CHOICE HOTELS INTERNATIONAL INC /DE (CHH) Business

Item 1.Business

Overview

We are primarily a hotel franchisor operating in 49 states, the District of Columbia, and 50 countries and territories. As of December 31, 2025, we had 7,575 hotels with 656,825 rooms open and operating, and 825 hotels with 77,862 rooms under construction, awaiting conversion or approved for development, or committed to future franchise development on outstanding

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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 & SuitesSM, Econo Lodge®, and Rodeway Inn®.

The hotel franchising business represents the Company's primary operations. The Company's U.S. operations are primarily conducted through direct franchising relationships, the ownership of 10 Cambria, four Everhome Suites, one Radisson RED, one Radisson Blu, and one Country Inn & Suites open and operating hotels, and the management of 13 hotels (inclusive of four owned hotels), while its international franchise operations are conducted through a combination of direct franchising and master franchising relationships. Master franchising relationships are governed by master franchising agreements which generally provide the master franchisee with the right to use our brands and sub-license the use of our brands in a specific geographic region, usually for a fee. As a result of our master franchise relationships and international market conditions, our revenues are primarily concentrated in the U.S. Therefore, our description of our business is primarily focused on the U.S. operations.

Our Company generates revenues, income, and cash flows primarily from our hotel franchising operations. Revenues are also generated from partnerships with qualified vendors and travel partners that provide value-added solutions to our platform of guests and hotels, hotel ownership, and other ancillary sources. Historically, the hotel industry has been seasonal in nature. For most hotels, demand is typically lower in November through February than during the remainder of the year. Our principal source of revenue is franchise fees, which is based on the gross room revenues or the number of rooms at our franchised properties. The Company's franchise and managed fees, as well as its owned hotels' revenues, normally reflect the industry's seasonality and historically have been lower in the first and fourth quarters than in the second and third quarters of the year.

Because our primary focus is hotel franchising, we benefit from the economies of scale inherent in the franchising business. The fee and cost structure of our franchising business provides opportunities to improve our operating results by increasing the number of franchised hotel rooms and the royalty rates in our franchise contracts. In addition, our operating results can also be improved through our company-wide efforts related to improving property-level performance and expanding the number of partnerships with travel-related and other companies with products and services that appeal to our franchisees and guests.

The primary factors that affect the Company’s results are: the number and relative mix of hotel rooms in the various hotel lodging price categories, growth in the number of hotel rooms owned and under franchise, occupancy and room rates achieved by the hotels in our system, the average royalty rates achieved in our franchise agreements, the level of franchise sales and relicensing activity, the number of qualified vendor arrangements and partnerships and the level of engagement with these partners by our franchisees and guests, and our ability to manage costs. The number of rooms in our hotel system and the occupancy and room rates at those hotel properties significantly affect the Company’s results because our fees are based upon room revenues or the number of rooms at owned and franchised hotels. The key industry standard for measuring hotel-operating performance is revenue per available room ("RevPAR"), which is calculated by multiplying the percentage of occupied rooms by the average daily room rate ("ADR") realized. Our variable overhead costs associated with the franchise system growth of our established brands have historically been less than the incremental royalty fees generated from new franchises. Accordingly, over the long-term, the continued growth of our franchise business should enable us to realize the benefits from the operating leverage in place and improve our operating results.

We are required by our franchise agreements to use the marketing and reservation fees we collect for system-wide marketing and reservation activities. These expenditures, which include advertising costs and the costs to maintain our central reservations systems, enhance awareness and consumer preference for our brands and deliver guests to our franchisees. Greater awareness and preference promote long-term growth in business delivery to our franchisees and increases the desirability of our brands to hotel owners and developers, which ultimately increases the franchise fees earned by the Company. Additionally, the Company's management agreements include cost reimbursements, which is primarily related to payroll costs at the managed hotels where the Company is the employer.

Our Company articulates its mission as a commitment to our franchisees’ profitability by providing our franchisees with hotel franchises that strive to generate the highest return on investment of any hotel franchise. We have developed an operating system dedicated to our franchisees’ success that focuses on delivering guests to their hotels and reducing hotel operating costs.

We believe that executing on our strategic priorities creates value for our shareholders. Our Company focuses on the following strategic priorities:

Profitable Growth - Our success is dependent on improving the performance of our hotels, increasing the size of our system by selling additional hotel franchises with a focus on revenue-intense chain scales and markets, improving our royalty rates, expanding our qualified vendor and partnership programs and maintaining a disciplined cost structure. We attempt to improve our revenues and overall profitability by providing a variety of products and services designed to increase business delivery

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and/or reduce operating and development costs. These products and services include national marketing campaigns, a guest loyalty program, a central reservation system, property and yield management programs and systems, revenue management services, quality assurance standards, and qualified vendor relationships and partnerships with companies that provide products and services to our franchisees and guests. We believe that healthy brands, which deliver a compelling return on investment, will enable us to sell additional hotel franchises and raise royalty rates. We have multiple brands that meet the needs of many different types of guests, and can be developed at various price points and applied to both new and existing hotels. This ensures that we have brands suitable for creating growth in a variety of market conditions. Improving the performance of the hotels in our system, strategically growing the system through additional franchise sales, and improving franchise agreement pricing while maintaining a disciplined cost structure are the keys to profitable growth.

Maximizing Financial Returns and Creating Value for Shareholders - Our capital allocation decisions, including our capital structure and the uses of capital, are intended to maximize our return on invested capital and create value for our shareholders. Since our business has not historically required significant reinvestment of capital, we typically utilize cash in ways that management believes provides the greatest returns to our shareholders, which include acquisitions, share repurchases, and dividends. Refer to the Liquidity and Capital Resources section in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for more information regarding our capital returns to shareholders.

In addition to our hotel franchising business, we have also developed or acquired 10 Cambria, four Everhome Suites, one Radisson RED, one Radisson Blu, and one Country Inn & Suites open and operating hotels. Owning hotels allows us to increase the presence of our newly introduced brands in the U.S., drive greater guest satisfaction and brand preference, and ultimately increase the number of franchise agreements awarded. When developing hotels, we seek key markets with strong growth potential that will deliver strong operating performance and improve the recognition of our brands. Our hotel development and ownership efforts primarily focus on the Cambria Hotels and Everhome Suites brands. We believe our owned hotels provide us the opportunity to support and accelerate the growth of these brands. We do not anticipate owning hotels on a permanent basis and we expect to target dispositions to a franchisee encumbered with a long-term Choice franchise agreement in the future.

A key component of our strategy for owned hotels is to maximize revenues and manage costs. We strive to optimize revenues by focusing on revenue management, increasing guest loyalty, expanding brand awareness with targeted customer groupings, and providing superior guest service. Other than four owned hotels, we currently do not manage our owned hotels but utilize the services of third-party hotel management companies that provide their own employees. We manage costs by setting performance goals for our hotel management companies and optimizing distribution channels.

The Company also allocates capital to financing, investment, and guaranty support to incentivize franchise development for certain brands in strategic markets. The timing and amount of these investments are subject to market and other conditions.

We believe our growth investments and strategic priorities, when properly implemented, will enhance our profitability, maximize our financial returns, and continue to generate value for our shareholders.

Our direct real estate exposure is currently limited to activity in the U.S., including our owned hotel assets open and under development. In addition, our development activities that involve financing, equity investments, and guaranty support to hotel developers create limited additional exposure to the real estate markets. For additional information, refer to the Investing Activities caption in the Liquidity and Capital Resources section in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The Company was incorporated in 1980 under the laws of the State of Delaware.

The Lodging Industry

Companies participating in the lodging industry primarily do so through a combination of one or more of the three primary lodging industry activities: ownership, franchising, and management. A company’s relative reliance on each of these activities determines which drivers most influence its profitability.

•Ownership requires a substantial capital commitment and involves the most risk but offers high returns due to the owner’s ability to influence its margins by driving RevPAR, managing operating expenses, and providing financial leverage. The ownership model has a high fixed-cost structure that results in a high degree of operating leverage relative to RevPAR performance. As a result, profits escalate rapidly in a lodging up-cycle but erode quickly in a lodging downturn as costs rarely decline as fast as revenue. Profits from an ownership model increase at a greater rate from RevPAR growth that is attributable to ADR growth rather than from occupancy gains since there are more incremental costs associated with higher guest volumes as compared to higher pricing.

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•Franchisors license their brands to a hotel owner, giving the hotel owner the right to use the brand name, logo, operating practices, and reservations systems in exchange for a fee and an agreement to operate the hotel in accordance with the franchisor’s brand standards. Under a typical franchise agreement, the hotel owner pays the franchisor an initial fee, a percentage-of-revenue royalty fee, and a marketing & reservation fee. A franchisor’s revenues are dependent on the number of rooms in its system and the top-line revenue performance of those hotels. Earnings drivers include RevPAR increases, unit growth, and royalty rate improvement. Franchisors enjoy significant operating leverage in their business model since it typically costs little to add a new hotel franchise to an existing system. Franchisors normally benefit from higher industry supply growth because unit growth usually outpaces lower RevPAR resulting from excess supply. As a result, franchisors benefit from both RevPAR growth and supply increases, which aids in reducing the impact of lodging industry economic cycles.

•Management companies operate hotels for the owners that do not have the expertise and/or the desire to self-manage the hotels. These companies collect management fees predominately based on revenues earned and/or profits generated. Similar to franchising activities, the key drivers of revenue-based management fees are RevPAR and unit growth. Similar to ownership activities, profit based fees are driven by improved hotel margins and RevPAR growth.

Similar to other industries, the lodging industry experiences both positive and negative operating cycles. Positive operating cycles are characterized as periods of sustained occupancy growth, increasing room rates, and an increase in hotel development. These cycles usually continue until either the economy sustains a prolonged downturn, conditions create excess supply, or some external factor occurs such as war, terrorism, pandemic, and/or natural resource shortages. Negative operating cycles are characterized by hoteliers reducing room rates to stimulate occupancy and a reduction in hotel development. An industry recovery usually begins with an increase in occupancy followed by hoteliers increasing room rates. As demand begins to exceed room supply, then occupancies and rates will improve. Collectively, these factors will result in an increase in hotel development.

Hotel room supply growth is cyclical as hotel construction responds to interest rates, construction and material supply conditions, capital availability, and industry fundamentals. Historically, the lodging industry has added hotel rooms to its inventory through new construction due largely to favorable lending environments that encouraged hotel development. Typically, hotel development continues during favorable lending environments until the increase in room supply outpaces demand. The excess supply eventually results in lower occupancies, which results in hoteliers reducing room rates to stimulate demand, and reduced hotel development. Over time, the slow growth in hotel supply results in increased occupancy rates and allows hotels to again increase room rates. The increase in occupancy and room rates serves as a catalyst for increased hotel development.

As a franchisor with 7,575 opened hotels, including ownership of 17 hotels and management of 13 hotels (inclusive of four owned hotels), we believe we are generally well positioned in any stage of the lodging cycle as our fee-for-service business model has historically delivered predictable and profitable, long-term growth in a variety of lodging and economic environments. We have historically benefited from both the RevPAR gains typically experienced in the early stages of recovery as our revenues are based on our franchisees’ gross room revenues, and the supply growth normally occurring in the later stages as we increase our portfolio size.

The Company’s portfolio of brands offers both new construction and conversion opportunities. Our new construction brands typically benefit from periods of supply growth and favorable capital availability and pricing. Our conversion brands also benefit from periods of supply growth as the construction of hotels increases the need for existing hotels to seek new brand affiliations. Furthermore, the Company's conversion brands generally benefit from lodging cycle downturns as our unit growth has been historically driven from the conversion of independent and other hotel chain affiliates into our system as these hotels endeavor to improve their performance, which typically outpaces termination of hotels from our system.

The lodging industry can be divided into chain scale categories of generally competitive brands as follows:

The lodging industry consists of independent operators and those that have joined national hotel franchise chains. Independent operators of hotels not owned or managed by major lodging companies have increasingly joined national hotel franchise chains

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as a means of remaining competitive with hotels owned by or affiliated with national lodging companies. Hotel owners also generally have the flexibility to reposition hotels between the various chain scale categories to maximize profitability or for other reasons. For example, owners may choose to reposition a hotel to a higher chain scale through capital investment or a lower chain scale to limit capital outlays depending on the individual requirements of the owner.

Due to the fact that a significant portion of the costs of owning and operating a hotel are generally fixed, increases in revenues generated by affiliation with a hotel franchise chain can improve a hotel’s financial performance. The large hotel franchise chains, including us, generally provide a number of support services to hotel operators designed to improve the financial performance of their properties including central reservation and property management systems, marketing and advertising programs, training and education programs, revenue enhancement services, and relationships with qualified vendors to streamline their purchasing processes and make lower cost products available. We believe that national franchise chains with a large number of hotels enjoy greater brand awareness among potential guests and greater bargaining power with suppliers than those with fewer hotels, and that greater brand awareness and bargaining power can increase the desirability of a hotel to its potential guests and reduce operating costs of a hotel. Furthermore, we believe that hotel operators choose lodging franchisors based primarily on the perceived value and quality of each franchisor’s brand and its services, and the extent to which affiliation with that franchisor may increase the hotel operator's profitability. We believe these factors enhance the resiliency of hotels affiliated with brands, and as a result, the value proposition of the hotel franchise chains during a negative operating cycle.

Choice’s Franchising Business

We operate primarily as a hotel franchisor and deploy our family of 22 brands and brand extensions, which represent both new construction and conversion brands and compete at various hotel consumer and developer price points.

Economics of the Franchising Business - The fee and cost structure of our business provides opportunities for us to improve operating results by increasing the number of franchised hotel rooms, improving RevPAR performance, and increasing the royalty rates in our franchise contracts. As a hotel franchisor, we derive our revenue primarily from various franchise fees, which consist primarily of an initial fee and ongoing royalty, marketing, and reservation fees that are typically based on a percentage of the franchised hotel’s gross room revenues. The initial fee and the ongoing royalty portion of the franchise fees are intended to cover our operating expenses, which are the expenses incurred in business development, quality assurance, administrative support, certain franchise services, and to provide us with operating profits. The marketing and reservation fees are used for the expenses associated with marketing, media, advertising, providing a central reservation system, and certain franchise services.

Our fees depend on the number of rooms in our system, the gross room revenues generated by our franchisees, and the royalty rates in our franchise contracts. We enjoy significant operating leverage since the variable operating costs associated with the franchise system growth of our established brands have historically been less than the incremental fees generated from new franchises. We believe that our business is well positioned in the lodging industry since we generally benefit from both increases in RevPAR and unit growth from new hotel construction or conversion of existing hotel assets into our system. In addition, improving business delivery to our franchisees should allow us to improve the royalty rates in our franchise contracts.

Our family of well-known and diversified brands positions us well within the lodging industry. Our new hotel development brands, such as Cambria Hotels, Comfort, Sleep Inn, WoodSpring Suites, Everhome Suites, and Country Inn & Suites, offer hotel developers an array of choices at various price points for transient and extended stay business during periods of supply growth in the various hotel chain scale categories. Certain of our brands, such as Quality, Clarion Pointe, Ascend Collection, Econo Lodge, and Radisson, offer conversion opportunities during both industry contraction and growth cycles to independent operators and non-Choice affiliated hotels who desire to affiliate with our brands and take advantage of the services we have to offer.

Strategy - Our mission is a commitment to franchisee profitability by providing our franchisees with hotel franchises that strive to generate the highest return on investment of any hotel franchise. Our business strategy is to create franchise system growth by leveraging Choice’s large and well-known hotel brands, franchise sales capabilities, effective marketing and reservation delivery efforts, training and education programs, RevPAR enhancing services, and technologies and financial strength created by our significant free cash flow. We believe that our brands’ growth will be driven by our ability to create a compelling return on investment for our franchisees. Our strategic objective is to improve the profitability of our franchisees by providing services which increase business delivery, enhance RevPAR, reduce hotel operating and development costs, and/or improve guest satisfaction. Specific elements of our strategy include building strong brands, delivering exceptional services, reaching more consumers, and leveraging our size, scale, and distribution to reduce costs for hotel owners. We believe that by focusing on these elements we can increase the gross room revenues generated by our franchisees by increasing the business delivered to existing franchisees and expanding our market share of franchised hotels in the chain scale categories in which we operate or seek to operate. Improving the desirability of our brands should also allow us to continue to improve the royalty rates in our franchise contracts.

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Building Strong Brands - Each of our brands has particular attributes and strengths, including awareness with both consumers and developers. Our strategy is to utilize the strengths of each brand for room growth, RevPAR gains, and royalty rate improvement, all of which will create revenue growth. We believe brand consistency, brand quality, and guest satisfaction are critical in improving brand performance and building strong brands.

We have multiple brands that are positioned to meet the needs of many types of guests. These brands can be developed at various price points and are suitable for both new construction properties and conversion of existing hotels. This flexibility ensures that we have brands suitable for creating room growth in various types of markets, with various types of customers, and during both industry contraction and growth cycles. During times of lower industry supply growth and tighter capital markets, we can target conversions of existing non-Choice affiliated hotels seeking the awareness and proven performance provided by our brands. During periods of strong industry supply growth, we generally expect a greater portion of our room growth to come from our new construction brands. We believe that a large number of markets can still support our hotel brands and that the growth potential for our brands remains strong.

We strive to maintain the strength of our brands by enhancing product consistency and quality. We attempt to achieve consistency and quality for new entrants into the franchise system by placing prospective hotels in the appropriate brand based on the physical characteristics, the expected financial and operating performance, amenities of the hotel, and by requiring property improvement plans, when necessary, to ensure the new hotel meets the quality standards of the brand. Furthermore, we may require hotels currently in our franchise system to execute property improvement plans at specified contractual windows to ensure that they continue to maintain the product consistency and quality standards of the brand.

We believe that each of our brands appeal to the targeted hotel owners and guests because of unique brand standards, marketing campaigns, loyalty programs, reservation delivery, revenue enhancing programs, service levels, and pricing.

Delivering Exceptional Services - We provide a combination of services and technology-based offerings to help our franchisees improve performance. We have field services staff members located nationwide that help franchisees improve RevPAR performance, efficiency of their hotel operations, and guest satisfaction. In addition, we provide our franchisees with education and training programs as well as revenue management technology and services designed to improve property-level performance. These services and products promote revenue gains for franchisees and improve guest satisfaction which translate into both higher royalties for the Company and improved returns for owners, leading to further room growth by making our brands even more attractive to prospective franchisees. We develop our services based on customer needs and focus on activities that generate a high return on investment for our franchisees.

Reaching More Consumers - We believe hotel owners value and benefit from the large volume of guests that we deliver through a mix of activities, including brand marketing, reservation systems, account sales (corporate, government, social, military, educational, and fraternal organizations), and the Company’s loyalty program, Choice Privileges®. Our strategy is to maximize the effectiveness of these activities in delivering both leisure and business travelers to Choice-branded hotels.

The Company intends to continue to increase awareness of its brands through its national marketing campaigns and continual enhancements to its loyalty program, including promotions. These campaigns are intended to generate a compelling message to consumers to create even greater awareness for our brands with the ultimate goal of driving business through our central reservation system. Local and regional co-op marketing campaigns will continue to be utilized to leverage the national marketing programs to drive business to our franchised properties at a local level. We expect our efforts at marketing directly to individual guests and corporate customers will continue to be enhanced through the use of our customer relationship management technology and programs, as well as our field-based sales agents that are focused on increasing our share of business travelers. Our continued focus on overall brand quality coupled with our marketing initiatives is designed to stimulate room demand for our franchised hotels through improved guest awareness and satisfaction.

Our central reservations system is a critical technology used to deliver guests to our franchisees through multiple channels, including our call centers, proprietary web and mobile sites, global distribution systems (e.g., SABRE, Amadeus), online travel agents ("OTAs") (e.g., Expedia, Booking.com), and internet referral or booking services (e.g., Kayak, Tripadvisor). We believe our well-known brands, combined with our relationships with many internet distribution websites, benefits our franchisees by facilitating increased rate and reservations delivery, and reducing costs and operational complexity.

Leveraging Size, Scale, and Distribution - We continually focus on identifying methods to utilize our significant platform of hotels in our system and our relationships with hospitality-related vendors and partnerships with travel-related providers in order to reduce costs and increase returns for our franchisees. We are focused on expanding our business through key partnerships, new technology, and other key franchisee resources, which is reflected in our partnership services and fees revenues. The expansion of these relationships has enabled us to further drive our top-line revenue and deliver tangible value-added solutions to our hotel owners and customers. For example, we create relationships with qualified vendors to: (i) make low-cost products available to our franchisees, (ii) streamline the purchasing process, and (iii) maintain brand standards and

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consistency. We also create relationships with key partners to market their services directly to our guests. These relationships provide value-added travel-related services to our guests and generate revenues for the Company. We continue to expand these relationships and identify new methods for decreasing hotel operating costs by increasing penetration within our existing franchise system and enhancing our existing vendor relationships and/or creating new vendor relationships. We believe our efforts to leverage the Company’s size, scale, and distribution benefit the Company by enhancing brand quality and consistency, improving our franchisees returns and satisfaction, and generating partnership services and fees revenues.

Industry Positioning

Our brands offer consumers and developers a wide range of options for transient and extended stay customers, including economy, midscale, upper midscale, upscale, and upper upscale hotels. Our brands consist of the following:

Clarion - Clarion helps owners of existing assets with food and beverage capabilities achieve strong returns with reasonable investment. Clarion allows a more focused and efficient food and beverage operational model that works well with a variety of conversion property configurations. Clarion helps business and leisure guests "Get Together Here™" by providing meeting/banquet facilities, restaurants, and lounges. Amenities include free high-speed internet access, a pool or fitness center, and a business center. The principal competitor brands include Holiday Inn and Ramada.

Clarion Pointe - Clarion Pointe is ideal for owners who want to strategically reposition their limited-service property into a brand with strong awareness and a concept that satisfies the expectations of emerging travelers. The hotels offer guests a convenient and affordable experience with elevated essentials in just the right places, including contemporary design touches, curated food and beverage options, and on-demand connectivity. The principal competitor brands include Best Western and Wingate.

Comfort - The Comfort brand family is the flagship brand in the Choice Hotels portfolio and is inclusive of Comfort Inn, Comfort Suites, and Comfort Inn & Suites. Comfort is an upper midscale brand that allows guests to unlock the joy of traveling while enabling owners to capitalize on a trusted brand with proven performance and market leadership. The properties offer guest rooms and public spaces that can transform from day to night or business to leisure – blending form and function to optimize the guest experience and the owner’s investment. The principal competitor brands include Hampton by Hilton, Holiday Inn Express, and Fairfield by Marriott.

Country Inn & Suites by Radisson - Country Inn & Suites delivers “generous hospitality with touches of home”, creating heartfelt experiences for travelers through inviting design, thoughtful touches, and genuine service. Guests enjoy a mix of spacious standard rooms and suites, cozy seating by the living room fireplace, and complementary offerings including a hot breakfast, all-day coffee and tea, freshly baked cookies upon arrival, free Wi-Fi, and printer access. Country Inn & Suites properties are equipped with fitness and laundry facilities, outdoor patios with fire pit features, casual workspaces, swimming pools, and meeting spaces. Guests feel cared for and valued at Country Inn & Suites, enabling them to maintain their routines while away from home. The principal competitor brands include Holiday Inn Express, Fairfield by Marriott, Best Western Plus, and Hampton by Hilton.

Sleep Inn - A new-construction brand, every Sleep Inn hotel is built with a specific vision in mind, which is to be a sanctuary for travelers as well as a cost-efficient property to build, operate, and maintain. Every Sleep Inn hotel offers thoughtful touches designed to help enhance our guests well-being and "Dream Better Here®." Guests find a perfectly dreamy hotel environment, with nature-inspired design elements, that create a relaxed and serene stay, providing both business and leisure travelers with free Wi-Fi, free hot breakfast, lifestyle amenities to support a "Better Night’s Rest®", and an exercise room and/or pool. The principal competitor brands include Baymont and Best Western.

Quality Inn - Quality helps both guests and owners "Get Your Money's Worth™" in the midscale chain scale category. Quality hotels provide clean, comfortable, and affordable accommodations, as well as the "Value Qs" of a Q Bed, Q Breakfast, Q Shower, Q Service, and Q Essentials. The brand delivers warm, friendly service, a hot breakfast, and premium bedding. The principal competitor brands include Days Inn, Baymont, La Quinta, Best Western, and Ramada.

Park Inn by Radisson - Park Inn by Radisson is Choice Hotels' premium value conversion brand focused on delivering the basics to "brighten up the stay". The properties feature a smoke-free environment, fast and free Wi-Fi, ample charging outlets, and hot coffee with a convenient grab-and-go breakfast, all of which are complemented by a bright welcome and friendly service. The principal competitor brands include Days Inn, Baymont, and SureStay.

Everhome Suites - Everhome Suites operates in the midscale extended stay chain scale category, offering developers a value-engineered new construction prototype for entry into major markets. Everhome Suites provides a “Closer to Home” experience, empowering longer staying guests to stay productive and feel connected while away from home. All suites include a fully equipped kitchen with defined spaces to work, relax, and eat. Larger one-bedroom suites come equipped with in-unit washers and dryers, larger kitchens, and a dedicated bedroom. Guests have access to free high-speed internet, a modern fitness room with Peloton stationary bikes, outdoor amenity space with grills and fire pits, 24/7 laundry facilities, and weekly housekeeping service. Each hotel also has a “Homebase Market” with food, drink, and personal items available for purchase. Small kitchen

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appliances are available to check out at the front desk through the “Homebase Essentials” program. The principal competitor brands include Candlewood Suites, Stay APT, Extended Stay America Premier Suites, StudioRes, and LivSmart.

WoodSpring Suites - WoodSpring Suites are all new construction, value-engineered hotels that operate in the economy extended stay chain scale category. WoodSpring developers adhere to strict prototype and design specifications and an operating model that embodies WoodSpring’s promise of “It’s Simple. Done Better.” Every suite includes a well-designed kitchen, seating area, and a free premium movie channel. Guests have access to free high-speed internet, 24/7 laundry facilities, and bi-weekly housekeeping. The principal competitor brands include Extended Stay America, MyPlace, Studio 6, Echo Suites, and LivAway.

MainStay Suites - MainStay Suites operates in the midscale extended stay chain scale category, offering developers flexible conversion and new construction opportunities in a variety of market types. The MainStay Suites guest experience delivers on a "Live Like Home" promise for guests traveling for business or pleasure whose stays are longer than a few nights. All guest rooms feature fully equipped kitchens as well as separate lounges and work areas. MainStay Suites offer free high-speed internet, an exercise room, 24/7 laundry facilities, and weekly housekeeping. Each hotel also has a "MainStay Marketplace" where guests may purchase a variety of food and sundry items. Guests also have complimentary access to small kitchen appliances through the "Things I Use at Home" program. The principal competitor brands include Candlewood Suites, Extended Stay America Premier Suites, My Place Hotels, StudioRes, and LivAway.

Suburban Studios - Suburban Studios operate in the economy extended stay chain scale category, offering developers access to this category through flexible conversion options. Suburban Studios’ “longer stays made easy” philosophy provides value-conscious, long staying guests with clean, comfortable rooms, friendly service, and the amenities they need. All guestrooms provide in-room kitchens. Guests have access to free high-speed internet, 24/7 laundry facilities, and bi-weekly housekeeping. The principal competitor brands include Extended Stay America, InTown Suites, HomeTowne Studios, SureStay Studios, Studio 6, and Echo Suites.

Radisson Blu - Radisson Blu hotels offer full-service, upper upscale accommodations that are redefining the hospitality experience. Scandinavian-inspired minimalist design prioritizes comfort and distinctiveness in the guestrooms, in addition to unique dining concepts, multipurpose workspaces with complimentary Wi-Fi, smart TVs, and wellness facilities. Radisson Blu hotels are located in urban and resort locations in key RevPAR markets. The principal competitor brands include Le Meridien and Kimpton.

Park Plaza - Park Plaza combines engaging service, contemporary elegance, and local flavor. At each hotel, team members

warmly welcome guests and make it a point to foster genuine and meaningful interactions. Refined spaces incorporate the

essence of each location and provide a vibrant social setting for guests and the local community alike. Located in capital cities

and key business and leisure destinations, these charmingly distinctive hotels help travelers connect with the authentic character

and culture of their location. The principal competitor brands include Staybridge Suites, DoubleTree, and Residence Inn.

Cambria Hotels - Cambria Hotels is a select service hotel brand that operates in the upscale chain scale category, targeting the top primary market locations and secondary markets with a mix of business and leisure demand. Cambria offers guests a distinct experience with simple, guilt-free indulgences and little luxuries allowing them to stay at their best while on the road. The environment matches our guests' casual lifestyles and tailors to the needs of the modern traveler. The properties feature a compelling design inspired by the location, spacious and comfortable rooms, spa inspired bathrooms, outdoor spaces featuring pools and rooftop bars (in select locations), flexible meeting space, enhanced beverage options, and small plates with flavors inspired by the destination. The principal competitor brands include Courtyard by Marriott, Aloft, Hyatt Place, Hotel Indigo, AC Hotels, and Hilton Garden Inn.

Ascend Collection - Ascend Collection is a global collection brand offering resort, boutique, and historic properties that are deeply connected to the character of their destinations. Ascend Collection empowers upscale hotels to retain their individual brand equity and identity while enjoying access to Choice Hotels' global distribution, technology, performance support services, training, and loyalty benefits. For independent hotels, Ascend Collection offers a platform for customer acquisition, delivery and distribution, volume purchasing benefits, and operational efficiencies. The properties can be found in suburban, small town, and resort locations. The principal competitor brands include BW Signature Collection, BW Premier Collection, Trademark, Voco, Series by Marriott, and Outset Collection by Hilton.

Radisson RED - An upscale, select service hotel brand, Radisson RED is characterized by a love of bold design, social connectedness, and playful twists on the conventional. These urban hotels inject new life into hospitality through informal services where anything goes. The properties have vibrant designs, encourage social sharing, and easily switch from work to play and back. Connected, trend-savvy travelers will love this unique opportunity to tailor their stay to their style. The principal competitor brands include Moxy, Citizen M, and Aloft Hotels.

Radisson Individuals - Radisson Individuals is an upscale collection brand that brings together independent and boutique hotels, inspiring curious travelers to uncover the untold stories of each destination. Blending a spirit of exploration with service

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excellence, these hotels offer curated amenities like distinctive dining and wellness facilities. Found in urban, suburban, and resort locations, the principal competitor brands include Autograph Collection, Curio, JdV, Tapestry, and Tribute.

Radisson - Radisson is a full-service hotel brand offering an upscale experience designed for today’s modern travelers. Striking the perfect balance between dependability and discovery, Radisson meets the evolving needs of guests with functional guestrooms, upscale on-site services such as modern fitness facilities, restaurants and bars, and free Wi-Fi. It provides a steady, dependable base from which guests can work, connect, discover, and rest. Radisson hotels are found in key urban, suburban, resort, and airport locations. The principal competitor brands include DoubleTree by Hilton, Delta Hotels, and Crowne Plaza.

Econo Lodge - Econo Lodge offers an “easy stop on the road” for value-oriented travelers. Free high-speed internet, bedside recharge outlets, in-room refrigerators, and complimentary morning coffee position Econo Lodge as a smart choice for guests who appreciate convenience and affordability. The principal competitor brands include SureStay by Best Western, Knights Inn, Days Inn, and Red Roof Inn.

Rodeway Inn - Rodeway Inn offers sensible lodging for budget-conscious travelers who want to hit the road with confidence. With free coffee to start the day and free high-speed internet to stay connected, Rodeway Inn delivers a reliable option for practical travelers looking for a “Good night. Great Savings.” The principal competitor brands include Americas Best Value Inn and Motel 6.

The Company's brands also include the Radisson Collection and Radisson Inn & Suites, however there are no open properties under these brands as of December 31, 2025.

U.S. Franchise System

Our standard U.S. franchise agreements grant franchisees the non-exclusive right to use certain of our trademarks and to receive the benefits from our franchise system in order to facilitate the operation of their franchised hotels in specified locations. Our U.S. franchise agreements generally have terms ranging from 10 to 30 years, with certain rights for each of the franchisor and franchisee to terminate the agreement. Our U.S. franchisees operate under one of 22 brands and brand extensions.

The following table presents the key statistics related to our U.S. franchise system for the five years ended December 31, 2025:

(1)For the year ended December 31, 2022, the legacy Radisson brands are included for the period from the August 11, 2022 acquisition date through December 31, 2022. Additionally, royalty fees include intersegment royalties assessed to the Company's owned hotels of $2.8 million for 2025, $2.4 million for 2024, $2.0 million for 2023, $2.2 million for 2022, and $1.6 million for 2021.

(2)To enhance the comparability for the year ended December 31, 2022, the average royalty rate, average occupancy percentage, ADR, and RevPAR reflect the operating performance as if the legacy Radisson brands were acquired on January 1, 2022.

(3)The Company calculates the RevPAR metrics based on information as reported by the franchisees. To accurately reflect average occupancy percentage, ADR, and RevPAR, the company revises its prior years' operating statistics for the most current information provided.

Owned and Managed Hotels

While the hotel franchising business represents the Company's primary operations, the Company also owns 10 Cambria hotels, four Everhome Suites, one Radisson RED, one Radisson Blu, and one Country Inn & Suites, and manages 13 hotels (inclusive of four owned hotels). We generate revenue from the owned hotels primarily from guest stays. We generate revenue from the managed hotels from base and incentive management fees and cost reimbursements, which is primarily for payroll costs at the managed hotels where the Company is the employer.

International Franchise Operations

The Company conducts its international franchise operations primarily through a combination of direct franchising and master franchising relationships. Our business strategy has been to conduct direct franchising in those international markets where both franchising is an accepted business model and our brands can achieve significant revenue growth through our proprietary distribution channels. We typically enter into master franchise agreements in those international markets with complex business models and language and cultural differences. Master franchising relationships are governed by agreements that generally provide the master franchisee with the right to use and sub-license the use of our brands in a specific geographic region. We

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also enter into certain distribution arrangements which grant hotels access to certain of our proprietary distribution channels in order to broaden our offerings in a given market.

When entering into master franchising relationships, we strive to select partners that have both professional hotel and asset management capabilities along with the financial capacity to invest in building the Company's brands in their respective markets. Master franchising relationships typically provide lower revenues to the Company as the master franchisees are responsible for managing certain necessary services (such as training, quality assurance, reservations and marketing) to support the franchised hotels in the assigned development territory and, therefore, retain a larger percentage of the hotel franchise fees to cover their expenses. The master franchisee collects the fees paid by the local franchisee and remits an agreed upon share to us. Our master franchise and similar multi-unit licensing agreements have expiration dates, which we actively manage and potentially renew as we deem beneficial. We also enter into distribution agreements which grant hotels access to certain of our proprietary distribution channels in order to broaden our offerings in a given market.

In some territories outside the U.S., hotel franchising has less prevalence in favor of independent operators. We believe chain and franchise affiliation will increase in certain international markets as local economies grow and hotel owners seek the economies of scale in centralized reservations systems and marketing programs. We believe that international franchise operations will provide a long-term growth opportunity for the Company and as a result, we will continue to make investments into our international franchise operations, which are expected to enhance the value proposition for prospective international franchisees.

The following chart summarizes our franchise system and operating results outside of the U.S.(1):

(1)Reporting of operating statistics (i.e., average occupancy percentage, average daily room rate) of international franchisees is not required by all master franchise contracts.

As of December 31, 2025, the open hotels and rooms by region and franchising relationship are presented below:

The Company's international operations are primarily conducted in the following countries and territories, as organized by region:

Asia-Pacific - Australia, China, India, Japan, and New Zealand.

Europe & Middle East - Andorra, Austria, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Ireland, Italy, Kingdom of Saudi Arabia, Lithuania, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Turkey, and the United Kingdom.

Americas (excluding U.S.) - Argentina, Aruba, Bahamas, Barbados, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Honduras, Mexico, Panama, Peru, Puerto Rico, Sint Maarten, Suriname, Trinidad and Tobago, Uruguay, and U.S. Virgin Islands.

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As of December 31, 2025, the worldwide open hotels and rooms by region are presented below:

(1)Includes the Comfort family of brand extensions, including Comfort Inn and Comfort Suites.

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

(3)Includes the Radisson, Radisson Blu, Radisson Individuals, Radisson RED, and Park Plaza brands.

(4)Includes other brands under Master Franchise Agreements.

Franchise Sales

Expansion of the number of hotels in our franchise system is important to our business model. We have identified key market areas for hotel development based on supply and demand relationships and our strategic objectives. Development opportunities are typically offered to: (i) existing franchisees, (ii) developers of hotels or multi-family housing, (iii) owners of independent hotels and motels, (iv) owners of hotels leaving other franchisors’ brands, and (v) franchisees of non-hotel related products such as restaurants.

Our franchise sales organization is structured to support the continued growth of the Company through awarding franchise agreements with a focus on revenue-intense chain scales and markets. The franchise sales organization employs both sales managers as well as regional vice presidents. This organization emphasizes the benefits of affiliating with the Choice system, our commitment to helping hotels improve profitability, our central reservation delivery services, our marketing and customer loyalty programs, our revenue management services, our training and support systems (including our proprietary property management systems), and our Company’s track record of delivering growth and profitability. Regional vice presidents are assigned to specific brands to leverage their brand expertise to enhance product consistency and deal flow. Our sales managers ensure each prospective hotel is placed in the appropriate brand, facilitate teamwork and information sharing amongst the sales directors, and provide better service to our potential franchisees. The structure of this organization integrates our brands and strategies, and allows our brand teams to focus on understanding, anticipating, and meeting the unique needs of our customers.

Our objective is to continue to strategically grow our portfolio by selling the Company's brands spanning the various chain scale categories. Based on market conditions and other circumstances, we may offer certain incentives to developers to increase development of our brands, such as discounting various fees including the initial franchise fee, royalty fee, marketing and reservation fee, and providing franchise agreement acquisition cost payments to support development, property improvements, and other hotel expenditures.

Because retention of our existing franchisees is important to our growth strategy, we have a formal impact policy. This policy offers existing franchisees protection from the opening of a same-brand property within a specified distance, depending upon the market in which the property is located. The policy applies to most, but not all, of the Company's brands.

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Investment, Financing, and Guaranty Support

Our Board of Directors authorized a program which permits us to offer investment, financing, and guaranty support to qualified franchisees, and allows us to acquire or develop and resell hotels to incentivize franchise development of our brands in strategic markets. We deploy capital pursuant to this program opportunistically to promote the growth of our brands. The amount and timing of the investment in this program will be dependent on market and other conditions and we generally expect to recycle these investments within a five year period. For additional information, refer to the Cash Flows from Investing Activities caption in the Liquidity and Capital Resources section in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Franchise Agreements

Our standard U.S. franchise agreements grant franchisees the non-exclusive right to use certain of our trademarks and to receive the benefits from our franchise system in order to facilitate the operation of their franchised hotels in specified locations. Our U.S. franchise agreements generally have terms ranging from 10 to 30 years. Generally, either party to our standard U.S. franchise agreement can terminate the agreement prior to the conclusion of the agreement’s term under certain circumstances, such as upon designated anniversaries of the agreement, subject to applicable law. Early termination options give us the flexibility to eliminate or re-brand our properties for reasons other than contractual failure by the franchisee. This allows us the opportunity to strengthen our brand portfolio in various markets by replacing weaker performing hotels. We also have the right to terminate a franchise agreement if a franchisee fails to bring the property into compliance with contractual or quality standards within specific time periods. The franchise agreements typically contain liquidated damages provisions addressing franchisee termination at intervals other than those specified in the agreement which represent a fair and reasonable measure of damages that both parties agree should be paid to us.

The Company utilizes master development agreements ("MDA") with respect to the WoodSpring Suites and Everhome Suites brands (and on occasion other brands). In exchange for a non-refundable fee, developers are provided geographic exclusivity to enter into a specified number of franchise agreements and develop properties of the specified brand. The upfront fees received on signing of the MDA are non-refundable and are allocable to the affiliation fees due upon the execution of each franchise agreement between the parties in the regions covered by the MDA. The MDA specifies development schedules the developer must maintain. If the development schedules are not met, the Company can terminate the geographic exclusivity, however the upfront fees remain allocable to future franchise agreement affiliation fees as long as the MDA remains in effect.

The Company's franchise agreements are generally individually negotiated and we believe the terms are competitive with lodging industry standards for the respective chain scales. Franchise fees usually have three primary components: an affiliation fee, a royalty fee, and a marketing and reservation fee. Royalty fees typically range from 5% to 6% of gross room revenues, and marketing and reservation fees typically range from 3% to 4% of gross room revenues. During the negotiation process with a prospective franchisee, the Company may discount the standard royalty fee and/or the marketing and reservation fee during the initial years of the franchise agreement as a franchise acquisition strategy. Typically, these discounts will expire over time when the contractual fees reach the standard franchise fees in effect at the time the franchise agreement was executed.

Franchise Operations

Our operations are designed to help our franchisees improve RevPAR and lower their operating and development costs, as these are the measures of performance that most directly impact franchisee profitability. Our focus is not only to help increase the number of reservations delivered to our franchisees, but also to help increase the percentage of guest reservations processed through our proprietary channels. We believe that our proprietary channels, which include our loyalty program, propriety internet sites (including mobile and tablet applications), global sales programs, and interfaces with global distribution systems, help in delivering guests to our franchisees' hotels at the lowest cost to the franchisee. We believe that by helping our franchisees become more profitable, then we will enhance our ability to retain our existing franchisees, attract new franchisees, and improve the pricing of our franchise agreements. The key aspects of our franchise operations are the following:

Brand Name Marketing and Advertising - The majority of our franchised hotels are typically located in areas conveniently accessible to business and leisure travelers, and therefore, a significant portion of hotel room nights are sold to guests who either walk-in or contact the hotel directly. As a result, we believe that brand name recognition and the strength of the brand reputation are important factors in influencing business and leisure traveler hotel accommodation choices.

Our marketing and advertising programs are designed to heighten consumer awareness and preference for our brands as offering the greatest value and convenience in the lodging categories in which we compete. Marketing and advertising efforts include national television, social media and digital advertising, online radio advertising, print advertising in trade media, and promotional events, which include joint marketing promotions with qualified vendors and corporate partners. We also actively seek to reach travelers who are shopping for travel online by purchasing key search related terms and meta search ads from the various search engine providers to help ensure that our franchisees' hotels are prominently displayed to potential guests.

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We conduct numerous marketing and sales programs and deploy field-based sales agents which target corporate entities, travel agencies, groups, and small and medium size enterprises including business travelers, senior citizens, automobile club members, government and military employees, educational organizations, and meeting planners. Other marketing efforts include U.S. and international trade show programs, targeted marketing campaigns (including print, digital, and social media), direct-mail programs, marketing e-mail programs, and centralized commissions for travel agents.

We operate a loyalty program, Choice Privileges, for all of our brands except WoodSpring Suites, in order to attract and retain travelers by rewarding stays with points towards free hotel nights at properties and through our partners that provide travel-related accommodations. The loyalty program also offers guests the ability to redeem points for gift cards at participating retailers, and earn airline miles from qualifying stays redeemable for flights with various airline partners. These programs allow us to conduct lower cost, more targeted marketing campaigns to our consumers, help us to deliver business to our franchised hotels, and are an important selling point for our franchise sales personnel. As of December 31, 2025, the Choice Privileges program had more than 74 million worldwide members. Growing the membership of the Choice Privileges loyalty program, as well as increasing the number of room nights consumed by existing members, will continue to be a focus of the Company.

Marketing and advertising programs are directed by our marketing department, which utilizes the services of independent advertising agencies. We also employ home-based sales personnel geographically located across the U.S. using personal sales calls, telemarketing, and other techniques to target specific customer groups, such as potential corporate clients in areas where our franchised hotels are located, the group travel market, and meeting planners.

Our field-based franchise services area directors work with our franchisees to profitably grow revenue, improve the efficiency of their hotel operations, and maintain and improve guest satisfaction. The franchise services area directors advise the franchisees on topics such as marketing their hotels, improving quality, and maximizing the benefits offered by the Choice reservations system. Our proprietary property management system, choiceADVANTAGE, includes a rate and selling management tool to help our franchisees better manage rates and inventory, which are designed to help them improve RevPAR by optimizing ADR and occupancy. In addition, we offer revenue management services to our franchisees to assist them in optimizing their room rates and minimizing the costs of reservation delivery.

Central Reservation System ("CRS") - Our central reservation system consists of our toll-free telephone reservation system, our proprietary internet sites, mobile phone and tablet reservation applications, interfaces with global distribution systems, and other internet reservations sites. We strive to improve the percentage of business delivered by the CRS as the room nights reserved through these channels are typically at higher average daily room rates than the reservations booked directly through the property. In addition, increasing the percentage of business delivered through the CRS improves our value proposition to a hotel owner and therefore assists in the retention of existing franchisees and the acquisition of new franchisees.

Our CRS provides a data link to our franchised properties as well as to the travel reservation systems, such as Amadeus, Galileo, SABRE, and Worldspan, which facilitate the reservation process for travel agents and corporate travelers. We also offer rooms for rent on our website (http://www.choicehotels.com) and mobile applications as well as those of OTAs and other third-party internet referral and booking services.

Our toll-free telephone reservation system primarily utilizes third-party call center service providers. The reservation agents are trained on the reservation system and they have a goal of matching each caller with a Choice-branded hotel that meets the caller’s needs. We also operate a call forwarding program through which our franchisees can leverage our central reservation system capabilities by forwarding reservation calls received directly by the property to one of our reservation centers. Typically, this helps to reduce the hotel’s front desk staffing needs, improves customer service, and results in a higher average daily room rate than the reservations booked directly through the property.

We continue to implement our integrated reservation and distribution strategy to help improve the delivery of reservations, reduce franchisee costs, and improve franchisee satisfaction by enhancing our website, http://www.choicehotels.com. We design our marketing campaigns to drive reservation traffic directly to our proprietary channels to minimize the impact that third party reservation sites may have on the pricing of our franchisees' inventory. In addition, we have introduced programs such as our Lowest Price Guarantee program, which has significantly reduced the ability of the third-party travel intermediaries to undercut the published rates at our franchisees' hotels. Further, we selectively distribute our franchisees' inventory to key third-party travel intermediaries that we have established agreements with to help drive additional business to our franchisees' hotels. These agreements typically offer our brands a preferred placement on these third-party booking sites at reduced transaction fees. We continue to educate our individual franchisees about the risk of an unfavorable impact to their business from contracting with booking sites when we do not have preferred agreements. We currently have agreements with many, but not all, of the major online third-party booking sites.

We also continue to upgrade our technology to ensure that our CRS can effectively handle the current and future volume on digital channels and support the industry's shift toward accelerated digital communications and guest experience

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personalization. In support of these initiatives, the Company developed choiceEDGE, which is a cloud-based software to manage all distribution for the Company by optimizing rate, inventory, availability, shopping, booking, and reservations for its website, mobile apps, and third-party distribution partners.

Property Management Systems - ChoiceADVANTAGE, which is our proprietary property and yield management system that the significant majority of our hotels utilize, is designed to help franchisees maximize profitability and compete more effectively by assisting them in managing their room inventory, rates, and reservations. ChoiceADVANTAGE synchronizes each hotel’s inventory with our central reservation system, which gives our reservation sales agents and other proprietary channels the last room sell capabilities at every hotel. Our property management system also includes a proprietary revenue management feature that calculates and suggests the optimum rates based on each hotel’s past performance and projected occupancy. These tools are critical to business delivery and yield improvements as they facilitate a franchisee's ability to effectively manage hotel operations, determine appropriate rates, help drive occupancy, and participate in our marketing programs. ChoiceADVANTAGE, which is a cloud-based solution, helps to reduce each hotel’s investment in on-site computer equipment, which typically results in a lower total cost of ownership for the property management systems as compared to the traditional on-site solutions.

Quality Assurance Programs - Consistent quality standards are critical to the success of a hotel franchise. We have established quality standards for all of our franchised brands that cover cleanliness, condition, brand standards and minimum service offerings. We inspect most properties for compliance with our quality standards before allowing a property to open as one of our franchised brands. The compliance of existing franchisees with quality standards is monitored through scheduled and unannounced quality assurance reviews conducted by a third-party at the property and through the use of guest surveys. Franchise properties that fail to maintain a minimum score are reinspected on a more frequent basis until the deficiencies are cured, or until such properties are terminated. To encourage compliance with quality standards, various brand-specific incentives and awards are used to reward franchisees that maintain consistent quality standards. We identify franchisees whose properties operate below minimum quality standards and assist them to comply with brand specifications. Franchisees who fail to improve on identified quality issues may be subject to consequences ranging from written warnings, the payment of re-inspection(s), non-compliance and guest satisfaction fees, attendance at mandatory training programs, and ultimately the termination of the franchise agreement. Actual consequences, if any, are determined in the Company’s discretion on a case-by-case basis and may take into account a variety of factors apart from a franchisee’s level of compliance with our quality standards and brand specifications.

Training - We maintain a training department that conducts mandatory and voluntary training programs for all franchisees and general managers. Regularly scheduled regional and national training meetings are also conducted for owners and general managers. We offer an interactive computer and mobile-based training system to help train hotel employees in real-time as well as at their own pace. Additional training is conducted through a variety of methods, including group instruction seminars and live online instructor-led programs.

Opening Services - We maintain an opening services department that ensures incoming hotels meet or exceed brand standards and are properly displayed in our various reservation distribution systems to help ensure that each incoming hotel opens successfully. We also maintain a design and construction department to assist franchisees in refurbishing, renovating, or constructing their properties prior to or after joining the system. Department personnel assist franchisees in meeting our brand specifications by providing technical expertise and cost-savings suggestions.

Competition

Competition among franchise lodging brands is strong with regard to attracting potential franchisees, retaining existing franchisees, and generating reservations for franchisees. Franchise contracts are typically long-term in nature, but most allow either the hotel owner or the Company to terminate the agreement at mutually agreed upon anniversary dates.

We believe that the hotel operators choose a franchisor based primarily on the value and quality of each franchisor’s brand(s) and services and the extent to which affiliation with that franchisor may increase the franchisee’s reservations and profits. We also believe that the hotel operators select a franchisor in part based on the franchisor’s reputation among other franchisees and the success of its existing franchisees.

Since our franchising revenues are generated primarily as a percentage of the franchisees’ gross room revenues, our prospects for growth are largely dependent upon the ability of our franchisees to compete in the lodging market, our ability to retain existing franchisees, our ability to convert our competitor's franchisees and independent hotels to our brands, and the ability of existing and potential franchisees to obtain financing to construct new hotel properties.

The ability of a hotel to compete in the lodging industry may be affected by a number of factors, including the location and quality of the property, the abilities of the franchisee, the number and quality of competing lodging facilities nearby, its affiliation with a recognized name brand, and national and local economic conditions. We generally believe the effect of local

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economic conditions on our results is substantially reduced by our range of products and room rates and the geographic diversity of our franchised properties, which are open and operating in 49 states, the District of Columbia, and 50 countries and territories outside the U.S.

We believe that our focus on core business strategies, combined with our financial strength and size, geographic diversity, scale, and distribution, will enable us to remain competitive in the lodging industry.

Service Marks and Other Intellectual Property

The service marks Ascend Collection, Cambria, Choice Hotels, Choice Privileges, Clarion, Clarion Pointe, Comfort Inn, Comfort Suites, Country Inn & Suites by Radisson, Econo Lodge, Everhome Suites, MainStay Suites, Park Inn by Radisson, Park Plaza, Quality, Radisson, Radisson Blu, Radisson Collection, Radisson Individuals, Radisson Inn & Suites, Radisson Red, Rodeway Inn, Sleep Inn, Suburban Studios, WoodSpring Suites, and related marks and logos are material to our business. All of the material marks are registered or have registrations pending with the U.S. Patent and Trademark Office. We seek to protect our brands and marks throughout the world, although the strength of legal protection available varies from country to country. Depending on the jurisdiction, trademarks and other registered marks are valid as long as they are in use and/or their registrations are properly maintained and they have not been found to have become generic.

Seasonality

The lodging industry is seasonal in nature. For most hotels, demand is lower from November through February than during the remainder of the year. Our principal source of revenues is franchise fees, which is based on the gross room revenues of our franchised properties. The Company's franchise fee revenues reflect the industry's seasonality and historically have been lower in the first and fourth quarters than in the second and third quarters.

Regulation

Our business is subject to various U.S. and international regulations, including the regulations of the Federal Trade Commission ("FTC"), various states and certain other foreign jurisdictions (including Australia, France, Canada, and Mexico) that relate to the sale of franchises. The FTC requires franchisors to make extensive disclosures to prospective franchisees, and a number of states in which our franchisees operate require registration and disclosure in connection with franchise offers and sales. In addition, several states have "franchise relationship laws" that, among other things, limit the ability of the franchisor to terminate franchise agreements or to withhold consent to the renewal or transfer of franchise agreements.

Our franchisees are responsible for compliance with all laws and government regulations applicable to the hotels they own or operate.

With respect to our owned and managed hotels, we are subject to the laws governing our relationship with employees, including minimum wage requirements, overtime, working conditions, and work permit requirements.

In addition, our business is subject to numerous federal, state and local government regulations, including those relating to the preparation and sale of food and beverages (such as health and liquor license laws), safety and health standards, building and zoning requirements, tax laws, and laws governing employee relations, including minimum wage requirements, overtime, working conditions and work permit requirements.

Further, we are subject to various U.S. federal, state, and international privacy and data protections laws, including the California Consumer Protection Act, the Virginia Consumer Data Protection Act, and the European Union General Data Protection Regulation, as well as privacy laws in Connecticut, Colorado, and Utah.

Impact of Inflation and Other External Factors

Franchise fees are impacted by the supply of hotel rooms within the lodging industry relative to the demand for rooms by travelers and inflation, amongst other external factors.

We expect to benefit in the form of increased franchise fees from the future growth in consumer demand for hotel rooms as well as growth in the supply of hotel rooms, to the extent it does not result in excess lodging industry capacity. However, a prolonged decline in the demand for hotel rooms will negatively impact our business.

Although we believe that increases in the rate of inflation will generally result in comparable increases in hotel room rates, severe inflation could contribute to a slowing of the economies in which we operate. Such a slowdown could result in reduced travel by both business and leisure travelers, and potentially less demand for hotel rooms, which could result in a reduction in room rates and fewer room reservations, all of which could negatively impact our revenues. A weak economy could also reduce the demand for new hotels, which negatively impacts our franchise fees revenues.

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Among other unpredictable external factors which may negatively impact us are wars, acts of terrorism, pandemics, high interest rates, stress on the U.S. banking system, gasoline shortages, severe weather, and the risks described in Item 1A. Risk Factors.

Human Capital Management

As a franchisor and hotel management company, one of our greatest assets is our associates. We seek to attract and retain the best talent in the hospitality, franchising, and technology industries and to provide an open and welcoming environment for all of our associates. The quality of our talent delivers a high performing organization that drives positive business outcomes for the Company, our shareholders, our franchisees, and hotel owners.

Our Board of Directors provides oversight on certain human capital matters through two committees.

•Human Capital and Compensation Committee - Providing a broad scope of oversight on talent, including: (1) overall associate wellbeing, (2) succession planning for the top 60 leadership roles, (3) talent management and leadership development oversight for the top 150 leadership roles, (4) oversight of pay goals, and (5) overall organizational engagement.

•Diversity Committee - Overseeing our efforts to develop and sustain a welcoming culture for all associates, foster belonging, and promote equal access and opportunity for everyone.

Career Development

We empower over 1,700 associates across the globe to enhance their careers by providing a career framework that allows them to understand and proactively manage their career path potential. Guided by a personalized development plan, each associate is empowered to identify and develop the skills and competencies necessary to expand the scope of their work or prepare for their next, and future, desired roles. As of December 31, 2025, the Company had 1,562 U.S. and 192 international associates, excluding employees at our 13 managed hotels.

Leadership development programs offer level specific career-building experiences, increasing the potential for broader levels of responsibility and leadership. These programs focus on competency-based self-development, creating customized action plans for growth and development, and the transformation of functional managers to business leaders, increasing their potential for broader levels of responsibility.

The Company conducts talent review and succession planning discussions across all levels. The talent landscape is reviewed with the Board of Directors semi-annually, focusing primarily on senior leadership levels.

Further, 11 Choice Resource Groups (“CRGs”) allow groups of associates to come together based on shared affinities, communities, life experiences, and/or interests. Each CRG is open for all associates to join, and everyone is welcome at all CRG events. Associates are invited to participate as CRG Members, Community Builders, and CRG Chairs. The CRGs provide support, contribute to personal and career development, provide networking opportunities, and enhance wellbeing and engagement.

Choice's Culture of Respect and Belonging

At Choice, we strive to create an environment where every associate feels welcome, wanted, and respected. Part of how we deliver on this promise is by weaving belonging-focused initiatives throughout all levels of the enterprise, focusing on three core commitments:

•Inclusion – Striving to build a workforce where all associates, regardless of background, have an opportunity to thrive.

•Fair and Competitive Pay – Committed to promoting equal opportunity in all aspects of the talent lifecycle, inclusive of fair and competitive pay regardless of background.

•Trust, Belonging, and Engagement – Fostering a culture where associates are inspired, engaged, and feel like they belong.

We remain committed to delivering fair and competitive pay across all roles, including those in our Managed Hotels division. To uphold this commitment, we conduct fair pay analyses for U.S.-based positions and make adjustments in pay as needed, as well as report the findings to the Board of Directors for transparency and accountability.

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Health, Wellbeing, and Engagement

Choice Hotels remains committed to advancing the health, well-being, and engagement of our associates, recognizing that a strong workforce drives superior performance for our hotel owners and shareholders. In 2025, we enhanced programs that support mental health, financial resilience, and social connectedness. These initiatives reinforce our culture of care and strengthen retention and productivity.

Choice Hotels differentiates itself through a holistic and culturally aligned approach to associate wellbeing. Our strategy integrates physical, mental, and financial health into a single framework, offering innovative programs such as diabetes and obesity management, mental health panels, and financial coaching. Beyond benefits, we embed wellbeing into our culture of belonging and psychological safety, ensuring every associate feels welcome, wanted, and respected through initiatives like Choice Resource Groups and social connectedness campaigns.

We measure impact through engagement and experience surveys. In 2025, participation in our engagement survey reached 82%, and our engagement score exceeded industry benchmarks by six points demonstrating strong associate commitment to Choice’s mission and confidence in our inclusive culture. These results underscore the link between associate well-being and sustained business performance.

Award Winning Culture

In 2025, Choice Hotels continued to earn recognition for excellence across multiple dimensions of our business and culture. We maintained our standing on Newsweek’s “World’s Most Trustworthy Companies” and TIME’s “World’s Best Companies” lists, underscoring our reputation for integrity and performance.

Additional accolades included Newsweek America’s Most Responsible Companies, Time America’s Best Companies, Forbes' Best Employers for Tech Workers, Computerworld's 2026 Best Places to Work, Comparably Best Company: Leadership, Happiness, Compensation, Perks and Benefits, Culture and CEO, and the Human Rights Campaign's Corporate 100 Equality Index. These achievements reflect our strategic focus on creating an inclusive, high-performing culture, and delivering long-term value for stakeholders.

Information about our Executive Officers

The name, age, title, present principal occupation, business address and other material occupations, positions, offices and employment of each of the executive officers of the Company as of December 31, 2025 are set forth below. The business address of each executive officer is 915 Meeting Street, Suite 600, North Bethesda, Maryland 20852.

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Stewart W. Bainum, Jr. - Director from 1977 to 1996 and since 1997, serving as Chairman of the Board from March 1987 to November 1996 and since October 1997; Managing Member of Artis Senior Living, LLC, a developer-owner-operator of assisted living residences, since 2012; Board of Advisors of UCLA's School of Management; Director of White Oak Legacy, Inc. (f/k/a Realty Investment Company, Inc.) a real estate management and investment company, from December 2005 through December 2016 and Chairman from December 2005 through June 2009; Director of Sunburst Hospitality Corporation, a real estate developer, owner and operator, from November 1996 through December 2016 and Chairman from November 1996 through June 2009. Director of SunBridge Manager, LLC from September 2011 through December 2016. Mr. Bainum was a director of Manor Care, Inc. from September 1998 to September 2002, serving as Chairman from September 1998 until September 2001. From March 1987 to September 1998, he was Chairman and Chief Executive Officer of Manor Care, Inc. He served as President of Manor Care of America, Inc., and Chief Executive Officer of ManorCare Health Services, Inc., from March 1987 to September 1998, and as Vice Chairman of Manor Care of America, Inc., from June 1982 to March 1987.

Patrick S. Pacious - President and Chief Executive Officer since September 2017; President and Chief Operating Officer from May 2016 until September 2017; and Chief Operating Officer from January 2014 until May 2016. He was Executive Vice President, Global Strategy & Operations from February 2011 through December 2013. He was Senior Vice President Corporate Strategy and Information Technology from August 2009 to February 2011. He was Senior Vice President, Corporate Development and Strategy from December 2007 to August 2009. He was Vice President, Corporate Development and Innovation from May 2006 to December 2007 and was Senior Director of Corporate Strategy from July 2005 to May 2006. Prior to joining the Company, he was employed by BearingPoint Inc. as a Senior Manager from 2002 until 2005 and Arthur Andersen Business Consulting LLP as a Senior Manager from 1996 until 2002.

Scott E. Oaksmith - Chief Financial Officer since September 2023. He was previously Senior Vice President, Deputy Chief Financial Officer from May 2023 to September 2023 and Senior Vice President, Real Estate and Finance from March 2020 to September 2023. He was Senior Vice President, Finance & Chief Accounting Officer from May 2016 to March 2020. He was Controller of the Company from September 2006 until May 2016, was Senior Director & Assistant Controller from February 2004 to September 2006, and was Director, Marketing and Reservations, Finance from October 2002 until February 2004. Prior to joining the Company, he was employed by American Express Tax & Business Services, Inc. from January 1994 to October 2002, last serving as Senior Manager from October 2000 to October 2002.

Dominic E. Dragisich - Executive Vice President, Operations and Chief Global Brand Officer since September 2023. He was previously Chief Financial Officer from March 2017 to September 2023. Prior to joining the Company, he was employed by XO Communications as Chief Financial Officer from July 2015 to February 2017 and Vice President, Financial Planning and Analysis ("FP&A") and Strategic Finance from September 2014 to July 2015. Before that, he was Senior Director, IR Business Consultancy of Marriott International from October 2013 to September 2014, Global Director of FP&A of NII Holdings, Inc. from March 2012 to October 2013, and held various management positions at Deloitte Consulting from 2004 to 2012.

Simone Wu - Senior Vice President, General Counsel, Corporate Secretary & External Affairs since 2015. She was Senior Vice President, General Counsel, Corporate Secretary & Chief Compliance Officer from 2012 to 2015. Prior to joining the Company in 2012, she was employed by XO Communications and its affiliates as Executive Vice President, General Counsel and Secretary from 2011 until 2012, Senior Vice President, General Counsel and Secretary from 2006 to 2011, Vice President, the acting General Counsel and Secretary from 2005 to 2006, Vice President and Assistant General Counsel from 2004 until 2005, and Senior Corporate Counsel from 2001 until 2004. Before that, she was Vice President of Legal and Business Affairs at LightSource Telecom, held legal and business positions at MCI and AOL, and began her legal career in 1989 at Skadden, Arps, Slate, Meagher & Flom. Ms. Wu serves on the Board of Alarm.com.

Patrick J. Cimerola - Chief Human Resources Officer since 2015. He was Senior Vice President, Human Resources and Administration from September 2009 to 2015. He was Vice President of Human Resources from January 2003 to September 2009. He was Sr. Director of Human Resources from January 2002 to January 2003.

Raul Ramirez Sanchez - Chief Segment and International Operations Officer since August 2023. He was Chief Strategy and International Operations Officer from October 2021 to August 2023. He was Senior Vice President, Head of International, Strategy & Enterprise FP&A from June 2020 until October 2021. He was Senior Vice President, International Strategy and Enterprise FP&A from August 2019 until June 2020 and Vice President, Strategic Finance and FP&A from August 2017 to August 2019. Prior to joining the Company, he was Head of Finance, XO Business Unit for Verizon Communications from February 2019 until August 2019 and was employed at XO Communications as Vice President, Financial Planning and Analysis and Corporate Development from September 2015 until January 2019.

Noha Abdalla - Chief Marketing Officer since August 2022. Prior to joining the Company, she was employed by MyEyeDr. as Chief Marketing Officer from November 2020 to August 2022. Before that, she was employed by Hilton from July 2018 to November 2020 as the Global Vice President, Social Media, and Global Vice President, Digital and Content Marketing, and by

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Capital One from September 2011 to March 2018 in various roles, most recently as Vice President, Digital Brand Strategy and Social Media.

Anna Scozzafava - Chief Strategy Officer and Senior Vice President, Technology since September 2023. She was previously Senior Vice President and General Manager, Extended Stay Brands from August 2023 through September 2023, and Vice President, Extended Stay Brands, Strategy & Operations from July 2019 through September 2023. She was also previously Vice President, Strategy and Planning from November 2017 through July 2019, Senior Director, Corporate Strategy and Planning from July 2016 through October 2017, Director, Corporate Strategy from January 2014 through June 2016, Manager, Corporate Strategy from October 2012 through December 2013, and Project Manager, Corporate and Business Strategy from May 2011 through October 2012. Prior to joining the Company, she was employed by Corporate Executive Board from December 2005 through May 2011.