Dive Brief:
- Choice Hotels International reported that its global RevPAR increased 0.2% year over year in the third quarter of 2025, with international RevPAR increasing 9.5% offset by a 3.2% decline in U.S. RevPAR, according to an earnings report published Wednesday.
- The U.S. decline was “primarily due to softer government and international inbound demand,” the hotel company said in the report. Given the results, Choice downgraded its U.S. RevPAR growth outlook, now expecting growth in the range of down 3% to down 2%, on the lower end of its previous forecast range of down 3% to 0%.
- International markets outperformed in the quarter — a positive sign as Choice continues to “shift toward higher-value brand segments and multiple growth avenues beyond U.S. RevPAR,” CEO Patrick Pacious said in the report.
Dive Insight:
“Our international business, which represents $3 billion in gross rooms revenue, is now our highest growth opportunity,” Pacious said during a Wednesday earnings call. In the report, he said Choice’s international business is on track to double profitability by 2027.
In addition to RevPAR growth in international markets, Choice saw its international system size increase 8.3% year over year in the third quarter, according to the report. That portfolio growth “was fueled by a 66% year-over-year increase in hotel openings,” Pacious said on the call.
The extended stay category is a top growth opportunity for Choice in the U.S. The company’s U.S. extended stay portfolio grew 12% year over year in Q3, CFO Scott Oaksmith said during the call. The third quarter represented the company’s ninth consecutive quarter of double-digit extended stay portfolio growth, Pacious said.
“This cycle-resilient segment represents nearly half of our U.S. pipeline, offering longer average stays, higher margins and stable revenue streams despite a challenging new construction environment for the industry,” Pacious said, adding that data center development is “fueling strong long-term demand for extended stay.”
At this year’s Lodging Conference, Wyndham Hotels & Resorts Chief Development Officer Amit Sripathi said markets with proximity to AI data center investments, specifically, have significant upward growth potential for hotel development.
Meanwhile, Choice anticipates hotel conversions “to remain a core growth driver through year-end,” Pacious said. In Q3, the company’s conversion franchise agreements increased 7% year over year.
Looking at the fourth quarter, Oaksmith said that Choice “continues to monitor potential impacts related to the government shutdown,” which, as of Wednesday, is the longest U.S. government shutdown in history. As of Oct. 23, the shutdown had resulted in an estimated $650 million in lost hotel business, according to the American Hotel & Lodging Association.
