Choice's Drive-To Portfolio Positioned Well for Any Economic Related Trade-Down

With about 90% of Choice's US portfolio within 1 mile of interstates, the company is positioned to benefit from any industry trade-down if economic growth slows due to tariff uncertainty. Long term, we expect Choice Hotels to gradually expand room share in the hotel industry in the next decade, with its keys increasing 2% on average annually, above the 1%-2% supply lift we estimate for the US industry during that time. This growth is supported by a rejuvenated Comfort brand (26% of 2024 total domestic rooms), newer Cambria, Ascend, and Everhome concepts (10% combined), its extended-stay brand WoodSpring (6%), the acquisition of the higher-scale Radisson brand in 2022, the partnership with upscale Westgate resorts in 2024 (about 3%), and a solid loyalty program with 69 million members as of Dec. 31, 2024, up from 44 million in 2019. The company was seeing healthy portfolio growth from its extended-stay brands prior to the coronavirus outbreak, and this demand should continue with the onshoring and infrastructure rebuilding in the US during the next several years, benefiting Choice's 5,000 hotels within a mile of a US interstate. Also, Radisson should increase Choice's mix of upscale and midscale hotels, and generate room night revenue above the consolidated average. The expansion of its higher-scale and extended-stay portfolio stands to buoy its brand intangible asset and switching cost advantages. Overall, Choice holds around 2% global hotel revenue share, ranking it seventh in the industry.