Choice Hotels International, Inc. (CHH): Business Model Canvas [Dec-2025 Updated]

You're digging into how a major hotel operator prints money without the headache of owning thousands of buildings, and honestly, the secret sauce for Choice Hotels International, Inc. (CHH) is their asset-light franchise engine. As someone who spent a decade mapping out these structures at BlackRock, I can tell you this model thrives on high-margin fee revenue, evidenced by their Q2 2025 domestic effective royalty rate landing at just 5.12% on gross room revenue. This strategy is projected to deliver an Adjusted EBITDA between $615 million and $635 million for the full year 2025, all while supporting a portfolio of over 7,500 hotels. This Business Model Canvas lays out the nine critical components-from their 70 million loyalty members to their key franchisee support-that make this high-return structure work; check out the details below to see the full blueprint.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Key Partnerships

The Key Partnerships for Choice Hotels International, Inc. are central to its asset-light franchising model, enabling scale, technology integration, and franchisee support.

Independent hotel owners and developers (franchisees) form the core relationship, representing the vast majority of the system size.

• Choice Hotels International operates a portfolio of over 7,500 hotels across 46 countries and territories as of Q1 2025.
• The company's revamped loyalty program, Choice Privileges, boasts more than 70 million members as of the May 2025 convention.

The company actively works to facilitate capital access for these owners through new technology partners.

Financial technology platform Bridge for franchisee financing

• The partnership with Bridge, announced in January 2025, provides owners access to financing solutions.
• Qualified borrowers can compare rates and terms from multiple lenders in Bridge's network of more than 100 lenders.
• Hoteliers can submit a commercial loan request via the platform in as little as 10 minutes.

The expansion of Choice Hotels International, Inc.'s direct control in certain markets also solidifies key operational partnerships, such as the consolidation of its Canadian operations.

Global master franchise partners drive international growth, with specific agreements providing room count expansion targets.

• Agreement extension with Atlantica Hospitality International in Brazil covers over 10,000 rooms and was extended by 20 years (as of Q2 2025).
• Strategic agreements with SSAW Hotels & Resorts in China include a distribution agreement expected to add over 9,500 rooms in 2025.

Technology providers like Mews for cloud-based property management are integrated to enhance international operations.

This partnership introduces Mews as a Property Management System (PMS) option specifically for international franchisees.

The integration with Mews is designed to synchronize reservations, rates, and inventory across all systems, connecting with Choice Hotels' proprietary choiceEDGE reservation system.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Key Activities

You're looking at the core engine of Choice Hotels International, Inc. (CHH) as of late 2025, focusing on what they actually do to keep the asset-light model humming. It's all about driving fees through scale and brand management, so the numbers here reflect that focus.

Franchising and brand management across 22 brands

Choice Hotels International, Inc. manages a diverse portfolio, consisting of 22 distinct brands. This activity is central, as it directly feeds the primary revenue stream. Franchise and management fees for the third quarter of 2025 hit $193.8 million, marking a 3 percent increase compared to the same period in 2024. The overall system size reflects this management effort, with global net rooms growing 2.3 percent as of September 30, 2025, compared to September 30, 2024.

Developing and deploying proprietary technology (e.g., AI-powered revenue management)

The company is pushing technology, which supports franchisee performance and direct booking. While specific AI-powered revenue management deployment statistics aren't public, the focus on digital transformation is clear. For instance, the company is deploying Mirai, noted as the world's first native 3D hotel booking engine. This digital push supports direct booking conversion, which saw an over 14 percent increase in upscale online booking conversion in the first quarter of 2025.

Operating and growing the Choice Privileges loyalty program (over 70 million members)

The Choice Privileges loyalty program is a major activity for driving direct business. Loyalty membership has surged past 70 million members. These members can redeem points at over 7,000 hotels across 45 countries. To enhance engagement, early 2025 enhancements included tripling the reward night booking window to 50 weeks and introducing Choice RewardSaver, which lowered the minimum point requirement from 8,000 to 6,000 points. Partnership services and fees, which often tie into loyalty and related services, grew 19 percent to $28.9 million in the third quarter of 2025.

Driving hotel conversions and new construction, especially in extended-stay

This activity is measured by franchise agreement awards and room growth, with a clear emphasis on higher-revenue segments. The global pipeline as of September 30, 2025, exceeded 86,000 rooms, with 98 percent concentrated in upscale, extended stay, and midscale segments. The company expects 2025 to be the final year for developing new company-owned Cambria Hotels, with EverHome Suites development continuing into 2026, and investments concluding in 2027.

Here's a look at the growth metrics driving this activity through the third quarter of 2025:

Providing centralized marketing and global sales support to franchisees

Centralized sales and marketing efforts translate directly into franchise agreement volume. Global franchise agreements awarded grew 54 percent for the third quarter of 2025 compared to the same period in 2024. This indicates strong franchisee confidence, supported by the sales and marketing engine. The international push is also a key sales activity; international net rooms grew 8.3 percent compared to September 30, 2024, highlighted by a 66 percent increase in openings. The company expects to generate more than $50 million of international adjusted EBITDA by 2027, doubling the 2024 baseline.

The financial results of these support activities are evident in the fee structure:

• Franchise and management fees: $193.8 million in Q3 2025.
• Partnership services and fees: $28.9 million in Q3 2025.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Key Resources

You're looking at the core assets that Choice Hotels International, Inc. uses to run its business as of late 2025. These aren't just line items; they are the engines driving franchise value and market presence.

The physical footprint remains a massive resource. As of the third quarter of 2025, Choice Hotels International, Inc. operates a portfolio of over 7,500 hotels, which translates to nearly 650,000 rooms across 47 countries and territories. This scale is critical for brand recognition and distribution. You can see the room count breakdown below, showing growth across the board compared to the prior year.

The Choice Privileges loyalty program member base is a significant intangible asset, driving repeat business and providing valuable customer data. As of late 2024, the program boasted 66 million members, who can redeem points at over 7,000 hotels globally. The program continues to evolve, with plans announced in late 2025 to introduce a new top-tier status, Titanium, in early 2026, achievable at 55 nights.

Choice Hotels International, Inc. relies heavily on its proprietary central reservation and distribution technology systems. These tools help franchisees manage bookings and connect to the global distribution network. For instance, the company has invested in technology like its partnership with Mews, a property management system designed to connect seamlessly with Choice Hotels' proprietary tools, helping owners capture revenue earlier.

Strong brand equity is evident in segment performance, especially in the higher-growth areas. Here's a snapshot of how specific brands and segments are performing as of late 2025:

• WoodSpring Suites brand rooms grew by 9.7% to nearly 33,000 rooms since June 30, 2024, and was ranked number one for the third year in a row in guest satisfaction by J.D. Power in 2025.
• The U.S. extended stay segment outperformed the industry RevPAR by 20 basis points year-to-date through September 2025.
• The U.S. transient economy segment gained 310 basis points in RevPAR index share versus competitors year-to-date through September 2025.
• Global pipeline as of September 30, 2025, exceeded 86,000 rooms, with 98% concentrated in upscale, extended stay, and midscale segments, indicating strong future brand equity in those areas.

Finally, the company maintains substantial financial flexibility, which is a key resource for seizing opportunities or weathering downturns. As of June 30, 2025, Choice Hotels International, Inc. reported total available liquidity of $587.5 million, which included available borrowing capacity and cash and equivalents. For context, as of the next reporting date, September 30, 2025, this figure stood at $564.2 million.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Value Propositions

You're looking at the core value Choice Hotels International, Inc. delivers to its partners and guests as of late 2025. For hotel owners, the proposition centers on maximizing profitability through an asset-light structure supported by scale. For travelers, it's about a broad, reliable, and rewarding lodging experience across many price points.

For Franchisees: Asset-light model with high-margin fee revenue and support to drive RevPAR

Choice Hotels International, Inc. focuses on franchising, which means high-margin fee revenue streams for the corporation. You see this reflected in the domestic effective royalty rate, which stood at 5.12% for the second quarter of 2025. By the third quarter of 2025, that U.S. average royalty rate had expanded to 5.15%. The company is driving revenue through its network, evidenced by franchise and management fees hitting $193.8 million in Q3 2025. Also, partnership services and fees saw a significant jump, increasing 19% in that same quarter. Business travelers, who represent a more resilient customer base, now account for 40% of all stays. This focus on driving higher-yield guests is key to the model.

The support structure is designed to directly impact your top line. For example, participating properties in the ChoiceROCS consultancy program saw $81 million in incremental revenue in 2024. Furthermore, those same properties experienced a 100-basis-point premium in RevPAR Index compared to hotels not using the program that year. It's defintely about using data to boost performance.

Here's a quick look at some of the tangible support metrics provided to franchise owners:

For Franchisees: Operational cost savings, averaging $33,000 per participating property

Choice Hotels International, Inc. uses its scale to negotiate better supplier terms, directly lowering your operating expenses. Area Directors helped owners identify over $25 million in potential operational cost savings in 2024 alone, which translates to an average of $33,000 saved per property that participated in that effort. Beyond general savings, a new food group purchasing program launched in mid-2024 delivered an average saving of 9% on food costs based on market-basket comparisons through March 2025.

For Guests: Diverse lodging options from economy to upper upscale (e.g., WoodSpring Suites to Radisson Blu)

You get access to a wide spectrum of lodging needs because the global portfolio encompasses over 7,500 hotels as of 2025. The company operates a diverse portfolio of 22 brands, which lets Choice Hotels International, Inc. meet travelers' needs across the entire spectrum, from economy to upper upscale. This range includes deep penetration in the extended-stay segment, where brands like WoodSpring Suites continue to deliver impressive operating profits above 55%. Furthermore, the Everhome Suites brand is projected to open 25 new hotels by the end of 2025. For the higher end, brands like Radisson Blu are part of the network accessible to top-tier loyalty members.

For Guests: Value maximization through the loyalty program and direct booking benefits

The Choice Privileges rewards program is positioned as a key driver of guest value. Membership has surged past 70 million members. This engaged base is showing higher spend and longer stays; members saw a 13% growth in average length of stay and a 30% jump in reward redemptions. You benefit from guests booking direct, as the ChoiceHotels.com refresh resulted in a 6% year-over-year increase in converting lookers into direct bookers, with upscale booking conversions up more than 14% in the first quarter of 2025. The program is also evolving to offer more value:

• Faster paths to existing Elite status tiers starting in 2026, requiring five fewer nights (e.g., Diamond Elite at 35 nights).
• A new top-tier Titanium status, achievable at 55 nights or 110,000 Elite Qualifying Credits.
• The Titanium travel award benefit allows booking one room for up to seven nights at over 400+ premium properties for just half the points.

For Franchisees: Access to a domestic effective royalty rate of 5.12% in Q2 2025

The specific financial commitment for domestic franchisees is anchored by the royalty rate. As noted, the domestic effective royalty rate was 5.12% in the second quarter of 2025. This rate is a core component of the asset-light, fee-based revenue model that Choice Hotels International, Inc. champions for its stability and high margin potential.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Customer Relationships

Dedicated Franchisee Success System and Area Directors

Choice Hotels International, Inc. focuses on driving owner value through its Franchisee Success System. Through strategic partnerships, the company helped franchise owners identify over $25 million in potential operational savings as of early 2025, averaging $33,000 per participating property. Furthermore, a food group purchasing program saved franchisees an average of 9% on food costs. The strength of this system is underscored by segment growth; for instance, the WoodSpring Suites brand grew by 9.7% to nearly 33,000 rooms since June 30, 2024. The domestic extended stay segment pipeline reached over 40,000 rooms as of March 31, 2025.

Automated, personalized digital engagement via the loyalty program

The Choice Privileges rewards program is a core digital relationship driver. Loyalty membership surged past 70 million as of April 2025. Enhancements implemented in early 2025 drove a 30% increase in redemptions and a 13% growth in the average length of stay in 2024. You can see the scale of the program below:

The company is committed to making it easier for these members to earn and redeem points.

High-touch relationship management for upscale and extended-stay owners

The focus on higher-revenue segments necessitates a more direct approach. The upscale and above-brand portfolio saw impressive room count growth of 44% in the year leading up to April 2025. The domestic upscale, extended stay, and midscale net rooms portfolio grew by 2.3% compared to June 30, 2024. This growth in premium segments is supported by the overall system expansion, which saw net global rooms system size increase by 2.8% as of March 31, 2025, compared to March 31, 2024.

Self-service tools for booking and loyalty account management

Digital self-service tools directly impact the transactional relationship with both guests and owners. A refreshed ChoiceHotels.com resulted in a 6% year-over-year increase in converting lookers into direct bookers in the first quarter of 2025. For upscale bookings specifically, conversions rose by more than 14% in Q1 2025. For loyalty members, Choice Hotels International, Inc. implemented a reward night booking window tripled to 50 weeks, up from the prior 100 days. Also, the Choice RewardSaver tool lets members book reward nights for as low as 6,000 points, a reduction from the previous minimum of 8,000 points.

• Points can be combined with cash via Points Plus Cash redemption.
• Members can exchange points for miles with 10 participating airlines.
• Elite members receive a welcome gift or bonus points upon check-in at every Choice hotel.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Channels

Choice Hotels International, Inc. manages distribution across a global portfolio that surpassed 150,000 rooms as of the third quarter of 2025, with a total revenue of $447.3 million reported for that quarter alone.

Direct booking channels (ChoiceHotels.com, mobile app)

The push for direct bookings is central, driven by the desire to capture the full margin by avoiding third-party commissions, which in the industry can reach 30% or higher. Choice Hotels International, Inc. incentivizes this channel through its loyalty program, offering Choice Privileges® members instant discounts ranging from 2 - 7% off the Best Available Rate when booking direct via ChoiceHotels.com or the mobile app. Furthermore, the company offers a $50 Reward Card match to any guest who finds a lower, publicly available rate elsewhere, reinforcing the lowest price guarantee on direct channels. In a prior period, the company noted a 20% increase in direct online contribution for the Country Inn & Suites brand.

Global Sales team for group and corporate business

The Global Sales team focuses on securing group and negotiated corporate volume, which is a key area for Choice Hotels International, Inc. as business travel grew 10 percent year-over-year in the first quarter of 2025. The integration of the Radisson Americas global sales team contributed significantly; in the 12 months following that integration, the team drove nearly $100 million in incremental Gross Room Revenue for hotels across the Choice system. The revenue from the Global Sales team saw a 10% increase year-over-year in 2024. The international business, which represents $3 billion in gross rooms revenue as of late 2025, is a major focus for growth.

Online Travel Agencies (OTAs) and third-party distribution partners

Third-party partners, primarily OTAs, remain a necessary component for broad market visibility, despite the associated cost structure. The company's overall revenue streams are supported by its large system size, with Franchise and management fees reaching $193.8 million in the third quarter of 2025. The company continues to expand its global footprint, with its international net rooms growing 8.3% year-over-year in the third quarter of 2025. The focus on higher-value segments, such as extended stay, helps to mitigate the margin impact from third-party bookings.

Global distribution systems (GDS) for business travel

Global Distribution Systems (GDS) serve as a critical pathway for corporate travel managers and travel agents booking on behalf of business travelers. The overall GDS market for hotels was valued at $7499.6 million in 2025. Corporate travelers are explicitly noted as being able to book through their online booking tool, GDS, or with a travel agent. The company's business travel segment showed growth, supported by its expanding upscale and extended-stay portfolio. The strategic agreements, such as the one in China expected to add over 9,500 rooms, rely on distribution channels like GDS for access to corporate booking tools.

• Choice Privileges members have access to rates discounted by 2 - 7% off BAR when booking direct.
• The company offers a $50 Reward Card for successfully claiming a lower rate found on a third-party site.
• Choice Hotels International, Inc. is expecting to nearly double its France portfolio by year-end 2025.
• Choice Privileges® has more than 66 million members.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Customer Segments

You're looking at the core groups Choice Hotels International, Inc. (CHH) serves as of late 2025, grounded in their latest system performance metrics. This is about who is signing up to own the hotels and who is staying in them.

Franchise Owners/Developers: Seeking an asset-light, high-ROI business model

The health of the franchise relationship is central to Choice Hotels International, Inc.'s model. The company emphasizes driving owners' revenue up and their costs down. Franchisee confidence is reflected in the development pipeline growth.

• Global franchise agreements awarded grew 54% in the third quarter of 2025 compared to the same period of 2024.
• U.S. franchise agreements awarded increased 7% in the third quarter of 2025 versus the prior year, with new construction up 10%.
• The total global pipeline exceeded 86,000 rooms as of September 30, 2025.
• 98% of the global pipeline is concentrated in the upscale, extended stay, and midscale segments.
• Choice Hotels has over 7,500 hotels globally.

Choice Hotels International, Inc. uses its scale to deliver tangible benefits to these partners. For example, through strategic partnerships, the company helped franchise owners identify over $25 million in potential operational savings in 2024, averaging $33,000 per participating property. Also, a new food group purchasing program, launched in mid-2024, saved franchisees an average of 9% on food costs based on market-basket comparisons through March 2025. The ChoiceROCS consultancy program delivered $81 million in incremental revenue to participating properties in 2024.

Value-Conscious Leisure Travelers: Families and road-trippers (midscale/economy)

This segment remains a bedrock for Choice Hotels International, Inc., often showing resilience. The loyalty program is a key tool for retention here.

Extended-Stay Guests: Project-based workers and long-term travelers

The extended-stay category is highlighted as a beacon and a cycle-resilient area for Choice Hotels International, Inc. Development momentum is strong here.

• Domestic extended-stay net rooms grew 10.8% compared to March 31, 2024, and 12% compared to September 30, 2024.
• The domestic extended-stay pipeline reached over 40,000 rooms as of March 31, 2025, and nearly 43,000 rooms as of June 30, 2025.
• Domestic extended-stay RevPAR rose 6.8% in Q1 2025, outperforming the industry by 410 basis points.
• The WoodSpring Suites brand continues to deliver gross operating profits above 55%.
• The Everhome Suites brand is projected to open 25 new hotels by the end of 2025.
• Choice brands accounted for half of all economy and midscale extended stay hotels open or under construction in 2024.

The WoodSpring Suites brand specifically grew its rooms by 9.7% year-on-year in Q2 2025.

Business and Upscale Travelers: Targeting growth in the upper midscale and upscale segments

Choice Hotels International, Inc. is actively attracting a higher-yield customer base, evidenced by strong growth in its upscale portfolio and business travel metrics. This focus is a strategic lever for the company.

• Business travelers now account for 40% of all stays.
• Transient business revenue in the upper midscale segment increased by 20% in Q4 2024.
• The upscale and above-brand segments saw 44% growth in room count in the past year (2024).
• Global net upscale rooms grew 20.8% in Q3 2025 compared to the same period in 2024.
• Global upscale pipeline increased by 7% from March 31, 2025, reaching nearly 29,000 rooms as of June 30, 2025.
• Upscale online booking conversions on ChoiceHotels.com rose by more than 14% in the first quarter of 2025.

Global upscale openings saw a more than fourfold increase in Q3 2025 compared to Q3 2024.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Cost Structure

You're looking at the core spending habits of Choice Hotels International, Inc. as of late 2025, focusing on the figures reported around the second quarter. This is where the operational cash goes to keep the franchise machine running and growing.

Selling, General, and Administrative Expenses (SG&A), which covers the overhead of running the corporate side, saw its adjusted figure for the second quarter of 2025 land at $77.6 million. Honestly, if you strip out a $2 million operating guarantee payment related to the Radisson Hotels Americas acquisition, that adjusted SG&A for Q2 2025 was even lower, coming in at $75.6 million.

The structure also heavily involves managing funds related to franchised and managed properties. Reimbursable revenues from these properties in Q2 2025 were $167 million. The company notes that franchise and management agreements require these revenues to be used for specific associated expenses, such as central reservation systems and national marketing.

Here's a look at some of the key financial metrics from the Q2 2025 period that feed into the cost structure view:

Technology development and maintenance costs, which include investments in things like AI platforms and keeping the central reservation system humming, are funded through the general operating budget and the specific revenues mentioned above. Similarly, costs associated with the Choice Privileges loyalty program-covering rewards redemption, associated marketing efforts, and any co-brand credit card fees-are embedded within the operating expenses, though specific dollar amounts for these sub-categories weren't itemized separately in the primary Q2 2025 disclosures.

Marketing and advertising spend for brand awareness and driving direct bookings is also a significant outflow. The franchise and management agreements stipulate that associated revenues must cover national marketing and media advertising. For Q2 2025, the company reported that Partnership services and fees revenue, which supports these activities, was $27.1 million.

• Technology/CRS costs are covered by franchise service revenues and general operating funds.
• Loyalty program expenses are tied to member rewards and co-brand card agreements.
• Marketing spend is supported by fees designated for national advertising efforts.

Finance: draft 13-week cash view by Friday.

Choice Hotels International, Inc. (CHH) - Canvas Business Model: Revenue Streams

You're looking at the core income drivers for Choice Hotels International, Inc. as of late 2025. This is a fee-based model, meaning the company makes money from its hotel owners, not directly from guests.

Royalty Fees represent the largest, most consistent revenue stream, calculated as a percentage of the domestic franchisees' gross room revenue. For the second quarter of 2025, the domestic effective royalty rate stood at 5.12%. By the third quarter of 2025, this rate had expanded slightly to 5.15%.

The revenue streams are detailed below, showing the most recent concrete figures available:

Other key components that feed the top line include:

• Initial Franchise Fees: Paid by new franchisees upon signing.
• System Fees: Fees for central reservation, marketing, and technology access.

The company's overall financial expectation for the year remains strong, despite softer U.S. RevPAR guidance revisions. The full-year 2025 Adjusted EBITDA projection is currently set between $615 million and $635 million, with the most recent update tightening that range to $620 million to $632 million.

The growth in Partnership Services and Fees is notable; it increased from $19.84 million in Q1 2024 to $25.38 million in Q1 2025, and then to $27.1 million in Q2 2025.