Choice Hotels’ RevPAR plunges 7.6% in Q4, US$13B SMB play offers hope

USA – Choice Hotels International has reported a troubling 7.6% drop in U.S. RevPAR for the fourth quarter of 2025, dragging global RevPAR down 2.5% despite international markets showing resilience with 3.2% growth.

The company is now pinning its recovery hopes on a bold US$13 billion digital platform targeting small and midsized businesses, set to launch next quarter, as it navigates what CEO Patrick Pacious described as a challenging domestic environment complicated by the U.S. government shutdown and softening international inbound travel.

U.S. Headwinds Hit Hard

The numbers paint a stark picture of domestic struggles. Fourth-quarter U.S.

RevPAR plummeted 7.6%, with CFO Scott Oaksmith citing multiple factors: the U.S. government shutdown during the quarter, continued softness in international inbound travel, and difficult year-over-year comparisons due to business gained from the 2024 hurricanes.

Systemwide RevPAR for the full year dropped 4.6%, while average daily rates slipped 0.7% and occupancy dipped 0.3 percentage points.

Business Travel Bright Spot

Despite the gloomy top-line numbers, business travel emerged as a genuine bright spot.

Group revenue jumped an impressive 35% year-over-year, while small and midsized business revenue grew 13%, led by resilient sectors including construction, utilities, and high-tech manufacturing.

Business travel now represents 40% of total stays at Choice properties, a significant shift that has helped cushion the blow from leisure travel softness.

The company is leveraging AI-enabled request-for-proposal tools to accelerate hotel responsiveness and drive those high-value bookings.

International Markets Shine

While the U.S. struggled, international operations provided genuine cause for optimism. Fourth-quarter international RevPAR climbed 3.2% to US$60.52, supported by a 1.2% bump in average daily rates.

For the full year, international RevPAR rose 3.5%, driven by higher ADR and improved occupancy rates.

This builds on Choice’s aggressive global expansion strategy, which has seen international net rooms grow 12.5% with hotel openings up 82%, bringing the international system to nearly 160,000 rooms.

International EBITDA has quadrupled since 2022, with margins expanding from 45% to 72% as Choice shifts toward direct franchising.

The US$13 Billion Bet on SMBs

In a bold strategic move, Choice announced the upcoming launch of a dedicated digital platform targeting small and midsized businesses, tapping into what Pacious called “an estimated US$13 billion addressable opportunity.”

The platform, set to debut next quarter, aims to offer customized solutions for SMBs, driving more bookings and increasing customer loyalty.

Pacious didn’t clarify whether this would replace or support the current Business Essentials program, but the message was clear: Choice is betting big on the business traveler.

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