acquired derivative — — 1,943

Debt issuance costs — ( 8,069 ) ( 1,553 )

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Cash payments during the year for

Income taxes, net of refunds $ 108,173 $ 94,342 $ 115,972

Federal income taxes, net of refunds and transferable tax credits $ 65,295 $ 85,880 $ 71,161

State income taxes, net of refunds (1)

$ 14,325 $ 18,237 $ 20,771

Foreign income taxes, net of refunds (1)

$ 5,088 $ 4,056 $ 2,410

Interest, net of capitalized interest $ 90,310 $ 67,176 $ 60,773

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Investments in property, equipment, and intangible assets recognized in accounts payable and accrued expense liabilities $ 18,273 $ 23,284 $ 10,291

Asset acquisition from extinguishment of note receivable $ — $ — $ 20,446

(1) In 2025, 2024, and 2023, there were no individual jurisdictions for which the cash income taxes paid equaled or exceeded 5% of the total cash income taxes paid.

The accompanying notes are an integral part of these consolidated financial statements.

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Value Additional

Capital Accumulated Other Comprehensive Income (Loss) Treasury

Capital Accumulated Other Comprehensive Income (Loss) (2)

Stock Retained

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Treasury purchases ( 3,106,946 ) — — — ( 378,395 ) — ( 378,395 )

( 3,040,779 ) — — — ( 365,823 ) — ( 365,823 )

Balance as of December 31, 2024 46,856,567 $ 951 $ 370,201 $ ( 6,193 ) $ ( 2,411,527 ) $ 2,001,297 $ ( 45,271 )

Net income — — — — — 369,946 369,946

Other comprehensive loss, net of tax — — — ( 522 ) — — ( 522 )

Other comprehensive income, net of tax — — — 886 — — 886

Share-based payment activity (1)

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Treasury purchases ( 1,091,750 ) — — — ( 135,557 ) — ( 135,557 )

( 3,106,946 ) — — — ( 378,395 ) — ( 378,395 )

Balance as of December 31, 2025 45,996,087 $ 951 $ 403,927 $ ( 5,307 ) $ ( 2,536,373 ) $ 2,318,031 $ 181,229

(1) During certain periods presented, accumulated dividends were paid to certain shareholders upon vesting of their PVRSUs, which are presented in Share-based payment activity.

(2) Beginning January 1, 2023, Treasury purchases include a 1% excise tax as imposed by the Inflation Reduction Act of 2022.

(2) Accumulated other comprehensive income (loss) relates entirely to foreign currency items.

There were no amounts reclassified from accumulated other comprehensive income (loss) during the years ended December 31, 2025, 2024, and 2023.

The accompanying notes are an integral part of these consolidated financial statements.

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Certain prior year amounts in our consolidated financial statements have been reclassified in order to maintain comparability with the current year presentation.

Business combination, diligence and transition costs, which were previously presented in selling, general and administrative expenses, are now presented within a standalone financial statement line item in the consolidated statements of income.

The reclassification had no effect on the Company’s previously reported operating income or net income.

Investments in owned hotel properties and investments in other property and equipment, which were previously presented in investments in property and equipment, are now presented within standalone financial statement line items in the consolidated statements of cash flows.

The reclassification had no effect on the Company's previously reported net cash used in investing activities or the net change in cash and cash equivalents.

Purchases of investments for employee benefit plans, investments in intangible assets, asset acquisitions, net of cash paid, and proceeds from sales of investments for employee benefit plans, which were previously presented in standalone financial statement line items, are now presented within other items, net in the consolidated statements of cash flows.

The reclassification had no effect on the Company's previously reported net cash used in investing activities or the net change in cash and cash equivalents.

Acquisition of Radisson Hotels Americas

On August 11, 2022, the Company completed the acquisition (the "Transaction") of (1) all of the issued and outstanding shares of Radisson Hospitality, Inc., and (2) certain trademarks held by Radisson Hospitality Belgium BV/SRL (collectively referred to as "Radisson Hotels Americas").

The Company determined that it was the accounting acquirer of Radisson Hotels Americas and accounted for the Transaction as a business combination using the acquisition method of accounting.

Accordingly, the assets acquired and the liabilities assumed were recorded at their fair values as of the August 11, 2022 acquisition date, with the exception of certain assets and liabilities which were accounted for in accordance with the provisions of ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08").

The Company finalized the purchase price allocation for the Transaction during the third quarter of 2023.

The reclassifications were not as a result of any error in our consolidated financial statements.

The Company reclassified certain prior year amounts in the consolidated statements of income in order to maintain comparability with the current year presentation.

• Royalty, licensing and management fees were revised to franchise and management fees in the consolidated statements of income, and now include the revenues previously presented in royalty, licensing and management fees, with the exception of partnership licensing revenues which are now presented in partnership services and fees in the consolidated statements of income, and the addition of the revenues generated from programs, platforms, and services associated with the Company's franchise operations which were previously presented in other revenues from franchised and managed properties in the consolidated statements of income.

• Initial franchise fees, which were previously presented as a standalone financial statement line item, are now presented within franchise and management fees in the consolidated statements of income.

• Platform and procurement services fees were revised to partnership services and fees in the consolidated statements of income, and now include the revenues previously presented in platform and procurement services fees, with the exception of the revenues from the Company’s annual franchisee convention which are now presented in other revenues, the addition of partnership licensing revenues which were previously presented in royalty, licensing and management fees, and the addition of the revenues generated from other non-franchising agreements which are primarily software as a service (“SaaS”) arrangements for non-franchised hoteliers which were previously presented in other revenues in the consolidated statements of income.

• Other revenues from franchised and managed properties were revised to revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income, and now include the revenues previously presented in other revenues from franchised and managed properties, with the exception of the revenues generated from programs, platforms, and services associated with the Company’s franchise operations which are now presented in franchise and management fees in the consolidated statements of income.

• Selling, general and administrative expenses were revised to include the expenses incurred related to programs, platforms, and services associated with the Company’s franchise operations, which were previously presented in other expenses from franchised and managed properties in the consolidated statements of income.

• Depreciation and amortization was revised to include amortization expense from information technology platforms, which was previously presented in other expenses from franchised and managed properties in the consolidated statements of income.

• Other expenses from franchised and managed properties were revised to reimbursable expenses from franchised and managed properties in the consolidated statements of income, and now include the expenses previously presented in other expenses from franchised and managed properties, with the exception of the expenses incurred from programs, platforms, and services associated with the Company’s franchise operations which are now presented in selling, general and administrative expenses, and amortization expense from information technology platforms which is now presented in depreciation and amortization expense in the consolidated statements of income.

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 years ended December 31, 2024 and December 31, 2023 consolidated statements of income.

Year Ended Year Ended

December 31, 2024 December 31, 2023

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

Franchise and management fees $ 514,569 $ 155,068 $ 669,637 $ 513,412 $ 138,648 $ 652,060

Initial franchise fees 25,606 ( 25,606 ) — 27,787 ( 27,787 ) —

Partnership services and fees 75,752 23,739 99,491 75,114 16,676 91,790

Owned hotels 113,459 — 113,459 97,641 97,641

Other 61,803 2,257 64,060 46,051 9,046 55,097

Revenue for reimbursable costs from franchised and managed properties 793,650 ( 155,458 ) 638,192 784,160 ( 136,583 ) 647,577

Total revenues 1,584,839 — 1,584,839 1,544,165 — 1,544,165

OPERATING EXPENSES

Selling, general and administrative 219,878 92,510 312,388 216,081 96,620 312,701

Business combination, diligence and transition costs 17,233 — 17,233 55,778 55,778

Depreciation and amortization 43,282 8,671 51,953 39,659 5,379 45,038

Owned hotels 83,148 — 83,148 71,474 71,474

Reimbursable expenses from franchised and managed properties 757,525 ( 101,181 ) 656,344 782,409 ( 101,999 ) 680,410

Total operating expenses 1,121,066 — 1,121,066 1,165,401 — 1,165,401

Impairment of long-lived assets — — — ( 3,736 ) — ( 3,736 )

Operating income $ 463,773 $ — $ 463,773 $ 375,028 $ — $ 375,028

The Company also reclassified certain prior year amounts in the consolidated statements of cash flows in order to maintain comparability with the current year presentation.

Depreciation and amortization was revised to include amortization expense from information technology platforms, which was previously presented in depreciation and amortization - other expenses from franchised and managed properties in the consolidated statements of cash flows.

Depreciation and amortization - other expenses from franchised and managed properties was revised to depreciation and amortization - reimbursable expenses from franchised and managed properties in the consolidated statements of cash flows.

Federal income taxes, net of refunds and transferable tax credits, state income taxes, net of refunds, and foreign income taxes, net of refunds, which were previously presented in income taxes, net of refunds, are now presented within standalone financial statement line items in the consolidated statements of cash flows.

The reclassifications had no effect on the Company's previously reported net cash provided by operating activities, the net cash used in investing activities, or the net change in cash and cash equivalents.

Revenue Recognition

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An up-front initial franchise fee is assessed to the third-party hotel owners to affiliate with our brands, which is typically paid prior to the execution of the franchise agreement and is non-refundable.

After hotel opening, franchise fees are typically generated based on a percentage of gross room revenues or as designated transactions and events occur (such as when a reservation is delivered to the hotel through a specified channel) and are invoiced by the Company in the following month.

After hotel opening, franchise fees are typically generated based on a percentage of gross room revenues

or as designated transactions and events occur (such as when a reservation is delivered to the hotel through a specified channel) and are invoiced by the Company in the following month.

The franchise agreements are comprised of multiple performance obligations, which may require significant judgment in identifying.

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The royalty fees are billed and collected monthly and the revenues are recognized in the same period that the underlying gross room revenues are earned by the Company’s franchisees.

The royalty fees are recognized within royalty, licensing and management fees revenue in the consolidated statements of income.

The royalty fees are presented within franchise and management fees in the consolidated statements of income.

• Initial franchise fees - Initial franchise fees are charged when (i) new hotels enter the franchise system, (ii) there is a change of ownership, or (iii) the existing franchise agreements are extended.

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The enforceable period is the period from the hotel's opening to the first point the franchisee or the Company can terminate the franchise agreement without incurring a significant penalty.

• Other revenue - Other revenue is a combination of miscellaneous non-marketing and reservation system fees, which includes quality assurance, non-compliance, and franchisee training fees.

Other revenue is recognized in the period that the designated transaction or event has occurred.

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

The Company is obligated to use these marketing and reservation system fees to provide marketing and reservation services, such as marketing, media, advertising, access to centralized reservation systems, and certain franchise services to support the operation of the overall franchise system.

The marketing and reservation system fees are recognized within other revenues from franchised and managed properties in the consolidated statements of income.

The initial franchise fees are presented within franchise and management fees in the consolidated statements of income.

• System implementation fees - System implementation fees charged to the franchisees are deferred and recognized as revenue over the enforceable period of the franchise agreement.

The system implementation fees charged to the franchisees are primarily presented within franchise and management fees in the consolidated statements of income.

• Other fees - Other fees are a combination of miscellaneous non-marketing and reservation fees, which includes quality assurance, non-compliance, and franchisee training fees.

Other fees are recognized in the period that the designated transaction or event has occurred.

Other fees are presented within franchise and management fees and other revenues in the consolidated statements of income.

The Company’s franchise agreements require the payment of marketing and reservation fees.

The Company is obligated to use these marketing and reservation fees to provide marketing and reservation services, such as marketing, media, advertising, access to centralized reservation systems, and certain franchise services to support the operation of the overall franchise system.

The marketing and reservation fees are presented within revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income.

These services are comprised of multiple fees including the following:

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• Fees based on the occurrence of a designated transaction or event are recognized in the period the transaction or event occurred.

• System implementation fees charged to the franchisees are deferred and recognized as revenue over the enforceable period of the franchise agreement.

• Marketing and reservation system activities also include revenues generated from the Company’s guest loyalty programs.

The revenue recognition of these programs is discussed in the Material rights for free or discounted goods or services to hotel guests section below .

Marketing and reservation system expenses are the expenses that are incurred to facilitate the delivery of the marketing and reservation system services, including direct expenses and an allocation of costs for certain administrative activities that are required to carry out marketing and reservation system services.

Marketing and reservation system expenses are recognized when the services are incurred or the goods are received within other expenses from franchised and managed properties in the consolidated statements of income.

As a result, the marketing and reservation system expenses may not equal the marketing and reservation system revenues in a specific period but are expected to equal the revenues earned from the franchisees over time.

The Company’s franchise agreements provide the Company the right to advance monies to the franchise system when the needs

of the franchisor system surpass the balances currently available.

Marketing and reservation expenses are the expenses that are incurred to facilitate the delivery of the marketing and reservation services, including direct expenses and an allocation of costs for certain administrative activities that are required to carry out

marketing and reservation services.

Marketing and reservation expenses are recognized when the services are incurred or the goods are received within reimbursable expenses from franchised and managed properties in the consolidated statements of income.

As a result, the marketing and reservation expenses may not equal the marketing and reservation revenues in a specific period but are expected to equal the revenues earned from the franchisees over time.

The Company’s franchise agreements provide the Company the right to advance monies to the franchise system when the needs of the franchisor system surpass the balances currently available.

The Company has the right to recover such advances in future periods through additional fee assessments or reduced spending.

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The loyalty points are typically redeemed within three years of issuance.

The loyalty program point redemption revenues are recognized within other revenues from franchised and managed properties in the consolidated statements of income.

The Company also recognizes revenues from various contracts that are incidental to the support of the operations for the franchised hotels, including the purchasing operations.

The loyalty program point redemption revenues are presented within revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income.

Partnership Agreements

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The allocation of the fixed and variable consideration to the performance obligations is based on the standalone selling price, which is estimated based on the market and income methods, which contain significant judgments.

The amounts allocated to the brand intellectual property are recognized on a gross basis over time using the output measure of the time elapsed, primarily within royalty, licensing and management fees and platform and procurement services fees in the consolidated statements of income.

The amounts allocated to the 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 the breakage, primarily within other revenues from franchised and managed properties 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 the time elapsed and presented within partnership services and fees in the consolidated statements of income.

The amounts allocated to the 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 the breakage and presented within revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income.

Qualified Vendors

The Company generates procurement services revenue from qualified vendors.

The Company generates revenue from qualified vendors.

The qualified vendor revenue is generally based on the marketing services provided by the Company on behalf of, and the access provided to, the qualified vendors to the hotel owners and guests.

The Company provides these services in exchange for either fixed consideration or a percentage of the revenues earned by the qualified vendor pertaining to purchases by the Company’s franchisees or guests.

The fixed consideration is paid in installments based on a contractual schedule, with an initial payment typically due at contract execution.

The fixed consideration is paid in

installments based on a contractual schedule, with an initial payment typically due at contract execution.

The variable consideration is typically paid quarterly after the sales to the franchisees or guests have occurred.

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The variable consideration is determined and recognized in the period when the vendors' sales to the franchisees or guests are known or the cash payment has been remitted.

The qualified vendor revenues are recognized within platform and procurement services fees revenue in the consolidated statements of income.

The Company is a party to other non-franchising agreements that generate revenue, which are primarily software as a service ("SaaS") arrangements for non-franchised hoteliers, and is presented as other revenue in the consolidated statements of income.

The qualified vendor revenues are presented within partnership services and fees in the consolidated statements of income.

SaaS Arrangements

The Company is a party to other non-franchising agreements that generate revenue, which are primarily SaaS arrangements for non-franchised hoteliers, and is presented within partnership services and fees in the consolidated statements of income.

SaaS agreements typically include fixed consideration for installment and other initiation fees that are paid at the beginning of the contract, and variable consideration for recurring subscription revenue that is typically paid on a monthly basis.

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Incentive management fees are generally based on a percentage of the hotel's operating profits and are invoiced on an annual basis.

Base and incentive management fee revenues are recognized within royalty, licensing and management fees in the consolidated statements of income.

Refer to Note 23 for more information on the management agreement guarantees.

Base and incentive management fee revenues are presented within franchise and management fees in the consolidated statements of income.

The Company's management agreements include amounts that are contractually reimbursed to the Company by the hotel owners, either directly or indirectly, relating to certain costs and expenses that are paid by the Company in support of the operations of these hotel properties.

The reimbursements include payroll costs and certain other operating costs of the managed properties' operations, which are reimbursed to the Company by the hotel owners as the expenses are incurred.

The revenue related to these direct reimbursements is recognized based on the amount of the expenses incurred by the Company, which are recognized as other expenses from franchised and managed properties in the consolidated statements of income.

The revenue related to these direct reimbursements is recognized based on the amount of the expenses incurred by the Company, which are presented within reimbursable expenses from franchised and managed properties in the consolidated statements of income.

The hotel owner typically reimburses the Company on a monthly basis, which results in no net effect to operating income or net income.

The revenues related to marketing and reservations are recognized over time and are intended to reimburse the Company, indirectly, for the expenses incurred in performing the marketing and reservation services.

These managed revenues are presented within other revenues from franchised and managed properties in the consolidated statements of income.

The Company owned 12 hotels and 10 hotels as of December 31, 2024 and 2023, respectively, from which the Company generates revenues.

These managed revenues are presented within revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income.

The Company owned 17 hotels, 12 hotels, and 10 hotels as of December 31, 2025, 2024, and 2023, respectively, from which the Company generates revenues.

As a hotel owner, the Company has performance obligations to provide accommodations to hotel guests and in return, the Company earns a nightly fee for an agreed upon period that is generally payable at the time the hotel guest checks out of the hotel.

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These primarily consist of food and beverage, incidentals, and parking fees.

The hotel room night and other ancillary good and services revenues are recognized within owned hotels revenue in the consolidated statements of income.

The hotel room night and other ancillary goods and services revenues are presented within owned hotels revenue in the consolidated statements of income.

The Company presents the taxes collected from customers and then remitted to governmental authorities on a net basis and, therefore, the taxes are excluded from revenues in the consolidated financial statements.

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The Company determines the allowance considering its historical write-off experience, a review of the aged receivable balances and customer payment trends, the economic environment, and other available evidence.

The Company recognizes the provisions for credit losses on accounts receivable in selling, general and administrative expenses and other expenses from franchised and managed properties in the consolidated statements of income.

The Company presents the provisions for credit losses on accounts receivable in selling, general and administrative expenses and reimbursable expenses from franchised and managed properties in the consolidated statements of income.

When the Company determines that a trade or note receivable is not collectible, then the account is written-off to the associated allowance for credit losses.

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Advertising expense was $ 207.8 million, $ 194.6 million, and $ 195.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The Company presents advertising costs primarily in other expenses from franchised and managed properties in the consolidated statements of income.

The Company presents advertising costs primarily in reimbursable expenses from franchised and managed properties in the consolidated statements of income.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

The Company maintains cash balances at domestic banks, which at times may exceed the limits of the amounts insured by the Federal Deposit Insurance Corporation.

The Company maintains cash balances at U.S.

banks, which at times may exceed the limits of the amounts insured by the Federal Deposit Insurance Corporation.

In addition, the Company also maintains cash balances at international banks which do not provide deposit insurance.

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Upon designation as an asset held for sale, the Company recognizes the carrying value of each asset as a component of other current assets at the lower of its carrying value or its estimated fair value, less the estimated costs to sell, and immediately ceases the recognition of depreciation or amortization expense on the asset.

classified as held for sale, adjusted for any depreciation or amortization expense that would have been recognized had the asset been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Long-Lived Assets, Intangible Assets, and Goodwill

If, at any time, these criteria are no longer met, subject to certain exceptions, then the assets previously classified as held for sale are reclassified as held and used and measured individually at the lower of (a) the carrying amount before the asset was classified as held for sale, adjusted for any depreciation or amortization expense that would have been recognized had the asset been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

Long-Lived Assets, Goodwill, and Intangible Assets

The Company groups its long-lived assets, including property and equipment and definite-lived intangible assets (e.g., franchise rights and franchise agreement acquisition costs), at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

The Company evaluates the potential impairment of its long-lived asset groups annually as of December 31 or earlier when other circumstances indicate that the Company may not be able to recover the carrying value of the asset group.

The Company evaluates the potential impairment of its long-lived asset groups annually as of October 1st or earlier when other circumstances indicate that the Company may not be able to recover the carrying value of the asset group.

During the year ended December 31, 2025, the Company changed its annual impairment assessment date from December 31st to October 1st.

When indicators of impairment are present, then the recoverability is assessed based on undiscounted expected cash flows.

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Significant management judgment is involved in evaluating any indicators of impairment and developing any required projections to test for the recoverability or the estimated fair value.

The Company did not identify any indicators of impairment of long-lived assets from the Hotel Franchising reporting unit during the years ended December 31, 2024, 2023, and 2022, other than impairments on franchise sales commission assets and franchise agreement acquisition cost intangible assets, which are recognized within selling, general and administrative expenses and other expenses from franchised and managed properties in the consolidated statements of income.

The Company did not identify any indicators of impairment of long-lived assets from the Hotel Franchising reporting unit during the years ended December 31, 2025, 2024, and 2023, other than impairments on franchise sales commission assets and franchise agreement acquisition cost intangible assets, which are presented within selling, general and administrative expenses and reimbursable expenses from franchised and managed properties in the consolidated statements of income.

Refer to Note 2 for additional information.

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Refer to Note 5 for additional information.

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.

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.

During the year ended December 31, 2025, the Company changed its annual impairment assessment date from December 31st to October 1st.

In evaluating these assets for impairment, the Company may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit or the indefinite-lived intangible asset is less than its carrying amount.

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As of December 31, 2025, the Company is not the primary beneficiary of any VIE.

The Company's qualitative analysis is based on its review of the design of the entity, the organizational structure including its decision-making ability, and the relevant development, operating management, and financial agreements.

The Company's qualitative analysis is based on its review of

the design of the entity, the organizational structure including its decision-making ability, and the relevant development, operating management, and financial agreements.

The investments in unconsolidated affiliates where the Company is not deemed to be the primary beneficiary but where the Company exercises significant influence over the operating and financial policies of the investee are accounted for using the equity method of accounting.

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For declines in value that are deemed to be other-than-temporary, then the impairment charge is recognized to earnings.

The Company did not recognize any impairment charges on its investments in affiliates during the years ended December 31, 2024 and 2023.

During the year ended December 31, 2022, the Company recognized impairment charges of $ 0.2 million related to multiple investments in affiliates that are accounted for under the equity method of accounting.

The impairment charges were recognized within equity in net gain of affiliates in the consolidated statements of income.

Refer to Note 8 for additional information.

Investments in Equity Securities

The Company's investments in equity securities are recognized at fair value in the consolidated balance sheets, and the unrealized gains and losses on the investments in equity securities are recognized as other loss (gain) in the consolidated statements of income.

Refer to Note 14 for additional information on the fair value measurements of the equity securities.

The realized gains and losses on the investments in equity securities are recognized upon the disposition of the equity securities using the specific identification method as other loss (gain) in the consolidated statements of income.

The Company's investments in equity securities are recognized at fair value in the consolidated balance sheets, and the unrealized gains and losses on the investments in equity securities are recognized as other (gains) losses, net in the consolidated statements of income.

The realized gains and losses on the investments in equity securities are recognized upon the disposition of the equity securities using the specific identification method as other (gains) losses, net in the consolidated statements of income.

Foreign Operations

The United States dollar is the functional currency of the consolidated entities operating in the United States.

The functional currency for the consolidated entities operating outside of the United States is generally the currency of the primary economic environment in which the entity primarily generates and expends cash.

The Company translates the financial statements of the consolidated entities whose functional currency is not the United States dollar into United States dollars.

dollar is the functional currency of the consolidated entities operating in the U.S.

The functional currency for the consolidated entities operating outside of the U.S.

is generally the currency of the primary economic environment in which the entity primarily generates and expends cash.

The Company translates the financial statements of the consolidated entities whose functional currency is not the U.S.

dollar into U.S.

The Company translates the assets and liabilities at the exchange rate in effect as of the financial statement date, and translates income statement accounts using the approximate weighted average exchange rate for the period.

The Company includes translation adjustments from foreign exchange and the effect of exchange rate changes on intercompany transactions of a long-term investment nature as a separate component of shareholders’ (deficit) equity.

The Company presents foreign currency transaction gains and losses, and the effect of inter-company transactions of a short-term or trading nature, within other loss (gain) in the consolidated statements of income.

For the years ended December 31, 2024 and 2023, the foreign currency transaction gains were $ 2.1 million and $ 0.5 million, respectively.

The Company presents foreign currency transaction gains and losses, and the effect of intercompany transactions of a short-term or trading nature, within other (gains) losses, net in the consolidated statements of income.

For the year ended December 31, 2025, the foreign currency transaction losses were $ 0.1 million.

For the years ended December 31, 2024 and 2023, the foreign currency transaction gains were $ 2.1 million and $ 0.5 million, respectively.

Share-Based Compensation

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The restricted stock awards generally vest ratably over the service period beginning on the first anniversary of the grant date.

The restricted stock awards granted to retirement eligible non-employee directors are recognized over the shorter of the requisite service period or the length of time until retirement since the terms of the grant provide that awards will vest upon retirement.

restricted stock awards granted to retirement eligible non-employee directors are recognized over the shorter of the requisite service period or the length of time until retirement since the terms of the grant provide that awards will vest upon retirement.

Performance Vested Restricted Stock Units ("PVRSUs") - The Company has granted PVRSUs to certain employees.

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These short-term leases are expensed on a straight-line basis over the lease term.

Non-Qualified Retirement, Savings, and Investment Plans

The Company has an Executive Deferred Compensation Plan ("EDCP") and a Non-Qualified Retirement Savings and Investment Plan ("Non-Qualified Plan") (together, the "Deferred Compensation Plan").

Under the EDCP, certain executive officers may defer a portion of their salary into an irrevocable trust and invest these amounts in a selection of available diversified investment options.

The Non-Qualified Plan allows certain employees who do not participate in the EDCP to defer a portion of their salary and invest these amounts in a selection of available diversified investment options.

The long-term deferred compensation and retirement plan liabilities related to the deferrals and the credited investment returns under the Deferred Compensation Plan are presented in deferred compensation and retirement plan obligations in the consolidated balance sheets.

The corresponding long-term deferred compensation and retirement plan assets are presented in investments for employee benefit plans, at fair value in the consolidated balance sheets.

Compensation expense or benefit is recognized in

selling, general and administrative expenses in the consolidated statements of income based on the change in the deferred compensation and retirement plan obligations related to the earnings credited to the participants as well as the changes in the fair value of the diversified investments.

Business Combinations

The Company allocates the purchase price of an acquisition to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.

The Company recognizes goodwill as the amount by which the purchase price of an acquired entity exceeds the fair values assigned to the assets acquired and liabilities assumed.

For a business combination achieved in stages, in which there is a change in ownership interest and control is obtained when there is a previously held equity interest, a gain or loss from remeasurement of the previously held equity interest to fair value is recognized in the period that control was obtained.

Recently Adopted & 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 is 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.

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 20 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 regards to how an entity's operations, risks, and planning affect its tax rate, opportunities, and future cash flows.

ASU 2023-09 is effective for the annual reporting period beginning after December 15, 2024.

Based on the Company's assessment, the adoption of this standard is not expected to have an impact on the Company's consolidated financial statements, but it will require enhanced income tax disclosures in the notes to the consolidated financial statements.

The Company adopted ASU 2023-09 on a prospective basis effective December 31, 2025.

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

Refer to Note 11 for more information.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03").

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Contract liabilities relate to (i) advance consideration received related to services considered to be a part of the brand intellectual property performance obligation, such as initial franchise fees that are paid when a franchise agreement is executed and system implementation fees that are paid at the time of installation, and (ii) amounts received when loyalty points are issued but the associated revenue has not yet been recognized because the related loyalty points have not been redeemed.

Deferred revenues from initial franchise fees and system implementation fees are typically recognized over a ten-year period, unless the franchise agreement is terminated and the hotel exits the franchise system whereby the remaining deferred revenue amounts are recognized to revenue in the period of termination.

Deferred revenues from initial franchise fees are typically recognized over a ten-year period, unless the franchise agreement is terminated and the hotel exits the franchise system whereby the remaining deferred revenue amounts are recognized to revenue in the period of termination.

As of December 31, 2025 and 2024, deferred revenues from initial franchise fees were $ 103.0 million and $ 111.2 million, respectively.

Loyalty points are typically redeemed within three years of issuance.

As of December 31, 2025 and 2024, deferred revenues from the loyalty program were $ 114.9 million and $ 110.4 million, respectively.

The following table summarizes the significant changes in the contract liabilities balances during the year ended December 31, 2025:

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The estimated benefit period is the Company's estimate of the duration a hotel will remain in the Choice system.

As of December 31, 2024 and 2023, the capitalized franchise sales commissions were $ 59.5 million and $ 58.6 million, respectively, which are recognized within other assets in the consolidated balance sheets.

For the years ended December 31, 2024, 2023, and 2022, amortization expense and impairment charges were $ 10.2 million, $ 13.1 million, and $ 13.0 million, respectively, which are recognized in selling, general and administrative expenses in the consolidated statements of income.

As of December 31, 2025 and 2024, the capitalized franchise sales commissions were $ 69.0 million and $ 59.5 million, respectively, which are presented within other assets in the consolidated balance sheets.

For the years ended December 31, 2025, 2024, and 2023, amortization expense and impairment charges were $ 13.2 million, $ 10.2 million, and $ 13.1 million, respectively, which are presented within selling, general and administrative expenses in the consolidated statements of income.

The Company makes certain payments to customers as an incentive to enter into new franchise agreements (“franchise agreement acquisition costs”).

These payments are recognized as an adjustment to the transaction price and capitalized as an intangible asset in the consolidated balance sheets.

The franchise agreement acquisition cost intangible assets are amortized on a straight-line basis over the estimated benefit period of the arrangement as a reduction to royalty, licensing and management fees and other revenues from franchised and managed properties in the consolidated statements of income.

For the year ended December 31, 2024, the net recoveries from adverse franchise agreement activity, including terminations and significant delinquencies in construction or invoice payments, was $ 0.4 million which is recognized in selling, general and administrative expenses and other expenses from franchised and managed properties in the consolidated statements of income.

For the years ended December 31, 2023 and 2022, the net impairments from adverse franchise agreement activity, including terminations and significant delinquencies in construction or invoice payments, were $ 7.3 million and $ 2.5 million, respectively, which are recognized in selling, general and administrative expenses and other expenses from franchised and managed properties in the consolidated statements of income.

Other Revenues

During the year ended December 31, 2022, other revenues included contract termination fee revenue of $ 22.7 million from the exit of 110 WoodSpring units in September 2022.

The contract termination fee revenue consisted of $ 67.4 million in consideration received, less the $ 44.7 million in intangible assets that were initially recognized on the date of the WoodSpring acquisition.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

(in thousands) 2024 2023

Prepaid expenses $ 36,591 $ 34,669

Other current assets 4,726 4,162

Total prepaid expenses and other current assets $ 41,317 $ 38,831

The franchise agreement acquisition cost intangible assets are amortized on a straight-line basis over the estimated benefit period of the arrangement as a reduction to franchise and management fees and revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income.

For the years ended December 31, 2025 and 2023, the net impairments from adverse franchise agreement activity, including terminations and significant delinquencies in invoice payments, were $ 1.1 million and $ 7.3 million, respectively, which are presented within selling, general and administrative expenses and reimbursable expenses from franchised and managed properties in the consolidated statements of income.

For the year ended December 31, 2024, the net recoveries from adverse franchise agreement activity, including terminations and significant delinquencies in invoice payments, were $ 0.4 million, which is presented within selling, general and administrative expenses and reimbursable expenses from franchised and managed properties in the consolidated statements of income .

Receivables and Allowance for Credit Losses

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Beginning balance $ 7,331 $ 8,616

(Reversal) provision for credit losses ( 609 ) 763

Provision (reversal) for credit losses 1,150 ( 609 )

Recoveries — ( 676 )

Ending balance $ 8,481 $ 7,331

During the years ended December 31, 2024 and 2023, the recoveries were primarily associated with cash collections pursuant to a settlement agreement with a borrower.

As of December 31, 2024 and December 31, 2023, one note receivable loan with a senior credit quality indicator met the definition of collateral-dependent and is collateralized by the membership interests in the borrowing entities and the associated land parcel.

The Company used a market approach that uses quoted market prices to value the underlying collateral.

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 December 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.

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.

The Company reviewed the borrower's financial statements, economic trends, industry projections for the market, and comparable sales capitalization rates, which represent significant inputs to the cash flow projections.

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 loan was $ 2.2 million as of December 31, 2024 and 2023.

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

The allowance for credit losses attributable to the collateral-dependent note receivable loans were $ 4.6 million and $ 2.2 million as of December 31, 2025 and 2024, respectively.

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

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For the collateral-dependent loans, the Company has no exposure to the borrowing VIE beyond the respective note receivable and the limited commitments which are addressed in Note 16.

Transactions with Unconsolidated Affiliates

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 $ 65.3 million and $ 66.2 million as of December 31, 2025 and December 31, 2024, respectively.

Accounts Receivable

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

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 other expenses from franchised and managed properties, in the consolidated statements of income.

During the year ended December 31, 2023, the Company recognized provisions for credit losses on accounts receivable of $ 7.5 million in selling, general and administrative expenses, and $ 9.0 million in other expenses from franchised and managed properties, in the consolidated statements of income.

During the year ended December 31, 2025, the Company recognized provisions for credit losses on accounts receivable of $ 20.2 million in selling, general and administrative expenses, and $ 15.0 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.

For the years ended December 31, 2025 and 2024, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 29.6 million and $ 14.4 million, respectively.

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For the years ended December 31, 2025, 2024, and 2023, the Company recognized depreciation and amortization expense of $ 35.3 million, $ 31.3 million, and $ 25.2 million, respectively, in depreciation and amortization in the consolidated statements of income.

Additionally, for the years ended December 31, 2024, 2023, and 2022, the Company recognized depreciation and

amortization expense of $ 25.6 million, $ 32.2 million, and $ 29.4 million, respectively, in other expenses from franchised and managed properties in the consolidated statements of income.

Additionally, for the years ended December 31, 2025, 2024, and 2023, the Company recognized depreciation and amortization expense of $ 18.4 million, $ 17.4 million, and $ 27.9 million, respectively, in reimbursable expenses from franchised and managed properties in the consolidated statements of income.

For the years ended December 31, 2025, 2024, and 2023, the Company recognized amortization of capitalized software development costs of $ 27.6 million, $ 22.8 million, and $ 30.3 million, respectively, which are included in the total depreciation and amortization expense amounts that are disclosed in the paragraph above.

As of December 31, 2025 and 2024, unamortized capitalized software development costs were $ 65.1 million and $ 65.3 million, respectively.

Goodwill, Impairment of Assets, and Sale of Business and Assets

Goodwill and Impairment of Assets

The following table summarizes the carrying amount of the Company's goodwill:

(in thousands) 2025 2024

Goodwill $ 227,765 $ 226,231

Goodwill arising from the Radisson Hotels Americas acquisition — 1,534

Goodwill, excluding goodwill arising from the Choice Hotels Canada acquisition $ 227,765 $ 227,765

Goodwill arising from the Choice Hotels Canada acquisition 86,194 —

Effect of foreign currency translation ( 623 ) —

Total goodwill, gross carrying amount 313,336 227,765

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As a result of the intended change of use, the Company determined the assets associated with the legacy Radisson corporate office space represent their own long-lived asset group, inclusive of the head lease right-of-use asset and leasehold improvements, with a carrying value of $ 9.5 million.

The legacy Radisson corporate office space long-lived asset group was determined to be impaired due to the carrying value exceeding its fair value, which resulted in the recognition of a $ 3.4 million impairment loss, which is presented in impairments of long-lived assets in the consolidated statements of income and the Corporate & Other segment in Note 20.

The legacy Radisson corporate office space long-lived asset group was determined to be impaired due to the carrying value exceeding its fair value, which resulted in the recognition of a $ 3.4 million impairment loss, which is presented within impairments of long-lived assets in the consolidated statements of income and the Corporate & Other segment in Note 15.

This nonrecurring fair value measurement, which is based on a discounted cash flows analysis, is classified as Level 3 in the fair value measurement hierarchy because there are unobservable inputs which are significant to the overall fair value.

Real Estate Asset Sales

During the year ended December 31, 2022, four separately owned Cambria hotel assets or land parcels met the held for sale classification and the Company completed the sale transactions to third-party franchisees, which resulted in the derecognition of the assets from the consolidated balance sheets.

During the year ended December 31, 2022, the Company recognized a gain on sale of business and assets, net for the four sale transactions of $ 16.2 million in the Corporate & Other segment.

Intangible Assets

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$ 352,710 $ 90,059 $ 262,651 $ 278,956 $ 67,620 $ 211,336

Reacquired Territory Rights (2)

75,971 1,000 74,971 — — —

Franchise Agreement Acquisition Costs (3)

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Total amortizing intangible assets 1,086,240 256,575 829,665 846,336 209,037 637,299

Trademarks (non-amortizing) (5)

Trademarks & Other (non-amortizing) (6)

252,821 — 252,821 246,714 — 246,714

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(1) Represents the purchase price assigned to long-term franchise contracts.

The unamortized balance relates primarily to the franchise rights established from the Radisson Hotels Americas Transaction, as well as the active WoodSpring franchise rights since the acquisition.

The unamortized balance relates primarily to the franchise rights established from the Radisson Hotels Americas acquisition, the Choice Hotels Canada acquisition, as well as the active WoodSpring franchise rights since the acquisition.

The franchise rights are being amortized over useful lives ranging from 12 to 15 years on a straight-line basis.

(2) Represents certain payments to customers as an incentive to enter into new franchise agreements, which are amortized as a reduction to royalty, licensing and management fees and other revenues from franchised and managed properties in the consolidated statements of income over useful lives generally ranging from 10 to 30 years on a straight-line basis commencing at hotel opening.

(2) Represents the reacquired territory rights for the use of certain Choice brands within Canada.

The reacquired territory rights are being amortized on a straight-line basis over a useful life of 38 years.

(3) Represents certain payments to customers as an incentive to enter into new franchise agreements, which are amortized as a reduction to franchise and management fees and revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income over useful lives generally ranging from 10 to 30 years on a straight-line basis commencing at hotel opening.

The gross and accumulated amortization amounts are written off upon full amortization recognition, including the termination of an associated franchise agreement.

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(5) Represents software licenses that have been capitalized under a SaaS agreement, which are generally amortized on a straight-line basis over an average period of 3 years.

(5) Represents the purchase price assigned to the Radisson, WoodSpring, and Suburban trademarks that were recognized at the time of their respective acquisitions.

The trademarks are non-amortizing assets because they are expected to generate future cash flows for an indefinite period of time.

For the years ended December 31, 2024, 2023, and 2022, amortization on the amortizing intangible assets was $ 50.9 million, $ 42.5 million, and $ 35.1 million, respectively.

(6) Represents the purchase price assigned to the Radisson, WoodSpring, and Suburban trademarks and other intellectual property that were recognized at the time of their respective acquisitions.

The trademarks and other intellectual property are non-amortizing assets because they are expected to generate future cash flows for an indefinite period of time.

For the years ended December 31, 2025, 2024, and 2023, the Company recognized amortization on the amortizing intangible assets of $ 24.4 million, $ 20.7 million, and $ 19.8 million, respectively, in depreciation and amortization in the consolidated statements of income and $ 1.2 million, $ 1.5 million, and $ 2.8 million, respectively, in reimbursable expenses from franchised and managed properties in the consolidated statements of income.

Additionally, for the years ended December 31, 2025, 2024, and 2023, the Company recognized amortization on the amortizing intangible assets of $ 20.6 million, $ 16.2 million, and $ 11.6 million, respectively, as a reduction to franchise and management fees in the consolidated statements of income and $ 12.1 million, $ 12.5 million, and $ 8.3 million, respectively, as a reduction to revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income.

The estimated annual amortization on the amortizing intangible assets for each of the next five years is as follows:

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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 years ended December 31, 2024, 2023, and 2022, the Company recognized gains of $ 6.9 million, and losses of $ 3.4 million and $ 3.7 million, respectively, from these investments that represent VIEs.

During the years ended December 31, 2025, 2024, and 2023,

the Company recognized losses of $ 16.1 million, gains of $ 6.9 million, and losses of $ 3.4 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 16 to these consolidated financial statements.

During the years ended December 31, 2024 and 2023, the Company recognized no impairment charges related to its equity method investments.

During the year ended December 31, 2022, the Company recognized impairment charges of $ 0.2 million related to certain equity method investments.

The Company estimated the fair value of each investment on an individual basis and derived the fair value from a combination of observable prices from offers received for either the underlying collateral or the ownership interest of the unconsolidated affiliate, comparable market transactions, and DCF techniques to project the cash

flows for the investment based upon the underlying property.

There are judgments and assumptions in each of these fair value determinations, including our selection of comparable market transactions, the amount and timing of the expected future cash flows, long-term growth rates, and sales capitalization rates.

These nonrecurring fair value measurements are classified as level three in the fair value measurement hierarchy, as the Company utilized unobservable inputs which are significant to the overall fair value.

Based on these analyses, in each case, the Company determined that the fair value declined below the carrying value and the decline is other-than-temporary.

As a result, the Company recognized an impairment charge equal to the difference between the carrying value and the estimated fair value for each investment.

The Company has entered into franchise agreements with certain of its unconsolidated affiliates.

Pursuant to these franchise agreements, the Company recognized royalty fees and marketing and reservation fees of approximately $ 19.6 million, $ 34.5 million, and $ 30.9 million for the years ended December 31, 2025, 2024, and 2023, respectively.

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 is 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.

The maximum exposure to losses related to this limited payment guarantee is described in Note 16 to these consolidated financial statements.

• The Company sold four wholly-owned Everhome Suites hotels under construction to the Joint Venture for an aggregate sale price of $ 52.0 million, resulting in a gain of $ 0.7 million which is reported within gain on sale of assets in the consolidated statements of income.

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

• Seven of the Company's unconsolidated affiliates, which the Company previously accounted for under the equity method of accounting, contributed their underlying assets to the Joint Venture.

Prior to the transaction, the seven unconsolidated affiliates had an aggregate investment balance of $ 42.1 million, which was reported within investments in affiliates in the consolidated balance sheets.

During the year ended December 31, 2024, the Company received distributions from the sale of affiliates of $ 15.9 million and recognized net gains of $ 7.2 million, which was recognized in equity in net gain of affiliates in the consolidated statements of income.

During the year ended December 31, 2023, the Company received distributions of $ 0.9 million which resulted in no net gains (losses).

During the year ended December 31, 2022, the Company received no distributions and therefore recognized no net gains (losses).

During the year ended December 31, 2023, the Company received distributions from the sale of affiliates of $ 0.9 million which resulted in no net gains (losses).

During the years ended December 31, 2025, 2024, and 2023, the Company recognized no impairment charges related to its equity method investments.

The Company's ownership interests in its affiliates were as follows:

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CS Hotel West Orange, LLC 50 % 50 %

City Market Hotel Development, LLC (2)

Wood Boulevard, LLC 75 % 75 %

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Radisson Hotel La Crosse (1)

CH East Avenue, LLC 65 % 65 %

EH Cheyenne JV, LLC 80 % 80 %

EH Clarksville JV, LLC 80 % 80 %

EH Waco JV, LLC (3)

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EH Wichita JV, LLC (3)

CH East Avenue, LLC 65 % — %

EH Salem JV, LLC (3)

EH Clarksville JV, LLC 80 % — %

EH Facility JV, LLC (3)

(1) Non-VIE investments.

(2) During the year ended December 31, 2024, the Company received a liquidating distribution as a result of the affiliate selling its underlying assets.

(2) During the year ended December 31, 2025, the Company completed the acquisition of the remaining 50 % of the outstanding shares of Choice Hotels Canada, Inc.

As a result of the acquisition, Choice Hotels Canada, Inc.

is now a wholly-owned and consolidated subsidiary of the Company.

Refer to Note 17 for additional information.

(3) During the year ended December 31, 2025, seven of the Company's unconsolidated affiliates contributed their underlying assets to EH Facility JV, LLC.

The following tables present summarized financial information for all of the unconsolidated joint ventures in which the Company holds an investment in affiliate that is accounted for under the equity method of accounting:

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Total liabilities $ 383,582 $ 342,096

Other assets consisted of the following:

(in thousands) 2024 2023

Land and buildings $ 20,303 $ 20,303

Capitalized franchise sales commissions 59,450 58,611

Other assets 14,083 14,375

Total other assets $ 93,836 $ 93,289

The land and buildings presented as other assets in the consolidated balance sheets represent real estate that the Company does not intend to progress to active construction and development.

Accrued Expenses and Other Current Liabilities

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Dividends payable 13,542 13,888

Termination benefits 5,944 5,252

Income taxes payable 862 10,405

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Total accrued expenses and other current liabilities $ 125,282 $ 136,729

Deferred Revenue

Deferred revenue consisted of the following:

(in thousands) 2024 2023

Initial franchise fees $ 111,240 $ 128,935

Loyalty program 110,371 98,225

System implementation fees 3,601 3,912

Procurement services fees 3,882 7,963

Other 5,279 2,782

Total deferred revenue $ 234,373 $ 241,817

Current portion $ 102,114 $ 108,316

Long-term portion $ 132,259 $ 133,501

Refer to Note 2 for the revenue recognition policies resulting in the deferral of revenue, including the relationship between the loyalty program deferred revenue and the liability for the guest loyalty program.

Debt consisted of the following:

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446,910 446,300

$ 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 $ 11.2 million at December 31, 2024

$ 500 million unsecured term loan due 2024 ("2023 Term Loan") with an effective interest rate of 6.83 %, less a discount and deferred issuance costs of $ 0.7 million at December 31, 2023

$ 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 $ 10.1 million and $ 11.2 million at December 31, 2025 and December 31, 2024, respectively

589,936 588,764

$ 1 billion senior unsecured revolving credit facility with an effective interest rate of 5.22 %, less deferred issuance costs of $ 2.8 million and $ 3.6 million at December 31, 2025 and December 31, 2024, respectively

469,783 336,420

Total debt $ 1,768,526 $ 1,568,019

current portion — 499,268

Economic development loans with an effective interest rate of 3.00 % at December 31, 2025

Total long-term debt $ 1,906,122 $ 1,768,526

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(in thousands) Senior Notes Revolving Credit

Facility Total

Facility Other Notes Payable Total

2026 $ — $ — $ — $ —

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Total payments $ 1,434,489 $ 469,783 $ 1,850 $ 1,906,122

Senior Unsecured Revolving Credit Facility

On June 28, 2024, the Company entered into a Second Amended and Restated Senior Unsecured Credit Agreement (the "Restated Credit Agreement"), which amended and restated the Company's existing amended and restated senior unsecured credit agreement dated August 20, 2018 (the "Former Credit Agreement").

The Former Credit Agreement provided for an $ 850 million unsecured revolving credit facility (the "Revolver") with a final maturity date of August 20, 2026.

The Restated Credit Agreement increased the commitments under the Revolver to $ 1 billion and extended the final maturity date of the Revolver to June 28, 2029, subject to optional one-year extensions that can be requested by the Company prior to each of the third, fourth, and fifth anniversaries of the closing date of the Restated Credit Agreement.

The effectiveness of such extension is subject to the consent of the lenders under the Restated Credit Agreement and certain customary conditions.

The Restated Credit Agreement also provides that up to $ 50 million of borrowings under the Revolver may be used for alternative currency loans, up to $ 10 million of capacity under the Revolver may be used for the issuance of letters of credit, and up to $ 25 million of borrowings under the Revolver may be used for swingline loans.

The Company may from time to time designate one or more wholly-owned subsidiaries of the Company as additional borrowers under the Restated Credit Agreement, subject to the consent of the lenders and certain customary conditions.

At any time prior to the final maturity date, the Company may increase the amount of the Revolver or add one or more term loan facilities under the Restated Credit Agreement by up to an additional $ 500 million in the aggregate to the extent that any one or more lenders commit to being a lender for the additional amount of such increase or the term loan facility and certain other customary conditions are met.

2024 Senior Unsecured Notes Due 2034

On July 2, 2024, the Company issued unsecured senior notes with a principal amount of $ 600 million (the “2024 Senior Notes”) at a discount of $ 6.4 million, bearing a coupon of 5.85 %, with an effective rate of 6.11 %, and mature on August 1, 2034.

Interest on the 2024 Senior Notes is payable semi-annually on February 1 st and August 1 st of each year, commencing on February 1, 2025.

The interest rate payable on the 2024 Senior Notes will be subject to adjustment based on certain rating events.

2023 Term Loan Due 2024

On December 18, 2023, the Company entered into a $ 500 million unsecured term loan with a maturity date of December 16, 2024 (the "2023 Term Loan").

The 2023 Term Loan and all accrued but unpaid interest must be repaid in full on the maturity date.

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.

Non-Qualified Retirement, Savings, and Investment Plans

The Company sponsors two non-qualified retirement savings and investment plans for certain employees and senior executives.

Employee and Company contributions are maintained in separate irrevocable trusts.

Legally, the assets of the trusts remain those of the Company;

however, access to the trusts’ assets is severely restricted.

The trusts cannot be revoked by the Company or an acquirer, but the assets are subject to the claims of the Company’s general creditors.

The participants do not have the right to assign or transfer contractual rights in the trusts.

In 2002, the Company adopted the Choice Hotels International, Inc.

Executive Deferred Compensation Plan ("EDCP") which became effective on January 1, 2003.

Under the EDCP, certain executive officers may defer a portion of their salary into an irrevocable trust and invest these amounts in a selection of available diversified investment options.

In 1997, the Company adopted the Choice Hotels International, Inc.

Non-Qualified Retirement Savings and Investment Plan ("Non-Qualified Plan").

Under the EDCP and the Non-Qualified Plan (together, the "Deferred Compensation Plan"), the Company recognized current and long-term deferred compensation and retirement plan liabilities of $ 55.0 million and $ 47.5 million as of December 31, 2024 and 2023, respectively, related to the deferrals and the credited investment returns under these two deferred compensation plans.

Compensation expense or benefit is recognized in selling, general and administrative expenses in the consolidated statements of income based on the change in the deferred compensation and retirement plan obligations related to the earnings credited to the participants as well as the changes in the fair value of the diversified investments.

For the years ended December 31, 2024 and 2023, the Company recognized compensation expense of $ 8.2 million and $ 7.0 million, respectively, in selling, general and administrative expenses in the consolidated statements of income.

For the year ended December 31, 2022, the Company recognized compensation benefit of $ 5.3 million in selling, general and administrative expenses in the consolidated statements of income.

Fair Value Measurements

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Level 1 - Quoted prices in active markets for identical assets and liabilities.

The Company’s Level 1 assets consist of equity securities and mutual funds held in the Company's Deferred Compensation Plan.

The Company’s Level 1 assets consist of mutual funds held in the Company's Deferred Compensation Plan.

Level 2 - Observable inputs, other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable.

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As of December 31, 2025

Equity securities $ — $ — $ — $ —

Mutual funds (1)

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As of December 31, 2024

Equity securities $ 116,374 $ 116,374 $ — $ —

Mutual funds (1)

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The long-term assets at fair value noted above are presented in investments for employee benefit plans, at fair value in the consolidated balance sheets.

Investments in Equity Securities

For the year ended December 31, 2024, the Company sold approximately 1.4 million shares of equity securities of another issuer for $ 108.1 million and recognized a net loss of $ 8.3 million on the sales of equity securities.

The following table is a summary of the unrealized gains and losses of the investments in equity securities:

As of December 31, 2024 As of December 31, 2023

(in thousands) Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Equity Securities $ — $ — $ — $ — $ 112,420 $ 3,954 $ — $ 116,374

Other Financial Instruments Disclosure

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Foreign 4,568 2,609 1,593

Deferred tax (benefit) expense

Deferred tax expense (benefit)

Federal 17,330 ( 18,378 ) ( 2,022 )

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The Company assesses all positive and negative evidence to estimate whether sufficient future taxable income will be generated to use its deferred tax assets.

Based on this evaluation, the Company recorded a net change to its valuation allowance of $ 5.4 million due to state tax credits.

The Company has $ 24.7 million of state income tax credit carryforwards.

Based on this evaluation, the Company recorded a net change to its valuation allowance of $ 3.9 million due to state tax credits and foreign NOLs.

The Company has $ 28.0 million of state income tax credit carryforwards as of December 31, 2025.

It is unlikely that the Company will realize these benefits.

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As of December 31, 2025, the Company had gross foreign net operating losses ("NOLs") of $ 28.3 million, all of which have indefinite carryforward lives.

The Company has recorded a tax-effected valuation allowance of $ 1.8 million for these NOLs, primarily related to France and India.

The Company has recorded a tax-effected valuation allowance of $ 2.4 million for these NOLs, primarily related to Australia and India.

In addition, the Company has a Dutch deferred tax asset of $ 7.6 million, for which it has recorded a valuation allowance of $ 3.0 million.

The Dutch valuation allowance did not change during the year ended December 31, 2025.

The following table presents a reconciliation of the statutory United States federal income tax rate to the effective income tax rate for continuing operations:

The following table presents a reconciliation of the statutory U.S.

federal income tax rate to the effective income tax rate for continuing operations, in accordance with ASU 2023-09 for the year ended December 31, 2025.

Refer to Note 1 for more information on the adoption of ASU 2023-09.

Year Ended December 31,

(in thousands, except percentages) Amount Percent

federal statutory tax rate $ 95,989 21.0 %

State and local income taxes, net of federal income tax effect (1)

Foreign tax effects:

Federal statutory tax rate difference between Canada and U.S.

( 6,137 ) ( 1.3 )

Non-taxable gain ( 15,026 ) ( 3.3 )

Netherlands 1,169 0.3

Other foreign jurisdictions (2)

Effects of cross-border tax laws ( 903 ) ( 0.2 )

Research & development tax credits ( 4,861 ) ( 1.1 )

Other ( 3,107 ) ( 0.7 )

Nontaxable or nondeductible items:

Expenses related to compensation, net 5,271 1.2

Other 927 0.2

Changes in unrecognized tax benefits ( 455 ) ( 0.1 )

Other ( 48 ) —

Effective income tax rate $ 86,945 19.0 %

(1) State taxes in Minnesota, California, New York, Illinois, Georgia, Florida, Tennessee, and Wisconsin made up the majority (greater than 50%) of the tax effect of this category.

(2) All other foreign jurisdictions do not exceed the 5% threshold at the jurisdiction level in total or for individual reconciling items of the same nature within each jurisdiction.

The Company's effective income tax rate from continuing operations was 19.0 % for the year ended December 31, 2025.

The effective income tax rate for the year ended December 31, 2025 was lower than the U.S.

federal income tax rate of 21.0% primarily due to the impact of a $ 100.0 million non-taxable gain from an acquisition of a joint venture and federal income tax credits, which were partially offset by the impact of state income taxes and tax expense related to compensation.

The following table presents a reconciliation of the statutory U.S.

federal income tax rate to the effective income tax rate for continuing operations as previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09.

Year Ended December 31,

Statutory U.S.

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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.

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.

For the years ended December 31, 2025, 2024, and 2023, the Company’s gross unrecognized tax benefits totaled $ 5.8 million, $ 6.9 million, and $ 13.4 million, respectively.

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Balance, December 31 $ 5,832 $ 6,914 $ 13,434

It is reasonably possible that the Company’s unrecognized tax benefits could decrease within the next 12 months by as much as $ 2.6 million due to settlements and the expiration of applicable statutes of limitations.

The Company files income tax returns in the U.S.

federal jurisdiction and various state, local, and foreign jurisdictions.

The Company's federal income tax returns for the 2022, 2023, 2024, and 2025 tax years are subject to examination by the Internal Revenue Service.

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The Company did not incur any material interest or penalties during the years ended December 31, 2025, 2024, and 2023.

The Company had $ 0.3 million and $ 0.1 million of accrued interest and penalties as of December 31, 2024 and 2023, respectively.

The Company had no accrued interest and penalties as of December 31, 2025.

The Company had $ 0.3 million of accrued interest and penalties as of December 31, 2024.

Share-Based Compensation and Capital Stock

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Options exercisable as of December 31, 2025 560,223 $ 107.84 4.7 years

* The outstanding PVRSUs have been adjusted by 31,468 net units during the year ended December 31, 2024, due to an increase in the outstanding PVRSUs as a result of the Company exceeding the targeted performance conditions.

* Any revisions to the outstanding PVRSUs during the year ended December 31, 2025 are based on the Company's performance relative to the targeted performance conditions in the respective PVRSUs.

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

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Stock Options

The following table is a summary of the activity related to the stock option grants:

The following table is a summary of the activity related to the stock options:

For the Year Ended December 31,

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Fair value of options granted (in thousands) $ — $ 3,069 $ 3,779

Weighted average exercise price per share $ 111.94 $ 102.90 $ 94.97

Total intrinsic value of stock options exercised (in thousands) $ 2,356 $ 12,185 $ 9,170

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Expected volatility — 31.34 % 30.90 %

Expected life of stock option 6.0 years 6.0 years 5.9 years

Expected life of stock option — 6.0 years 6.0 years

Dividend yield — 1.03 % 0.90 %

Requisite service period 4 years 4 years 4 years

Contractual life 10 years 10 years 10 years

Requisite service period — 4 years 4 years

Contractual life — 10 years 10 years

Weighted average fair value of the stock options granted (per stock option) $ — $ 38.85 $ 42.59

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Restricted Stock

The following table is a summary of the activity related to the restricted stock grants:

The following table is a summary of the activity related to the restricted stock:

For the Year Ended December 31,

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Performance Vested Restricted Stock Units

The following table is a summary of the activity related to the PVRSU grants:

For the Years Ended December 31,

The following table is a summary of the activity related to the PVRSUs :

For the Year Ended December 31,

2025 2024 2023

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Share Repurchases and Redemptions

During the years ended December 31, 2024, 2023, and 2022, the Company redeemed 120,601 , 114,242 , and 36,120 , respectively, shares of common stock at a total cost of approximately $ 12.4 million, $ 14.2 million, and $ 5.4 million, respectively, from employees to satisfy the stock option exercise price and the statutory minimum tax-withholding requirements related to exercising stock options and the vesting of performance vested restricted stock units and restricted stock grants.

During the years ended December 31, 2025, 2024, and 2023, the Company redeemed 71,386 , 120,601 , and 114,242 shares of common stock, respectively, at a total cost of approximately $ 9.9 million, $ 12.4 million, and $ 14.2 million, respectively, from employees to satisfy the stock option exercise price and the statutory minimum tax-withholding requirements related to exercising stock options and the vesting of performance vested restricted stock units and restricted stock grants.

These redemptions were outside of the share repurchase program.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss were as follows:

(in thousands) 2024 2023 2022

Foreign currency translation adjustments $ ( 6,193 ) $ ( 5,671 ) $ ( 5,211 )

Total accumulated other comprehensive loss $ ( 6,193 ) $ ( 5,671 ) $ ( 5,211 )

The changes in accumulated other comprehensive loss, net of tax, were as follows:

Year Ended December 31,

(in thousands) 2024 2023

Beginning Balance $ ( 5,671 ) $ ( 5,211 )

Foreign currency translation adjustments ( 522 ) ( 460 )

Ending Balance $ ( 6,193 ) $ ( 5,671 )

Other comprehensive loss, net of tax, for the years ended December 31, 2024 and 2023 relates entirely to foreign currency items.

There were no amounts reclassified from accumulated other comprehensive loss during the years ended December 31, 2024 and 2023.

Earnings Per Share

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The Company has operating leases for office spaces, buildings, and equipment.

The Company's leases, excluding the assumed ground lease discussed below, have remaining lease terms of four months to ten years , some of which include options to extend the lease for up to ten years .

The Company's leases, excluding the assumed ground lease discussed below, have remaining lease terms of two to nine years , some of which include options to extend the lease for up to ten years .

Additionally, the Company has a ground lease on an owned hotel with a remaining lease term of 86.3 years.

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(in thousands)

2026 $ 13,071

Thereafter 297,944

2 unchanged sentences

Present value of the minimum lease payments $ 116,327

On September 26, 2023, the Company's principal executive office lease agreement commenced with an unrelated third-party for a lease term of approximately twelve years .

The Company accounted for this lease as an operating lease and established a lease liability and a right-of-use asset of approximately $ 41.9 million and $ 28.6 million, respectively.

In October 2023, the Company entered into a lease agreement with an unrelated third-party to sublease the legacy Radisson corporate office space in Minneapolis, Minnesota.

The sublease term is approximately eight years and commenced during the first quarter of 2024.

The Company re-evaluated the head lease upon the effectiveness of this sublease, which resulted in the Company recognizing a $ 3.4 million impairment loss on certain long-lived assets associated with the leased office space in 2023.

Refer to Note 6 for additional information.

Related Party Lease

The Company and the family members of the Company's largest shareholder entered into an agreement that allows those family members to lease the Company's aircraft from time to time for their personal use.

The agreement provides for lease payments that contribute towards the fixed costs associated with the aircraft as well as a reimbursement of the Company’s variable costs associated with operating the aircraft, in compliance with and to the extent authorized by applicable regulatory requirements.

The terms of this lease agreement are consistent with the terms of other lease agreements that the Company has entered into with unrelated third parties for use of the aircraft.

During both of the years ended December 31, 2024 and 2023, the Company received less than $ 0.1 million pursuant to this related party lease arrangement.

Reportable Segment Information

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The 22 brands and brand extensions and hotel management operations are aggregated together within this reportable segment because they have similar economic characteristics, types of customers, distribution channels, and regulatory business environments.

The revenues from the hotel franchising and management business include royalty fees, initial franchise fees and relicensing fees, cost reimbursement revenues, platform and procurement services fees revenue, base and incentive management fees, and other hotel franchising and management-related revenue.

The revenues from the hotel franchising and management business include royalty fees, initial franchise fees and relicensing fees, cost reimbursement revenues, partnership services and fees, base and incentive management fees, and other hotel franchising and management-related revenue.

The Company provides certain services under its franchise and management agreements which result in direct and indirect reimbursements.

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Interest income ( 6,237 )

Loss on extinguishment of debt 331

Other loss 1,641

Equity in net gain of affiliates ( 12,329 )

Gain from an acquisition of a joint venture ( 100,025 )

Gain on sale of assets ( 713 )

Other gains, net ( 6,989 )

Equity in net loss of affiliates 14,324

Income before income taxes $ 456,891

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Interest income ( 8,646 )

Gain on extinguishment of debt ( 4,416 )

Other gain ( 10,649 )

Loss on extinguishment of debt 331

Other losses, net 1,641

Equity in net gain of affiliates ( 12,329 )

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Interest income ( 7,764 )

Loss (gain) on extinguishment of debt —

Other loss 7,018

Gain on extinguishment of debt ( 4,416 )

Other gains, net ( 10,649 )

Equity in net gain of affiliates ( 2,879 )

Income before income taxes $ 336,956

(1) Other segment items for the reportable segment include selling, general and administrative expenses and other expenses from franchised and managed properties.

The results of the Company's international operations are included in the Hotel Franchising & Management reportable segment and Corporate & Other.

For the years ended December 31, 2024, 2023, and 2022, the revenues generated by the international operations, including royalty fees, cost reimbursable revenues, and other revenues, were $ 102.7 million, $ 103.2 million, and $ 70.2 million, respectively.

Related Party Transactions

Transactions with the Company's Largest Shareholder

Effective October 15, 1997, Choice Hotels International, Inc., which included both a franchising business and an owned hotel business, separated the businesses via a spin-off into two companies:

Sunburst Hospitality Corporation (referred to hereafter as “Sunburst”) and the Company.

Subsequent to the spin-off, the Company’s largest shareholder retained significant ownership percentages in both Sunburst and the Company.

As part of the spin-off, Sunburst and the Company entered into a strategic alliance agreement (as amended, the "Strategic Alliance Agreement").

Among other things, the Strategic Alliance Agreement provided for revised royalty and system fees and the determination of liquidated damages related to the termination of Choice-branded Sunburst properties.

The liquidated damage provisions extend through the life of the existing Sunburst franchise agreements.

On June 5, 2019, the Strategic Alliance Agreement was terminated and replaced with addenda to each of the five hotels under a franchise at that time.

The addenda preserve certain terms from the Strategic Alliance Agreement with respect to the five hotels, including the revised royalty and system fees and liquidated damage provisions, which would also apply to new franchise agreements signed for the five hotels (as either a renewal or a change to another Choice brand not contemplated at the time of the original agreement execution).

No terms were substantially modified with respect to the five hotels under franchise.

In June 2019, the Company and Sunburst entered into master development agreements, which provide Sunburst the geographic exclusivity in two specified regions for the development of five WoodSpring branded hotels.

For the years ended December 31, 2024 and 2023, there were nine and three new franchise agreements signed between the Company and Sunburst and its affiliates, respectively.

As of December 31, 2024, Sunburst and its affiliates operated seven hotels under franchise with the Company.

For the years ended December 31, 2024, 2023, and 2022, the total franchise fees revenues, including royalty fees and marketing and reservation system fees, paid by Sunburst and its affiliates to the Company included in the consolidated financial statements was $ 1.8 million, $ 0.9 million, and $ 0.8 million, respectively.

As of December 31, 2024, there was no outstanding accounts receivable due from Sunburst and its affiliates.

As of December 31, 2023, accounts receivable due from Sunburst and its affiliates was approximately $ 0.1 million.

In November 2023, the Company executed a 13-month office work space agreement, beginning December 1, 2023, for family members of the Company’s largest shareholder.

Pursuant to this arrangement, the Company made payments of $ 96 thousand and $ 18 thousand during the years ended December 31, 2024 and 2023, respectively, for full repayment under the arrangement.

During 2024, the Company executed a 12-month extension of the agreement, beginning January 1, 2025.

Pursuant to this arrangement, the Company made payments of $ 10 thousand during the year ended December 31, 2024.

As of December 31, 2024, the Company had $ 102 thousand of remaining payments under this arrangement.

Transactions with Unconsolidated Affiliates

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 $ 66.2 million and $ 64.5 million as of December 31, 2024 and December 31, 2023, respectively.

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

The Company has management fee arrangements with certain of its unconsolidated affiliates.

The fees earned and the payroll costs reimbursed under these arrangements totaled $ 8.5 million, $ 7.9 million, and $ 2.4 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The Company has entered into franchise agreements with certain of its unconsolidated affiliates.

Pursuant to these franchise agreements, the Company recognized royalty fees and marketing and reservation system fees of approximately $ 34.5 million, $ 30.9 million, and $ 27.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The Company recognized $ 9.5 million and $ 4.9 million of gross accounts receivables in the consolidated balance sheets from these unconsolidated affiliates as of December 31, 2024 and 2023, respectively.

(1) Other segment items for the reportable segment include selling, general and administrative expenses and reimbursable expenses from franchised and managed properties.

For the years ended December 31, 2025, 2024, and 2023, the revenues generated by the international operations, including royalty fees, cost reimbursement revenues, partnership services and fees, and other revenues, were $ 117.8 million, $ 102.7 million, and $ 103.2 million, respectively.

Commitments and Contingencies

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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 its 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.

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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 both an annual basis and over the duration of the agreement.

Accordingly, no liability was recognized as of December 31, 2024 in the consolidated balance sheets.

As of December 31, 2025, no liability was recognized in the consolidated balance sheets.

For the year ended December 31, 2025, the Company recognized guarantee payments of $ 3.8 million in selling, general and administrative expenses in the consolidated statements of income.

As of December 31, 2025, the maximum unrecorded exposure of the guarantee was $ 18.2 million.

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

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As of December 31, 2025, the Company had remaining commitments of up to $ 3.5 million, if certain conditions are met.

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

In accordance with the terms of our franchise agreements, the Company is obligated to use the marketing and reservation system revenues it collects from the current franchisees to provide marketing and reservation services that are appropriate to support the operation of the overall system.

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

In accordance with the terms of our franchise agreements, the Company is obligated to use the marketing and reservation revenues it collects from the current franchisees to provide marketing and reservation services that are appropriate to support the operation of the overall system.

To the extent the revenues collected exceed the expenditures incurred, the Company has a commitment to the franchisee system to make expenditures in future years.

Conversely, to the extent the expenditures incurred exceed the revenues collected, the Company has the contractual enforceable right to assess and collect such amounts from the franchisees.

• The Company has committed to purchase transferable production tax credits generated by qualified solar energy facilities for an aggregate purchase price of approximately $ 193 million over an eleven year period, from 2026 through 2036.

The Company’s commitments are contingent upon the satisfaction of certain legal and contractual conditions from the sellers, and the continued availability of the credits under federal tax laws.

The Company expects to utilize these credits in the same quarter in which they are purchased, offsetting federal income tax estimated payments and reducing income tax expense each year.

In the ordinary course of business, the Company enters into numerous agreements that contain standard indemnities whereby the Company indemnifies another party for breaches of representations and warranties.

Such indemnifications are granted under various agreements, including those governing (i) purchases or sales of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) access to credit facilities, (v) issuances of debt or equity securities, and (vi) certain operating agreements.

Such indemnifications are granted under various agreements, including those governing (i) purchases or sales of assets or businesses, (ii) leases of real estate,

(iii) licensing of trademarks, (iv) access to credit facilities, (v) issuances of debt or equity securities, and (vi) certain operating agreements.

The indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) franchisees in licensing agreements, (iv) financial institutions in credit facility arrangements, (v) underwriters in debt or equity security issuances, and (vi) parties under certain operating agreements.

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While some of these indemnities extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations).

There are no specific limitations on the maximum potential amount of the future payments that the Company could be required to make under these indemnities, nor is the Company able to develop an estimate of the maximum potential amount of the future payments that could be made under these indemnifications as the triggering events are not subject to

predictability.

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.

Choice Hotels Canada Acquisition

On July 2, 2025, the Company completed the acquisition (the “Transaction”) of 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 $ 114.5 million, inclusive of preliminary 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 historically been included in the Company's franchised hotel statistics as a result of the prior master franchise agreement.

Choice Hotels Canada now has the ability to offer developers access to all of the Company's 22 hotel brands and brand extensions, 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.

As a result of the Transaction, Choice Hotels Canada is now a wholly-owned and consolidated subsidiary of the Company, and the Transaction was accounted for as a business combination using the acquisition method.

In connection with the Transaction, the Company remeasured the value of its previously held 50 % equity investment to its acquisition date fair value of $ 114.5 million, which resulted in a gain of approximately $ 100.0 million that is reported within gain from an acquisition of a joint venture in the consolidated statements of income.

The fair value of the previously held equity investment was determined using a market approach based on the cash consideration exchanged for the newly acquired 50 % equity interest.

The following is a summary of the purchase consideration transferred:

Purchase Consideration

(in thousands)

Cash consideration transferred for the newly acquired interest $ 114,470

Fair value of the previously held interest 114,470

Effective settlement of intercompany payables 3,280

Total consideration, including previously held interest $ 232,220

During the year ended December 31, 2025, the Company recognized transaction and transition costs of $ 2.2 million in business combination, diligence and transition costs in the consolidated statements of income.

Preliminary Fair Values of the Assets Acquired and the Liabilities Assumed

The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets acquired and the liabilities assumed on July 2, 2025.

The preliminary fair values are based on management’s estimates and assumptions, using the best information available at the time of this filing.

The final valuation and related allocation of the purchase price will be completed no later than 12 months after the closing date of the acquisition.

The final acquisition accounting adjustments could be materially different and may include (1) changes in the allocations to the intangible assets as well as goodwill, and (2) other changes to assets and liabilities, such as working capital.

The preliminary allocation of the purchase price is as follows:

(in thousands) July 2, 2025

Assets acquired

Cash and cash equivalents $ 44,356

Accounts receivable 10,706

Income taxes receivable 149

Prepaid expenses and other current assets 335

Operating lease right-of-use assets 358

Intangible assets 150,665

Total assets acquired $ 206,569

Liabilities assumed

Accounts payable $ 5,235

Accrued expenses and other current liabilities 1,926

Deferred revenue - current 333

Liability for guest loyalty program - current 7,194

Deferred income taxes 38,045

Long-term deferred revenue 1,845

Operating lease liabilities 358

Liability for guest loyalty program - noncurrent 5,607

Total liabilities assumed $ 60,543

Fair value of net assets acquired $ 146,026

Goodwill 86,194

Total consideration, including previously held interest $ 232,220

Identified Intangible Assets

The following table presents the estimated fair values of the acquired identified intangible assets and their estimated useful lives:

Estimated Useful Life Estimated Fair Value

(in years) (in thousands)

Reacquired territory rights 38 $ 76,523

Franchise agreements 12 74,142

Total intangible assets $ 150,665

The reacquired territory rights represent the reacquired rights for the use of certain Choice brands within Canada.

The fair value of the reacquired territory rights and the franchise agreements was estimated using a multi-period excess earnings method, which is a variation of the income approach.

This method uses the present value of the incremental after-tax cash flows attributable to the intangible asset in order to estimate the fair value.

This valuation methodology utilizes Level 3 inputs, and the Company is continuing to assess the assumptions used in estimating these values as well as the respective useful lives, which could result in changes to the provisional values.

As the Transaction is accounted for as a business combination, deferred tax assets and liabilities are generally recognized on the differences between the fair value of the assets acquired and the liabilities assumed and the tax bases of the assets acquired and the liabilities assumed in the business combination.

The Transaction consists of a foreign entity, so the Company asserts an indefinite reinvestment and has not recorded a deferred tax liability on the outside basis difference in its investment.

Pro Forma Results of Operations

The following unaudited pro forma information presents the combined results of operations of Choice and Choice Hotels Canada as if the Company had completed the Transaction on January 1, 2024, but using the preliminary fair values of the assets acquired and the liabilities assumed as of the acquisition date.

The unaudited pro forma information reflects adjustments relating to (i) the allocation of the purchase price and related adjustments, including the incremental amortization expense based on the preliminary fair values of the intangible assets acquired, (ii) the incremental impact of the senior unsecured revolving credit facility draw on interest expense, (iii) nonrecurring transaction costs, and (iv) the income tax impact of the aforementioned pro forma adjustments.

As required by GAAP, these unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies.

Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Transaction had occurred at the beginning of the period presented, nor are they indicative of the future results of operations.

Year Ended December 31,

(in thousands) 2025 2024

Revenues $ 1,613,116 $ 1,623,945

Net income (1)

$ 268,603 $ 296,040

(1) The gain on the previously held 50 % equity interest in Choice Hotels Canada is excluded from the pro forma results of operations.

Choice Hotels Canada Results of Operations

The Company's consolidated statements of income include Choice Hotels Canada's results of operations since the July 2, 2025 acquisition date.

Choice Hotels Canada contributed $ 24.9 million and $ 9.4 million in total revenues and net income, respectively, for the year ended December 31, 2025.

The $ 86.2 million of goodwill recognized is primarily attributable to the value that the Company expects to realize from the existing customer base, cost synergies, and new agreements signed with new franchisees and developers.

The goodwill for the Transaction is fully attributable to the Hotel Franchising & Management reportable segment and is not deductible for tax purposes.

Refer to Note 5 for the reconciliation of the Company's goodwill balance.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data