CHOICE HOTELS INTERNATIONAL INC /DE 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 54 Consolidated Statements of Income 56 Consolidated Statements of Comprehensive Income 57 Consolidated Balance Sheets 58 Consolidated Statements of Cash Flows 59 Consolidated Statements of Shareholders' Equity (Deficit) 61 Notes to Consolidated Financial Statements 62 53 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Choice Hotels International, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Choice Hotels International, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 19, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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 Description of the Matter The Company recognized $125.6 million in revenues from loyalty points redeemed, net of the cost of redemptions, and had a point liability and deferred revenue of $124.8 million and $114.9 million, respectively, as of December 31, 2025, associated with the Choice Privileges Loyalty Program. As discussed in Note 1 to the consolidated financial statements, loyalty points earned represent a performance obligation attributable to usage of the points, and thus revenues are recognized at the point in time when the loyalty points are redeemed by members for benefits. The liability for the Choice Privileges Loyalty Program is developed based on an estimate of the eventual redemption rates on future redemption behavior using various actuarial methods and point values. The amount of the Choice Privileges Loyalty Program fees in excess of the point liability represents deferred revenue, which is recognized to revenue as points are redeemed including an estimate of future forfeitures. Auditing the Choice Privileges Loyalty Program results is complex due to: (1) the complexity of the models used and the high volume of data to monitor and account for Choice Privileges Loyalty Program results; and (2) the complexity of estimating the future redemption rate. Performing audit procedures to evaluate the reasonableness of these estimates requires a high degree of auditor judgment and an increased extent of effort, which includes the use of actuarial specialists. 54 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for the Choice Privileges Loyalty Program during the year. For example, we tested controls over management’s review of the assumptions and data inputs used in the accounting model and the actuarial methods used to estimate the ultimate redemption rate of Choice Privileges Loyalty Program points. To test the recognition of revenues and liabilities associated with the Choice Privileges Loyalty Program, we performed audit procedures that included, among others, testing the completeness and accuracy of the data and significant assumptions used in the models and assessing the accounting models developed by the Company to recognize the related revenue and the liabilities. For example, we tested significant inputs into the accounting models, including the amounts received and paid by the Choice Privileges Loyalty Program as well as the recognition of points earned and redeemed during the period. 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 We have served as the Company’s auditor since 2014. Tysons, Virginia February 19, 2026 55 Table of Contents CONSOLIDATED FINANCIAL STATEMENTS CHOICE HOTELS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Years Ended December 31, 2025 2024 2023 REVENUES 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 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 OPERATING EXPENSES Selling, general and administrative 328,958 312,388 312,701 Business combination, diligence and transition costs 4,701 17,233 55,778 Depreciation and amortization 59,715 51,953 45,038 Owned hotels 91,684 83,148 71,474 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 ) Operating income 448,399 463,773 375,028 OTHER EXPENSES AND (INCOME), NET Interest expense 91,148 87,131 63,780 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 (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 Income before income taxes 456,891 395,645 336,956 Income tax expense 86,945 95,980 78,449 Net income $ 369,946 $ 299,665 $ 258,507 Basic earnings per share $ 7.97 $ 6.26 $ 5.11 Diluted earnings per share $ 7.90 $ 6.20 $ 5.07 The accompanying notes are an integral part of these consolidated financial statements. 56 Table of Contents CHOICE HOTELS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) Years Ended December 31, 2025 2024 2023 Net income $ 369,946 $ 299,665 $ 258,507 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 886 ( 522 ) ( 460 ) Other comprehensive income (loss), net of tax: 886 ( 522 ) ( 460 ) Comprehensive income $ 370,832 $ 299,143 $ 258,047 The accompanying notes are an integral part of these consolidated financial statements. 57 Table of Contents CHOICE HOTELS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS) December 31, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents $ 44,997 $ 40,177 Accounts receivables (net of allowance for credit losses of $ 51,189 and $ 45,610 , respectively) 207,491 176,672 Income taxes receivable 13,456 5,419 Notes receivable (net of allowance for credit losses of $ 7,462 and $ 5,805 , respectively) 94,686 75,501 Prepaid expenses and other current assets 45,368 41,317 Total current assets 405,998 339,086 Property and equipment, net 649,291 604,345 Operating lease right-of-use assets 77,670 83,451 Goodwill 305,758 220,187 Intangible assets, net 1,082,486 884,013 Notes receivable (net of allowance for credit losses of $ 1,019 and $ 1,526 , respectively) 12,490 32,682 Investments for employee benefit plans, at fair value 50,227 47,603 Investments in affiliates 134,975 117,016 Deferred income taxes 75,371 108,308 Other assets 123,937 93,836 Total assets $ 2,918,203 $ 2,530,527 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) Current liabilities Accounts payable $ 156,276 $ 134,865 Accrued expenses and other current liabilities 125,282 136,729 Deferred revenue 100,698 102,114 Liability for guest loyalty program 85,035 89,013 Total current liabilities 467,291 462,721 Long-term debt 1,906,122 1,768,526 Long-term deferred revenue 130,505 132,259 Deferred compensation and retirement plan obligations 56,532 53,316 Deferred income taxes 25,303 — Operating lease liabilities 107,963 113,255 Liability for guest loyalty program 39,771 40,607 Other liabilities 3,487 5,114 Total liabilities 2,736,974 2,575,798 Commitments and contingencies (Note 16) Common stock, $ 0.01 par value; 160,000,000 shares authorized; 95,065,638 shares issued at December 31, 2025 and December 31, 2024; 45,996,087 and 46,856,567 shares outstanding at December 31, 2025 and December 31, 2024, respectively 951 951 Additional paid-in-capital 403,927 370,201 Accumulated other comprehensive loss ( 5,307 ) ( 6,193 ) Treasury stock, at cost; 49,069,551 and 48,209,071 shares at December 31, 2025 and December 31, 2024, respectively ( 2,536,373 ) ( 2,411,527 ) Retained earnings 2,318,031 2,001,297 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. 58 Table of Contents CHOICE HOTELS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) Years Ended December 31, 2025 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 369,946 $ 299,665 $ 258,507 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 59,715 51,953 45,038 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 ) 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, net ( 6,439 ) ( 7,282 ) ( 8,747 ) Deferred income taxes 19,764 ( 19,028 ) ( 1,336 ) 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 ) Change in working capital and other ( 97,979 ) 17,396 6,128 Net cash provided by operating activities 270,447 319,403 296,554 CASH FLOWS FROM INVESTING ACTIVITIES Investments in other property and equipment ( 38,924 ) ( 39,102 ) ( 47,717 ) Investments in owned hotel properties ( 106,871 ) ( 106,750 ) ( 68,560 ) Contributions to investments in affiliates ( 93,675 ) ( 52,768 ) ( 38,930 ) Issuances of notes receivable ( 6,885 ) ( 37,994 ) ( 4,323 ) 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 — Distributions from sales of affiliates 44,617 15,850 868 Other items, net ( 2,504 ) ( 4,056 ) ( 5,396 ) Net cash used in investing activities ( 218,264 ) ( 84,571 ) ( 265,626 ) CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (repayments) pursuant to revolving credit facilities 132,982 111,500 ( 131,500 ) 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 ) — Debt issuance costs — ( 8,069 ) ( 1,553 ) Purchases of treasury stock ( 138,304 ) ( 380,743 ) ( 362,772 ) Dividends paid ( 53,472 ) ( 55,497 ) ( 56,457 ) Proceeds from the exercise of stock options 6,841 17,525 6,345 Net cash used in financing activities ( 50,103 ) ( 221,710 ) ( 45,937 ) Net change in cash and cash equivalents 2,080 13,122 ( 15,009 ) Effect of foreign exchange rate changes on cash and cash equivalents 2,740 301 197 Cash and cash equivalents, beginning of period 40,177 26,754 41,566 Cash and cash equivalents, end of period $ 44,997 $ 40,177 $ 26,754 59 Table of Contents Years Ended December 31, 2025 2024 2023 Supplemental disclosure of cash flow information: Cash payments during the year for 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 Non-cash investing and financing activities Dividends declared but not paid $ 13,218 $ 13,471 $ 14,902 Investments in property, equipment, and intangible assets recognized in accounts payable and accrued expense liabilities $ 18,273 $ 23,284 $ 10,291 (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. 60 Table of Contents CHOICE HOTELS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT SHARE AMOUNTS) Common Stock - Shares Outstanding Common Stock - Par Value Additional Paid-in- Capital Accumulated Other Comprehensive Income (Loss) (2) Treasury Stock Retained Earnings Total Balance as of December 31, 2022 52,200,903 $ 951 $ 298,053 $ ( 5,211 ) $ ( 1,694,857 ) $ 1,555,724 $ 154,660 Net income — — — — — 258,507 258,507 Other comprehensive loss, net of tax — — — ( 460 ) — — ( 460 ) Share-based payment activity (1) 366,121 — 32,697 — 13,889 — 46,586 Dividends declared ($ 1.15 per share) — — — — — ( 57,872 ) ( 57,872 ) Treasury purchases ( 3,040,779 ) — — — ( 365,823 ) — ( 365,823 ) Balance as of December 31, 2023 49,526,245 $ 951 $ 330,750 $ ( 5,671 ) $ ( 2,046,791 ) $ 1,756,359 $ 35,598 Net income — — — — — 299,665 299,665 Other comprehensive loss, net of tax — — — ( 522 ) — — ( 522 ) Share-based payment activity (1) 437,268 — 39,451 — 13,659 — 53,110 Dividends declared ($ 1.15 per share) — — — — — ( 54,727 ) ( 54,727 ) Treasury purchases ( 3,106,946 ) — — — ( 378,395 ) — ( 378,395 ) 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 income, net of tax — — — 886 — — 886 Share-based payment activity (1) 231,270 — 33,726 — 10,711 — 44,437 Dividends declared ($ 1.15 per share) — — — — — ( 53,212 ) ( 53,212 ) Treasury purchases ( 1,091,750 ) — — — ( 135,557 ) — ( 135,557 ) 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) 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. 61 Table of Contents CHOICE HOTELS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements of Choice Hotels International, Inc. and subsidiaries (collectively, "Choice" or the "Company") have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the accompanying consolidated financial statements include all adjustments that are necessary to fairly present the Company's financial position and results of operations. Except as otherwise disclosed, all adjustments are of a normal recurring nature. Certain prior year amounts in our consolidated financial statements have been reclassified in order to maintain comparability with the current year presentation. 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. 62 Table of Contents 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 REVENUES 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 Franchise Agreements The Company's revenues are primarily derived from franchise agreements with third-party hotel owners. The majority of the Company’s performance obligations are a series of distinct services, which are described in more detail below, for which the Company receives variable consideration through franchise fees. The Company enters into franchise agreements to provide franchisees with a limited non-exclusive license to utilize the Company’s registered brand tradenames and trademarks, marketing and reservation services, and other miscellaneous franchise services. These agreements typically have an initial term of 10 to 30 years with provisions permitting the franchisees or the Company to terminate the franchise agreement upon designated anniversaries of the hotel opening before the end of the initial term. 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 63 Table of Contents 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. The primary performance obligations are as follows: • License of brand intellectual property and related services (“brand intellectual property”) - Grants the right to access the Company’s intellectual property associated with the brand tradenames, trademarks, reservation systems, property management systems, and related services. • Material rights for free or discounted goods or services to hotel guests - Primarily consists of the points issued under the Company’s guest loyalty program, Choice Privileges. License of Brand Intellectual Property and Related Services The fees generated from brand intellectual property are recognized to revenue over time as the hotel owners pay for access to these services for the duration of the franchise agreement. The franchise fees are typically based on the sales or usage of the underlying hotel (i.e., after the completion of a hotel stay), with the exception of fixed up-front fees that usually represent an insignificant portion of the transaction price. The variable transaction price is determined for the period when the underlying gross room revenues and the transactions or events which generate fees are known. Franchise fees include the following: • Royalty fees - Royalty fees are earned in exchange for a license to brand intellectual property typically based on a percentage of gross room revenues. 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 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. The initial franchise fees are recognized as revenue ratably as the services are provided over the enforceable period of the franchise agreement, unless the franchise agreement is terminated and the hotel exits the franchise system whereby the remaining deferred amounts are recognized to revenue in the period of termination. 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. 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: • Fees based on a percentage of gross room revenues are recognized in the period the gross room revenue was earned, based on the underlying hotel’s sales or usage. • Fees based on the occurrence of a designated transaction or event are recognized in the period the transaction or event occurred. • 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 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 64 Table of Contents 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. Material Rights for Free or Discounted Goods or Services to Hotel Guests Choice Privileges is the Company’s guest loyalty program, which enable members to earn points based on their spending levels with the Company’s franchisees or certain vendors (refer to the Partnership Agreements section below). The points, which the Company accumulates and tracks on the members’ behalf, may be redeemed for free accommodations or other benefits (e.g. gift cards to participating retailers). The Company collects from the franchisees a percentage of the loyalty program members’ gross room revenue from completed stays to operate the programs. At such time the points are redeemed for free accommodations or other benefits, the Company reimburses the franchisees or third parties based on a rate derived in accordance with the franchise or vendor agreement. The loyalty points represent a performance obligation attributable to the usage of the points, and thus the revenues are recognized at the point in time when the loyalty points are redeemed by the members for benefits (with both franchisees and third-party partners), net of the cost of redemptions. For the years ended December 31, 2025, 2024, and 2023, the loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $ 125.6 million, $ 123.2 million, and $ 93.1 million, respectively. The transaction price is variable and determined in the period when the loyalty points are earned and the underlying gross room revenues are known. No loyalty program revenues are recognized at the time the loyalty points are issued. The Company is an agent in coordinating the delivery of the services between the loyalty program member and the franchisee or third party, and as a result, the revenues are recognized net of the cost of redemptions. The estimated value of the future redemptions is reflected in the current and non-current liability for guest loyalty program in the consolidated balance sheets. The liability for the guest loyalty program is developed based on an estimate of the eventual redemption rates and point values using various actuarial methods. These significant judgments determine the required point liability attributable to the outstanding points, which is relieved as the redemption costs are processed. The amount of the loyalty program fees in excess of the guest loyalty program point liability represents current and non-current deferred revenue, which is recognized to revenue as the points are redeemed including an estimate of the future forfeitures (“breakage”). The anticipated redemption pattern of the points is the basis for the current and non-current designation of each liability. As of December 31, 2025, the current and non-current deferred revenue balances were $ 78.2 million and $ 36.7 million, respectively. The loyalty points are typically redeemed within three years of issuance. 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 The Company is a party to various agreements with third-party partners, including the co-branding of the Choice Privileges credit card. The agreements typically provide for use of the Company’s marks, limited access to the Company’s distribution channels, and the sale of Choice Privileges loyalty points, in exchange for fees primarily comprising variable consideration that is paid each month. Loyalty members can earn points through participation in the partner’s program. The partnership agreements include multiple performance obligations. The primary performance obligations are for the brand intellectual property and material rights for free or discounted goods or services to hotel guests. 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 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 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 65 Table of Contents 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. The qualified vendor agreements comprise a single performance obligation, which is satisfied over time based on the access afforded, and the services provided, to the qualified vendor for the stated duration of the agreement. The fixed consideration is allocated and recognized ratably to each period over the term of the agreement. 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 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. SaaS agreements comprise a single performance obligation, which is satisfied over time based on the access to the software for the stated duration of the agreement. The fixed consideration is allocated and recognized ratably to each period over the term of the agreement. The variable consideration is determined at the conclusion of each period, and allocated to and recognized in the current period. Managed Hotels The Company manages 13 hotels (inclusive of four owned hotels). The management agreements provide for the use of the Company's marks and hotel management services, which include providing day-to-day management services in the operation of the hotels for the hotel owners. The fees generated from the management agreements are recognized to revenue over time as the hotel owners pay for access to these services for the duration of the management agreement, and include base and incentive management fees. Base management fees are generally based on a percentage of the hotel's monthly gross revenue and are invoiced and collected monthly. 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 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 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 revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income. Owned Hotels 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. The Company typically satisfies the performance obligations over the length of the stay and recognizes the revenue on a daily basis, as the hotel rooms are occupied and the services are rendered. Other ancillary goods and services at the owned hotels are purchased independently of the hotel stay at the standalone selling prices and are considered separate performance obligations, which are satisfied at the point in time when the related good or service is provided to the guest. These primarily consist of food and beverage, incidentals, and parking fees. The hotel room night and other ancillary goods and services revenues are presented within owned hotels revenue in the consolidated statements of income. Sales Taxes 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. 66 Table of Contents Business Combination, Diligence and Transition Costs The Company incurs costs during the review of potential business combinations, including legal fees, financial advisory, and other professional service fees. If the Company is successful in completing a business combination, then the Company may incur transition and integration costs, including professional service fees, technology costs, and employee-related costs such as bonuses, retention, and severance. The business combination, diligence and transition costs are expensed as incurred in the consolidated statements of income. Notes & Accounts Receivable and Allowances for Credit Losses The Company provides financing in the form of notes receivable loans to franchisees to support the development or conversion of properties in strategic markets. The Company accrues interest for notes receivable loans in accordance with loan provisions. The Company considers notes receivable loans past due and in default when payments are not made when due in accordance with the then-current loan provisions or the terms extended to the borrowers, including loans with concessions or interest deferral. The Company suspends the accrual of interest when payments on loans are more than 30 days past due or upon a loan being classified as collateral-dependent. The Company applies the payments received for loans on a non-accrual status first to interest and then to principal. The Company does not resume an interest accrual until all delinquent payments are received based on the then-current loan provisions. The Company has developed a systematic methodology to determine its allowance for credit losses across our portfolio of notes receivable loans. The Company monitors the risk and performance of our portfolio by the level of security in the collateral (i.e., senior, subordinated, or unsecured), which is the Company's credit quality indicator. As each of the Company’s notes receivable loans has unique risk characteristics, the Company deploys its methodology to calculate allowances for credit losses at the individual notes receivable loan level. The Company primarily utilizes a discounted cash flow ("DCF") technique to measure the credit allowance, influenced by the key economic variables of each note receivable loan. The Company identified the key economic variables for these loans to be the loan-to-cost ("LTC") or loan-to-value ("LTV") ratios and a debt service coverage ratio ("DSCR"). The LTC or LTV ratio represents the loan principal relative to the project cost or value and is an indication of the loan principal's ability to be re-paid at loan maturity. The DSCR represents property-specific net operating income as a percentage of the interest and principal payments incurred (i.e., debt service) on all debt of the borrower for the property and is an indication of the borrower's ability to make timely payments during the term of the loan. The LTC or LTV ratios and DSCR are considered during the loan underwriting process as indications of risk and, accordingly, we believe these factors are the most representative risk indicators for calculating the allowance for credit loss. Loans with higher LTC or LTV ratios and lower DSCR ratios generally are representative of loans with greater risk and, accordingly, have higher credit allowances as a percentage of loan principal. Conversely, loans with lower LTC or LTV ratios and higher DSCR ratios generally are representative of loans with lesser risk and, accordingly, have lower credit allowances as a percentage of loan principal. In preparing or updating a DCF model to measure the credit allowance, the Company develops various recovery scenarios and, based on the key economic variables, the present status of the loan, and the underlying collateral, applies a probability-weighting to the outputs of the scenarios. Collateral-dependent financial assets are financial assets for which repayment is expected to be derived substantially through the operation or sale of the collateral and when the borrower is experiencing financial difficulty. For collateral-dependent loans, the expected credit losses are based on the fair value of the collateral, less the selling costs if repayment will be from the sale of the collateral. The Company calculates the fair value of the collateral using a DCF technique to project the cash flows or a market approach via quoted market prices. In developing the cash flow projections, the Company will review the borrower's financial statements for the property, economic trends, industry projections for the market where the property is located, and comparable sales capitalization rates. Management assesses the credit quality of the notes receivable portfolio and the adequacy of the credit loss allowances on a quarterly basis and recognizes the provisions for credit losses in selling, general and administrative expenses in the consolidated statements of income. Significant judgment is required in this analysis. Accounts receivable consists primarily of the franchise and related fees due from the hotel franchisees and are recorded at the invoiced amount. The allowance for credit losses is the Company’s best estimate of the amount of expected credit losses inherent in the accounts receivable balance. 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 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. 67 Table of Contents 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. Refer to Note 3 for more information on the receivables and the allowances for credit losses. Advertising Costs The Company expenses advertising costs as incurred. 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 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 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. Capitalization Policies Property and equipment are generally recorded at cost and depreciated for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Major renovations and replacements incurred during construction are capitalized. The costs for computer software developed for internal use are capitalized during the application development stage and amortized using the straight-line method over the estimated useful lives of the software. The capitalized software licenses pertaining to cloud computing arrangements are amortized using the straight-line method over the shorter of the cloud computing arrangement term or the estimated useful lives of the software. The Company capitalizes the interest incurred during the construction and development of property and equipment, including software. The total interest capitalized as a cost of property and equipment was $ 8.1 million and $ 9.4 million during the years ended December 31, 2025 and 2024, respectively. As construction in progress and software development are completed and then placed in service, the assets are transferred to the appropriate property and equipment categories and depreciation and amortization begins. Upon the sale or the retirement of the property, the cost and the related accumulated depreciation are eliminated from the accounts and any related gain or loss is recognized in the consolidated statements of income. Repairs and maintenance, and minor replacements, are charged to expense as incurred. The Company has made certain acquisitions of hotel assets, which are recognized at the fair value of the consideration exchanged. The Company acquires land parcels with the intention to develop hotels, which are recognized at cost within property and equipment, net in the consolidated balance sheets. If the Company determines that it will not progress to active construction and development of a land parcel, then the land parcel is reclassified to other assets in the consolidated balance sheets. The table below summarizes the estimated useful lives for the respective assets for depreciation and amortization purposes: Computer equipment and software 2 - 7 years Buildings and leasehold improvements 10 - 40 years Furniture, fixtures, vehicles and equipment 3 - 10 years Assets Held for Sale The Company considers assets to be held for sale when all of the following criteria are met: • Management commits to a plan to sell an asset; • It is unlikely that the disposal plan will be significantly modified or discontinued; • The asset is available for immediate sale in its present condition; • Actions required to complete the sale of the asset have been initiated; • The sale of the asset is probable and the Company expects the completed sale will occur within one year; and • The asset is actively being marketed for sale at a price that is reasonable given its current market value. 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. 68 Table of Contents 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 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. If the undiscounted expected cash flows are less than the carrying amount of the asset group, then an impairment charge is measured and recognized, as applicable, for the excess of the carrying value over the fair value of the asset group. The fair value of the long-lived asset groups are estimated primarily using discounted cash flow analyses representing the highest and best use by an independent market participant. 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, 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. During the year ended December 31, 2023, the Company recognized an impairment loss on the long-lived assets associated with the legacy Radisson corporate office lease. Refer to Note 5 for additional information. 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. If the conclusion is that it is not more likely than not that the fair value of the asset is less than its carrying value, then no further testing is required. If the conclusion is that it is more likely than not that the fair value of the asset is less than its carrying value, then a quantitative impairment test is performed whereby the carrying value is compared to the fair value of the asset and an impairment charge is recognized, as applicable, for the excess of the carrying value over the fair value. The Company may elect to forgo the qualitative assessment and move directly to the quantitative impairment tests for goodwill and indefinite-lived intangible assets. The Company determines the fair value of its reporting units and indefinite-lived intangible assets using the income and market methods. Goodwill is allocated to the Company's reporting units. The Company's reporting units are determined primarily by the availability of discrete financial information relied upon by the chief operating decision maker ("CODM") to assess performance and make operating segment resource allocation decisions. As of December 31, 2025, the Company's goodwill is allocated solely to the Hotel Franchising reporting unit. The Company performed the qualitative impairment analysis for the Hotel Franchising reporting unit, concluding that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount. As such, a quantitative test was not required and no impairment was recorded. Variable Interest Entities In accordance with the guidance for the consolidation of variable interest entities ("VIE"), the Company identifies its variable interests and analyzes to determine if the entity in which the Company has a variable interest is a VIE. The Company's variable interests include equity investments, loans, and guaranties. The determination of whether a variable interest is a VIE includes both quantitative and qualitative considerations. For those entities determined to be VIEs, a further quantitative and qualitative analysis is performed to determine if the Company is deemed to be the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impacts the entity's economic performance and who has an obligation to absorb the losses of the entity or a right to receive the benefits from the entity that could potentially be significant. The Company consolidates those entities in which it is determined to be the primary beneficiary. 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 69 Table of Contents 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. Investments in Affiliates The Company evaluates an investment in an affiliate for impairment when circumstances indicate that the carrying value may not be recoverable, such as a loan default, significant under-performance relative to historical or projected operating performance, and/or significant negative industry, market, or economic trends. When there is an indication that a loss in value has occurred, the Company evaluates the carrying value compared to the estimated fair value of the investment. The fair value is based upon internally-developed discounted cash flow models, third-party appraisals, or current estimated net sales proceeds from pending offers. There are judgments and assumptions in each of these fair value determinations, including our selection of comparable market transactions, the amount and timing of 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 utilizes unobservable inputs which are significant to the overall fair value. If the estimated fair value is less than the carrying value, then management uses its judgment to determine if the decline in value is other-than-temporary. In determining this, the Company considers factors including, but not limited to, the length of time and extent of the decline, loss of value as a percentage of the cost, financial condition, near-term financial projections, the Company's intent and ability to recover the lost value, and current economic conditions. For declines in value that are deemed to be other-than-temporary, then the impairment charge is recognized to earnings. 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 (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 U.S. 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. dollars. 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’ equity (deficit). 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 The Company has stock compensation plans pursuant to which it is authorized to grant share-based awards, including restricted stock, stock options, stock appreciation rights, and performance-based share awards, to officers, key employees, and non-employee directors with contractual terms that are set by the Compensation and Management Development Committee of the Board of Directors. Stock Options - The Company recognizes compensation expense related to the fair value of these awards on a straight-line basis over the requisite service period for the share-based awards that ultimately vest. The fair value of the stock options is estimated on the grant date using the Black-Scholes options-pricing model. Restricted Stock Units ("RSUs") - The Company recognizes compensation expense related to the fair value of the restricted stock awards on a straight-line basis over the requisite service period for the restricted stock awards that ultimately vest. The fair value of the grants is measured by the market price of the Company’s common stock on the date of grant. The restricted stock awards generally vest ratably over the service period beginning on the first anniversary of the grant date. The 70 Table of Contents 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. The Company grants three types of PVRSU awards: (i) PVRSUs with performance conditions based on internal performance metrics, (ii) PVRSUs with market conditions based on the Company's total shareholder return ("TSR") relative to a predetermined peer group, and (iii) PVRSUs with both performance and market conditions. The vesting of the PVRSU awards is contingent upon the Company achieving the internal performance and/or TSR targets over a specified period and the employees' continued employment over the service period. The performance and market conditions affect the number of shares that will ultimately vest. The fair value of the PVRSUs with performance conditions based on internal performance metrics is measured by the market price of the Company's common stock on the date of the award grant. The Company recognizes compensation expense ratably over the requisite service period based on the Company's estimate of achieving the performance conditions. The fair value of the PVRSUs with market conditions is estimated using a Monte Carlo simulation method as of the date of the award grant. The Company recognizes compensation expense ratably over the requisite service period regardless of whether the market conditions are achieved and the awards ultimately vest. The fair value of the PVRSUs with both performance and market conditions is estimated using a Monte Carlo simulation as of the date of the award grant. The Company recognizes compensation expense ratably over the requisite service period based on the Company's estimate of achieving the performance conditions, with subsequent adjustments being made for the performance-based leveraging of any unvested PVRSUs, as necessary. Over the life of the share-based award grant, the Company's estimate of the share-based compensation expense for the share-based awards with performance and/or service requirements will be adjusted so that compensation expense is recognized only for the share-based awards that will ultimately vest. The expected forfeiture rate is calculated based on the number of shares that have historically been forfeited due to termination within one year of the grant date. Leases The Company determines if an arrangement is a lease, and the classification as either an operating lease or a financing lease, at lease inception. Operating leases are included in operating lease right-of-use assets, accrued expenses and other current liabilities, and operating lease liabilities in our consolidated balance sheets. As of December 31, 2025 and 2024, the Company did not have any leases classified as a financing lease. On the commencement date, operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. The operating lease right-of-use assets are further offset by prepaid rent, lease incentives, and initial direct costs incurred. When a lease agreement does not provide an implicit rate, the Company utilizes its incremental borrowing rate based on the information available at the commencement date in determining the present value of the future minimum lease payments. Lease expense for the minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments include certain index-based changes in rent, certain non-lease components (such as maintenance and other services provided by the lessor), and other charges included in the lease. Variable lease payments are excluded from the future minimum lease payments and expensed as incurred. The Company has made an election to not separate the lease and the non-lease components for all classes of underlying assets in which it is the lessee. In addition, the Company has made an election to not recognize short-term leases with an initial term of 12 months or less in the consolidated balance sheets. 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 71 Table of Contents 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 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. 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"). ASU 2024-03 requires public entities to provide detailed disclosure of the income statement expenses in the footnotes to the consolidated financial statements. ASU 2024-03 does not require any changes to the expense captions on the face of the consolidated income statement. ASU 2024-03 is effective for the annual reporting period beginning after December 15, 2026 and for the interim periods within the annual reporting period beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that ASU 2024-03 will have on the Company's consolidated financial statements. 2. Revenue Contract Liabilities 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 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: (in thousands) Balance as of December 31, 2024 $ 216,697 Increases to the contract liability balance due to cash received 153,031 Revenue recognized in the period ( 149,388 ) Balance as of December 31, 2025 $ 220,340 Remaining Performance Obligations The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $ 220.3 million as of December 31, 2025. This amount represents the fixed transaction price that will be recognized as revenue in future periods, which is presented as current and non-current deferred revenue in the consolidated balance sheets. 72 Table of Contents Based on the practical expedient elections permitted by ASU 2014-09, Revenue From Contracts with Customers (Topic 606) and subsequent amendments ("Topic 606"), the Company does not disclose the value of unsatisfied performance obligations for (i) variable consideration subject to the sales or usage-based royalty constraint or comprising a component of a series (including franchise, partnership, qualified vendor, and SaaS agreements), (ii) variable consideration for which the Company recognizes revenue at the amount to which it has the right to invoice for the services performed, or (iii) contracts with an expected original duration of one year or less. Capitalized Franchise Agreement Costs Sales commissions earned by Company personnel upon execution of a franchise agreement (“franchise sales commissions”) meet the requirement to be capitalized as an incremental cost of obtaining a contract with a customer. The capitalized franchise sales commissions are amortized on a straight-line basis over the estimated benefit period of the arrangement, unless the franchise agreement is terminated and the hotel exits the system whereby the remaining capitalized amounts will be expensed in the period of termination. The estimated benefit period is the Company's estimate of the duration a hotel will remain in the Choice system. 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 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 . 3. Receivables and Allowance for Credit Losses Notes Receivable The Company has provided financing in the form of notes receivable loans to franchisees in order to support the development of hotel properties in strategic markets. The Company's credit quality indicator is the level of security in the note receivable. The following table summarizes the composition of the notes receivable balances by credit quality indicator and the allowance for credit losses: December 31, (in thousands) 2025 2024 Senior $ 98,257 $ 94,963 Subordinated 13,356 15,433 Unsecured 4,044 5,118 Total notes receivable 115,657 115,514 Less: allowance for credit losses 8,481 7,331 Total notes receivable, net of allowance for credit losses $ 107,176 $ 108,183 Current portion, net of allowance for credit losses $ 94,686 $ 75,501 Long-term portion, net of allowance for credit losses $ 12,490 $ 32,682 73 Table of Contents The following table summarizes the amortized cost basis of the notes receivable by the year of origination and credit quality indicator: (in thousands) 2025 2024 2023 2022 2021 Prior Total Senior $ 1,713 $ 40,832 $ — $ — $ — $ 55,712 $ 98,257 Subordinated 1,501 — 3,503 — — 8,352 13,356 Unsecured 386 125 — — 771 2,762 4,044 Total notes receivable $ 3,600 $ 40,957 $ 3,503 $ — $ 771 $ 66,826 $ 115,657 The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses: December 31, (in thousands) 2025 2024 Beginning balance $ 7,331 $ 8,616 Provision (reversal) for credit losses 1,150 ( 609 ) Recoveries — ( 676 ) Ending balance $ 8,481 $ 7,331 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 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: (in thousands) 1-30 days Past Due 31-89 days Past Due > 90 days Past Due Total Past Due Current Total Notes Receivable As of December 31, 2025 Senior $ — $ — $ 42,900 $ 42,900 $ 55,357 $ 98,257 Subordinated — — — — 13,356 13,356 Unsecured — — 404 404 3,640 4,044 $ — $ — $ 43,304 $ 43,304 $ 72,353 $ 115,657 As of December 31, 2024 Senior $ — $ — $ 15,200 $ 15,200 $ 79,763 $ 94,963 Subordinated — — 2,264 2,264 13,169 15,433 Unsecured — — 784 784 4,334 5,118 $ — $ — $ 18,248 $ 18,248 $ 97,266 $ 115,514 The amortized cost basis of the notes receivable in a non-accrual status was $ 42.9 million and $ 17.5 million as of December 31, 2025 and 2024, respectively. Variable Interest through Notes Receivable The Company has issued notes receivable loans to certain entities that have created variable interests in the associated borrowers totaling $ 103.2 million and $ 103.1 million as of December 31, 2025 and 2024, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs"). 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. 74 Table of Contents 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, 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. 4. Property and Equipment The components of property and equipment were the following: December 31, (in thousands) 2025 2024 Land and land improvements $ 67,451 $ 51,045 Construction in progress and software under development 88,125 151,756 Computer equipment and software 114,031 105,196 Buildings and leasehold improvements 462,543 354,689 Furniture, fixtures, vehicles and equipment 79,254 67,562 Property and equipment 811,404 730,248 Less: Accumulated depreciation and amortization ( 162,113 ) ( 125,903 ) Property and equipment, net $ 649,291 $ 604,345 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, 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. 75 Table of Contents 5. Goodwill and Impairment of Assets Goodwill The following table summarizes the carrying amount of the Company's goodwill: December 31, (in thousands) 2025 2024 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 Accumulated impairment losses ( 7,578 ) ( 7,578 ) Goodwill, net carrying amount $ 305,758 $ 220,187 As of December 31, 2025 and 2024, goodwill is entirely attributable to the Hotel Franchising reporting unit. The Company assessed the qualitative factors attributable to the Hotel Franchising reporting unit and determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount. The Hotel Franchising reporting unit is included in the Hotel Franchising & Management reportable segment in Note 15. Long-lived Asset Group Impairments Legacy Radisson Corporate Office Lease On October 12, 2023, the Company executed an agreement to sublease the legacy Radisson corporate office space in Minneapolis, Minnesota. 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 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. 76 Table of Contents 6. Intangible Assets The components of the Company's intangible assets were the following: As of December 31, 2025 As of December 31, 2024 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Franchise Rights (1) $ 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) 644,997 159,630 485,367 548,544 128,932 419,612 Trademarks & Other (4) 10,603 4,569 6,034 12,444 6,414 6,030 Capitalized SaaS Licenses (5) 1,959 1,317 642 6,392 6,071 321 Total amortizing intangible assets 1,086,240 256,575 829,665 846,336 209,037 637,299 Trademarks & Other (non-amortizing) (6) 252,821 — 252,821 246,714 — 246,714 Total intangible assets $ 1,339,061 $ 256,575 $ 1,082,486 $ 1,093,050 $ 209,037 $ 884,013 (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 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 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. (4) Represents definite-lived trademarks and other amortizing assets, including management agreements, which are generally amortized on a straight-line basis over a period of 10 years to 30 years. (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. (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: (in thousands) 2026 $ 63,758 2027 $ 62,193 2028 $ 60,689 2029 $ 59,477 2030 $ 53,910 7. Investments in Affiliates The Company has equity method investments in affiliates primarily related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites in strategic markets. As of December 31, 2025 and 2024, the Company had total investments in affiliates in the consolidated balance sheets of $ 135.0 million and $ 117.0 million, respectively, which included investments in affiliates that represent VIEs of $ 134.4 million and $ 104.2 million, respectively. The Company has determined that it is not the primary beneficiary of any of these VIEs, however the Company does exercise significant influence through its equity ownership and as a result, the investments in these affiliates are accounted for under the equity method of accounting. During the years ended December 31, 2025, 2024, and 2023, 77 Table of Contents 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. 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 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. 78 Table of Contents The Company's ownership interests in its affiliates were as follows: Ownership Interest December 31, 2025 December 31, 2024 Choice Hotels Canada, Inc. (1) (2) — % 50 % Main Street WP Hotel Associates, LLC 50 % 50 % CS Hotel West Orange, LLC 50 % 50 % 926 James M. Wood Boulevard, LLC 75 % 75 % EH Glendale JV, LLC 80 % 80 % CS Lakeside Santa Clara LLC 50 % 50 % BL 219 Holdco, LP 50 % 50 % Integrated 32 West Randolph, LLC 20 % 20 % EH Nampa JV LLC 80 % 80 % Radisson Hotel La Crosse (1) 14 % 14 % CH East Avenue, LLC 65 % 65 % EH Cheyenne JV, LLC 80 % 80 % EH Clarksville JV, LLC 80 % 80 % EH Waco JV, LLC (3) — % 80 % EH Amarillo JV, LLC (3) — % 80 % EH Yuma JV, LLC (3) — % 80 % EH El Paso JV, LLC (3) — % 80 % EH Brownsville JV, LLC (3) — % 80 % EH Wichita JV, LLC (3) — % 80 % EH Salem JV, LLC (3) — % 80 % EH Facility JV, LLC (3) 86 % — % (1) Non-VIE investments. (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: Year Ended December 31, (in thousands) 2025 2024 2023 Revenues $ 73,113 $ 65,732 $ 65,634 Operating income $ 13,091 $ 14,199 $ 12,504 (Loss) income before income taxes $ ( 13,990 ) $ ( 1,203 ) $ 314 Net loss $ ( 14,443 ) $ ( 3,488 ) $ ( 1,255 ) As of December 31, (in thousands) 2025 2024 Current assets $ 27,787 $ 71,737 Non-current assets 502,562 412,269 Total assets $ 530,349 $ 484,006 Current liabilities $ 30,988 $ 84,966 Non-current liabilities 352,594 257,130 Total liabilities $ 383,582 $ 342,096 79 Table of Contents 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: December 31, (in thousands) 2025 2024 Accrued compensation and benefits $ 47,451 $ 55,806 Accrued interest 24,761 27,333 Dividends payable 13,542 13,888 Income taxes payable 862 10,405 Current operating lease liabilities 8,364 5,367 Other liabilities 30,302 23,930 Total accrued expenses and other current liabilities $ 125,282 $ 136,729 9. Debt Debt consisted of the following: December 31, 2025 2024 (in thousands) $ 400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88 %, less a discount and deferred issuance costs of $ 2.4 million and $ 3.0 million at December 31, 2025 and December 31, 2024, respectively $ 397,643 $ 397,042 $ 450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86 %, less a discount and deferred issuance costs of $ 3.1 million and $ 3.7 million at December 31, 2025 and December 31, 2024, respectively 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 $ 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 Economic development loans with an effective interest rate of 3.00 % at December 31, 2025 1,850 — Total long-term debt $ 1,906,122 $ 1,768,526 As of December 31, 2025, the scheduled principal maturities of debt, net of unamortized discounts, premiums, and deferred issuance costs, were as follows: (in thousands) Senior Notes Revolving Credit Facility Other Notes Payable Total 2026 $ — $ — $ — $ — 2027 — — — — 2028 — — — — 2029 397,643 469,783 — 867,426 2030 — — — — Thereafter 1,036,846 — 1,850 1,038,696 Total payments $ 1,434,489 $ 469,783 $ 1,850 $ 1,906,122 10. Fair Value Measurements The Company estimates the fair value of its financial instruments utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The following summarizes the three levels of inputs, as well as the assets that the Company values using those levels of inputs on a recurring basis. Level 1 - Quoted prices in active markets for identical assets and liabilities. The Company’s Level 1 assets consist of mutual funds held in the Company's Deferred Compensation Plan. 80 Table of Contents 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. The Company’s Level 2 assets consist of money market funds held in the Company's Deferred Compensation Plan. Level 3 - Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument. The Company does not currently have any assets recorded at fair value on a recurring basis whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the years ended December 31, 2025 and 2024. The Company recognized the following assets at fair value on a recurring basis in the consolidated balance sheets: Fair Value Measurements at Reporting Date Using (in thousands) Total Level 1 Level 2 Level 3 As of December 31, 2025 Mutual funds (1) $ 47,713 $ 47,713 $ — $ — Money market funds (1) 4,281 — 4,281 — Total $ 51,994 $ 47,713 $ 4,281 $ — As of December 31, 2024 Mutual funds (1) $ 43,887 $ 43,887 $ — $ — Money market funds (1) 5,439 — 5,439 — Total $ 49,326 $ 43,887 $ 5,439 $ — (1) The current assets at fair value noted above are presented in prepaid expenses and other current assets in the consolidated balance sheets. 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. Other Financial Instruments Disclosure The Company believes that the fair values of its current assets and current liabilities approximate their reported carrying amounts due to the short-term nature of these items. In addition, the interest rate on the senior unsecured revolving credit facility adjusts frequently based on current market interest rates; therefore, the Company believes the carrying amount approximates the fair value. The fair values of the Company's senior unsecured notes are classified as Level 2 because the significant inputs are observable in an active market. Refer to Note 9 for additional information on debt. As of December 31, 2025 and 2024, the carrying amounts and the fair values were as follows: December 31, 2025 December 31, 2024 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value 2019 Senior Notes Due 2029 $ 397,643 $ 389,612 $ 397,042 $ 371,600 2020 Senior Notes Due 2031 $ 446,910 $ 428,963 $ 446,300 $ 405,351 2024 Senior Notes Due 2034 $ 589,936 $ 612,612 $ 588,764 $ 601,836 The fair value estimates are determined at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. The settlement of such fair value amounts may not be possible or a prudent management decision. 81 Table of Contents 11. Income Taxes The Company's income before income taxes, classified by source of income, was as follows: Year Ended December 31, (in thousands) 2025 2024 2023 U.S. $ 324,611 $ 370,395 $ 303,337 Outside the U.S. 132,280 25,250 33,619 Income before income taxes $ 456,891 $ 395,645 $ 336,956 The provision for income taxes, classified by the timing and the location of payment, was as follows: Year Ended December 31, (in thousands) 2025 2024 2023 Current tax expense Federal $ 45,262 $ 89,716 $ 60,493 State 10,890 21,518 16,890 Foreign 4,568 2,609 1,593 Deferred tax expense (benefit) Federal 17,330 ( 18,378 ) ( 2,022 ) State 4,343 ( 2,908 ) ( 1,874 ) Foreign 4,552 3,423 3,369 Income tax expense $ 86,945 $ 95,980 $ 78,449 The net deferred tax assets were as follows: December 31, (in thousands) 2025 2024 Deferred tax assets: Accrued compensation $ 21,571 $ 20,958 Deferred revenue 36,209 40,946 Receivable, net 13,888 12,345 Tax credits 34,615 24,663 Operating lease liabilities 27,872 28,455 Partnership interests 2,896 5,130 Capitalized research and experimental expenditures 35,253 44,946 Foreign net operating losses 7,651 7,870 Non-U.S. intellectual property 7,555 11,333 Other 5,015 7,235 Total gross deferred tax assets 192,525 203,881 Less: Valuation allowance ( 33,542 ) ( 29,660 ) Deferred tax assets $ 158,983 $ 174,221 Deferred tax liabilities: Property, equipment and intangible assets $ ( 87,465 ) $ ( 42,895 ) Operating lease ROU assets ( 18,601 ) ( 20,016 ) Other ( 2,849 ) ( 3,002 ) Deferred tax liabilities ( 108,915 ) ( 65,913 ) Net deferred tax assets $ 50,068 $ 108,308 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 $ 3.9 million due to state tax credits and foreign NOLs. 82 Table of Contents 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. Accordingly, the Company has provided a full valuation allowance against these carryforwards. 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 $ 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 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, 2025 (in thousands, except percentages) Amount Percent U.S. federal statutory tax rate $ 95,989 21.0 % State and local income taxes, net of federal income tax effect (1) 11,996 2.6 Foreign tax effects: Canada: 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) 2,130 0.4 Effects of cross-border tax laws ( 903 ) ( 0.2 ) Tax credits 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. 83 Table of Contents Year Ended December 31, 2024 2023 Statutory U.S. federal income tax rate 21.0 % 21.0 % State income taxes, net of federal tax benefit 3.5 % 3.2 % Expenses related to foreign operations 0.7 % 0.3 % Expenses related to compensation, net 1.3 % 1.0 % Unrecognized tax positions ( 0.8 ) % 0.5 % Tax credits ( 2.4 ) % ( 2.4 ) % Valuation allowance 0.6 % 0.6 % Other 0.4 % ( 0.9 ) % Effective income tax rate 24.3 % 23.3 % The Company's effective income tax rates from continuing operations were 24.3 % and 23.3 % for the years ended December 31, 2024 and 2023 , respectively. The effective income tax rates for the years ended December 31, 2024 and 2023 were higher than the U.S. federal income tax rate of 21.0% primarily due to the impact of state income taxes and tax expense related to compensation, which were partially offset by federal income tax credits. 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. After considering the deferred income tax accounting impact, it is expected that approximately $ 3.5 million of the total as of December 31, 2025 would reduce the effective income tax rate if resolved in the Company’s favor. The following table presents a reconciliation of the beginning and ending amounts of the unrecognized tax benefits: (in thousands) 2025 2024 2023 Balance, January 1 $ 6,914 $ 13,434 $ 11,876 Changes for tax positions of prior years 91 ( 776 ) 2,338 Increases for tax positions related to the current year 1,400 1,516 1,670 Settlements and lapsing of statutes of limitations ( 2,573 ) ( 7,260 ) ( 2,450 ) Balance, December 31 $ 5,832 $ 6,914 $ 13,434 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. The Company's policy is to recognize interest and penalties related to income tax matters in the provision for income taxes. The Company did not incur any material interest or penalties during the years ended December 31, 2025, 2024, and 2023. 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. 12. Share-Based Compensation and Capital Stock Share-Based Compensation The Company has stock compensation plans pursuant to which it is authorized to grant share-based awards, including restricted stock, stock options, stock appreciation rights, and performance-based share awards, to officers, key employees, and non-employee directors with contractual terms that are set by the Compensation and Management Development Committee of the Board of Directors. Approximately 1.9 million shares of the Company's common stock remain available for grant as of December 31, 2025. The Company’s policy allows the issuance of new common stock shares or treasury shares to satisfy the share-based awards. 84 Table of Contents For the year ended December 31, 2025, the following table presents a summary of the share-based award activity: 2025 Stock Options Restricted Stock Performance Vested Restricted Stock Units Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Outstanding as of January 1, 2025 771,641 $ 111.15 355,405 $ 136.67 467,521 $ 137.74 Granted — — 65,223 132.64 148,709 150.77 Performance-based leveraging* — — — — ( 41,012 ) 125.90 Exercised/vested ( 62,025 ) 107.71 ( 65,961 ) 129.32 ( 116,107 ) 151.76 Expired ( 12,850 ) 135.92 — — — — Forfeited ( 1,683 ) 137.55 ( 11,502 ) 125.14 ( 14,300 ) 146.55 Outstanding as of December 31, 2025 695,083 $ 110.98 5.2 years 343,165 $ 138.02 444,811 $ 138.89 Options exercisable as of December 31, 2025 560,223 $ 107.84 4.7 years * 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: For the Year Ended December 31, (in thousands) 2025 2024 2023 Stock options $ 3,946 $ 5,265 $ 5,816 Restricted stock 12,785 12,728 13,774 Performance vested restricted stock units 21,590 20,447 20,924 Total share-based compensation expense $ 38,321 $ 38,440 $ 40,514 The following table as of December 31, 2025 is a summary of the total unrecognized compensation expense related to the share-based awards that have not yet vested and the related weighted average remaining amortization periods over which the compensation expense will be recognized: (in thousands) Unrecognized Compensation Expense on Unvested Awards Weighted Average Remaining Amortization Period Stock options $ 1,776 1.5 years Restricted stock 18,507 1.9 years Performance vested restricted stock units 18,749 1.7 years Total $ 39,032 Stock Options The following table is a summary of the activity related to the stock options: For the Year Ended December 31, 2025 2024 2023 Number of options granted — 78,988 88,733 Fair value of options granted (in thousands) $ — $ 3,069 $ 3,779 Total intrinsic value of stock options exercised (in thousands) $ 2,356 $ 12,185 $ 9,170 Total fair value of stock options vested (in thousands) $ 5,108 $ 5,032 $ 4,857 The stock options granted by the Company had an exercise price equal to the market price of the Company’s common stock on the date of grant. As of December 31, 2025, the aggregate intrinsic value of the stock options outstanding and exercisable was $ 1.5 million and $ 1.5 million, respectively. 85 Table of Contents The fair value of the options granted was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions: 2025 2024 2023 Risk-free interest rate — 4.27 % 4.10 % Expected volatility — 31.34 % 30.90 % Expected life of stock option — 6.0 years 6.0 years Dividend yield — 1.03 % 0.90 % 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 The expected life of the stock options and the expected volatility are based on historical data which is believed to be indicative of future exercise patterns and volatility. The historical volatility is calculated based on a period that corresponds to the expected life of the stock option. The dividend yield and the risk-free interest rate are calculated on the grant date based on the then-current dividend rate and the risk-free interest rate for the period corresponding to the expected life of the stock option. Restricted Stock The following table is a summary of the activity related to the restricted stock: For the Year Ended December 31, 2025 2024 2023 Restricted shares granted 65,223 69,249 65,991 Weighted average grant date fair value per share $ 132.64 $ 115.57 $ 123.65 Aggregate grant date fair value (in thousands) $ 8,651 $ 8,003 $ 8,160 Restricted shares forfeited 11,502 16,246 13,202 Vesting service period for the restricted shares granted 9 - 48 months 9 - 48 months 9 - 48 months Fair value of the restricted shares vested (in thousands) $ 8,790 $ 6,804 $ 11,134 Performance Vested Restricted Stock Units The following table is a summary of the activity related to the PVRSUs : For the Year Ended December 31, 2025 2024 2023 PVRSUs granted at target 148,709 147,943 110,636 Weighted average grant date fair value per share $ 150.77 $ 115.04 $ 128.71 Aggregate grant date fair value (in thousands) $ 22,421 $ 17,019 $ 14,240 PVRSUs forfeited & expired 14,300 23,710 16,504 Requisite service period 9 - 48 months 9 - 48 months 9 - 48 months Fair value of PVRSUs vested (in thousands) $ 17,621 $ 15,773 $ 17,413 During the year ended December 31, 2025, the Company granted PVRSUs with performance conditions, PVRSUs with market conditions, and PVRSUs with performance and market conditions, with requisite service periods between 9 months and 48 months and with award vesting ranges generally between 0 % and 230 % of the initial units granted. Share Repurchases and Redemptions 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. 86 Table of Contents 13. Earnings Per Share The Company’s shares of restricted stock contain rights to receive nonforfeitable dividends and thus are participating securities requiring the computation of basic earnings per share using the two-class method. The shares of restricted stock are both potential shares of common stock and participating securities so the Company calculates diluted earnings per share by using the more dilutive of the treasury stock method or the two-class method. The calculation of earnings per share for the net income available to common shareholders excludes the distribution of dividends and the undistributed earnings attributable to the participating securities from the numerator. The diluted earnings per share includes stock options, PVRSUs, and RSUs in the calculation of the weighted average shares of common stock outstanding. The computation of basic and diluted earnings per share was as follows: Year Ended December 31, (in thousands, except per share amounts) 2025 2024 2023 Numerator: Net income $ 369,946 $ 299,665 $ 258,507 Income allocated to participating securities ( 1,780 ) ( 1,521 ) ( 1,379 ) Net income available to common shareholders $ 368,166 $ 298,144 $ 257,128 Denominator: Weighted average shares of common stock outstanding - basic 46,170 47,653 50,341 Basic earnings per share $ 7.97 $ 6.26 $ 5.11 Numerator: Net income $ 369,946 $ 299,665 $ 258,507 Income allocated to participating securities ( 1,780 ) ( 1,521 ) ( 1,379 ) Net income available to common shareholders $ 368,166 $ 298,144 $ 257,128 Denominator: Weighted average shares of common stock outstanding - basic 46,170 47,653 50,341 Dilutive effect of stock options, PVRSUs, and RSUs 410 425 359 Weighted average shares of common stock outstanding - diluted 46,580 48,078 50,700 Diluted earnings per share $ 7.90 $ 6.20 $ 5.07 The following securities have been excluded from the calculation of the diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive effect: Year Ended December 31, (in thousands) 2025 2024 2023 Stock options 202 147 232 PVRSUs 46 7 71 14. Leases 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 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. The Company's lease costs were as follows: Year Ended December 31, (in thousands) 2025 2024 Operating lease cost $ 12,130 $ 11,979 Sublease income ( 937 ) ( 789 ) Total lease cost $ 11,193 $ 11,190 87 Table of Contents Other information related to the Company's lease arrangements were as follows: Year Ended December 31, (in thousands) 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,602 $ 6,637 ROU assets obtained in exchange for lease liabilities in non-cash transactions: Operating lease assets obtained in exchange for operating lease liabilities $ 427 $ 4,585 Weighted-average remaining lease term 31.6 years 31.7 years Weighted-average discount rate 5.09 % 5.07 % As of December 31, 2025, the future minimum lease payments were as follows: (in thousands) 2026 $ 13,071 2027 13,697 2028 13,594 2029 13,586 2030 13,642 Thereafter 297,944 Total minimum lease payments $ 365,534 Less: imputed interest 249,207 Present value of the minimum lease payments $ 116,327 15. Reportable Segment Information The Hotel Franchising & Management reportable segment includes the Company's hotel franchising operations which consists of its 22 brands and brand extensions and the hotel management operations of 13 hotels (inclusive of four owned hotels). 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, 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. The cost reimbursement revenues received from the franchisees are included in Hotel Franchising & Management revenues and are offset by the related expenses in order to calculate Hotel Franchising & Management operating income. The equity in the earnings or losses from the hotel franchising-related investment in affiliates is allocated to the Hotel Franchising & Management reportable segment. The Company evaluates its Hotel Franchising & Management reportable segment based primarily on the operating income of the segment without allocating corporate expenses or indirect general and administrative expenses. The Corporate & Other column includes the operations of the Company's owned hotels. Intersegment Eliminations to revenues is the elimination of Hotel Franchising & Management revenue which includes royalty fees, management and cost reimbursement fees charged to our owned hotels against the franchise and management fee expense that is recognized by our owned hotels in Corporate & Other operating income (loss). Our President and Chief Executive Officer, who is our chief operating decision maker ("CODM"), utilizes budgeted and forecasted financial information as well as industry metrics, such as RevPar, Occupancy, and ADR, to assess the performance and to make resource allocation decisions. The CODM does not use assets by operating segment when assessing the performance or when making operating segment resource allocation decisions and therefore, assets by segment are not disclosed below. 88 Table of Contents The following tables presents the financial information for the Company's segments: For the Year Ended December 31, 2025 (in thousands) Hotel Franchising & Management Corporate & Other Intersegment Eliminations Consolidated Revenues $ 1,472,535 $ 137,439 $ ( 13,181 ) $ 1,596,793 Other Segment Items (1) 834,953 266,907 ( 13,181 ) 1,088,679 Depreciation and amortization 34,520 25,195 — 59,715 Operating income (loss) 603,062 ( 154,663 ) — 448,399 Reconciliation of segment profit or loss: Interest expense 91,148 Interest income ( 6,237 ) 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 For the Year Ended December 31, 2024 (in thousands) Hotel Franchising & Management Corporate & Other Intersegment Eliminations Consolidated Revenues $ 1,470,592 $ 126,450 $ ( 12,203 ) $ 1,584,839 Other Segment Items (1) 857,843 223,473 ( 12,203 ) 1,069,113 Depreciation and amortization 28,450 23,503 — 51,953 Operating income (loss) 584,299 ( 120,526 ) — 463,773 Reconciliation of segment profit or loss: Interest expense 87,131 Interest income ( 8,646 ) Loss on extinguishment of debt 331 Other losses, net 1,641 Equity in net gain of affiliates ( 12,329 ) Income before income taxes $ 395,645 For the Year Ended December 31, 2023 (in thousands) Hotel Franchising & Management Corporate & Other Intersegment Eliminations Consolidated Revenues $ 1,444,394 $ 110,854 $ ( 11,083 ) $ 1,544,165 Other Segment Items (1) 911,301 223,881 ( 11,083 ) 1,124,099 Depreciation and amortization 24,562 20,476 — 45,038 Operating income (loss) 508,531 ( 133,503 ) — 375,028 Reconciliation of segment profit or loss: Interest expense 63,780 Interest income ( 7,764 ) 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 reimbursable expenses from franchised and managed properties. 89 Table of Contents 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. 16. Commitments and Contingencies The Company is not a party to any litigation other than litigation in the ordinary course of business. The Company's management and legal counsel do not expect that the ultimate outcome of any of its current legal proceedings, individually or in the aggregate, will have a material adverse effect on the Company's financial position, results of operations, or cash flows. Contingencies 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. As of December 31, 2025, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $ 38.5 million, plus unpaid expenses and accrued but unpaid interest. The Company believes the likelihood of having to perform under these guaranties is remote. In the event of performance, the Company has recourse for certain of the guaranties in the form of partial guaranties from third parties. Commitments The Company had the following outstanding commitments as of December 31, 2025: • As part of the acquisition of Radisson Hotels Americas in August 2022, the Company entered into a long-term management arrangement, with an expiration date of July 31, 2031, to manage hotels owned by a third-party. As of December 31, 2025, the Company managed seven hotels pursuant to the long-term management arrangement. In conjunction with the management arrangement, the Company entered into a guarantee with the third-party to fund any shortfalls in the payment of the third-party owner’s priority that is stipulated in the management agreement. 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. These payments are typically made at the commencement of construction or the hotel's opening, in accordance with agreed upon provisions in the individual franchise agreements. The timing and the amount of the franchise agreement acquisition cost payments are dependent on various factors, including the implementation of various development and brand incentive programs, the level of franchise sales, and the ability of our franchisees to complete construction or convert their hotels to one of the Company’s brands. • The Company has committed to provide financing in the form of loans or credit facilities to franchisees for brand development efforts. 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 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, 90 Table of Contents (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. In addition, these parties are also generally indemnified against any third-party claim resulting from the transaction that is contemplated in the underlying agreement. 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. 17. Acquisitions 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: 91 Table of Contents (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. Income Taxes 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. 92 Table of Contents 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. Goodwill 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. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.