What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-04-30 · 132 added, 59 removed, 288 unchanged (40% of the section changed)

4 unchanged sentences

We are primarily a hotel franchisor operating in 49 states, the District of Columbia, and 49 countries and territories.

As of March 31, 2026, we had 7,588 hotels with 658,348 rooms open and operating, and 830 hotels with 77,773 rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding master development agreements (collectively, "pipeline") in our global system.

Our brand names include Clarion®, Clarion Pointe™, Comfort Inn®, Comfort Suites®, Country Inn & Suites® by Radisson, Sleep Inn®, Quality®, Park Inn by Radisson®, Everhome Suites®, WoodSpring Suites®, MainStay Suites®, Suburban Studios™, Radisson Blu®, Park Plaza®, Cambria® Hotels, Ascend Collection®, Radisson RED®, Radisson Individuals®, Radisson®, Radisson Collection®, Radisson Inn & Suites SM , Econo Lodge®, and Rodeway Inn®.

As of June 30, 2026, we had 7,608 hotels with 661,089 rooms open and operating, and 841 hotels with 77,275 rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding master development agreements (collectively, "pipeline") in our global system.

Our brand names include Clarion®, Clarion Pointe®, Comfort®, Country Inn & Suites® by Radisson, Sleep Inn®, Quality®, Park Inn® by Radisson®, Everhome Suites®, WoodSpring Suites®, MainStay Suites®, Suburban Studios®, Radisson Blu®, Park Plaza®, Cambria® Hotels, Ascend Collection®, Radisson RED®, Radisson Individuals®, Radisson®, Radisson Collection®, Radisson Inn & Suites™, Econo Lodge®, and Rodeway Inn®.

The hotel franchising business represents the Company's primary operations.

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Due to the seasonal nature of the Company’s hotel franchising and management business and the multi-year investments required to support the franchise operations, quarterly and/or annual surpluses or deficits may be generated.

During the three months ended March 31, 2026 and 2025, reimbursable expenses from franchised and managed properties exceeded revenue for reimbursable costs from franchised and managed properties by $37.9 million and $20.4 million, respectively.

During the three months ended June 30, 2026 and 2025, reimbursable expenses from franchised and managed properties exceeded revenue for reimbursable costs from franchised and managed properties by $34.3 million and $9.0 million, respectively.

During the six months ended June 30, 2026 and 2025, reimbursable expenses from franchised and managed properties exceeded revenue for reimbursable costs from franchised and managed properties by $72.2 million and $29.4 million, respectively.

Refer to the Operations Review section in MD&A for additional analysis of our results of operations.

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Operations Review

Comparison of the Operating Results for the Three Months Ended March 31, 2026 and 2025

Comparison of the Operating Results for the Three Months Ended June 30, 2026 and 2025

Three Months Ended

17 unchanged sentences

Interest income (1,095) (1,456)

Other losses, net 721 436

Other gains, net (6,124) (5,374)

Equity in net loss of affiliates 1,216 80

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Results of Operations

For the three months ended March 31, 2026, the Company recognized income before income taxes of $30.3 million, which is a $29.5 million decrease from the same period in the prior year.

The decrease in income before income taxes was primarily due to a $19.9 million decrease in operating income, a $6.2 million increase in equity in net loss of affiliates, and a $2.7 million increase in interest expense.

For the three months ended June 30, 2026, the Company recognized income before income taxes of $85.9 million, which is a $22.7 million decrease from the same period in the prior year.

The decrease in income before income taxes was primarily due to a $20.5 million decrease in operating income.

Operating income decreased $20.5 million primarily due to a $25.3 million increase in the net reimbursable deficit from franchised and managed properties, a $6.9 million increase in selling, general and administrative expenses, and a $3.4 million increase in depreciation and amortization, all of which were partially offset by a $10.5 million increase in franchise and management fees.

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Franchise and Management Fees

Franchise and management fees increased $4.6 million primarily due to a $5.2 million increase in international royalty fees and a $4.5 million increase in revenues generated from programs, platforms, and services associated with the Company's franchise operations, all of which were partially offset by a $4.0 million decrease in U.S.

royalty fees and a $1.5 million decrease in initial franchise fees.

royalty fees decreased $4.0 million to $90.6 million for the three months ended March 31, 2026 from $94.6 million for the three months ended March 31, 2025.

The decrease in U.S.

royalty fees was primarily due to a 2.3% decrease in U.S.

system-wide RevPAR as a result of a 2.1% decrease in average daily rates and a 10 basis points decrease in occupancy during the current period, which was partially offset by a system-wide 11 basis points increase in the average royalty rate from 5.11% for

the three months ended March 31, 2025 to 5.22% for the three months ended March 31, 2026.

system-wide RevPAR during the three months ended March 31, 2025 includes a hurricane-related impact of 410 basis points.

Franchise and management fees increased $10.5 million primarily due to a $6.4 million increase in international royalty fees, a $2.8 million increase in revenues generated from programs, platforms, and services associated with the Company's franchise operations, and a $1.2 million increase in U.S.

royalty fees, all of which were partially offset by a $1.4 million decrease in initial franchise fees.

royalty fees increased $1.2 million to $122.5 million for the three months ended June 30, 2026 from $121.3 million for the three months ended June 30, 2025.

The increase in U.S.

royalty fees was primarily due to a 1.3% increase in U.S.

system-wide RevPAR as a result of a 0.7% increase in average daily rates and a 40 basis points increase in occupancy during the current period, and a system-wide 11 basis points increase in the average royalty rate from 5.12% for the three months ended June 30, 2025 to 5.23% for the three months ended June 30, 2026, all of which were partially offset by a 0.3% decrease in open and

operating U.S.

system-wide RevPAR during the three months ended June 30, 2026 includes a FIFA World Cup-related impact of 60 basis points.

A summary of the operating performance for the Company's U.S.

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Three Months Ended Three Months Ended Change

March 31, 2026 March 31, 2025

June 30, 2026 June 30, 2025

Rate Occupancy RevPAR Average

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A summary of the U.S.

hotels and rooms by brand in our franchise system as of March 31, 2026 and 2025 was as follows:

March 31, 2026 March 31, 2025 Variance

hotels and rooms by brand in our franchise system as of June 30, 2026 and 2025 was as follows:

June 30, 2026 June 30, 2025 Variance

Hotels Rooms Hotels Rooms Hotels % Rooms %

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(3) Includes the Clarion family of brand extensions, including Clarion and Clarion Pointe.

International royalty fees increased $5.2 million to $11.8 million for the three months ended March 31, 2026 from $6.6 million for the three months ended March 31, 2025.

The increase in international royalty fees was primarily due to an increase in the international franchise system size by 152 hotels (from 1,248 hotels as of March 31, 2025 to 1,400 hotels as of March 31, 2026) and 18,481 rooms (from 141,986 rooms as of March 31, 2025 to 160,467 rooms as of March 31, 2026), an increase in royalty fees as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada, and an increase in international RevPAR.

International royalty fees increased $6.4 million to $14.2 million for the three months ended June 30, 2026 from $7.8 million for the three months ended June 30, 2025.

The increase in international royalty fees was primarily due to an increase in the international franchise system size by 155 hotels (from 1,258 hotels as of June 30, 2025 to 1,413 hotels as of June 30, 2026) and 18,025 rooms (from 143,838 rooms as of June 30, 2025 to 161,863 rooms as of June 30, 2026), an increase in royalty fees as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada, and an increase in international RevPAR.

Selling, General and Administrative

Selling, general and administrative expenses increased $3.8 million primarily due to a $4.3 million increase in bad debt expense and a $1.1 million increase in expenses to operate Choice Hotels Canada during the three months ended March 31, 2026, all of which were partially offset by a $0.7 million decrease in costs related to the global ERP system implementation and decreases in other general costs to operate the franchising business.

Selling, general and administrative expenses increased $6.9 million primarily due to a $4.5 million increase in the provision for credit losses in accounts receivable, a $1.7 million increase in non-recurring operational restructuring and executive severance expense, a $1.4 million increase in expenses to operate Choice Hotels Canada during the three months ended June 30, 2026, and increases in other general costs to operate the franchising business, all of which were partially offset by a $2.0 million decrease

in operating guarantee payments for a portfolio of managed hotels which was acquired in connection with the Company's purchase of Radisson Hotels Americas, and a $1.0 million decrease in costs related to the global enterprise resource planning ("ERP") system implementation.

Depreciation and Amortization

Depreciation and amortization expense increased $3.1 million primarily due to a $2.0 million increase in amortization expense for intangible assets as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada in July 2025 and a $1.0 million increase in depreciation expense related to the opening of four owned hotels during the third and fourth quarters of 2025.

Depreciation and amortization expense increased $3.4 million primarily due to a $2.0 million increase in amortization expense for intangible assets as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada in July 2025 and a $1.1 million increase in depreciation expense related to the opening of five owned hotels.

Income Tax Expense

The Company’s effective income tax rates were 25.1% and 24.7% for the three months ended June 30, 2026 and 2025, respectively.

The effective income tax rate for the three months ended June 30, 2026 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes and tax expense related to compensation.

The effective income tax rate for the three months ended June 30, 2025 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes.

Comparison of the Operating Results for the Six Months Ended June 30, 2026 and 2025

Six Months Ended

(in thousands) 2026 2025

Franchise and management fees $ 337,167 $ 322,154

Partnership services and fees 53,408 52,445

Owned hotels 65,329 58,088

Other 38,205 35,843

Revenue for reimbursable costs from franchised and managed properties 287,228 290,773

Total revenues 781,337 759,303

OPERATING EXPENSES

Selling, general and administrative 174,199 163,508

Business combination, diligence and transition costs 772 446

Depreciation and amortization 33,634 27,172

Owned hotels 49,108 43,479

Reimbursable expenses from franchised and managed properties 359,452 320,169

Total operating expenses 617,165 554,774

Operating income 164,172 204,529

OTHER EXPENSES AND (INCOME), NET

Interest expense 48,221 43,978

Interest income (2,306) (3,015)

Other gains, net (5,403) (4,938)

Equity in net loss of affiliates 7,468 131

Equity in net loss of affiliates increased $6.2 million primarily due to a $5.8 million decrease in the equity earnings from our unconsolidated affiliates and a $0.9 million decrease in the equity earnings as a result of acquiring the remaining 50% equity interest in Choice Hotels Canada in July 2025.

Total other expenses and (income), net 47,980 36,156

Income before income taxes 116,192 168,373

Income tax expense 31,550 42,105

Net income $ 84,642 $ 126,268

Results of Operations

For the six months ended June 30, 2026, the Company recognized income before income taxes of $116.2 million, which is a $52.2 million decrease from the same period in the prior year.

The decrease in income before income taxes was primarily due to a $40.4 million decrease in operating income, a $7.3 million increase in equity in net loss of affiliates, and a $4.2 million increase in interest expense.

Operating income decreased $40.4 million primarily due to a $42.8 million increase in the net reimbursable deficit from franchised and managed properties, a $10.7 million increase in selling, general and administrative expenses, and a $6.5 million

increase in depreciation and amortization, all of which were partially offset by a $15.0 million increase in franchise and management fees.

The primary reasons for these fluctuations are described in more detail below.

Franchise and Management Fees

Franchise and management fees increased $15.0 million primarily due to an $11.6 million increase in international royalty fees and a $7.3 million increase in revenues generated from programs, platforms, and services associated with the Company's franchise operations, all of which were partially offset by a $2.9 million decrease in initial franchise fees and a $2.7 million decrease in U.S.

royalty fees.

royalty fees decreased $2.7 million to $213.1 million for the six months ended June 30, 2026 from $215.8 million for the six months ended June 30, 2025.

The decrease in U.S.

royalty fees was primarily due to a 0.2% decrease in U.S.

system-wide RevPAR as a result of a 0.5% decrease in average daily rates and a 20 basis points increase in occupancy, and a 0.3% decrease in open and operating U.S.

hotel rooms, all of which were partially offset by a system-wide 11 basis points increase in the average royalty rate from 5.11% for the six months ended June 30, 2025 to 5.22% for the six months ended June 30, 2026.

system-wide RevPAR during the six months ended June 30, 2025 includes a hurricane-related impact of 212 basis points.

A summary of the operating performance for the Company's U.S.

franchised hotels, organized by chain scale, was as follows:

Six Months Ended Six Months Ended Change

June 30, 2026 June 30, 2025

Rate Occupancy RevPAR Average

Rate Occupancy RevPAR

Upscale & Above (1)

$ 148.67 55.1 % $ 81.97 $ 146.55 55.2 % $ 80.86 1.4 % (10) bps 1.4 %

Midscale & Upper Midscale (2)

98.02 54.7 % 53.62 98.48 54.6 % 53.74 (0.5) % 10 bps (0.2) %

Extended Stay (3)

67.87 68.7 % 46.65 66.60 69.5 % 46.31 1.9 % (80) bps 0.7 %

68.80 46.1 % 31.71 70.67 46.9 % 33.18 (2.6) % (80) bps (4.4) %

Total $ 93.92 55.5 % $ 52.08 $ 94.41 55.3 % $ 52.20 (0.5) % 20 bps (0.2) %

(1) Includes Ascend Hotel Collection, Cambria, Park Plaza, Radisson, Radisson Blu, Radisson Individuals, and Radisson RED brands.

(2) Includes Clarion, Comfort Inn, Country Inn & Suites, Park Inn, Quality, and Sleep Inn brands.

(3) Includes Everhome Suites, Mainstay Suites, Suburban Studios, and WoodSpring Suites brands.

(4) Includes Econo Lodge and Rodeway brands.

International royalty fees increased $11.6 million to $26.0 million for the six months ended June 30, 2026 from $14.4 million for the six months ended June 30, 2025.

The increase in international royalty fees was primarily due to an increase in the size of the international franchise system, an increase in royalty fees as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada, and an increase in international RevPAR.

Selling, General and Administrative

Selling, general and administrative expenses increased $10.7 million primarily due to an $8.9 million increase in the provision for credit losses in accounts receivable, a $2.5 million increase in expenses to operate Choice Hotels Canada during the six months ended June 30, 2026, and increases in other general costs to operate the franchising business, all of which were partially offset by a $2.0 million decrease in operating guarantee payments for a portfolio of managed hotels which was acquired in connection with the Company's purchase of Radisson Hotels Americas, a $1.8 million decrease in non-recurring operational restructuring and executive severance expense, and a $1.7 million decrease in costs related to the global ERP system implementation.

Depreciation and Amortization

Depreciation and amortization expense increased $6.5 million primarily due to a $4.1 million increase in amortization expense for intangible assets as a result of the acquisition of the remaining 50% equity interest in Choice Hotels Canada in July 2025 and a $2.1 million increase in depreciation expense related to the opening of six owned hotels.

Equity in Net Loss of Affiliates

Equity in net loss of affiliates increased $7.3 million primarily due to a $5.4 million net decrease in the equity earnings from our unconsolidated affiliates and a $1.8 million decrease in the equity earnings as a result of acquiring the remaining 50% equity interest in Choice Hotels Canada in July 2025.

Interest Expense

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Income Tax Expense

The Company’s effective income tax rates were 33.0% and 25.5% for the three months ended March 31, 2026 and 2025, respectively.

The effective income tax rate for the three months ended March 31, 2026 was higher than the U.S.

The Company's effective income tax rates were 27.2% and 25.0% for the six months ended June 30, 2026 and 2025, respectively.

The effective income tax rate for the six months ended June 30, 2026 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes and tax expense related to compensation.

The effective income tax rate for the three months ended March 31, 2025 was higher than the U.S.

The effective income tax rate for the six months ended June 30, 2025 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes.

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The Company's short-term and long-term liquidity requirements primarily arise from working capital needs, debt obligations, income tax payments, dividend payments, share repurchases, capital expenditures, and investments in growth opportunities.

As of March 31, 2026, the Company's primary sources of liquidity consisted of $474.0 million in cash and cash equivalents and available borrowing capacity under the senior unsecured revolving credit facility.

As of March 31, 2026, the Company was in compliance with all of its financial covenants under its credit agreements and the Company expects to remain in such compliance.

As of June 30, 2026, the Company's primary sources of liquidity consisted of $475.0 million in cash and cash equivalents and available borrowing capacity under the senior unsecured revolving credit facility.

As of June 30, 2026, the Company was in compliance with all of its financial covenants under its credit agreements and the Company expects to remain in such compliance.

The Company believes that its cash on hand, available borrowing capacity under the senior unsecured revolving credit facility, cash flows from operations, and access to additional capital in the debt markets will provide sufficient liquidity to meet the expected future operating, investing, and financing needs of the business.

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We primarily engage in these investment and guaranty support activities to encourage acceleration of the growth of our Cambria Hotels and Everhome Suites brands.

With respect to these activities, the Company had approximately $642.5 million of investments in the Cambria Hotels and Everhome Suites brands reflected in the consolidated balance sheet as of March 31, 2026.

With respect to these activities, the Company had approximately $653.6 million of investments in the Cambria Hotels and Everhome Suites brands reflected in the consolidated balance sheet as of June 30, 2026.

The Company is generally targeting to recycle these investments within a five year period, and expects our outstanding investments to not exceed $1.2 billion at any point in time based on the current board of directors' authorization.

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As a result, the Company maintains a share repurchase program and typically pays a quarterly dividend.

As of March 31, 2026, the Company had 2.3 million shares remaining under the current

share repurchase authorization.

As of June 30, 2026, the Company had 1.8 million shares remaining under the current share repurchase authorization.

The projected 2026 annual dividend rate is $1.15 per share or approximately $52.3 million in aggregate dividend payments.

1 unchanged sentence

Cash Flows from Operating Activities

During the three months ended March 31, 2026, the net cash used in operating activities was $23.2 million.

During the three months ended March 31, 2025, the net cash provided by operating activities was $20.5 million.

Our operating cash flows decreased $43.6 million primarily due to the timing of working capital items, an increase in the franchise agreement acquisition cost payments, and an increase in the net reimbursable deficit from franchised and managed properties, all of which were partially offset by a decrease in deferred income taxes.

During the six months ended June 30, 2026 and 2025, the net cash provided by operating activities was $67.4 million and $116.1 million, respectively.

Our operating cash flows decreased $48.7 million primarily due to an increase in franchise agreement acquisition cost payments and an increase in the net reimbursable deficit from franchised and managed properties, all of which were partially offset by a decrease in deferred income taxes and the timing of working capital items.

In conjunction with brand and development programs, we strategically make certain franchise agreement acquisition cost payments to franchisees as an incentive to enter into new franchise agreements or perform-designated improvements to properties under existing franchise agreements.

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If the franchisee exits our franchise system or is not operating their franchise in accordance with our quality or credit standards and is terminated, then the franchisee must repay the unamortized franchise agreement acquisition cost payment plus interest to the Company.

During the three months ended March 31, 2026 and 2025, the Company's net franchise agreement acquisition costs were $42.8 million and $26.3 million, respectively.

During the six months ended June 30, 2026 and 2025, the Company's net franchise agreement acquisition costs were $72.2 million and $41.5 million, respectively.

The Company’s franchise agreements require the payment of marketing and reservation fees to be used by the Company for the expenses associated with providing franchise services such as national marketing, media advertising, and central reservation systems.

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These activities are reflected in revenue for reimbursable costs from franchised and managed properties and reimbursable expenses from franchised and managed properties.

Cash Flows from Investing Activities

The net cash used in investing activities was $6.2 million and $53.0 million for the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026 and 2025, investments in owned hotel properties totaled $16.8 million and $35.5 million, respectively.

The net cash used in investing activities was $34.0 million and $95.1 million for the six months ended June 30, 2026 and 2025, respectively.

During the six months ended June 30, 2026 and 2025, investments in owned hotel properties totaled $27.3 million and $65.7 million, respectively.

These investments related to the ongoing hotel development efforts to support the continued growth of the Cambria Hotels and Everhome Suites brands.

During the three months ended March 31, 2026 and 2025, investments in other property and equipment totaled $10.1 million and $10.5 million, respectively.

During the six months ended June 30, 2026 and 2025, investments in other property and equipment totaled $17.9 million and $18.3 million, respectively.

These investments primarily related to leasehold improvements, office equipment, and capitalized software.

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

During the three months ended March 31, 2026 and 2025, the Company invested $3.9 million and $5.4 million, respectively, to support these efforts.

During the six months ended June 30, 2026 and 2025, the Company invested $10.6 million and $9.4 million, respectively, to support these efforts.

The Company provides financing to franchisees for hotel development efforts and other purposes in the form of notes receivable loans.

The loans bear interest and are expected to be repaid in accordance with the terms of the loan agreements.

During the three months ended March 31, 2026, the Company issued $0.2 million in notes receivable loans and received $24.6 million in notes receivable loan repayments.

During the three months ended March 31, 2025, the Company issued $2.0 million in notes receivable loans and received $1.5 million in notes receivable loan repayments.

During the six months ended June 30, 2026, the Company issued $1.9 million in notes receivable loans and received $24.6 million in notes receivable loan repayments.

During the six months ended June 30, 2025, the Company issued $3.4 million in notes receivable loans and received $2.8 million in notes receivable loan repayments.

Cash Flows from Financing Activities

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On June 28, 2024, the Company entered into a Second Amended and Restated Senior Unsecured Credit Agreement (the "Restated Credit Agreement").

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

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

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

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

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

one or more lenders commit to being a lender for the additional amount of such increase or the term loan facility and certain other customary conditions are met.

The Restated Credit Agreement allows the Company to elect to have the Revolver bear interest at a rate equal to (i) the secured overnight financing rate (subject to a credit spread adjustment of 0.10% and a 0.00% floor) plus a margin ranging from 0.90% to 1.50% or (ii) a base rate plus a margin ranging from 0.00% to 0.50%.

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The Restated Credit Agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of the Company under the Restated Credit Agreement to be immediately due and payable.

As of March 31, 2026, the Company maintained a total leverage ratio of 3.04x, including outstanding debt of approximately $566.3 million on the senior unsecured revolving credit facility.

As of June 30, 2026, the Company maintained a total leverage ratio of 3.02x, including outstanding debt of approximately $564.8 million on the senior unsecured revolving credit facility.

The Company was in compliance with all financial covenants under the Restated Credit Agreement.

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The Company entered into certain economic development agreements with various governmental entities in conjunction with the relocation of its corporate headquarters in November 2023.

In accordance with these agreements, as of March 31, 2026, the governmental entities advanced $1.9 million to the Company to offset a portion of the corporate headquarters relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees within the jurisdictions.

In accordance with these agreements, as of June 30, 2026, the governmental entities advanced $1.9 million to the Company to offset a portion of the corporate headquarters relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees within the jurisdictions.

The Company has been advanced the full amounts that were due pursuant to these agreements, and these advances bear interest at a rate of 3% per annum.

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The Company accrues interest on the portion of the advances that it expects to repay.

The Company is in compliance with all applicable current performance conditions as of March 31, 2026.

During the three months ended March 31, 2026, the Company paid $13.1 million in cash dividends.

The Company is in compliance with all applicable current performance conditions as of June 30, 2026.

During the six months ended June 30, 2026, the Company paid $26.3 million in cash dividends.

Based on the current per share dividend amount and our outstanding share count, the aggregate annual cash dividends for the year ended December 31, 2026 is projected to be $1.15 per share or approximately $52.3 million in aggregate dividend payments.

4 unchanged sentences

Treasury stock activity is recorded at cost in the consolidated balance sheets.

During the three months ended March 31, 2026, the Company repurchased 0.5 million shares of its common stock under the share repurchase program at a total cost, including accrued excise tax, of $47.8 million.

As of March 31, 2026, the Company had 2.3 million shares remaining under the current share repurchase authorization.

During the three months ended March 31, 2026, the Company redeemed 0.1 million shares of common stock at a total cost of $14.3 million from employees to satisfy the option exercise price and the statutory minimum tax-withholding requirements related to the exercising of stock options and the vesting of PVRSUs and restricted stock grants.

During the six months ended June 30, 2026, the Company repurchased 0.9 million shares of its common stock under the share repurchase program at a total cost, including accrued excise tax, of $98.2 million.

As of June 30, 2026, the Company had 1.8 million shares remaining under the current share repurchase authorization.

During the six months ended June 30, 2026, the Company redeemed 0.1 million shares of common stock at a total cost of $14.4 million from employees to satisfy the stock option exercise price and the statutory minimum tax-withholding requirements related to the exercising of stock options and the vesting of PVRSUs and restricted stock grants.

These redemptions were outside the share repurchase program.

During the three months ended March 31, 2026, the Company received proceeds of $0.9 million from stock options exercised by employees.

During the six months ended June 30, 2026, the Company received proceeds of $2.3 million from stock options exercised by employees.

Critical Accounting Estimates

1 unchanged sentence

We have discussed the estimates that we believe are critical because they involve a higher degree of judgment in their application and are based on information that is inherently uncertain in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

During the three months ended March 31, 2026, there were no material changes to the critical accounting estimates that were previously disclosed.

During the six months ended June 30, 2026, there were no material changes to the critical accounting estimates that were previously disclosed.

New Accounting Standards

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changes in law and regulation applicable to the travel, lodging or franchising industries, including with respect to the status of our relationship with employees of our franchisees;

the potential impact of new laws and regulations generally, including,

without limitation, those relating to taxes, wages, labor and immigration;

the potential impact of changes in laws and regulations generally, or the interpretation thereof, including, without limitation, those relating to taxes, wages, labor and immigration;

foreign currency fluctuations;

1 unchanged sentence

variability and unpredictability in trade relations, sanctions, tariffs or other trade controls;

the federal government funding lapse and related government shutdowns;

governmental action or inaction relating to the federal budget, including funding lapses and government shutdowns;

impairments or declines in the value of our assets;

1 unchanged sentence

operating risks common in the travel, lodging or franchising industries;

changes to the desirability of our brands as viewed by hotel operators and customers;

changes to the desirability of our brands as

viewed by hotel operators and customers;

changes to the terms or termination of our contracts with franchisees and our relationships with our franchisees;

8 unchanged sentences

the impact of inflation;

cyber security and data breach risks;

information technology, cyber security and data breach risks;

introduction and integration of artificial intelligence technologies;

4 unchanged sentences

operating risks associated with our international operations;

political instability, conflicts and terrorism;

political instability, geopolitical conflicts and terrorism;

labor shortages;

5 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis