Choice Hotels Beats RevPAR Forecasts but Still Loses Market Share

Choice Hotels International posted U.S. RevPAR (revenue per available room) growth of 3.8% in the third quarter, roughly 1.5 percentage points ahead of Wall Street's forecast. CEO Dominic Dragisich told analysts on a Monday earnings call that October RevPAR came in at about 7%.

The beat, however, does not equal share gain. Truist Securities analysts C. Patrick Scholes and Gregory Miller, citing CoStar data, wrote that the mix implies Choice is still losing market share against the 7% RevPAR growth the U.S. hotel sector recorded in the quarter, according to CBRE. They estimated Choice's fair-share growth would have been closer to 5% to 6%.

Where did the growth actually come from?

The strength sat almost entirely at the bottom of the portfolio. By tier, per Truist citing CoStar:

• Economy brands grew RevPAR 3.5% against roughly 2.5% for the industry
• Midscale and upper-midscale grew 3.6% against about 4.5%
• Upscale and above grew just 1.1% against roughly 4%

The pattern marks early progress for Dragisich, whose core problem in August was that Choice trailed industry benchmarks in every price tier where it competes, from economy to upscale. The third quarter narrowed that gap without erasing it.

"We did narrow the gap," Dragisich said, referring to Choice's performance relative to industry averages.

The budget win is the clearest measured result. Budget hotels outperformed their industrywide benchmark over the summer, growing RevPAR 3.5% against about 2.5%, according to Truist Securities. Upscale brands grew at a far lower pace than the industry average, and that drag continues to cap the company's overall share position.

What is Choice doing about growth?

The company is pushing further into an asset-light model while prioritizing organic growth. In the quarter, Choice:

• Took a $24 million charge to terminate an option to acquire an unnamed European hospitality business, after the option "eventually migrated to an obligation" and the target's growth became more lease-based
• Sold two owned hotels for about $34 million in net proceeds while retaining the franchise agreements, leaving 17 owned hotels
• Bought RV membership club Harvest Hosts for approximately $130 million on October 1

Room count stands roughly flat year over year. Dragisich said he wants net room growth of 2% to 4%, a target that will require reversing the current trajectory if Choice is to stop ceding distribution share to faster-growing rivals.

The Harvest Hosts purchase is the one growth bet with fresh capital behind it, extending Choice beyond traditional lodging into RV-oriented travel memberships. The European exit, by contrast, signals a harder line on acquisitions that would add lease-based exposure rather than franchise fees.

For travel sellers and distributors, the quarter's takeaway is a two-speed portfolio: economy properties are gaining revenue momentum, while upscale inventory — the segment most intermediaries monetize at higher commissions — continues to underperform the market by nearly three percentage points. Dragisich's task going into the fourth quarter is proving that October's 7% RevPAR reading reflects durable momentum rather than a one-month outlier.